Orchard Therapeutics scored a buyout deal worth up to $478 million from Japan's Kyowa Kirin on Thursday, pushing highly rated ORTX stock to a two-year high.
On today's stock market, Orchard stock launched itself 96% higher, ending the regular session at 15.95. That put ORTX stock just under the takeover price of $16 per American depository share.
Kyowa will also pay $1 per ADS if Orchard's gene therapy for metachromatic leukodystrophy, or MLD, gains Food and Drug Administration approval. MLD is a life-threatening genetic disease that causes fats to build up in the brain and other areas of the body, leading to loss of sensory, motor and cognitive function. The MLD gene therapy, Orchard's leading drug, is already approved in Europe.
"This is an exciting opportunity designed to accelerate the realization of our shared vision of ending the devastation caused by severe genetic diseases and life-changing value in medical care," Orchard Chief Executive Bobby Gaspar said in a statement.
The news sent ORTX stock to its highest point since November 2021.
ORTX Stock: Stem Cell-Based Gene Therapy
Orchard has a handful of gene therapies in testing for neurological and immunological diseases.
The company's platform involves removing a patient's own blood stem cells, genetically modifying them and then reinserting the cells back into the patient. Orchard hopes doing this will correct the underlying cause of the disease in a single treatment.
In addition to its MLD gene therapy, Orchard is also testing a Wiskott Aldrich syndrome gene therapy. Patients with this immune disorder face recurrent and severe infections, autoimmunity, eczema and severe bleeding episodes.
Gaspar, Orchard's CEO, says the Kyowa Kirin acquisition will bolster Orchard's ability to sell OTL-200, the MDL gene therapy, in the U.S. if approved. The drug sells in Europe as Libmeldy.
The $16 per ADS takeover price represents a 144% premium to the 30-day volume-weighted average price of ORTX stock. It values Orchard at $387.4 million. Looping in the $1 per ADS contingent value right brings the total value of the deal up to $477.6 million.
Orchard stock is highly rated, according to IBD Digital. Shares have a nearly perfect Relative Strength Rating of 98. This puts ORTX stock in the top 2% of all stocks in terms of 12-month performance.
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