Biotech Investors Look for Next Jackpot After Tobira (TBRA) Acquired at up to a 1650% Premium

September 20, 2016 10:20 AM EDT
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Biotech investors are used to wild swings in stocks they own but even the stomach-hardened group were aflutter this morning after Allergan (NYSE: AGN) continued its post generic-sale buying spree by acquiring tiny NASH company Tobira Therapeutics (NASDAQ: TBRA) for up to a 1650% premium.

Closing a $4.74 per share on Monday, Allergan agreed to acquire Tobira for an upfront payment of $28.35 per share, in cash, and up to $49.84 per share in Contingent Value Rights (CVRs) that may be payable based on the successful completion of certain development, regulatory and commercial milestones, for a total potential consideration of up to $1.695 billion.

The news sent shares of Tobira rocketing 708% to $38.11 at last check.

Needless to say, the news has everyone searching for the next small-cap biotech jackpot. This was exacerbated by word that Allergan was competing with another party for Tobira; meaning another buyer could be lurking and ready to pounce.

Three small-cap NASH stocks are already seeing big symphony buying as a result: Galmed Pharmaceuticals (NASDAQ: GLMD) +31.5%, Conatus Pharmaceuticals (NASDAQ: CNAT) +23.2%, Galectin Therapeutics (NASDAQ: GALT) +15.6%.

Intercept Pharmaceuticals (NASDAQ: ICPT), perhaps the best-known and biggest NASH stock, is up 5.3%.

One sell-side analyst, who had a 'Buy' rating on Tobira into today's news, told StreetInsider that while GLMD, CNAT, GALT are all up in sympathy, their NASH assets are much earlier in stage to warrant a serious look. In a year or two this might change, he said.

He doesn't see ICPT as the next target given the mixed data out for 2 years now.

Other stocks with assets in NASH include:

Can-Fite BioPharma (NYSE: CANF)
Catabasis Pharma (NASDAQ: CATB)
Medicinova (NASDAQ: MNOV)
Regulus Therapeutics (NASDAQ: RGLS)

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