By Shares of Poseida Therapeutics Inc (NASDAQ: PSTX) more than tripled this morning after Roche Holding (SWX: ROG) said it will buy the clinical-stage biopharmaceutical company for about $1.5 billion.
Roche’s offer values each share of Poseida Therapeutics at $9.0 that translates to a more than 200% premium on their previous close.
Poseida shareholders will also get a “non-tradeable contingent value right (CVR) to receive up to an aggregate of $4.0 per share in cash upon achievement of specific milestones” as part of the company’s agreement with Roche.
Why did Roche value Poseida stock at a premium
Poseida Therapeutics is known for its allogenic CAR-T therapies that promise “off-the-shelf” treatments that are readily available for patients with certain types of cancers.
Roche has been working with this California based company on evaluating P-BCMA-ALL01 as a potential treatment for multiple myeloma.
That study produced positive data last month.
Spending $1.5 billion in cash on Poseida Therapeutics will help expand its footprint in cancer treatments.
Roche’s “global capabilities in late-stage development and commercialisation will enable patients worldwide to benefit from the transformative potential of allo CAR-T” as well – as per Kristin Yarema – the chief executive of Poseida Therapeutics.
Heading into Tuesday, Wall Street had a consensus “buy” rating on Poseida stock.
Roche-Poseida deal to close in early 2025
Roche expects the PSTX transaction to complete in the first quarter of 2025 as long as it satisfies the customary closing conditions, including regulatory and shareholders’ approval.
The merger will improve clinical outcomes and expand access to TSCM-rich CAR-T therapies.
“This acquisition builds on our joint progress to catalyse the development of potentially first and best-in-class therapies in oncology, immunology, and neurology,” as per Levi Garraway – the chief medical officer of Roche Holding.
The news arrives more than a month after Roche reported a better-than-expected 9.0% increase in quarterly sales and forecast a high single-digit percentage increase in full-year adjusted per-share earnings.
Roche stock currently pays a healthy dividend yield of 3.81% that makes up for another good reason to have it in your portfolio.
Is Roche stock a buy after PSTX deal?
A 13% decline in Roche stock since early September may be a buying opportunity considering analysts at the Bank of America Securities see upside in it to CHF 340.
Their price target indicates potential for a more than 35% gain from current levels.
The investment firm expects a meaningful recovery in Roche’s per-share earnings in the coming year.
It’s bullish on Roche shares also because key products like Vabysmo and Xolair could deliver a significantly boost to the company’s pharmaceutical margins in 2025.
Additionally, three assets in Roche’s pipeline could eventually add over $5.0 billion to its annual sales, BofA told clients in a recent research note.
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