Shares of small biotech 89bio nearly doubled Thursday after Roche agreed to buy the MASH drug developer in a deal worth up to $3.5 billion.
89bio is working on a treatment for MASH, or metabolic dysfunction-associated steatohepatitis, a form of fatty liver disease often associated with obesity, type 2 diabetes and high blood pressure. Its drug, pegozafermin, mimics a protein that helps regulate glucose and lipid metabolism.
The acquisition underlines Roche's efforts to move into the metabolic disorders space. Last year, the Swiss drugmaker signed an agreement with Zealand Pharma to collaborate on and license an obesity drug. The company also bought Carmot Therapeutics for several of its weight-loss assets in 2024.
"We are highly encouraged by pegozafermin's potential to become a transformative treatment option in MASH, one of the most prevalent comorbidities of obesity, and to meet diverse patient needs associated with this complex disease," Roche Group Chief Executive Thomas Schinecker said in a statement.
Shares of 89bio skyrocketed 85.2% on today's stock market, closing at 14.96. Roche stock dipped a fraction.
Roche's Dive Into MASH
89bio is testing pegozafermin in two key groups of patients. Doctors measure the severity of MASH by the level of fibrosis, or scarring, on the liver. Patients with fibrosis levels two and three are deemed to have moderate to severe disease. The fourth level is the most serious. At this level, the liver is now cirrhotic and the only treatment thus far is a liver transplant.
Part of the deal's worth is tied to the potential success of pegozafermin. Roche will pay $14.5o per share of 89bio stock once the deal closes, likely in the fourth quarter. Investors will also receive a nontradable contingent value right, or CVR, worth $6 per share.
The CVR is tied to three milestones: the first commercial sale of pegozafermin in patients with cirrhotic MASH, once pegozafermin reaches annual net global sales of at least $3 billion and once pegozafermin achieves net global sales of at least $4 billion. Roche will consider paying up to $1 billion on top of all that if pegozafermin achieves every goal of the CVR.
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