Normally, for a biotech stock, a huge upward run comes from a big move at the FDA or a new milestone payment. But for Reunion Neuroscience (NASDAQ:REUN), it’s all about a new buyout move that sent shares blasting upward into double-digit gains, and by a wide margin, too.
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Reunion Neuroscience, which focuses on clinical-stage biopharmaceuticals, agreed to be acquired by MPM BioImpact. The deal would ultimately see Reunion Neuroscience taken private as part of the already-private MPM. MPM agreed to an all-cash transaction valued at around $13.1 million. As part of the deal, MPM will pay $1.12 for every share of Reunion Neuroscience held ahead of the time of the transaction’s effective date. The market immediately bought in a frenzy, sending share prices up to $1.10, where they remained as of this writing.
MPM paid heavily to land Reunion, as the payment—based on a press release—represents a 43.1% premium against the 30-day volume average weighted price. Why in the world would MPM pay that kind of money to land a biotech stock that was under a dollar a share? That same press release noted that Reunion recently brought out some new Phase 1 test results for one of its drugs that should, ultimately, lead to Phase 2 testing. MPM managing partner Ansbert Gadicke also noted that the move “…reflects MPM BioImpact’s strategy of investing in breakthrough science and innovative products…”
A look at the last five days of trading in Reunion Neuroscience stock shows a comparatively flat line until this morning when share prices shot up to their current levels. While some of the exuberance boiled off, and some sold shares that ended up above the new ceiling MPM’s deal established, the retreat to that new ceiling was rapid and stayed there, for the most part.
