What happened
Shares of VectivBio Holdings(NASDAQ: VECT) were up more than 35% Monday morning after the clinical-stage biotech company received a buyout offer from Ironwood Pharmaceuticals(NASDAQ: IRWD).
VectivBio's shares are up more than 85% so far this year. Ironwood's shares were down a little more than 2% on Monday morning.
So what
Ironwood, which specializes in gastrointestinal therapies, said it was acquiring VectivBio in a $1 billion all-cash deal, offering $17 a share for VectivBio, a 42% premium of what the stock closed at on Friday. The draw for Ironwood was VectivBio's short bowel syndrome-associated intestinal failure (SBS-IF) therapy, apraglutide, which is in a phase 3 trial. Ironwood said it sees the potential for $1 billion in peak annual sales for apraglutide.
Now what
VectivBio specializes in treatments for rare diseases, including SBS-IF and acute graft-versus-host disease (aGvHD). SBS-IF is a chronic disease that requires the ongoing administration of IVs and nutrients. It affects 18,000 adults in the U.S., Europe, and Japan. Ironwood saw enough positive signs from the trial to jump in now before its expected top-line readout later this year.
VectivBio also is testing apraglutide to treat pediatric SBS-IF and aGvHD. It has one other therapy in its pipeline, CoMET, which is in six different early-stage programs to treat severe inherited metabolic diseases (IMDs).
The buyout is a big deal for VectivBio, which had only $27.3 million in revenue last year and had a net loss of $93.7 million. The company says it has enough cash to fund operations into 2025.
The move should help Ironwood's growth. That company, known for irritable bowel syndrome (IBS) and chronic constipation drug Linzess, reported revenue of $101 million in the first quarter, up 6% year over year, and net income of $45.7 million, up 17% over the same period last year.
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Jim Halley has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
