Israeli holding company Clal Biotechnology Industries Ltd. (TASE: CBI) has announced that US company Neon Therapeutics, in which Clal Biotechnology has a 4% stake, had concluded a share swap with German company BioNTech. BioNTech is acquiring Neon in the deal at a company valuation of $67 million at the closing prices of the two shares on the day preceding the announcement. Clal Biotechnology's shar price was up 1.03% in early afternoon trading at NIS 127.50.
What Neon's shareholders are actually getting is 0.063 BioNTech shares for each Neon share, which is currently worth $2.10. This represents a 70% premium on the share price before the deal was announced on Thursday, and is still 1.23% higher than the current share price. BioNTech's share price has dropped 3% since the deal was announced, pushing its market cap down to $8 billion.
If BioNTech's share maintains its price, the BioNTech shares that Clal Biotech stands to receive in the deal will be worth $2.7 million. Clal Biotech's market cap on Thursday, before its share had a chance to respond to the news, was NIS 203 million.
Neon develops personalized treatment for cancer. The company has cooperative ventures with leading drug companies, among them Genentech, Eli Lilly, Sanofi, and Pfizer. Neon, regarded as a very promising company, raised $100 million in its Nasdaq IPO in June 2018 at a company valuation of $450 million after money. The share has since lost 90% of its value, despite a clinical trial that demonstrated the superiority of Neon's drug over the drug currently in use for cancer treatment. The company's share did not respond to the announcement with a sharp rise. The reason for the change in attitude towards the company is probably greater competition in the sector and the emergence of two companies, Moderna and BioNTech (the company that is now acquiring Neon), as leaders in it. On the other hand, several negative results were obtained in the sector, leading some investors to abandon it altogether.
BioNTech also deals with personalized cancer drugs, but using technologies that differ from Neon's. BioNTech also has some prestigious cooperative ventures. The company raised $150 million in its IPO three months ago, following a number of large private financing rounds, and its market cap is now $8 billion, following a 150% rise in its value since the IPO.
BioNTech cofounder and CEO Ugur Sahin said, "The deal corresponds to our strategy of expanding our capabilities in the US, while strengthening our immunotherapeutic pipeline of products. These products supplement our own product pipeline."
Published by Globes, Israel business news - en.globes.co.il - on January 19, 2020
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