What happened
Immunovant (NASDAQ: IMVT), a company developing a monoclonal antibody for the treatment of autoimmune diseases, is down almost 25% after receiving a cash injection of $200 million from Roivant Sciences.
So what
Prior to today's announcement, Roivant owned 57% of Immunovant because it was spun out of Roivant in 2019 through a special purpose acquisition company (SPAC). Now, Roivant is also in talks to launch via a SPAC itself.
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In March, Roivant said it would reacquire the 43% of Immunovant it didn't own. It was music to shareholders' ears. In an about-face, it's now only upping its stake to about 64% and providing enough funding for Immunovant to conduct late-stage trials.
The deal will see Roivant pick up its additional shares at $11.75. Some analysts thought a full buyout could bring a price 50% to 100% higher than that. In that context, it's no surprise the stock is under pressure. Shares currently trade hands around $8 per share.
Now what
The stock is now down almost 85% from its highs this past winter when safety concerns forced Immunovant to halt one of its two active clinical trials. It found high cholesterol in participants taking the drug. In June, it found the same problem in its other study.
For his part, Roivant CEO Matt Gline is staying positive. In comments related to the deal, he expressed excitement about Immunovant's product and pointed to this cash injection as the best way to move development forward.
The Immunovant drug -- IMVT-1401 -- will continue to be tested against several different autoimmune diseases. The steep sell-off indicates that many current shareholders aren't willing to wait for the results.
