In a development that’s garnering attention in the healthcare sector, La Jolla Pharmaceutical (NASDAQ:LJPC) has reportedly consented to be acquired by Innovia (NASDAQ:INVA). As a result, LJPC stock soon likely won’t be listed on the Nasdaq exchange, or any public market for that matter.
It’s not hard to figure out why Innovia would want to own La Jolla’s assets. La Jolla already has multiple regulatory wins under its belt. In 2017, the Food and Drug Administration (FDA) approved GIAPREZA, La Jolla’s lead product, to increase blood pressure in adults with septic or other distributive shock.
Also, in 2018 the FDA approved La Jolla subsidiary Tetraphase’s XERAVA to treat complicated intra-abdominal infections in patients 18 years of age and older. Thus, acquiring La Jolla Pharmaceutical will help Innovia strengthen its infectious-diseases portfolio. Apparently, Innovia was already moving in this direction through its recent purchase of Entasis Therapeutics, which develops novel antibacterial products.
La Jolla Pharmaceutical President and CEO Larry Edwards touted the envisioned clinical benefits of the takeover. “With Innoviva’s shared commitment to improve outcomes in patients suffering from life-threatening diseases, Innoviva can continue to advance our mission and maximize the potential of our innovative therapies,” Edwards explained.
What Will Happen to LJPC Stock?
Even beyond the potential clinical outcomes, there’s a lot to consider here. First of all, this agreement means that La Jolla Pharmaceutical will become a subsidiary of Innoviva. Second, Innoviva agreed to pay $5.95 per share to acquire La Jolla Pharmaceutical. The implied enterprise value of the deal will reportedly be around $149 million.
LJPC stock rocketed 80% higher after the buyout agreement was disclosed. This type of price movement often happens upon the announcement of a small healthcare business being bought out by a bigger one.
Yet, there’s something that traders need to know about this transaction. If everything goes according to plan, La Jolla’s common stock shares will no longer be listed on the Nasdaq, or any other public market.
So, get ready to say hello to INVA stock and good-bye to LJPC stock. There’s no exact timeline for when these events will play out. For the time being, though, La Jolla’s shareholders are apparently ecstatic and the company’s shares are on the move.
On the date of publication, David Moadel 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.
