Analysts applauded Vertex Pharmaceuticals on Thursday for its acquisition of Alpine Immune Sciences — a $4.9 billion deal that sent Alpine stock into the stratosphere.
Alpine has a potential best-in-class treatment for IgA nephropathy, a chronic kidney disease that often leads to end-stage renal disease. The drug, povetacicept, blocks a receptor called BAFF and a ligand called APRIL. The space has multiple competitors ahead of Alpine, including Novartis, Otsuka Pharmaceutical and Vera Therapeutics.
But analysts says Alpine's drug could ultimately lead its class.
"Despite being one to two years behind competitors, in our view, pove has the potential to be best in class given its superior APRIL/BAFF inhibition vs. other APRIL/BAFF inhibitors, which could improve clinical (effectiveness)," Banc of America Securities analyst Geoff Meacham said in a report. "Moreover, pove has a convenience once every four-week (under-the-skin injection) dosing regimen, which we expect to be viewed favorably by prescribers."
Alpine stock catapulted 36.9% on Thursday to close at 64.40. On Wednesday, amid rumors of the deal, shares soared 20.8%. Vertex Pharmaceuticals stock also rose 0.7%, closing at 400.23. Vera stock also popped 17.3% to 48.82.
Vertex Pharmaceuticals Adds To Kidney Diseases Pipeline
The companies expect the deal to close later this quarter. The deal values Alpine stock at $65 per share, which represents a roughly 67% premium to Tuesday's close, Leerink Partners analyst Thomas Smith said in a report.
"Overall, we believe the Alpine acquisition is a strong strategic fit for Vertex, who can leverage their resources and expertise in a large-scale clinical development and commercial experience/infrastructure in specialty markets to maximize the value of pove," he said.
The deal also speaks to Vertex Pharmaceuticals' confidence that Alpine can pivot povetacicept into other related diseases, Smith said. In the news release, the companies noted povetacicept could have promise in autoimmune conditions like membranous nephropathy and lupus nephritis.
Leerink's Smith has an outperform rating on Alpine stock.
Notably, the $4.9 billion price tag exceeds what Novartis paid for Chinook Therapeutics and its potential treatment for IgA nephropathy. Novartis bought Chinook for $3.5 billion.
But Meacham, the Bank of America analyst, said Vertex Pharmaceuticals is merely "putting its money to good work." Investors have long awaited Vertex's encore to its leading cystic fibrosis treatment franchise. Vertex is already in the kidney disease space with a potential treatment for APOL1-mediated kidney disease, an inherited condition that causes progressive kidney damage.
"And while this is the first acquisition for Vertex of this size in quite some time, management stressed this was the right deal at the right time and to not make any read-throughs for future acquisitions," he said.
He reiterated his buy rating on Vertex stock.
Alpine Stock Has High Ratings
Alpine stock is a top-rated biotech stock, according to IBD Digital. Additionally, Alpine stock a perfect Relative Strength Rating of 99, putting its performance in the top 1% of all stocks, regardless of industry group. Alpine stock also has a strong Composite Rating of 97, a measure of a stock's key fundamental and technical metrics.
Vertex Pharmaceuticals stock has a promising Composite Rating of 87.
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