Volatility in the stock market has been at heightened levels, with Friday's sizable gains helping to offset bigger losses earlier last week. However, it appeared that investors were ready for a bit of a rest coming into the new week. As of 8:30 a.m. ET, futures on the Dow Jones Industrial Average (^DJI 0.06%) were down just 1 point to 32,119. S&P 500 (^GSPC -0.22%) futures had eased lower by 7 points to 4,012, while Nasdaq Composite (^IXIC -0.52%) futures had fallen 44 points to 12,338.
Spirit Airlines (SAVE -1.95%) got a big premarket boost on Monday morning on news that JetBlue Airways (JBLU 4.10%) hasn't given up in its efforts to acquire the discount airline. Meanwhile, however, one company in the biopharmaceutical industry saw massive losses despite announcing a sizable transaction with a key treatment.
A dogfight for Spirit
Shares of Spirit Airlines moved higher by nearly 14% in premarket trading Monday. Shareholders got word that JetBlue had made a tender offer for their shares, bypassing an unwilling board of directors in a hostile takeover attempt.
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Under the terms of the tender offer, JetBlue wants to pay shareholders $30 per share in cash for their Spirit stock. That's less than a previous offer to the company itself at $33 per share, but JetBlue's letter to shareholders made it clear that it was ready to negotiate in good faith to reach the $33 price upon receiving certain assurances and disclosures.
Spirit has argued that a JetBlue acquisition isn't likely to pass regulatory muster, with antitrust concerns front and center in the airline industry. However, the JetBlue tender offer noted that its proposal includes a $200 million reverse break-up fee worth roughly $1.83 per share. By contrast, the offer that Spirit currently favors from Frontier Group Holdings has no such fee.
Spirit has set a date of June 10 for the shareholder meeting to vote on its proposed Frontier merger. If enough shareholders agree with JetBlue and give the rival airline their proxy to vote against the Frontier proposal at the meeting, then it could lead to even more drama for the airline industry in the months to come.
Chimerix makes a deal
Shares of Chimerix (CMRX 3.13%), meanwhile, were volatile in the premarket session. Initially the stock moved higher following news of a transaction covering a key treatment, but on further thought, investors sent the stock down by nearly 50%.
Chimerix released first-quarter financial results, but investors paid the most attention to its announcement to sell the worldwide rights to its smallpox treatment, Tembexa. Under the terms of the deal, Emergent BioSolutions (EBS -2.10%) will make an upfront payment of $225 million for Tembexa, in addition to providing for additional milestone payments of up to $100 million if additional procurement awards from the Biomedical Advanced Research and Development Authority get executed. Chimerix might also qualify for 20% royalties on future Tembexa sales in the U.S. if unit volume exceeds certain preset levels.
Chimerix also said it would aim to start a phase 3 clinical study of its ONC201 treatment for a form of glioma. The decision came as the U.S. Food and Drug Administration changed course in its assessment of the treatment, causing Chimerix to limit further investment in a natural disease history study.
The amount of cash Chimerix is getting from Emergent BioSolutions is enough to match its reduced market capitalization following the drop in the stock price. That indicates investor skepticism that Chimerix's remaining treatments will ever be successful, and it potentially puts the biopharma among a growing number of peers trading below their cash value.
