What happened?

Shares of clinical-stage biopharmaceutical company Immunovant (IMVT -0.35%) are on fire on Monday. As of 12:20 p.m. EST, the drugmaker's stock was up by 11.7%, after rising by as much as 44% earlier in the day. Immunovant did not report any news, but its majority stakeholder, Roivant Sciences, announced that it would offer to buy out the remaining shares of Immunovant it does not already own.

So what

Roivant Sciences is a privately owned biopharmaceutical company that currently owns 57.5% of the outstanding shares of Immunovant. In a Securities and Exchange Commission (SEC) filing submitted today, Roivant expressed the desire to buy out the 42.5% stake in Immunovant it currently does not own. Roivant did not say how much the proposed transaction would be worth.

But the company did mention that its offer would represent a premium over Immunovant's current stock price. That explains why investors are bidding up Immunovant's shares today. However, there is still a lot we don't know about this potential deal: when it will be officially announced (that is, if it is approved at all) and how generous Roivant's offer will be. 

Hand drawing upward-bound graph on a board

Image source: Getty Images.

Now what

The news of a potential buyout may not be so bad for Immunovant's shareholders. The company recently ran into a major roadblock when it announced that it would temporarily halt a couple of its clinical trials for IMVT-1401, a potential treatment for thyroid eye disease and the company's leading pipeline candidate. The decision came after Immunovant recorded elevated total cholesterol and LDL levels in patients treated with IMVT-1401.

LDL is a form of cholesterol, and high levels of it can be very harmful. Immunovant's stock plunged as a result of these developments, and although the healthcare company said it planned to continue the development of IMVT-1401, recent events have, at the very least, set the investigational treatment's progress back. Naturally, Roivant is aware of these issues, and then some. As the company said in its SEC filings: "As the Issuer's [Immunovant's] controlling shareholder, Roivant has received nonpublic information about the Issuer and its lead product candidate."

Whether said nonpublic information was positive or negative isn't clear. But the uncertainty surrounding IMVT-1401's future was doing no favors to Immunovant's stock price. Talks of a potential acquisition are the best thing to happen to the company's shares in the last month.