Why Is Epizyme (EPZM) Stock Up 75% Today?

  • Epizyme (EPZM) stock is up 65% today on news that the biotech company is being acquired by French pharmaceutical concern Ipsen (IPSEF).
  • The deal will see Ipsen pay a 53% premium for Epizyme stock.
  • Both boards of directors have approved the acquisition that is expected to close in this year's third quarter.
EPZM stock - Why Is Epizyme (EPZM) Stock Up 75% Today?

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Epizyme (NASDAQ:EPZM) stock is up nearly 65% today on news that the biotechnology company is going to be acquired by French pharmaceutical concern Ipsen (OTCMKTS:IPSEF).

A joint news release by the companies says that the board of directors of both Epizyme and Ipsen has approved the takeover, which is expected to close in this year’s third quarter. Under terms of the deal, Ipsen will acquire Epizyme for $1.45 per share. This represents a premium of 53% over the shares closing price of $0.95 last Friday (June 24).

What Happened

Ipsen said its acquisition of Epizyme will be fully financed by its existing cash and lines of credit. The acquisition of Epizyme will help to expand Ipsen’s line of oncology treatment and therapeutics. Epizyme focuses on cancer medications and its leading drug, called “Tazverik” is a chemotherapy-free EZH2a inhibitor that was given “Accelerated Approval” by the U.S. Food and Drug Administration (FDA) in 2020.

As part of the transaction, Ipsen will also acquire Epizyme’s SETD2 inhibitor development candidate, known as “EZM0414,” which has also been given FDA “Fast Track” approval status. “Through this agreement, we will expand our assets in oncology. Ipsen’s capabilities and resources in oncology combined with Epizyme’s will accelerate the growth of Tazverik to achieve its full potential in follicular lymphoma patients,” said Ipsen CEO David Loew.

Why It Matters

The acquisition is a win-win for both companies. For Epizyme shareholders, they get paid a hefty premium for the EPZM stock they own. And in return, Ipsen gets to expand its portfolio of cancer medications and treatments. Epizyme, a small biotech company, has struggled to keep its share price above $1 this year. Before the acquisition by Ipsen was announced, Epizyme’s share price had fallen 64% this year to trade at just $0.95 a share.

For French-based Ipsen, the acquisition of Epizyme helps it to expand its cancer drugs and therapies in the lucrative U.S. marketplace, which is positive for the company and its shareholders in the long run. Before today, IPN stock was up 9% on the year to Euro$85.50 (US$90.47) a share.

What’s Next for EPZM Stock

Shareholders of EPZM stock are happy today as the share price rockets higher on news that the company is being bought by a larger player in the pharmaceutical space. Given the big premium that Ipsen is paying to acquire Epizyme, it is likely that shareholders will vote to tender their shares at the agreed upon price. Investors looking to benefit from news of this deal might want to consider buying IPN stock.

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On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.


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