Shares of Audentes Therapeutics Inc. (NASDAQ:BOLD) were trading pre-market at $58.97, up $30.36, or 106% on word of the takeover by Astellas Pharma Inc., which is paying $60 per share in cash for an equity value of about $3 billion.

Audentes, of San Francisco, and Tokyo-based Astellas aim to create a stronghold in gene therapy, where each firm holds expertise. The deal is expected to finish in the first quarter of next year. The lead candidate in the works by Audentes is AT-132 for the treatment of X-linked myotubular myopathy (XLMTM). The BLA submission for AT-132 is on track for mid-2020 and Audentes planned to seek marketing authorization in the EU in the second half of next year.

This spring, Audentes broadened its efforts beyond adeno-associated virus-based gene therapy, bringing aboard expertise from Nationwide Children's Hospital and its own team to develop new vectorized antisense therapies for Duchenne muscular dystrophy (DMD) and myotonic dystrophy type 1 (DM1). The agreement expands the company's portfolio with two preclinical programs: AT-702, is an exon 2-skipping candidate for DMD; AT-466 is an RNA knockdown and exon-skipping candidate for the treatment of DM1. Audentes’ core technology involves gene replacement as a way of attacking XLMTM and Pompe disease.

The buyout of Audentes represents a furtherance of Astellas’ “focus area approach” whereby the company searches for new approaches to unmet medical needs by finding combinations of biology and therapeutic modality/technology based on emerging science. With the deal to take over Audentes, the company adds a fifth such area: genetic regulation, whereby Astellas said it aims to make gene therapy will be a key driver of the company’s future growth.

Wainwright analyst Debjit Chattopadhyay liked the arrangement, noting in a report this morning that the deal represents a 109% premium to Audentes’ closing price yesterday and a 44% premium to its 52-week high. “While the market was far from sanguine on the commercial prospects of XLMTM, we had repeatedly emphasized the quality of the data, the pricing precedence, and importantly, the in-house commercial-scale manufacturing as key differentiators,” he wrote, adding that he was “not overly surprised by this move from Astellas, as it takes a plunge into the rare disease, gene therapy segment. In a sector dominated by short-term trading, one man's no catalyst trade is another's access to late-stage pipeline and manufacturing know-how,” in his view.

Mizuho’s Difei Yang was on board, too. The premium price paid by Astellas “is fair in our view. As we have highlighted previously, Audentes made the important strategic move of investing early-on in its own manufacturing capabilities,” she wrote in a report. “Today, the company is well-positioned with manufacturing capacity to cover global commercial demand for XLMTM, as well as initial clinical development product needs in bigger indications such as Pompe (enough material for the entire phase I/II study), DMD and DM1.”

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