Sanofi (SNY) announced that it has entered into a definitive agreement to acquire Translate Bio (TBIO) for $38.00 per share in cash. The news sent shares of mRNA competitor Arcturus Therapeutics (ARCT) higher on Tuesday, with Piper Sandler analyst Yasmeen Rahimi saying that it is "clear large pharma has taken a significant interest in mRNA technology."
SANOFI TO ACQUIRE TRANSLATE BIO: Sanofi has entered into a definitive agreement with Translate Bio for $38.00 per share in cash, which represents a total equity value of $3.2B a fully diluted basis. The Sanofi and Translate Bio boards unanimously approved the transaction. The purchase price represents a premium of 56% to Translate Bio's volume-weighted average price per share over the past 60 days. The CEO of Translate Bio and Translate Bio's largest shareholder, The Baupost Group, have signed binding commitments to support the tender offer. These binding commitments, combined with the Translate Bio shares already owned by Sanofi or its affiliates, represent a total of approximately 30% of Translate Bio's total shares outstanding.
Following the announcement, both William Blair and Jefferies have downgraded Translate Bio to Neutral-equivalent ratings.
LARGE PHARMA INTEREST IN MRNA: Commenting on Sanofi's $3.2B acquisition of Translate Bio, Piper Sandler analyst Yasmeen Rahimi told investors that she believes it is "clear large pharma has taken a significant interest in mRNA technology, especially since Arcturus Therapeutics, an mRNA-focused company with six pipeline assets, has traded up by about 30% since market open. Rahimi believes Arcturus is "significantly undervalued" given its three franchises and $1B in four large pharma partnerships with Johnson & Johnson (JNJ), Takeda Pharmaceutical (TAK) and Ultragenyx (RARE). The analyst also highlights that Arcturus has two new COVID-19 constructs, ARCT-154 and ARCT-165, which received the greenlight from its Singapore partner to commence Phase 1/2 studies. Rahimi has an Overweight rating and $140 price target on Arcturus shares.
Meanwhile, Brookline analyst Kumaraguru Raja reiterated a Buy rating on Arcturus, with a price target of $95, saying he sees a favorable risk-reward as the pipeline advances. The analyst noted that RNA therapeutics are in focus as Sanofi's announced acquisition of mRNA company Translate Bio for $3.2B should bring in more interest from investors and pharmaceutical companies.
COVID VACCINE CANDIDATES: Arcturus Therapeutics announced on Monday an agreement with Vinbiocare, a member of Vingroup, regarding a collaboration to establish a manufacturing facility in Vietnam for the manufacture of Arcturus' investigational COVID-19 vaccines, for sale and use within Vietnam. Under the terms of the arrangement, Vinbiocare will, with consultation from Arcturus, build out a manufacturing facility in Vietnam, and Arcturus will provide to Vinbiocare access to proprietary technologies and processes for the manufacture of Arcturus' investigational COVID-19 vaccines. Arcturus will provide Vinbiocare with an exclusive license to manufacture the vaccines in Vietnam at the facility solely for distribution in Vietnam. The license and technology transfer applies toward drug product manufacturing but not toward mRNA drug substance manufacturing. Technology transfer is underway. Vinbiocare will make an upfront payment of $40M and be responsible for costs associated with the technology transfer. Vinbiocare will also pay for mRNA drug substance supplied by Arcturus and royalties on vaccines produced at the Facility.
The company also announced that it has received approval for a clinical trial application, or CTA, from the Singapore Health Sciences Authority, or HSA, to enable the advancement of two STARR mRNA vaccine candidates into the clinic. The Phase 1/2 clinical trial will evaluate the vaccines both as a primary vaccination series and as a booster following initial vaccination with Comirnaty. The Phase 1/2 trial costs are funded in part from a previously secured grant from Singapore.
Arcturus investigational COVID-19 vaccines utilize Arcturus' self-transcribing and replicating mRNA technology, and the STARR mRNA is delivered with Arcturus's lipid-mediated delivery system called Lunar delivery system.
PRICE ACTION: In Tuesday afternoon trading, shares of Arcturus Therapeutics have jumped almost 29% to $44.65.
