Yet again we’ve had a busy a start to the week in biotech. Here are three of the names getting the most attention on Tuesday, Raptor Pharmaceutical Corp.(NASDAQ:RPTP), Horizon Pharma PLC (NASDAQ:HZNP) and Foamix Pharmaceuticals Ltd (NASDAQ:FOMX).
During the middle of last month, we published this piece discussing the potential tie in between Raptor Pharmaceutical Corp.(NASDAQ:RPTP) and Retrophin Inc (NASDAQ:RTRX). Rumors spread that the latter was pitching to buy the former, and Raptor picked up a considerable amount of strength on the back of the suggestion. Well, as it turns out, Raptor was dressing itself up for acquisition, but not by Shkreli’s old haunt. Instead, and as announced on Monday, the company will be acquired by Dublin, Ireland based biotech Horizon Pharma PLC (NASDAQ:HZNP).
The deal will see the latter put up $800 million, $600 million internal debt and the rest cash, to fund the purchase, which values Raptor at around $9 a share. It’s worth noting here that this is a pretty small premium, especially when compared to some of the premiums paid in the space across the last twelve months. The average one week premium comes in at around $53% across a range of comparable transactions. In contrast, the Raptor premium only amounts to a little over 21%.
Shareholders are rightly a little bit frustrated, and some are up in arms on the transaction, but we don’t see it as too far off the mark. Yes, Raptor has performed well across the last few quarters, but the biotech sector (and specifically, the M&A side of the market) is softening in line with wider markets. High premiums can’t last forever, and there’s a good chance Raptor will look back on this as a just-in-time situation.
Whatever happens, the deal is expected to close before the end of the final quarter, and marks a step forward in Horizon’s acquisitive growth strategy – something that the company’s management has been vocal in expressing their desire to achieve over the last twelve months.
Moving on, let’s look at Foamix Pharmaceuticals Ltd (NASDAQ:FOMX). This one just gained low double digits on the announcement that its phase II trial in papulopustular rosacea had hit its primary efficacy endpoint. For those not familiar with the condition, it’s a dermatological affliction whereby patients have red, swollen, often pustular lumps on their skin – primarily on the face and neck. Foamix is developing a drug called FMX103 to treat the condition. The drug is based on a minocycline foam candidate called FMX101 (the company’s lead candidate) which is currently under development targeting moderate to severe acne.
From a scientific perspective, Foamix is pretty opaque on exactly how FMX103 works. Based on what we know, however, we can extrapolate that the drug is a sort of antibiotic foam (minocycline is an antibiotic) designed for topical administration (and in turn, dermatological absorption).
The trial also registered hits on a number of secondary endpoints including inflammatory lesion measurements, and safety and tolerability served up a pretty clean profile. A few AEs of various grades were reported, but across a total of more than 230 patients, they shouldn’t have any impact on the drug’s chances of advancing into a pivotal going forward.