What: Shares of Biotie Therapies Corp. (NASDAQ: BITI), a Finnish drugmaker focusing on neurodegenerative and psychiatric disorders, gained more than 86% in early morning trading today on moderately high volume. The catalyst behind this eye-popping move is the news that Biotie has agreed to an all-cash buyout offer, worth $363 million or $25.60 per ADS, from the U.S. biotech Acorda Therapeutics (NASDAQ:ACOR).
So what: Acorda is reportedly buying Biotie mainly for its experimental Parkinson's disease drug tozadenant, indicated as a treatment to reduce daily "off time," or the amount of time patients taking levodopa experience re-emerging symptoms as a result of the drug wearing off.
Now what: According to the two companies, tozadenant is currently in late-stage development, putting it on track to potentially reach the market by 2019. Given this long lead time, however, this buyout probably won't make much of an impact on Acorda's near-term outlook. That's disappointing news for investors that were hoping the biotech would make a significant move to broaden its product portfolio in a meaningful way to kick off the new year.
After all, Acorda's flagship multiple sclerosis drug, Ampyra, appears to be plateauing at this stage in its commercialization, and the company's shares are anything but cheap with a staggering 12-month-trailing P/E ratio of 750. That's why I'm content to watch this particular biotech from the safety of the sidelines for now.