What happened

Shares of Acceleron Pharma (XLRN) fell nearly 18% last month, according to data provided by S&P Global Market Intelligence. The company's shares tended to move by double digits in either direction from month to month last year, but turned in a 2.6% gain for the full year, compared to a 6.2% loss for the S&P 500. In other words, the December slide shouldn't provoke any anxiety for investors.

In fact, earlier last month Acceleron Pharma and partner Celgene announced positive phase 3 results for the prized asset luspatercept in treating myelodysplastic syndromes. The drug increases red blood cell count and helps patients who otherwise need red blood cell transfusions. The drug candidate is expected to be a major focus of each company's presentation at the upcoming JP Morgan Healthcare Conference

A chart on a chalkboard showing a steady rise followed by a sudden fall.

Image source: Getty Images.

So what

There's been some speculation that Celgene, which currently owns about 12% of Acceleron Pharma, would simply buy out its smaller partner. Analysts think luspatercept could hit peak sales of $2 billion or more. That's roughly equivalent to the market cap of Acceleron Pharma, which stands to receive healthy royalties from sales of the drug candidate should it receive marketing approval.

Ironically, Celgene was the company that ended up being acquired in early 2019: Bristol-Myers Squibb will gobble it up for $74 billion, assuming the merger goes through. Shares of Acceleron Pharma dropped 8% on that news, as investors figured it threw a wrench in their speculation of a buyout. No matter what happens, the smaller peer could be receiving significant royalty revenue soon.

Now what

Speculating about acquisitions can be fun, but it's never a sure thing. That aside, Acceleron Pharma has several positives going for it. Regulatory paperwork is expected to be filed for luspatercept in the United States and Europe in 2019. The company ended September 2018 with $112 million in cash and cash equivalents, and will receive milestone payments depending on regulatory outcomes.

With or without a buyout, Acceleron Pharma should have a comfortable amount of financial flexibility to continue developing its mid-stage neuromuscular and pulmonary pipeline candidates. That alone could make the stock worth a closer look for investors with a long-term mind-set.

Check out the latest Acceleron Pharma earnings call transcript.