ORTX - Orchard Therapeutics is being bought at a massive premium

2023-10-05 10:38:59 ET

Shares of Orchard Therapeutics (NASDAQ: ORTX) almost doubled this morning after Kyowa Kirin Co Ltd (TYO: 4151) announced plans of buying the gene therapy company.

Details of Orchard-Kyowa definitive agreement

The Japanese specialty pharmaceutical firm is willing to spend about $387.4 million on the acquisition.

The definitive agreement values each American Depository Share (ADS) of Orchard Therapeutics at $16 – close to a 100% premium on their previous close. According to Takeyoshi Yamashita – the Chief Medical Officer of Kyowa Kirin:

Our hope is to combine with mutual respect to realise the successful creation and delivery of life-changing value for patients living with rare and life-threatening inherited diseases.

The announcement arrives more than two months after Orchard Therapeutics reported $7.3 million in revenue for its second financial quarter.

Kyowa may end up paying $17 per share instead

Orchard Therapeutics is currently awaiting U.S. approval for its treatment of metachromatic leukodystrophy that it calls OTL-200.

If approved, the unlocked “contingent value rights” will increase the overall valuation of this deal to about $477.6 million or $17 per share. Yamashita of Kyowa Kirin also said in a press release today:

With this transaction, we anticipate being able to use a new modality that can have a profound impact on patients’ lives. ORTX has already launched its HSC gene therapy in Europe.

The Japanese specialty pharmaceutical company expects this transaction to complete in the first quarter of 2024. Kyowa Kirin will get to further strengthen its leading position in genetic medicine via this merger.

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