What happened
Shares of BELLUS Health (BLU) were up by a whopping 98.9% as of 10:19 a.m. ET Tuesday morning. The big gain came in response to a $2 billion buyout agreement with British pharma giant GSK (GSK 1.22%).
Per the terms of the deal, GSK has agreed to pay $14.75 per share for the specialty medicines company. This price point represents a 103% premium relative to the biotech's closing price yesterday. The two companies expect the transaction to close no later than the third quarter of 2023.
So what
What brought GSK to the negotiating table? Through this deal, GSK will acquire the late-stage refractory chronic cough (RCC) medicine camlipixant. Camlipixant is a highly selective P2X3 antagonist in phase 3 development as a front-line treatment for adults with RCC. If things go according to plan, camlipixant could hit the market by 2026.
This timeline puts GSK's newly acquired RCC candidate well behind Merck's (MRK -0.82%) rival therapy, gefapixant. Merck is currently in the process of resubmitting gefapixant's regulatory application to the Food and Drug Administration (FDA), putting its commercial launch on track for late 2024. GSK seems to be betting that camlipixant can generate a best-in-class profile, enabling it to overcome gefapixant's first-mover advantage.
Now what
The clear takeaway for investors from this latest biotech buyout is that big pharma is more than willing to pay up to acquire intriguing late-stage assets. After all, Merck paid a hefty premium just yesterday to acquire Prometheus Biosciences for a late-stage autoimmune disorder candidate therapy.
The key reason is that several big pharmas are facing steep patent cliffs later this decade. As a result, there's a good chance that more premium-laden deals will materialize in the space in the near future.
