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Why NeuroDerm Ltd Acquired a Higher Price Today

By Brian Orelli, PhD – Jul 24, 2017 at 1:07PM

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The biotech will be sold to Mitsubishi Tanabe Pharma.

What happened

NeuroDerm (NASDAQ: NDRM) is up 15.5% at 12:05 p.m. EDT after announcing that it will be acquired by Japan-based Mitsubishi Tanabe Pharma for $39 per share. The deal puts the value of the biotech at about $1.1 billion.

So what

The offer represents only a 17% premium on Friday's closing price, but it's important to remember that the stock has gone up substantially over the last month and a half after media outlets reported that the company was looking to put itself on the auction block. Relative to the share price before the increase, investors are getting a nice 79% premium.

Businessmen shaking hands

Image source: Getty Images.

Mitsubishi Tanabe Pharma is after NeuroDerm's pipeline of drugs for Parkinson's disease, including ND0612, which is on track to be submitted for approval in 2018 after promising early-stage results were disclosed earlier this year. NeuroDerm also has an earlier-stage Parkinson's drug, called ND0701, and another candidate, ND0801, that could help patients with a broad spectrum of cognitive disorders including attention deficit disorder, Alzheimer's disease, Parkinson's, and schizophrenia. NeuroDerm isn't resting on its laurels and plans to bring another Parkinson's drug, ND0901, into the clinic in early 2018.

Now what

Shares of NeuroDerm are trading a little under 2% below the offer price, suggesting that investors don't see another higher bid coming. With shareholders who own approximately 34% of the outstanding shares having already said they plan to support the sale, it appears the deal is likely to go through.

Shareholders can continue to hold on to shares to eke out the last bit of returns -- with the usual caveat that something unexpected might come up that derails the deal -- or they can sell now if they think they can get a better return somewhere else in the time until the deal closes in the fourth quarter.

Brian Orelli and The Motley Fool have no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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