SAN FRANCISCO – In a strategic move within the biopharmaceutical sector, XOMA Corporation has agreed to acquire Kinnate Biopharma Inc. for a cash consideration that values the oncology-focused company at a price per share ranging between $2.3352 and $2.5879. This acquisition includes a base cash price and an additional cash amount contingent on the sale of certain Kinnate assets.
The definitive merger agreement, unanimously approved by Kinnate's independent Board members following a comprehensive review, involves a tender offer to be initiated by a XOMA subsidiary to purchase all outstanding Kinnate common stock. The tender offer is expected to commence by March 4, 2024, with closing conditions including a majority of Kinnate's shares being tendered and the availability of at least $120 million in net cash at closing.
Kinnate's officers, directors, and certain shareholders, who collectively hold approximately 46% of the common stock, have agreed to support the merger. The transaction is anticipated to close in the first half of 2024.
Kinnate Biopharma, a clinical-stage company, specializes in precision oncology with a focus on developing targeted therapies for oncogenic drivers not addressed by current treatments. Its lead product candidates include the pan-RAF inhibitor exarafenib, targeting cancers with specific genetic alterations, and an investigational FGFR inhibitor for cancers with FGFR2 and FGFR3 alterations.
The merger agreement also provides for contingent value rights, entitling Kinnate shareholders to a portion of the net proceeds from the potential sale of exarafenib or other assets within a specified timeframe.
Leerink Partners is serving as the lead financial advisor to Kinnate, with Wilson Sonsini Goodrich & Rosati providing legal counsel. Lazard (NYSE:LAZ) is also acting as a financial advisor.
This announcement is based on a press release statement.
InvestingPro Insights
In light of XOMA Corporation's recent move to acquire Kinnate Biopharma Inc., a closer inspection of Kinnate's financial health and market performance provides additional context for potential investors. Kinnate, with a market capitalization of $106.95 million, appears to be a modest player in the biopharmaceutical industry. The company's financial metrics reveal a challenging situation: a Price/Earnings (P/E) ratio of -0.82 and an adjusted P/E ratio for the last twelve months as of Q3 2023 at -0.86, suggesting that investors are valuing the company's earnings negatively, which aligns with analysts' expectations that Kinnate will not be profitable this year.
Moreover, Kinnate's Price/Book (P/B) ratio stands at 0.62, which may indicate that the stock is undervalued relative to its assets, a point of interest for value-oriented investors considering the acquisition terms. However, the company's Return on Assets (ROA) for the same period is deeply negative at -51.6%, underscoring the company's difficulties in generating profit from its asset base.
From the perspective of InvestingPro Tips, Kinnate holds more cash than debt, which is a positive sign of financial stability, and its liquid assets exceed its short-term obligations, suggesting a solid short-term financial position. Yet, it is important to note that Kinnate is quickly burning through its cash and suffers from weak gross profit margins, which could be concerning for long-term sustainability. Moreover, Kinnate does not pay dividends, which may deter income-focused investors.
For those considering the implications of XOMA's acquisition of Kinnate, these financial insights are crucial. For further analysis and tips, including a total of 8 additional InvestingPro Tips for Kinnate, visit InvestingPro. You can also take advantage of a special offer using the coupon code PRONEWS24 to get an extra 10% off a yearly or biyearly Pro and Pro+ subscription.
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