Stock Spiking
First, read the raw warning…
Paratek Pharmaceuticals is a Boston-based bio company that appeared on the radar of a number of seemingly shrewd special situation hedgies earlier this year.
They were waiting for — and speculating upon — the outcome of clinical trials for an experimental antibiotic, based on tetracycline chemistry, called omadacycline. The potion was being tested on patients with serious pneumonia along with another group with nasty bacterial skin infections.
Good news duly arrived at the beginning of April and the stock set off moon-wards. Over a couple of sessions on Nasdaq the stock put on 40 per cent, topping out at $25.
The price has drifted back since then as the excitement around omadacycline subsided, but the stock was on the move again on Thursday after a fresh clinical update and Q1 figures. Paratek is pushing ahead with it’s FDA applications and has stated, confidently, that it has plenty of cash to keep it going through to 2019.
But the speculation around the stock has changed colour: it’s now seen as a potential takeover target.
Indeed, usually knowledgeable sources are convinced Paratek’s partner, Allergen, has already tabled indicative terms, having held quiet discussion just last week.
The two companies are already working togetheron an acne treatment. Acne Vulgaris. Bad acne. We’ll spare you the photos…
The straightforward chatter is that while Allergen would love a new spot cream, a proper breakthrough on the antibiotic front for serious infections is a rather bigger prize. And, at a current market cap of circa $560m, Paratek is a more-than-affordable bio-punt for Dublin-based Allegen (market cap $82bn).
But if take-out terms have been outlined, what sort of numbers are we talking about?
Target prices published the nine named analysts following the company are somewhat…frothy. Bar one ‘sell’ (EVA Dimensions), the ‘buy’ spread runs from $36 (Ed Arce at HC Wainwright) to $56 (Robert Hazlett at BTIG). That’s against a market price of $21.80 at pixel.
