What happened
Shares of Ra Pharmaceuticals (RARX), a clinical-stage biopharmaceutical company focused on rare diseases, jumped 101% as of 10:56 a.m. EST on Thursday. The huge move is a response to the news that Ra has agreed to be acquired by UCB (UCBJF 2.48%), a global biopharmaceutical company based in Belgium.
So what
Here are the key terms of the acquisition:
- The deal values Ra Pharmaceuticals at $48 per share, or about $2.5 billion.
- This represents a 93% premium to Ra Pharma's 30-day average closing price.
- The deal is expected to be completed by the end of the first quarter of 2020.
- UCB will fund the transaction with cash on hand and new bank term loans that have already been secured. UCB plans to rapidly pay down the debt after the closing.
- The boards of directors of both companies have unanimously approved the transaction.
- The deal still requires the approval of Ra Pharma shareholders.
Image source: Getty Images.
Ra Pharmaceuticals' CEO Doug Treco stated:
UCB shares our commitment to the rare disease patient community and our goal of developing novel, accessible, and cost-effective therapies in the areas of immunology and neurology. I firmly believe it is the right partner for us to advance new treatment options from our unique early and late stage pipeline to patients. Ra Pharma's technology platform is an ideal addition to UCB's leading innovation capabilities, and our scientists are looking forward to working with the entire team at UCB.
Ra's stock ended yesterday's trading session at $22.69, so given the buyout price of $48, it is no surprise to see shares making a triple-digit jump today.
Now what
Investors who purchased Ra Pharmaceuticals at its 2016 IPO are currently sitting on a gain of 250%. That's a fantastic return that showcases just how much money can be made from investing in clinical-stage biotechs.
Ra's stock is currently trading below $46 per share, which is a slight discount to the $48 takeover price. Ra's investors will have to decide for themselves whether they want to sell at a small discount today or wait until the deal closes in 2020 to receive the full $48. The good news is that odds of this deal going through appear to be very high, since UCB has already lined up the funding and both companies' boards have unanimously approved the transaction.
Either way, Ra's investors should take a victory lap today and begin their search for their next potential home-run investment.
