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Update 2:30pm: Adds WSJ report on Novartis backing away from potential deal.
Cytokinetics (NASDAQ:CYTK) plummeted by as much as 28% on a report that Novartis (NYSE:NVS) backed away from plans to buy the company and as the final day of the JPMorgan Healthcare conference is set to conclude and no deal for the company has been announced.
After pursuing the biotech for months, the Swiss pharma giant ended its overtures “sometime in the past day or two,” according to a WSJ report on Thursday, which cited people familiar with the matter. With a sale process already underway, Novartis (NVS) or another acquirer could reenter the bidding scene, or the company would target a capital raise or a similar transaction.
Some investors were expecting a deal announcement as soon as Monday, when the JP Morgan conference started in San Francisco. The conference is often a key catalyst for M&A events in the healthcare space. There was no specific news on Thursday to account for the stock drop.
The speculation about a potential deal this week come after a WSJ report on Monday that Novartis (NVS) was close to a deal to acquire Cytokinetics.
Novartis (NVS) CEO Vasant Narasimhan appeared to throw cold water on the prospect for a Cytokinetics (CYTK) acquisition after saying in an interview on Tuesday that the company is focused on bolt-on acquisitions. CYTK has a market cap of almost $10 billion.
“Our overall M&A strategy is really to focus on sub $5 billion assets,” Novartis CEO Vasant Narasimhan said in an interview on CNBC. “I can’t comment on specific deals.”
“We look at larger deals, which is why I think you see the media coverage, it’s always something we do and we have an obligation to do that,” Narasimhan added. “What I really want to highlight is that while we look at larger deals, our M&A stategy is bolt ons.”
A deal may be finalized as soon as this week, according to the WSJ report from Monday. The potential price and other terms weren’t known. Cytokinetics (CYTK) is running a sales process and there’s a possiblity another bidder could reemerge or there may be no deal reached.
The Cytokinetics (CYTK) sale speculation comes as the company’s attractiveness as a takeover target has been enhanced by recently released positive data for its hypertrophic cardiomyopathy drug candidate aficamten, or afi.
Shares of
Cytokinetics (CYTK) soared 83% on Dec. 27 in the wake of data. The postive data also came after a report last month that Novartis (NVS) and AstraZeneca (AZN) may be interested in a takeover amid strong interest as the company explores its options.
Bloomberg reported in late October that Cytokinetics (CYTK) was exploring options after receiving takeover interest.
Cytokinetics (CYTK) short interest is 15%.
