Novo Nordisk said Thursday it will spend $1.1 billion to acquire Forma Therapeutics in a deal that expands its reach in rare diseases. The news sent biotech stock Forma flying.
On the stock market today, Forma shares rocketed 51% to 20.24. That put the biotech stock just above the takeover price at $20 per share.
Forma's lead program is in sickle cell disease, an inherited blood condition that can cause painful episodes called vaso-occlusive crises. The company is also working on another blood condition called thalassemia, and has drugs in testing for various cancers.
"By adding Forma's differentiated approach to address unmet needs for patients, we are taking a step forward in enhancing our sickle cell disease pipeline," Ludovic Helfgott, Novo's head of rare diseases, said in a written statement.
Novo shares sank 1.5% to 104.53 on the news.
Biotech Stocks Eye Sickle Cell
Sickle cell disease is an increasingly common target among biotech companies. Its cause, a genetic abnormality that causes misshapen red blood cells, is well understood.
Forma is tackling the disease with a drug called etavopivat. Etavopivat aims to improve anemia and red blood cell health in people with the condition. It's currently in mid- and late-stage testing. The company is also evaluating etavopivat in sickle cell patients dependent on blood transfusions and thalassemia.
Novo Nordisk says the deal won't impact its guidance for 2022 nor its ongoing share buyback. The company will buy Forma stock in cash. The offer is a 92% premium to the biotech stock's weighted average price per share over the past 30 days.
Novo Nordisk already has an effort in sickle cell disease. It's in early-stage testing of a drug with a company called EpiDestiny.
Forma Shares Approach Fresh High
Forma, a highly rated biotech stock, has trended higher since mid-June. Shares bottomed out alongside the broader industry group this summer.
Now, Forma shares have a strong Relative Strength Rating of 98 out of 99. This puts the biotech stock in the leading 2% of all stocks in terms of 12-month performance, according to IBD Digital.
The deal sent Forma stock to its highest point since November 2021. Novo stock, on the other hand, continued sliding below its key moving averages. Shares are consolidating with a buy point at 122.26, according to MarketSmith.com.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
