Opko Health Inc. (NASDAQ:OPK) announce the signing of a definitive agreement under which OPKO will acquire Transition Therapeutics, a clinical stage biotechnology company.

Under the terms of the agreement approved by the Boards of Directors of both companies, Transition Therapeutics security holders will receive approximately 6.4 million shares of OPKO common stock. Based on the moving average price of OPKO common stock for the five trading days preceding the signing of the agreement, the transaction is valued at approximately US$60 million, or US$1.55 per share of Transition Therapeuticscommon stock, based on current outstanding shares. The companies expect the transaction to close during the second half of 2016, subject to approval of Transition Therapeutics stockholders and other customary conditions.

The Transition Therapeutics clinical portfolio includes:

  • TT401, a once or twice weekly oxyntomodulin for type 2 diabetes and obesity. We believe TT401 to be the most clinically advanced drug candidate among the new class of GLP1-glucagon receptor dual agonists. In a recently completed phase 2 study of 420 patients with type 2 diabetes, subjects receiving the highest dose of TT401 peptide once weekly demonstrated significantly superior weight loss compared with currently approved extended release exenatide and placebo after 12 and 24 weeks of treatment. TT401 also provided a reduction in HbA1c, a marker of sugar metabolism, similar to exenatide at weeks 12 and 24. TT401 strengthens OPKO’s existing pipeline of oxyntomodulin drug candidates for the treatment of type 2 diabetes and obesity. OPKO’s MOD-6031, currently in a phase 1 study, is a once weekly oxyntomodulin with a proprietary delivery system to slowly release the natural oxyntomodulin, which allows the molecule to penetrate the blood brain barrier. The potential of MOD-6031 to interact with CNS, as well as peripheral receptors, is expected to mimic the natural effect of oxyntomodulin for its effects on satiety and weight loss.
  • TT701 is a once daily oral selective androgen receptor modulator for patients with androgen deficiency. In a 12-week study of 350 male subjects, it resulted in significantly decreased fat mass and increased lean body mass and muscle strength without significantly changing prostate specific antigen levels. The selective and antagonistic properties of TT701 appear to be well suited to provide anabolic therapeutic benefits to specific patient populations, while potentially avoiding, or even reducing, prostate hypertrophy.
  • ELND005, a neuropsychiatric drug candidate. ELND005 is an orally administered small molecule that has completed phase 2 clinical studies in Alzheimer’s disease and Down syndrome patients.

“This acquisition provides OPKO with two late stage drug candidates, each of which holds exceptional market potential,” stated Phillip Frost, M.D., CEO and Chairman of OPKO. “We believe TT401, a once-weekly dual GLP1/Glucagon agonist that recently showed success in a 420-patient phase 2 study, will complement OPKO’s existing oxyntomodulin product candidate (MOD-6031), which may provide enhanced therapeutic benefit through targeted delivery.”

Dr. Frost added, “The selective androgen receptor modulator, TT701, could meet an important need in patients who can benefit from its anabolic effects without the risks associated with testosterone products. We believe it fits well with our Claros® 1 point-of-care diagnostic products under development for testosterone and PSA, which could serve as companion diagnostics.”

“OPKO is ideally positioned to leverage the potential of Transition’s clinical programs and bring these novel therapeutics to market for the benefit of patients,” said Tony F. Cruz, Ph.D., CEO and Chairman of Transition Therapeutics, “Further, OPKO has a strong pipeline of products coming to market that can provide future value for Transition Therapeutics stockholders.” (Original Source)

Shares of Opko Health are down nearly 3% to $9.05 in pre-market trading. OPK has a 1-year high of $9.58 and a 1-year low of $8.71. The stock’s 50-day moving average is $9.78 and its 200-day moving average is $9.70.

On the ratings front, Opko has been the subject of a number of recent research reports. In a report issued on June 21, Oppenheimer analyst Rohit Vanjani reiterated a Hold rating on OPK. Separately, on the same day, Standpoint Research’s Ronnie Moas reiterated a Buy rating on the stock and has a price target of $18.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Rohit Vanjani and Ronnie Moas have a total average return of 5.9% and 4.2% respectively. Vanjani has a success rate of 49.6% and is ranked #507 out of 3906 analysts, while Moas has a success rate of 66.7% and is ranked #103.

Overall, 2 research analysts have assigned a Hold rating and 3 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $16.00 which is 72.0% above where the stock closed yesterday.

OPKO Health, Inc. is a multi-national pharmaceutical and diagnostics company. The company is engaged in discovering, developing, commercializing and expertise its novel and proprietary technologies with a focus to provide unmet medical needs through a range of develops solutions to diagnose, treat and prevent various conditions, including molecular diagnostics, point-of-care tests and proprietary pharmaceuticals and vaccines. It operates its business through two segments: Pharmaceutical and Diagnostics. The Pharmaceutical segment consists of pharmaceutical research and development operations in Chile, Mexico, Ireland, Israel and Spain. The Diagnostics segment consists of pathology operations and point-of-care and molecular diagnostics operations.