French drugmaker Sanofi announced Monday that it entered into an agreement to acquire US company Principia Biopharma in an all-stock deal valued at $3.68 billion to help the companies build a portfolio of treatments for autoimmune diseases.
Under the terms of the agreement, Sanofi (SNYNF) will buy all of the outstanding shares of Principia for $100 per share in cash, which represents a 10.2% premium to Principia’s closing price on Friday. The US biotech company’s shares are up 11% trading at $101 in Monday’s pre-market session. Sanofi and Principia Boards of Directors have unanimously approved the transaction, which is expected to be completed in the fourth quarter of this year.
In a joint statement, the companies said that Principia’s (PRNB) Bruton tyrosine kinase (BTK) inhibitors add to Sanofi’s strategy to accelerate and build a portfolio of the next generation of transformative treatments for autoimmune diseases.
BTK is present in the signaling pathways of key innate and adaptive cell types of the immune system. Being able to block or disrupt these signaling processes can help in stopping inflammation and tissue destruction related to autoimmune diseases and target some of the underlying pathophysiology.
“This acquisition advances our ongoing R&D transformation to accelerate development of the most promising medicines that will address significant patient needs,” said Sanofi CEO Paul Hudson. “The addition of multiple BTK inhibitors to our pipeline demonstrates our commitment to strategic product acquisitions in our priority therapeutic areas. Full ownership of our brain-penetrant BTK inhibitor ‘168 removes complexities for this priority development program and simplifies future commercialization.”
Back in 2017, Sanofi entered into a collaboration with Principia under which Principia granted Sanofi an exclusive, worldwide license to develop and commercialize BTK inhibitor ‘168 in multiple sclerosis and other central nervous system diseases.
Principia shares have advanced 7% over the past month and are up a whopping 66% year-to-date. (See PRNB stock analysis on TipRanks)
On Aug. 7, Stifel Nicolaus analyst Derek Archila reiterated a Buy rating on PRNB and raised his price target on the stock to $104 from $72 to reflect a probability-weighted analysis to account for recent takeover speculation.
“While our standalone valuation moves to $73 based on 2Q20 financials, we believe if the company were to be acquired it could fetch upwards of $134 per share, which gets us to our $104 share price,” Archilla wrote in a note to investors. “Outside of the recent takeout chatter, PRNB continued to progress its pipeline in 2Q20, and the company remains very well capitalized.”
TipRanks data shows PRNB scores 6 unanimous Buy ratings from analysts which add up to a Strong Buy consensus. The $112.83 average price target reflects 24% upside potential in the shares in the coming 12 months.
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