Belgium-based pharmaceutical company UCB will buy Zogenix for up to $1.9 billion, the companies said Wednesday, leading ZGNX stock to rocket.
The deal leans into a recent trend of growing pharmaceutical interest in the epilepsy market, Mizuho Securities analyst Vamil Divan said. It follows Jazz Pharmaceuticals' acquisition of GW Pharma in 2021. Zogenix makes Fintepla, a treatment for a seizure disorder called Dravet syndrome.
"We have seen increased interest from larger biopharma companies in the rare epilepsy market, but do not expect other potential buyers to step in at this point and expect the deal to close as planned by the end of the second quarter," he said in a report to clients.
On the stock market today, ZGNX stock soared 65.7% to close at 25.92.
ZGNX Stock: Fintepla's Next Approvals
The announcement comes as Zogenix works to roll out Fintepla in the U.S. and Europe. So far, the drug is approved for Dravet syndrome. But the next potential use is in Lennox-Gastaut syndrome, which is a much bigger market.
"We would expect an acceleration of Fintepla's growth in Dravet in the U.S. under UCB's lead given UCB's greater ability to invest in the launch," Divan said.
Under the terms of the deal, UCB will pay $26 per share for ZGNX stock. The deal also includes an added cash payment of $2 per share — known as a contingent value right — if Fintepla wins European approval in Lennox-Gastaut syndrome by Dec. 31, 2023.
Before that, the Food and Drug Administration will consider approving Fintepla for Lennox-Gastaut no later than March 25.
"We assume investors will likely wait for a positive FDA decision in March before becoming overly optimistic on the likelihood of the CVR playing out," Divan said.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
