Achillion Pharmaceuticals, Inc. (NASDAQ: ACHN) is flying in the premarket hours this morning, trading on gains of nearly 75%. The gains come after the company announced that it has entered into an agreement to be acquired. Here’s what’s happening:
ACHN Stock Pops On Acquisition News
In a press release issued early this morning, Achillion Pharmaceuticals said that it has entered into a definitive agreement with Alexion Pharmaceuticals (ALXN). Under the terms of the agreement, ALXN will acquire ACHN.
Ultimately, the acquisition will give Alexion Pharmaceuticals access to Achillion’s two clinical stage development programs, ACH-4471 and ACH-5528.
According to the agreement, ACHN will receive a $930 million up front payment, which works out to a per share value of $6.30. This payment will be funded with cash on hand.
As part of the agreement, Alexion will also be acquiring Achillion’s balance sheet, which as of September 30, 2019, had approximately $230 million in cash.
Moving forward, ACHN may receive future payments in the form of no-tradeable contingent value rights, or CVRs. These CVRs will be paid to shareholders should certain clinical and regulatory milestones take place.
The additional payments include $1.00 per shae if the U.S. FDA approves danicopan and $1.00 per share for Phase 3 study initiation of ACH-5228.
In a statement, Ludwig Hantson, Ph.D., CEO at ALXN, had the following to offer:
Alexion has demonstrated the transformative impact that inhibiting C5 can have on multiple rare and devastating diseases. However, we believe this is just the beginning of what’s possible with complement inhibition. Targeting a different part of the complement system – the alternative pathway – by inhibiting Factor D production addresses uncontrolled complement activation further upstream in the complement cascade, and importantly, leaves the rest of the complement system intact, which is critical in maintaining the body’s ability to fight infection. We believe this approach has the opportunity to help patients with diseases not currently addressed through C5 inhibition. We look forward to applying our nearly three decades of complement and development expertise to unlock the potential of oral Factor D inhibitors and bring these benefits to patients.
The above statement was followed up by Joe Truitt, President and CEO at ACHN. Here’s what he had to say:
We have established great momentum – discovering and advancing several small molecules into clinical development that have the potential to treat immune-related diseases associated with the alternative pathway of the complement system. Having already demonstrated proof-of-concept and proof-of-mechanism with our lead candidate, danicopan (ACH-4471), in PNH and C3G, respectively, we believe there is significant opportunity for Factor D inhibition in the treatment of other diseases as well. Alexion is an established leader in developing medicines for complement-mediated diseases, and we look forward to working together to accelerate our objective of bringing novel therapies to patients as quickly as possible and ensuring that the broad promise of this approach is fully realized. We thank our employees, investigators and partners for their incredible work and commitment.
Why This News Is So Exciting
At the end of the day, the acquisition of Achillion Pharmaceuticals is great news for investors as it will lead to an immediate return of value. Here’s what investors are so excited about:
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