Innoviva Buys Remaining Shares in Advanced Antibiotic Co.

Source: Streetwise Reports   05/23/2022

Shares of Entasis Therapeutics traded 21% higher after the company reported it entered into a definitive merger agreement with Innoviva Inc., whereby Innoviva will acquire all outstanding shares of Entasis that it does not already own for $2.20 per share.

Advanced late-stage biopharmaceutical firm Entasis Therapeutics Holdings Inc. (ETTX:NASDAQ), which is engaged in discovering, developing and commercializing targeted antibacterial products to treat serious infections caused by multidrug-resistant pathogens, today announced it entered into definitive agreement to be acquired by Innoviva Inc. (INVA:NASDAQ) for $2.20 per share in cash, representing a total equity value for Entasis of $113 million.

Innoviva is a diversified holding company that owns a broad portfolio of royalties and healthcare assets including a 60% ownership stake in Entasis Therapeutics. Under the terms of the merger agreement, Innoviva will purchase the remaining 40% of the outstanding shares of Entasis that it does not already own. The report mentioned that the $2.20 per share offering price represents a 50% premium to Entasis’ closing price of $1.47 per share on January 31, 2022, which it advised is the last date before Innoviva’s original bid became public.

Entasis Therapeutics Holdings’ CEO Manos Perros remarked, “We are pleased that Innoviva recognizes the significant potential of our R&D pipeline and talented team, who have made great progress advancing our precision antibacterial programs to address serious unmet needs in treating multidrug-resistant Gram-negative infections…We believe that Innoviva is the ideal organization to maximize the value of our pipeline and accelerate our ability to bring novel antibacterial therapies to patients.”

Innoviva’s CEO Pavel Raifeld commented, “This acquisition will build upon our overall strategy to acquire differentiated, high-potential assets in attractive, yet often overlooked, disease areas where our capital and capabilities can make a difference…This transaction represents the next phase in our efforts to diversify our operations beyond our valuable royalty portfolio and will create significant value for patients, health systems and shareholders.”

“We look forward to working with the Entasis team to advance sulbactam-durlobactam (SUL-DUR) and its broader novel antibacterial pipeline to address the urgent and serious threat posed by multidrug-resistant pathogens. Carbapenem-resistant Acinetobacter infections are an area of significant unmet medical need and, if approved by regulators, SUL-DUR could become the leading treatment for this disease,” CEO Raifeld added.

The report advised that Entasis was established after being spun-out from AstraZeneca Plc (AZN:NYSE; AZN:LON) in 2015. The company stated that “its unique pathogen-targeted approach has produced a robust clinical and pre-clinical pipeline of potential first- and best-in-class medicines for the treatment of multidrug-resistant Gram-negative bacteria, including lead asset SUL-DUR.”

The firm stated that SUL-DUR successfully met all primary and secondary endpoints in its Phase 3 registrational ATTACK trial and is indicated for multidrug resistant Acinetobacter infections. The company is planning to submit a New Drug Application (NDA) to the U.S. Food and Drug Administration (FDA) in Q3/22.

The merger agreement calls for Innoviva to issue a tender offer to purchase all of the issued and outstanding equity securities of Entasis that it does not presently own. The report indicated that the transaction has already been unanimously approved by the board of directors of each company and is expected to close in Q3/22, subject to ordinary closing conditions.

Innoviva is a diversified $1.1 billion market cap holding company based in Burlingame, Calif. The firm owns a diverse royalty and healthcare asset portfolio. The company’s royalty portfolio includes several respiratory royalty generating assets partnered with GlaxoSmithKline (GSK:NYSE) and others.

Entasis is an advanced late-stage clinical biopharma firm headquartered in Waltham, Mass. The company is focused in the area of developing and commercializing targeted antibacterial products to combat serious infections caused by multidrug-resistant pathogens. The company’s small-molecule drug pipeline program includes medicines engineered to fight multidrug-resistant Acinetobacter baumannii, Neisseria gonorrhoeae, Enterobacterales and Gram-negative (including Pseudomonas) infections.

Entasis Therapeutics began the day with a market cap of around $86.1 million with approximately 47.85 million shares outstanding. ETTX shares opened more than 20% higher today at $2.17 (+$0.37, +20.56%) over Friday’s closing price. The stock has traded today between $2.155 and $2.19 per share and closed for trading at $2.18 (+$0.38, +21.11%).

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