Shares of clinical-stage biopharma Paratek Pharmaceuticals (NASDAQ:PRTK) soared 37% today after news leaked that the company is considering a sale.
The stock has returned solid gains to investors in the last year after a string of positive developments for its antibiotic pipeline, including positive phase 3 results for its top two drug candidates. The data are good enough to submit multiple New Drug Applications to the U.S. Food and Drug Administration by the first quarter of 2018. Investors are fairly confident that approval is imminent for both.
Apparently, several large drugmakers echo that sentiment and are interested in acquiring Paratek Pharmaceuticals, according to a report from Bloomberg. As of 2:15 p.m. EDT, the stock had settled to a 30.8% gain.
Paratek Pharmaceuticals has been busy in the last 12 months.
- In May, it announced positive phase 3 results for an intravenous formulation of omadacycline for treating community-acquired bacterial pneumonia.
- It announced positive phase 3 results for a once-daily oral-only formulation of omadacycline for treating acute bacterial skin and skin structure infections.
- It revealed, together with partner Allergan, positive phase 3 results for two studies involving sarecycline for treating acne.
- It completed two pre-NDA meetings with the FDA to confirm plans for submission.
In other words, the future potential of the company is at an all-time high. However, since antibiotics don't generally generate blockbuster revenue as do drugs for treating cancers or rare diseases, large drugmakers have been hesitant to invest in antibiotics research and development. Therefore, it's plausible companies would be interested in market-ready assets that have been largely derisked.
Paratek Pharmaceuticals has a bright future whether or not a sale occurs. But given the difficult and expensive tasks of manufacturing and marketing, management may strongly consider selling the company for the right price. That would be a big boost for current shareholders. As for investors on the outside, it may be best to sit this one out. If a sale falls through, then the stock could give up most or all of today's gains.