Why is Voyager Therapeutics (NASDAQ:VYGR) stock today up while Neurocrine Biosciences (NASDAQ:NBIX) is down? Evidently, today’s movement is because of a deal between the two biotechnology businesses to develop and commercialize gene therapies for the treatment of neurological diseases. If you’re wondering why one is soaring and the other is sinking, just follow the money.
Just to provide some background info, Massachusetts-based Voyager is a gene therapy company. Meanwhile, California-headquartered Neurocrine develops pharmaceuticals for neurological, endocrine and other disorders.
With a market capitalization of $10.83 billion, Neurocrine is much larger than Voyager, which has a market cap of $312.7 million. Apparently, Neurocrine is also prepared to shell out big bucks for access to Voyager’s gene therapy tech.
That technology includes Voyager’s GBA1 gene therapy program for Parkinson’s disease and other GBA1-mediated diseases, as well as Voyager’s TRACER (Tropism Redirection of AAV by Cell-type-specific Expression of RNA) platform. With all of that in mind, let’s see how financial traders are responding to the announcement of the Neurocrine-Voyager collaboration.
What’s Happening With VYGR Stock?
As of this writing, VYGR stock is up 18% while NBIX stock is down 8%. It may seem like a counterintuitive outcome for Neurocrine Biosciences to fall, since the arrangement looks like a win-win scenario. But again, we have to follow the money to understand why financial traders are reacting this way. Take a look at what Voyager stands to potentially gain from this deal:
- An up-front “consideration” of $175 million, “including a $39 million equity investment.”
- As much as “$1.5 billion in potential development milestones.”
- Additional potential commercial milestones, tiered royalties on net sales and program funding.
- An “option to elect 50/50 cost- and profit-sharing in the U.S. for the GBA1 program following Phase 1 readout.”
Clearly, Voyager has a strong incentive — up to $1.5 billion, to be exact — to achieve the commercial milestones. That’s a lot of money that Neurocrine might have to shell out.
Of course, Neurocrine will receive global rights to a specified gene therapy program provided by Voyager “as well as additional equity in Voyager.” However, the market apparently perceives the deal as a budget-drain for Neurocrine while VYGR stock investors are happily focused on a possible $1.5 billion capital influx for Voyager.
On the date of publication, David Moadel did not hold (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.
