What happened
Shares of Chinook Therapeutics (KDNY) were up more than 57% early Monday afternoon after the healthcare company agreed to a $3.2 billion buyout offer from Novartis.
So what
Chinook is a clinical-stage biotech company that specializes in treating kidney diseases. The company is being acquired by Novartis for $40 per share in cash, a premium of 67% over what the stock was trading for at the close of last week. The company said the deal could mean an additional $4 per share in cash through contingent rights, so it could be worth $3.5 billion. The enticement for Novartis was Chinook's pipeline to treat rare kidney diseases. The deal is expected to be completed in the second half of the year.
Now what
Chinook, while a clinical-stage company with little revenue, was on the cusp of being a commercial company. Its lead therapy, atrasentan, is in a phase 3 trial to treat IgA nephropathy (also known as Berger disease). This disease happens when the germ-fighting protein immunoglobulin A (IgA) builds up in the kidneys, causing swelling. The therapy is also in a phase 2 trial to treat proteinuric glomerular diseases, which can interfere with the clearance of waste products by the kidney. The drug is an endothelin receptor antagonist.
The company's small pipeline also includes monoclonal antibody BION-1301, which is also seen as a Berger disease therapy, and CHK-336, whose trial to treat primary and idiopathic hyperoxaluria (a buildup of oxalate in your urine, which can lead to kidney stones) was recently paused after an adverse event.
Chinook lost $60.2 million in the first quarter and reported collaboration revenue of $1.8 million. It said it had $385.3 million in cash at the end of the quarter, which may have been enough to finance operations through 2024, considering its burn rate.
