La Jolla Pharmaceutical Company (LJPC) Stock: Why It Skyrocketed Over 80% Today

By Amit Chowdhry ● Jul 11, 2022
  • The stock price of La Jolla Pharmaceutical Company (NASDAQ: LJPC) surged by over 80% during intraday trading today. This is why.

The stock price of La Jolla Pharmaceutical Company (NASDAQ: LJPC) surged by over 80% during intraday trading today. Investors are responding to Innoviva buying La Jolla Pharmaceutical Company, a company that is dedicated to the commercialization of innovative therapies that improve outcomes in patients suffering from life-threatening diseases

The companies had entered into a definitive merger agreement whereby Innoviva will acquire La Jolla. And Innoviva has agreed to pay $5.95 per share for La Jolla, representing a premium of approximately 70% to the 30-day volume-weighted average price (VWAP), and an incremental $0.28 per share for additional cash proceeds received in connection with the divestiture of a non-core asset. Under the terms of the merger agreement, Innoviva, through a wholly owned subsidiary, will commence a tender offer on or before July 25, 2022 to acquire all of the outstanding shares of La Jolla for $6.23 per share in cash, or an implied enterprise value of approximately $149 million.

La Jolla’s lead product GIAPREZA (angiotensin II) was approved by the Food and Drug Administration (FDA) in December 2017 to increase blood pressure in adults with septic or other distributive shock. And La Jolla’s second asset, XERAVA (eravacycline), was approved by the FDA in August 2018 for the treatment of complicated intra-abdominal infections (cIAIs) in patients 18 years of age and older. This acquisition strengthens Innoviva’s portfolio in infectious diseases, anchored by the company’s recent purchase of Entasis Therapeutics Holdings Inc., an advanced late-stage clinical biopharmaceutical company focused on the discovery and development of novel antibacterial products.

Assuming the minimum tender condition is met, any shares not tendered in the tender offer will be acquired in a second-step merger at the same cash price as paid in the tender offer. And the closing of the transaction is subject to specified closing conditions, including that a majority of La Jolla’s shares of common stock are validly tendered and not validly withdrawn. Upon the deal closing, La Jolla will become a wholly owned subsidiary of Innoviva, and shares of La Jolla’s common stock will no longer be listed on any public market.

The deal was unanimously approved by the La Jolla and Innoviva boards of directors and is expected to close within 30 business days. Additionally, certain La Jolla stockholders holding approximately 40% of La Jolla’s outstanding shares of common stock, have signed a support agreement under which such stockholders agreed, among other things, to tender their shares in the tender offer and support the merger.

KEY QUOTES:

“This acquisition represents a significant step forward in advancing our strategy to diversify operations and adds a highly complementary commercial franchise to our portfolio to accelerate long-term growth. We look forward to welcoming the La Jolla team to Innoviva and building upon the success of GIAPREZA and XERAVA.”

— Pavel Raifeld, Chief Executive Officer of Innoviva

“We are pleased to announce the acquisition of La Jolla by Innoviva, which we believe provides our stockholders with immediate value at a compelling premium. With Innoviva’s shared commitment to improve outcomes in patients suffering from life-threatening diseases, Innoviva can continue to advance our mission and maximize the potential of our innovative therapies.”

— Larry Edwards, President and Chief Executive Officer of La Jolla

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.