After a big rally on Wall Street, it's somewhat understandable that investors would come into the new week ready for a breather. Stock index futures suggested that might be the case, with most major benchmarks indicating modest declines of around a third of a percent in premarket trading.
However, there was considerable activity in the biopharmaceutical stock space. Dice Therapeutics (DICE) made a huge move higher on merger news, while Sanofi (SNY -0.47%) scored a significant victory that has shareholders feeling better about the company's prospects. Read on to learn more about both of these companies and the impact they're having on the biopharma space more broadly.
Rolling with Dice
Shares of Dice Therapeutics jumped 38% in premarket trading on Tuesday morning. The South San Francisco-based biotech company got an acquisition offer from a leading company in the pharmaceutical space, and the price was too good to pass up.
Dice agreed to a buyout bid from Eli Lilly. Under the terms of the deal, Lilly will initiate a tender offer to purchase outstanding Dice stock for $48 per share in cash. That implies a total value for Dice of roughly $2.4 billion, and the offering price is 42% higher than where Dice shares closed on Friday afternoon.
Lilly cited a desire to boost its ability to serve patients suffering from autoimmune diseases in agreeing to acquire Dice. As Lilly sees it, Dice's oral IL-17 inhibitors represent new technology that could set the stage for further drug discovery in the years to come. For Dice, combining forces with Lilly opens up a vast set of resources that could help it accelerate its clinical development efforts and get treatments through the trial process faster and more efficiently.
Neither Lilly nor Dice anticipate any problems having the deal approved, and they expect the merger to close sometime in the third quarter of 2023. With Dice's stock having held on to gains following favorable phase 1 study results in October 2022 from its DC-806 psoriasis candidate treatment, investors are pleased to get another bump higher from Lilly's acquisition bid.
Sanofi gets a win
Gains early Tuesday for Sanofi were more modest, with the share price climbing 3%. Yet the news was just as important for the drugmaker, as it will hopefully allow the pharmaceutical giant to take another step forward toward hopefully putting a contentious issue behind it.
Sanofi announced that the International Chamber of Commerce dismissed an arbitration claim from privately held Boehringer Ingelheim related to potential liability from ongoing class action litigation surrounding the heartburn medication Zantac. Boehringer had sought to assert contractual provisions that it said would have required Sanofi to indemnify the company for any losses that might result from the Zantac litigation. The ICC tribunal rejected that argument, confirming that Sanofi won't have to pay Boehringer anything in connection with outstanding litigation.
Sanofi also took the opportunity to express its confidence that it will eventually prevail in the underlying litigation in U.S. courts surrounding Zantac. Plaintiffs in those cases have asserted that Zantac contained a known carcinogen, which prompted producers including Sanofi, Boehringer, Pfizer, and GSK to issue recalls. Sanofi has rebutted that no reliable scientific evidence exists connecting Zantac to cancer.
Shares of Sanofi dropped sharply late last year, but a U.S. federal court decision that granted summary judgment in favor of drugmakers helped push the stock price back to higher levels. That still leaves state court proceedings, but Sanofi nevertheless believes it will eventually prevail.