Janux Therapeutics (JANX 18.34%) stock is crushing it. The stock was up 42.4% for the week as of market close on Thursday, according to data from S&P Global Market Intelligence.
The big gain came after Bloomberg reported on Wednesday that Janux was exploring a potential sale. Big drugmakers have expressed interest in acquiring Janux, according to anonymous sources interviewed by Bloomberg.
Silence is golden?
Janux hasn't publicly commented on the reported acquisition talks. Some investors might think management's silence hints there's truth to the rumors.
It wouldn't be surprising if one or more large biopharmaceutical companies have Janux in their crosshairs. In February, Janux announced positive results from a phase 1 clinical study evaluating experimental drug JANX007 in treating prostate cancer and other solid tumors. The company said that the data show "a potential best-in-class profile" for the therapy.
Even with its stock up over 360% year to date, Janux's market cap remains below $3 billion. Quite a few big drugmakers with oncology pipelines could easily afford to buy Janux in an all-cash transaction.
Should you buy Janux Therapeutics stock?
Some investors could adhere to the adage "buy the rumor, sell the news." There's a potential downside to this approach, though. When rumors don't turn into reality, biotech stocks' gains can evaporate in a heartbeat.
I wouldn't buy Janux Therapeutics stock solely because of the reports about a potential buyout. However, the stock might appeal to aggressive investors who are betting that the promising early-stage results for JANX007 will be replicated in further clinical trials. Most investors, though, will probably be better off staying on the sidelines for now.
