Why Abivax Stock Was on Fire Today
Key Points
New speculation arose about a potential buyout from a very deep-pocketed strategic investor.
These first started to swirl in mid-December.
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France-based biotech Abivax (NASDAQ: ABVX) landed on many investors' buy lists on Monday, following a media report that a giant American peer was interested in acquiring it. With that considerable tailwind at its back, Abivax's share price zoomed nearly 21% higher across that day's trading session.
On the hunt?
According to a widely disseminated article in French periodical La Lettre, that interested party is none other than American pharmaceutical king Eli Lilly. According to the article, Eli Lilly representatives met with French Treasury officials to gauge the regulatory requirements for acquiring Abivax.
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This isn't the first time in recent weeks that speculation has brewed about a potential Eli Lilly purchase of the company. On Dec. 10, Abivax experienced a similar price surge after such rumors surfaced, despite an unnamed Eli Lilly spokesperson telling Reuters that the company refuses to comment on "business development activity."
If the La Lettre article is accurate, Eli Lilly was surely drawn to Abivax after the latter company posted a positive readout from a Phase 3 clinical trial of its ulcerative colitis drug obefazimod. Like many well-capitalized pharmaceutical companies, Eli Lilly consistently appears to be on the lookout for promising assets to acquire.
Possible addition to the portfolio
The current speculation is quite believable, not least because Eli Lilly is an eagerly opportunistic acquirer. Earlier in December, for example, it put a bow on its acquisition of gene therapy specialist Adverum Biotechnologies, which gave its ophthalmology pipeline a boost.
At this point, though, even a deal that favors Abivax shareholders might not go down at a sizable premium, given the persistence of the rumors. I'm not convinced that Abivax can now be sold at a sky-high premium.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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