There’s been a surprising number of notable mergers and acquisitions going on right now. While the economy has shown some signs of improvement, it’s really the stock market that’s been on a continuous roll.
While that means buying out companies becomes more expensive when stock prices are high, it also means that using stock as a means of acquiring other companies is easier as well. Either way, one of the biggest movers on Friday was Five Prime Therapeutics (NASDAQ: FPRX), which boasts a very promising late-stage cancer drug, bemarituzumab.
Five Prime ended up skyrocketed when news broke that another pharmaceutical giant, Amgen (NASDAQ: AMGN), agreed to completely buy out Five Prime for around $1.9 billion. The idea is that, by acquiring Five Prime, Amgen can use its established presence in international markets to further market Five Prime’s promising cancer drug, something it couldn’t do by itself to the same extent. The deal is expected to close by the end of Q2 2021 formally.
“We see tremendous complementarity between the two companies. Amgen has global reach, world-class resources, and they share our deep passion for science and commitment to patients,” said Five Prime CEO Tom Civik in a statement on Thursday. “This is an exciting day for patients who may one day benefit from the promise of bemaritizumab and our full pipeline.”
Five Prime’s bemarituzumab is one of the most promising gastric cancer drug candidates on the market, especially considering how rare treatments for this condition are. If approved, the drug would become the first targeted therapy for advanced gastric cancer patients in close to ten years.
While not a particularly large cancer market, gastric cancer still is worth approximately $3.2 billion in annual revenue, depending on which sources you cite. For a small company like Five Prime, a drug in this area that receives Food and Drug Administration (FDA) approval could easily gobble up most of this multi-billion-dollar market. However, with Amgen now taking the reigns, it stands a much better chance of reaching this full market now.
Shares of Five Prime Therapeutics shot up around 77.8% following the news. Compared to where the stock was trading around just a year ago, Five Prime is already up around 1,100% or more. On the other side of the agreement, Amgen is dipping down around 1.5% as well. This is pretty typical in the acquisitions world, where the company that’s doing the buying will dip a little, while the business that’s getting bought will see a spike.
Five Prime Therapeutics Company Profile
Five Prime Therapeutics Inc is a biotechnology company focused on discovering and developing protein therapeutics for diseases. The company’s product candidates address patient populations for which therapies are still needed. Its is focused on advancing its internal pipeline and retaining rights for products in targeted specialty markets. It also seeks to establish additional collaborations to supplement its internal development capabilities. These collaborations generate additional funding in order to further validate the company’s technology. It has the following product in pipeline: Cabiralizumab, FPA150, Bemarituzumab and Immuno-Oncology. – Warrior Trading News
