Shares of Poseida Therapeutics Inc. (NASDAQ: PSTX), a clinical-stage biopharmaceutical firm, more than tripled today after Roche Holding (SWX ROG) announced it would buy the company for $1.5 billion.
The offer from Roche values each share of Poseida Therapeutics $9.0, which is a premium of more than 200% over their previous closing price.
As part of the agreement between Poseida and Roche, shareholders will receive a “non tradeable contingent value rights (CVR)” to receive an aggregate of up to $4,000 per share in cash if certain milestones are achieved.
Why did Roche value Poseida at a premium?
Poseida Therapeutics’ allogenic CAR T therapies promise to be “off the shelf” treatments for patients with certain types cancer.
This California-based company has been working closely with Roche to evaluate P-BCMAALL01 as a possible treatment for multiple myeloma.
Last month, a study revealed positive results.
Poseida Therapeutics’ $1.5 billion cash investment will help it expand its cancer treatment footprint.
According to Kristin Yarema, the chief executive officer of Poseida Therapeutics, Roche’s “global capability in late-stage research and development” will allow patients around the world to benefit from allo CAR T’s transformative potential.
Wall Street’s consensus rating for Poseida was “buy” heading into Tuesday.
The Roche-Poseida agreement will be completed in early 2025
Roche expects that the PSTX deal will be completed in the first quarter 2025, as long as the transaction meets the usual closing conditions. This includes shareholder and regulatory approval.
The merger will improve clinical outcomes, and expand access to T rich CAR-T therapies.
Levi Garraway, chief medical officer at Roche Holding, said: “This acquisition builds upon our joint progress in catalysing the development of potentially best-in class therapies in oncology and immunology as well as neurology.”
The news comes more than a week after Roche reported an increase of 9.0% in quarterly sales that was better than expected and forecasted a high single digit percentage increase for full-year adjusted earnings per share.
The current dividend yield on Roche stock is 3.81%, which is another reason to include it in your portfolio.
Is Roche stock worth buying after the PSTX deal?
The Bank of America Securities analysts see a potential upside of CHF 340 in the Roche stock after a 13% drop since early September.
Their price target suggests that they could achieve a gain of more than 35% from current levels.
The investment firm anticipates a significant recovery in Roche’s earnings per share in the next year.
It’s also bullish on Roche’s shares because key products such as Vabysmo or Xolair may deliver a significant boost to the pharmaceutical margins of the company in 2025.
In a recent client note, BofA informed clients that three assets in Roche’s pipeline could add up to $5.0 billion in annual sales.
This post Poseida shares tripled on Tuesday, boosted with Roche collaboration may be updated as new developments unfold
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