Dollar stock Vigil Neuroscience tripled Thursday after French drugmaker Sanofi agreed to buy it for $470 million plus a contingent value right tied to its experimental Alzheimer's treatment.
"The timing of the acquisition bid represents a best-case scenario for VIGL," Wedbush analyst Laura Chico said in a report.
Sanofi will acquire VG-3927, an experimental treatment for Alzheimer's disease that targets TREM2. TREM2 is a neuroinflammation target. But Sanofi won't be buying iluzanebart, which Vigil licensed from Amgen and is being tested in patients with a fatal and rare neurodegenerative disease called adult-onset leukoencephalopathy.
"The $8/share price is below our prior $13 target," Chico said. But "this target was predicated on the successful advancement of iluzanebart. Thus, the $470M offer appears full and fair for VG-3927 given its stage of development."
Vigil stock catapulted more than 241.1% to 7.88, within striking distance of the takeover price at $8 a share. Sanofi stock dipped a fraction to 52.51.
Sanofi's Focus On Alzheimer's Disease
The companies expect the deal to close in the third quarter. In addition to the $470 million, Vigil shareholders will receive a contingent value right, or CVR, for $2 a share. This is tied to the first commercial sale of VG-3927. William Blair analyst Myles Minter expects Phase 2 testing to begin in the third quarter.
VG-3927 increases the activity of TREM2, a protein that shows up on microglia. Microglia are the brain's immune cells. Scientists believe TREM2 deficiency or dysfunction increases the risk of Alzheimer's disease.
If Sanofi pays out the CVR, the total deal will be worth $600 million.
"Advancement of VG-3927 will remain Sanofi's focus going forward," Wedbush's Chico said. "While the company's neurology footprint is more entrenched in multiple sclerosis, half of the Sanofi pipeline focuses on immunology & inflammation, and we do see TREM2 as a relevant target."
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