NGM to go private through deal with investment firm
26 Feb 2024
Acquisition
Dive Brief:
San Francisco-based drug developer NGM Biopharmaceuticals plans to go private by selling to affiliates of The Column Group, a healthcare-focused venture firm and the company’s largest shareholder.
Per deal terms, the affiliates will pay $1.55 in cash for each outstanding share of NGM not already owned by The Column Group and certain other stockholders. The price corresponds to a total equity value of $135 million and is 80% higher than what NGM shares traded for in late December, just before the company disclosed that a collection of investors had expressed interest in a potential acquisition.
NGM said a special committee made from certain members of its board of directors recently conducted a strategic review. They “explored a range of strategic options, including engaging with multiple potential third party acquirers,” before settling on the take-private deal. The company expects the acquisition to close sometime between April and June.
Dive Insight:
Founded in 2007, NGM took a broad approach to its drug research, assembling a pipeline that spans from solid tumors to retinal diseases to liver and metabolic disorders.
NGM raised a few hundred million dollars in private funding before going public in the spring of 2019. Shares of the company, initially sold for $16, ticked up in value over the following year and a half, to trade at just north of $31 by the end of 2020.
But clinical setbacks have eroded investor enthusiasm. In May 2021, NGM said one of its most advanced drugs did not succeed in a mid-stage study targeting “NASH” — a liver disease that has received significant investment from large pharmaceutical companies and Wall Street investors, some of who see it as a multibillion-dollar market. Recently, the disease has been renamed “MASH,” or metabolic dysfunction-associated steatohepatitis.
NGM chalked up another loss in October 2022, as its main experimental eye drug failed in a trial focused on geographic atrophy, a condition that causes vision loss.
By the end of 2022, NGM shares were valued at roughly $5 apiece. And by late 2023, they were trading at less than $1 apiece, threatening the company’s listing on the Nasdaq stock exchange.
The challenges made saving money a priority. In April 2023, NGM announced it would lay off 75 employees, or about one-third of its total workforce. The company estimates that, as of Dec. 31, it had $144 million in cash, cash equivalents and short-term marketable securities.
Now, NGM is joining a handful of other biotechnology companies that have gone private through sales to investment firms. In November, Freeline Therapeutics said it would be acquired by the life sciences investor Syncona, which already owned more than half of the U.K.-based gene therapy specialist. The deal came about 18 months after Syncona bought another gene therapy company, Applied Genetic Technologies Corp.
In between those two acquisitions, antibiotics developer Paratek agreed to sell to Gurnet Point Capital and Novo Holdings in a deal that could be worth as much as $462 million.
”While we don’t have the same amount of info as the special committee, the strategic decision seems mistimed and $1.55 price seems low,” wrote Steven Seedhouse, an analyst at Raymond James, in a note to clients Monday.
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