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Why Acceleron Pharma Stock Jumped This Week

By George Budwell – Sep 25, 2021 at 12:48PM

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Buyout rumors are swirling around this mid-cap biotech company.

What happened

Shares of Acceleron Pharma (XLRN), a mid-cap hematology and pulmonary drugmaker, rose by a healthy 16.2% this week. While the catalyst behind this double-digit jump wasn't immediately apparent (the company didn't release any material news during the week), Bloomberg News reported late Friday afternoon that the company is in advanced talks to be acquired for approximately $11 billion, or $180 a share in an all-cash deal. 

Although Bloomberg couldn't identify the potential suitor in its initial report, Bristol Myers Squibb (BMY 0.31%) is the obvious candidate. Bristol already owns a sizable stake in Acceleron through its prior acquisition of Celgene, and the two companies are collaborating on the blood cancer drug Reblozyl and the late-stage pulmonary arterial hypertension (PAH) drug candidate Sotatercept.

Stacked wooden blocks that spell M&A.

Image source: Getty Images.

So what

Bloomberg noted that Acceleron has yet to agree to a buyout by any potential suitor. That's important to keep in mind because $11 billion for a company with a promising PAH medication comes across as a low ball offer that probably won't sit well with shareholders, especially since the company already sports a market cap of $10.2 billion. Johnson & Johnson, after all, ponied up a whopping $30 billion for the Swiss biotech company Actelion and its PAH pipeline only four years ago.

To be fair, Acceleron's Sotatercept probably won't achieve blockbuster status until the early part of the next decade, assuming it can successfully navigate through its late-stage clinical program. But Bristol would be getting the full commercial rights to two potential blockbusters drugs (Reblozyl and Sotatercept) in this deal. Thus, $11 billion doesn't seem like a feasible price tag for a company with these kinds of high-value assets.  

Now what

Acceleron, for its part, could simply choose to remain a stand-alone company if the right type of deal doesn't materialize. Then again, management may elect to take the risk-off approach by accepting a deal before Sotatercept's clinical program wraps up. Either way, biotech investors will definitely want to have their eyes on this name in the coming weeks. Buyout deals, after all, tend to send shockwaves through the entire biotech industry. 

George Budwell has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Bristol Myers Squibb. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.

Stocks Mentioned

Acceleron Pharma Stock Quote
Acceleron Pharma
XLRN
Bristol-Myers Squibb Stock Quote
Bristol-Myers Squibb
BMY
$81.13 (0.31%) $0.25
Johnson & Johnson Stock Quote
Johnson & Johnson
JNJ
$178.88 (0.08%) $0.14

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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