Myovant Sciences turned down a takeover bid from majority shareholder Sumitovant Biopharma on Monday, and MYOV stock skyrocketed.
Sumitovant offered to pay $22.75 per share. The bid "significantly undervalues the company" and isn't in the company's best interest, Myovant said in a news release. But the company also said it's willing to entertain new offers.
SVB Securities analyst Roanna Ruiz says Sumitovant's bid was opportunistic and could stoke a flurry of offers. Myovant recently gained Food and Drug Administration approval for a Pfizer-partnered endometriosis treatment. The duo also sell a pill to treat prostate cancer.
"We think Sumitovant's offer appears somewhat opportunistic, and bullish investors may be able to argue that Myovant could sell for a premium to the initial $22.75 per share bid," she said in a report to clients.
On the stock market today, MYOV stock soared 36.1% to 24.44.
Will MYOV Stock Win Fresh Bids?
Sumitovant owns 52% of Myovant following a December 2019 loan agreement with Sumitovant's parent group, Sumitomo Pharma. The proposal values MYOV stock at a 27% premium to its closing price on Friday.
The "opportunistic buyout proposal" could stoke additional bids, Ruiz said.
"We also believe that Myovant could be in a favorable position to negotiate thanks to multiple potential value drivers over the next 12 months," she said.
Among those, Ruiz noted the recent FDA approval for endometriosis drug Myfembree and a $100 million regulatory milestone payment from Pfizer. The latter brings Myovant's cash position up to about $500 million. Further, the U.S. launch of prostate cancer drug Orgovyx is going well. She sees Orgovyx as a potential blockbuster drug.
Importantly, the FDA is also considering Myfembree as a treatment for uterine fibroids and the company is running a contraceptive study with results expected in 2024-25.
Ruiz has an outperform rating on MYOV stock.
Highly Rated Stock Trends Higher
The news sent MYOV stock to its highest point since last October. Shares bottomed out in May and have trended higher since, according to MarketSmith.com.
Myovant shares have a strong Relative Strength Rating of 96, putting them in the top 4% of all stocks when it comes to 12-month performance, IBD Digital shows.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
