Hot Pharma stock to watch: Ra Pharmaceuticals Inc (NASDAQ: RARX)

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Ra Pharmaceuticals Inc (NASDAQ: RARX) stock rose by whopping 92.6% in the last one week (October 7th to 11th; Source:Finviz)  after UCB, which is a global biopharmaceutical company based in Belgium agreed to buy RARX at $48 per share, which is approximately $2.5 billion. The deal price, represents a 93% premium to Ra Pharma’s 30-day average closing price. The transaction has been unanimously approved by the Boards of Directors of both the companies, UCB and Ra Pharma and but the approval by Ra Pharma shareholders is still left. The company has to obtain anti-trust clearance and abide with other customary closing conditions. UCB and Ra Pharma expects to complete the deal by the end of the first quarter of 2020.

Meanwhile, UCB will fund the transaction with cash on hand and new bank term loans that have already been secured. These new bank term loans are arranged and underwritten by BNP Paribas Fortis and Bank of America Merrill Lynch. UCB plans to rapidly pay down the debt after the closing. UCB’s new net debt / rEBITDA ratio is expected to be in the range betwee 1.5 and 2.0 times. Centerview Partners is acting as exclusive financial advisor to RARX on this deal. Latham & Watkins LLP is acting as legal advisor to RARX on this transaction.

On the other hand, RARX’s phase 3 product candidate is zilucoplan, which is a once-daily self-administered, subcutaneous peptide inhibitor of C5. In December 2018, the company had delivered positive top-line results from a phase  trial of zilucoplan in patients with generalized myasthenia gravis (gMG), thus had achieved clinically meaningful and statistically significant reductions in both primary and key secondary endpoints. Zilucoplan is currently being tested in phase 3 for the treatment of gMG and the company expects the top-line results in early 2021. Further indications that are potentially addressable by zilucoplan include immune-mediated necrotizing myopathy (IMNM), amyotrophic lateral sclerosis (ALS) and other tissue-based complement-mediated disorders with high unmet medical need. RARX is also developing an extended release formulation of zilucoplan, and a potential first-in-class oral small molecule C5 inhibitor.

Additionally, for the second quarter of 2019, RARX has reported a net loss of $21.9 million, or a net loss of $0.52 per share (basic and diluted), compared to a net loss of $15.7 million, or a net loss of $0.49 per share, for the same period in 2018. As of June 30, 2019, Ra Pharma had reported total cash and cash equivalents of $173.6 million.

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