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Totting up investors' multiples on Allergan's acquisition of NASH play Tobira

September 26, 2016 7:00 AM UTC

The acquisition of Tobira Therapeutics Inc. (NASDAQ:TBRA) by Allergan plc (NYSE:AGN) suggests significant value exists for investors willing to sift through clinical trials that produce less than clear-cut results. In this case, long-time Tobira holders, as well as some new entrants that parsed a failed Phase II study in non-alcoholic steatohepatitis, will enjoy returns of at least 5x.

Allergan is paying $28.35 per share in upfront cash for Tobira, which is nearly a 500% premium to the biotech's close of $4.74 before the deal was announced. Tobira shareholders also get a contingent value right (CVR) worth up to $49.84 per share. The upfront alone values Tobira at $595 million, based on 21 million shares outstanding. The total price tag could rise to $1.7 billion if all the CVR-related milestones are met...