Ironwood Scoops Up Gastrointestinal Diseases Player For $1B

Ironwood Pharmaceuticals Inc IRWD has agreed to acquire VectivBio Holding AG VECT for $17.00 per share in an all-cash transaction with an estimated aggregate consideration of approximately $1 billion, net of VectivBio cash and debt.

The acquisition price represents a premium of 80% relative to the volume-weighted average share price over the previous 90 trading days. 

Headquartered in Basel, Switzerland, VectivBio is a clinical-stage biotechnology company focused on discovering and developing treatments for Short Bowel Syndrome with Intestinal Failure (SBS-IF) and acute Graft versus Host Disease (aGvHD). 

VectivBio's lead investigational asset, apraglutide, is a next-generation GLP-2 analog currently in Phase 3 with plans for topline readout by year's end. If successful and approved, Ironwood believes apraglutide presents an opportunity to reach $1 billion in peak net sales.

The transaction can potentially strengthen Ironwood's innovative portfolio and pipeline to advance the treatment of GI diseases.

Ironwood anticipates that the pro forma company will remain positioned to deliver sustained profits and cash flows. Ironwood expects to generate over $175 million in operating cash flows yearly on a pro forma basis ahead of apraglutide commercial launch. 

Assuming the successful commercialization of apraglutide, the deal is expected to be accretive to earnings per share beginning in 2026.

Ironwood expects to finance the acquisition with cash and funds drawn through a four-year, $500 million revolving credit facility. The company ended Q1 2023 with $740 million in cash and cash equivalents.

Price Action: VECT shares are up 36.10% at $16.20, and IRWD shares are up 0.14% at $10.49 on the last check Monday.