What happened
Shares of the clinical-stage biotech Synthorx (THOR +0.00%) jumped by an eye-popping 169% right out of the gate Monday morning. What's behind this enormous spike?
Synthorx's stock is on fire today in response to an all-cash buyout agreement with French pharma giant Sanofi (SNY 1.63%) for $68 per share. On a fully diluted basis, the total equity value of this buyout works out to a hefty $2.5 billion.
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So what
This latest biotech buyout is noteworthy for two reasons. First off, Sanofi CEO Paul Hudson has only been on the job for a little over three months. That's an unusually short amount of time for a newly minted pharma CEO to start engaging in mergers and acquisitions. So Hudson seems to have a clear vision of where he plans to take the French drugmaker.
Secondly, Sanofi is paying an extremely steep price for Synthorx. The biotech's novel cancer and autoimmune disease platform -- centering around the creation of synthetic proteins -- has yet to be validated in human trials after all. That's not to say that this unique drug development platform won't prove to be worth the price of admission, but it's a risky move nonetheless.
Now what
Synthorx and Sanofi said that the deal should close in the first quarter of 2020. Meanwhile, investors shouldn't be surprised if Sanofi continues to be aggressive on the M&A scene with Hudson at the helm, especially in the areas of cancer and autoimmune diseases.
