Investment firm All Blue Capital has approached Zymeworks Inc, a developer of antibody therapies for cancer, with a US$773-million acquisition offer.
In a regulatory filing late on Thursday, All Blue said it had made a non-binding offer for US$10.50 per share in cash, which represents a 116-per-cent premium to Wednesday’s closing price of US$4.86.
Zymeworks’ shares jumped by over 45 per cent on Thursday in after-market trade after Reuters reported the bid.
There is no certainty that Zymeworks will negotiate a deal, people familiar with the matter said. The company unsuccessfully engaged with potential buyers last year, the sources added, requesting anonymity.
Zymeworks confirmed in a release late Thursday it had received “an unsolicited, non-binding proposal,” but no formal offer yet from All Blue Falcons for US$10.50 per share in cash. The company said the board would “carefully review the proposal to determine the course of action that it believes is in the best interest of the company and all Zymeworks shareholders.”
The offer from Blue Falcons is one of the earliest examples of what many industry watchers predict will blossom into a full-blown trend later this year: private capital firms, which are sitting on record amounts of committed capital, offering to privatize publicly traded technology firms whose stocks have been beaten down in recent months.
In the filing, All Blue said it is currently in talks with potential co-investors and financing partners for the proposed acquisition.
Vancouver-based Zymeworks develops antibody treatments for different types of cancer and is currently working on clinical trials for a number of its products. It has repeatedly missed earnings estimates over the past few quarters and its shares have lost about 84 per cent of their market value over the past 12 months.
“We believe that the company has suffered from severe value erosion due to a number of serious missteps by an unfocused leadership with no clear strategy for improving performance,” All Blue said in a letter to the company’s board of directors on Thursday.
“We believe that Zymeworks stockholders deserve better than the consistent value destruction they have suffered during this relatively short period of time,” they added.
The Vancouver company was once Canada’s most highly valued biotechnology company with a market capitalization exceeding US$2-billion in 2020.
But Zymeworks stock had slid 90 per cent since the start of 2021, partly because of a couple of setbacks pertaining to its two lead drug candidates, and exacerbated by a general downdraft in valuations of biotech stocks that has worsened amid recent fears of an imminent set of interest rate hikes.
The company also raised US$100-million in a highly dilutive offering in January, shortly after announcing the departure of founder Ali Tehrani as CEO and a 25-per-cent job cut under the direction of his replacement, Kenneth Galbraith. It had little choice as the company faced big cash needs after using US$192.5-million to fund operating activities last year.
All Blue Capital is a technology-focused investment firm, whose investments include Airbnb, SpaceX, Lyft and Pinterest. All Blue currently holds a small stake in Zymeworks.
Sean Silcoff