We are now well and truly underway with a fresh week in the biotechnology space and the big news at the start of this week is rooted in a potential takeover of Dimension Therapeutics, Inc. (NASDAQ:DMTX). The news initially hit press (in rumor form) late on Friday but, early on Monday morning, we got confirmation that the rumors are seemingly correct. According to reports, the bidder is California-based Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE) which, at last count, closed for a market capitalization of a little over $2.2 billion.
As might be expected, Dimension is doing pretty well on the back of the news. The company closed out on Monday for $5.90 a share – a 40% appreciation on the price at which the company closed out last week.
Premarket on Tuesday, back and forth activity has brought this one to trade back down and around the $5.65 mark but that still represents a considerable premium on last week’s pricing.
So what is the deal look like?
Ultragenyx has offered to pay up to $5.50 a share for Dimension, in cash and to be effectuated via a tender offer.
So this is a pretty interesting situation. Why? Because earlier this year, Dimension’s Board of Directors voted to recommend that Dimension stockholders approve a merger agreement between Dimension and REGENXBIO Inc. (NASDAQ: RGNX). The previous agreement was for $3.90 a share, up from the $1.20 a share at which the company was trading prior to the REGENXBIO offer. That there hasn’t closed yet, of course, but it makes things a bit complicated going forward. Specifically, REGENXBIO will almost certainly have something to say about the situation if the company loses out on being able to acquire Dimension at just $3.90, while shareholders will no doubt be holding on for the higher offer to materialize and will, concurrently, be looking for an abandonment of the REGENXBIO deal.
In other words, however this one plays out, there’s no real way everybody can be happy and dependent on terms outlined as part of the REGENXBIO arrangement (which markets aren’t privy to in full) there could be some legal ramifications if Dimension drops REGENXBIO.
Anyway, markets are obviously interpreting the development as positive for Dimension as illustrated by the above-mentioned boost market capitalization and it’s now about what Dimension’s Board of Director’s has to say on the matter – something that we expect will hit press during the coming days.
The next notable mover in the biotechnology space this week is Nabriva Therapeutics plc (NASDAQ:NBRV). On Monday, the company put out data from a late-stage trial of one of its lead development assets, a drug called lefamulin. It’s under investigation as a potential therapy for pneumonia and, specifically, community-acquired bacterial pneumonia (CABP), which is one of the leading causes of infectious deaths in the US and is the most common form of pneumonia in the region.
The idea behind treating things like pneumonia is that available options need to constantly be reinvented in order to stay on top of (or, ahead of) bacterial resistance. Lefamulin is Nabriva’s attempt to do just that and the late-stage trial was set up to demonstrate that the drug can be as effective as what is generally referred to as the gold standard treatment regimen (essentially a batch of antibiotics all administered at once).
And as per the latest data, it seems to work.
The trial met the primary endpoint of non-inferiority compared to standard of care (in this instance, moxifloxacin) with or without adjunctive linezolid for early clinical response, with rates of 87.3% for lefamulin and 90.2% for moxifloxacin with or without linezolid.
So what’s next? This was an intravenous administration study and there is also a secondary pivotal trial running in parallel that’s designed to investigate an oral administration formulation. Both are relatively large markets, but shareholders would love to see the oral administration data reinforce the IV data and shore up the overall market potential for the program.
Data from this study, then, is an upcoming important catalyst, set to hit press during the second quarter of next year.
Nabriva ran up to $8.87 a share during the standard session and, despite announcing a public offering after hours, has gained a little bit more to set itself up for a Tuesday morning open at $9.31 a share.