Ra Pharma Stock Doubles On $2.5B Buyout Deal With Belgian Biopharma UCB

Ra Pharmaceuticals Inc RARX shares were up 100% Thursday following the announcement of a buyout by Belgian biopharma UCB SA UCBJF

The Deal Terms

Ra Pharm is a clinical-stage biopharma engaged in the development of therapies for serious diseases caused by excessive activation of the complement system, a critical component of the innate immune system.

UCB is paying $48 per share in cash for the company, or $2.5 billion. Net of Ra Pharma's cash, the transaction is valued at $2.1 billion.

The per share transaction value represented a 93% premium to the 30-day volume weighted average closing price of Ra Pharma shares prior to the signing of the agreement.

The boards of both companies have approved the transaction, according to the announcement. 

The closing of the transaction — which is subject to Ra Pharma shareholder approval, antitrust clearance and other customary closing conditions — is expected by the end of the first quarter of 2020.

UCB said it will finance the purchase with a combination of existing cash resources and new bank term loans arranged by BNP Paribas, Fortis and Bank of America Merrill Lynch.

The Deal Logic

Ra Pharma's lead product candidate zilucoplan is being evaluated in multiple trials and in preclinical studies for indications such as generalized myasthenia gravis (Phase 3), immune-mediated necrotizing myopathy (Phase 1), amyotrophic lateral sclerosis (Phase 2) and renal disorders (Phase 1).

UCB sees the proposed acquisition as a part of its strategic growth plan.

The addition of Ra Pharma's Phase 3 asset zilucoplan to UCB's anti-FcRn rozanolixizumab, according to the companies, creates an opportunity to give better treatment options to people living with myasthenia gravis.

The Ra Pharma deal enables UCB to offer new treatment opportunities for several rare diseases in neurology and immunology as well as different delivery forms, including extended release and orally available products. 

UCB said the deal will strengthen its presence in the U.S., especially in the innovation hub of Boston, Massachusetts.

From a financial perspective, the deal is expected to be dilutive to UCB's mid-term earnings due to R&D investments.

The deal will be accretive to core EPS from 2024 onwards, leading to accelerated top- and bottom-line growth from 2024 onwards, the companies said. 

Zilucoplan is a rival drug in development to Alexion Pharmaceuticals, Inc. ALXN's Soliris, which was approved in October 2017 for generalized myasthenia gravis.

Ra Pharma shares were up 100.4% to $45.40 at the time of publication. 

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