Biotech Bargain Hunt: Concentra Biosciences Eyes Atea's Promising COVID-19 Response

Earlier today, Concentra Biosciences, an affiliate of Tang Capital, sent an acquisition proposal to Atea Pharmaceuticals Inc AVIR at $5.75 per share, representing a 55% premium to Friday’s closing price, and a CVR representing the right to receive 80% of net proceeds payable from any license or disposition of Atea’s programs. 

Concentra is prepared to complete due diligence and negotiate a definitive merger agreement by June 15, and would be able to close the deal by the end of July 2023, Atea reported in its SEC filing.

The proposal is subject to limited confirmatory due diligence and is based on the availability of at least $570 million of net cash and cash equivalents at closing. 

In conjunction with the offer, Tang Capital and Concentra disclosed a 3.6% stake in the company, acquired between March through May 15 at prices between $3.11-$3.30 per share.

William Blair says that though the price reflects a 55% premium, it is lower than the value of the company’s cash and equivalents held at the end of the first quarter, reflecting the negative enterprise value at which shares of Atea have been trading. 

With the depressed valuations in the biotech sector, this type of proposal is not surprising.

The analyst says that bemnifosbuvir has a role in the global response to the ongoing COVID-19 endemic and still represents a commercial opportunity for Atea.

It maintains the Outperform rating, citing that the company has a differentiated platform and portfolio of product candidates for viral diseases, and it sees value in the name with shares trading at a negative enterprise value.

Price Action: AVIR shares closed higher 36.80% at $5.06 on Monday.