Cidara Therapeutics Secures $9.2 Billion Merck Buyout; Shares Soar

Cidara Therapeutics (CDTX) witnessed a remarkable surge in its stock price following the announcement of Merck’s acquisition. The deal is valued at $9.2 billion, prompting RBC Capital Markets analyst Brian Abrahams to highlight its significance.

Details of the Acquisition

The acquisition values Cidara shares at $221.50 each, which constitutes a 110% premium over the stock’s last closing price. As a result, Cidara’s stock skyrocketed by 105.4% during midday trading, ending the day at $217.71. In contrast, Merck’s stock closed with little change.

Investment Potential

• Cidara has seen an impressive year-to-date growth exceeding 294%.
• The stock holds an IBD Digital Relative Strength Rating of 99, placing it in the top 1% of stocks based on a 12-month performance metric.
• Abrahams projects further upside potential for Cidara, suggesting that more bids might emerge in the future.

Key Products and Strategies

Cidara is advancing its long-acting antiviral candidate, CD388, aimed at flu prevention. Abrahams described this program as particularly compelling, especially given its promising Phase II data. The estimated market opportunity for CD388 stands at $3.8 billion.

Merck’s Strategic Fit

Abrahams describes Merck’s acquisition of Cidara as a “sensible strategic fit.” The move supports Merck’s growing portfolio in infectious disease treatments and aligns with their need to prepare for the patent expiration of Keytruda. This cancer drug currently generates significant revenue, contributing nearly half of Merck’s total sales in the last quarter, equaling $8.14 billion.

Competitive Landscape

There is speculation that Merck faced competition for acquiring Cidara, despite no apparent antitrust concerns. Recent bidding contests have been commonplace in the biotech sector, evidenced by Pfizer’s recent win against Novo Nordisk for Metsera and Lundbeck’s interest in Avadel Pharmaceuticals.

Given Cidara’s attractive product pipeline, it’s likely that other major companies, such as Sanofi and Johnson & Johnson, could emerge as potential bidders.

As the market evolves, investors should watch for developments related to Cidara and its promising drug pipeline.