AUSTIN, Texas - Lumos Pharma, Inc. (NASDAQ:LUMO), a clinical-stage biopharmaceutical company, has agreed to be acquired by Double Point Ventures LLC (DPV) in a cash transaction valued at approximately $38 million. The merger agreement, announced today, includes a purchase price of $4.25 per share, a 7.6% premium over Lumos Pharma's closing share price on October 22, 2024.
The deal also offers Lumos Pharma stockholders one non-transferable Contingent Value Right (CVR) per share, which could yield additional cash payments based on future milestones related to Lumos Pharma’s products. However, there is no certainty that any payments will be made under the CVRs.
The acquisition has been unanimously approved by Lumos Pharma’s Board of Directors, who recommend that stockholders tender their shares. The transaction, subject to customary closing conditions, is expected to be finalized before the end of 2024. Officers, directors, and shareholders representing approximately 17.7% of Lumos Pharma’s common stock have agreed to support the merger.
In addition to the acquisition news, Lumos Pharma and the FDA have reached an agreement on the design of a global Phase 3 trial for LUM-201, an oral treatment for Pediatric Growth Hormone Deficiency (PGHD). The trial will compare the annualized height velocity of patients taking LUM-201 to those on a placebo.
Lumos Pharma will not host a third-quarter financial results call due to the pending offer, but will file a Quarterly Report for the period ending September 30, 2024. The company reported a net loss of $7.5 million for the third quarter, with operating expenses totaling $8.4 million and a cash balance of $13.5 million. No future financial guidance was provided.
Upon completion of the merger, Lumos Pharma will operate as an indirect wholly-owned subsidiary of DPV, maintaining its headquarters in Austin, Texas. Piper Sandler is serving as Lumos Pharma’s exclusive financial advisor, with legal counsel from Cooley LLP and Wilson Sonsini Goodrich and Rosati, P.C. Foley & Lardner LLP is representing DPV.
This report is based on a press release statement and contains forward-looking statements that involve risks and uncertainties. Actual future results may differ materially from those projected. Investors are advised to read the tender offer materials and the Solicitation/Recommendation Statement on Schedule 14D-9 when they become available, as they will contain important information.
In other recent news, Lumos Pharma has been a subject of interest due to significant developments. The company's projected revenue for the third quarter of 2024 stands at $0.5 million, with an Earnings Per Share (EPS) of ($0.93), according to H.C. Wainwright. The firm also revised its FY24 EPS estimate downward to ($4.13), following Lumos Pharma's report of having cash and equivalents totaling $16.8 million. Lumos Pharma is planning for a Phase 3 trial for its drug candidate, LUM-201, and is actively seeking strategic options to enhance shareholder value.
EF Hutton also issued a Buy rating for Lumos Pharma, setting a price target at $16.00, based on the company's potential across multiple indications. The company has also provided updates on the upcoming Phase 3 clinical trial for LUM-201, set to commence in 2025 with an estimated budget ranging from $85 million to $100 million. Lumos Pharma is also exploring strategic opportunities with Piper Sandler and is in discussions for potential additional financing.
These recent developments provide insight into Lumos Pharma's financial health and its strategic plans for its drug candidate, LUM-201. The company's focus on shareholder value and the progression of its clinical trials are key factors for investors to consider.
InvestingPro Insights
The acquisition of Lumos Pharma by Double Point Ventures at $4.25 per share represents a significant premium to the company's recent market valuation. According to InvestingPro data, Lumos Pharma's market cap stood at $32.09 million prior to the announcement, making the $38 million deal value a notable uplift for shareholders.
InvestingPro Tips reveal that Lumos Pharma holds more cash than debt on its balance sheet and has liquid assets exceeding short-term obligations. These factors likely contributed to the company's attractiveness as an acquisition target, providing financial stability during the transition period.
The company's strong return over the last three months, with a 158.17% price total return, and a large price uptick of 41.07% over the last six months, as reported by InvestingPro, may have influenced the timing of this acquisition. These positive price movements suggest growing market interest in Lumos Pharma's potential, possibly driven by developments in its LUM-201 treatment for Pediatric Growth Hormone Deficiency.
However, it's worth noting that analysts anticipate a sales decline in the current year, with revenue growth at -33.27% over the last twelve months. This, combined with the fact that the company is not currently profitable, underscores the strategic nature of the acquisition for Double Point Ventures, which may be looking to leverage Lumos Pharma's pipeline and research capabilities.
For investors seeking more comprehensive analysis, InvestingPro offers additional tips and insights beyond those mentioned here. The platform provides a total of 8 tips for Lumos Pharma, offering a deeper understanding of the company's financial health and market position.
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