Astellas Pharma snapped up Iveric Bio for $5.9 billion in cash, the companies said Monday in an announcement that sent ISEE stock flying.
Three months from now, the Food and Drug Administration will make a decision on whether to approve Iveric's avacincaptad pegol, or ACP. The company tested ACP in patients with the eye disease known as age-related macular degeneration. The condition can lead to permanent vision loss.
Astellas Chief Executive Naoki Okamura says Iveric has "capabilities across the entire value chain in (the) ophthalmology field."
"We believe that this acquisition will enable us to deliver greater value to patients with ocular diseases at high risk of blindness," Okamura said in a written statement.
On today's stock market, ISEE stock surged 15.7% to close at 38.05. Astellas stock climbed 1.6% to 15.26.
ISEE Stock: Huge Premium
Both boards have already approved the deal, which values ISEE stock at 40 per share. That's a 64% premium to the closing price on March 31 and a 75% premium to the 30-day volume-weighted average price as of the same date. The companies expect the deal to close in the second quarter.
Astellas will fund the deal with a mix of debt and cash on hand, Wedbush analyst David Nierengarten said in a report. He downgraded ISEE stock to a neutral rating and raised his price target to 40 from 35.
Iveric is also working on treatments for eye diseases called Stargardt disease, Leber congenital amaurosis type 10 and Usher syndrome. The latter affects both vision and hearing.
Shares of Apellis Pharmaceuticals was down on the news, falling a fraction to 82.92. Apellis makes the only approved geographic atrophy treatment, known as Syfovre. The FDA approved Astellas' drug in February.
ISEE stock has been on a run since March 31. Shares rocketed more than 35% over the month of April. The stock has a best-possible Relative Strength Rating of 99. This means ISEE stock ranks in the top 1% of all stocks when it comes to 12-month performance, according to IBD Digital.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
