BridgeBio CEO Neil Kumar engineers a deal to reel back Eidos shares. Or is he really hunting a buyout?
A year after BridgeBio took its biotech subsidiary Eidos public at $17 a share $EIDX, the mother company wants it all back.
BridgeBio CFO Brian Stephenson alerted investors in an SEC filing late last week that the San Francisco-based company proposed to buy out the investors who snapped up a third of the equity, shooting for a stock-for-stock deal.
BridgeBio, an umbrella drug development group co-founded by CEO Neil Kumar which owns 66.6% of Eidos, went public in a record-setting IPO a few weeks ago, pricing at $17 a share — but now trading north of $26, even after a 10% trim on Friday as the news of the filing began to percolate.
In a release out this morning, BridgeBio is proposing a swap: 1.3 shares of BridgeBio for every share of Eidos it doesn’t own.
That has SVB Leerink’s Mani Foroohar wondering if the real goal here isn’t spurring a better buyout offer, with a big upside.
While these steps are in line with our expectations and the Board carrying out its fiduciary responsibilities, we do see a scenario in which a potential competitive “overbid” for the company could yield upside beyond the ~21% implied unaffected premium from BBIO’s initial offer. As the owner of a majority of EIDX shares, BBIO would benefit financially in this scenario, though BBIO (in an Annex to today’s EIDX disclosure) proclaims no interest in selling control of EIDX to another entity.
For its part, BridgeBio is selling the prospect of better diversification. After all, noted Stephenson, Eidos investors shouldn’t be waiting for a buyout.
As stockholders of BridgeBio, the Company’s stockholders would have the opportunity to benefit from and participate in continued upside in Eidos while diversifying their investment through exposure to the broad portfolio of assets being developed by BridgeBio. This may be important to current investors, especially given the dearth of M&A in the cardiovascular area thereby limiting opportunities for liquidity and diversification.
BridgeBio now has a big unicorn valuation of $3.24 billion, compared to $1.3 billion for Eidos, which closed Friday at $35.17.
A special committee with RA Capital’s Rajeev Shah and William Lis will be responsible for handling the buyout. Shah, a high-profile figure in the biotech finance scene, led the $64 million round for Eidos in the spring of 2018, working directly with Kumar. Shah gambled on a mid-stage drug for TTR amyloidosis, looking to take the field against a well-advanced slate of rivals from Pfizer, Alnylam and Ionis.
Lis is the ex-CEO at Portola.
Headshot: Brian Stephenson, Linkedin