Vertex Pharmaceuticals was the lone bidder in a planned, $10 billion acquisition that has some investors questioning whether the biotechnology giant overpaid on its largest-ever deal.
Financial documents filed Tuesday provide an inside look at the tie-up between Vertex and Crinetics Pharmaceuticals, a California-based company specializing in endocrine drugs. Crinetics has one marketed therapy for an uncommon hormonal condition, as well as an experimental medicine in late-stage testing for a rare genetic disease called congenital adrenal hyperplasia. Vertex estimates that, together, the two drugs could generate north of $5 billion a year at their peak.
Yet, at a 102% premium, the $85-per-share offer is one of the biggest markups this year for a biotech buyout, according to BioPharma Dive data. When Vertex shares dipped after the deal’s announcement, analysts suspected that investors weren’t happy with the price tag. The deal value “assumes a bullish case outcome” for Crinetics’ drugs, and will likely stir debates about whether Vertex “paid full price or even a rich price,” Stifel analyst Paul Matteis wrote in a July 6 note to clients.
The newly released documents “are likely to reignite” that investor scrutiny, according to RBC Capital Markets analyst Brian Abrahams.
