Transition (TTHI) Stock Up On News Of Acquisition By Opko

Transition Therapeutics Inc.’s (NASDAQ:TTHI) shares were up 110% after the company announced that it has signed a definitive agreement under which it will be acquired by Opko Health, Inc. (NASDAQ:OPK) in an all-stock transaction.

Terms of the Agreement

The transaction is valued at approximately $60 million, or $1.55 per share of Transition Therapeutics common stock. Transition Therapeutics shareholders will receive approximately 6.4 million shares of Opko common stock.

The transaction is slated to close in the second half of 2016.

The deal will add Transition Therapeutics’ lead metabolic candidate, TT401, to Opko’s pipeline. TT401, a once- or twice-weekly oxyntomodulin, is being developed for the treatment of patients with type II diabetes and accompanying obesity.

Opko will add two other candidates to its pipeline – TT701 and ELND005. TT701 is being developed in a phase II study for the treatment of androgen deficiency while the company has completed phase II studies on ELND005 for the treatment of Alzheimer’s disease and Down syndrome.

Our Take

The decision to be acquired by Opko is a big and strategic deal on Transition Therapeutics’ part. With a strong pipeline, Opko will be able to offer increased value to Transition Therapeutics stockholders in the future. Moreover, Opko’s position in the market should facilitate the development of Transition’s pipeline candidates and their commercialization.

TT401 is expected to complement Opko’s existing oxyntomodulin candidate, MOD-6031, which is currently being evaluated in a phase I study.

Opko has a Zacks Rank #4 (Sell), while Transition Therapeutics carries a Zacks Rank #2 (Buy). Investors interested in the health care sector may consider Bristol-Myers Squibb Company (NYSE:BMY) and Pfizer Inc. (NYSE:PFE) . Both stocks sport a Zacks Rank #1 (Strong Buy).

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