Avidity Biosciences, Inc. (NASDAQ: RNA) stock rose after revealing a $12 billion all-cash acquisition by Novartis AG ( NYSE: NVS), marking among the biggest biotech buyouts of the year.
Expert Downgrade Matches $72 Per Share Deal
H.C. Wainwright experts led by Ananda Ghosh devalued Avidity Biosciences to Neutral from Buy and set a $72 rate projection, matching the money deal from Novartis AG.
The experts’ relocation follows Avidity’s statement that it will be gotten by Novartis for $72 per share, valuing the business at about $12 billion on a completely watered down basis.
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Offer Premium and Spin-Off Structure
The deal represents a 46% premium to Avidity’s Oct. 24 closing rate and 62% to its 30-day VWAP (Volume-Weighted Typical Cost).
Under the offer, Avidity will draw out its early-stage accuracy cardiology programs into a brand-new openly traded business (SpinCo) moneyed with $270 million in money. Investors will get equity in SpinCo in addition to the money factor to consider.
Strategic Reasoning: Reinforcing Neuroscience Pipeline
Experts stated the acquisition shows Novartis’ method to reinforce its neuroscience and uncommon illness portfolio, fixated Avidity’s late-stage AOC pipeline, that includes del-zota for Duchenne muscular dystrophy (DMD), del-desiran for myotonic dystrophy type 1 (DM1), and del-brax for facioscapulohumeral muscular dystrophy (FSHD), highlighting the platform’s capacity in muscle and neuromuscular illness.
The brokerage kept in mind that it moved to a Neutral position since it does not anticipate a contending quote to emerge following the revealed offer.
Wainwright’s $72 rate projection shows an equivalent weighting of a $92 per share price quote based upon a 25 × multiple of predicted 2034 profits of $10/share, marked down to 2025 at 12%, and a reduced capital worth of $51 per share utilizing an 11% discount rate and 2% development rate.
The experts kept in mind these presumptions line up with normal metrics for early-stage biopharmaceutical business.
Current Financial Efficiency
In August, Avidity reported a second-quarter loss of $1.21 per share, missing out on experts’ price quotes of a $1.00 loss. The outcome marked a broader loss compared to 65 cents per share a year previously. Sales for the quarter increased greatly to $3.85 million, up 88% year over year and well above the $1.46 million agreement price quote.
Cost Action: RNA shares were trading greater by 42.41% to $70.00 at last check Monday.
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