Prevail Therapeutics Inc. (NASDAQ: PRVL) shares absolutely exploded on Tuesday morning after it was announced that the company would be acquired by Eli Lilly and Co. (NYSE: LLY). Prevail’s board of directors unanimously approved the tender offer for this transaction.
Under the terms of the deal, Eli Lilly will acquire Prevail for $22.50 per share in cash for an aggregate of about $880 million. There also will be a contingent value right (CVR) worth up to $4.00 per share in cash, or $160 million, thrown into the mix. The total consideration for the deal would be $26.50 per share in cash, or $1.04 billion in total.
The CVR is payable upon the first regulatory approval of a product from Prevail’s pipeline, namely for commercial sale of a Prevail product in one of the following countries: United States, Japan, United Kingdom, Germany, France, Italy or Spain. The full amount of the CVR would be payable if the product is approved before December 2024, and it would be entirely diminished by December 2028. Note that there is no assurance any payments will be made with respect to the CVR.
Upon closing, the impact of this transaction will be reflected in Eli Lilly’s 2021 GAAP financial results. There will be no change required to Eli Lilly’s 2021 financial guidance for research and development expense or non-GAAP earnings per share as a result of this transaction.
The transaction price represents a premium of about 117% to the 60-day volume-weighted average trading price of Prevail’s common stock at Monday’s closing price, the last trading day before the announcement of the transaction.
Prevail Therapeutics’ pipeline includes treatments for Parkinson’s, Alzheimer’s, Gaucher disease, dementia and ALS, among others. All these would move to Eli Lilly for further development.
Eli Lilly stock traded Tuesday morning at $161.27, in a 52-week range of $117.06 to $170.75. The consensus price target is $168.65.
Prevail Therapeutics trade at $22.92, up more than 83%, in a new 52-week range of $9.02 to $23.08. The consensus price target is $22.63.