Autoimmune-focused biotech Forte to be acquired by Argenx; stock jumps 40%

Shares of Forte Biosciences, a small-cap developer of therapies for autoimmune diseases like vitiligo and celiac disease, soared around 40% on Monday. The company announced that Netherlands-based biotech Argenx will acquire it at a premium. Forte shares have now gained 560% over the last 12 months.

Forte shares jumped around 40% on the Nasdaq on Monday to $76.50 apiece, their highest level since late 2021. The rally followed the company’s announcement that biotech Argenx will acquire it. An Argenx subsidiary will launch a tender offer for all outstanding Forte shares at $77 per share, valuing the company’s equity at approximately $2.2 billion. Argenx must acquire a majority of Forte’s outstanding shares through the tender offer and secure regulatory clearance. The companies expect to close the deal in the third quarter.

Founded in 2017, Forte initially developed live biotherapeutics for the treatment of atopic dermatitis. It went public in 2020 through a reverse merger with Tocagen, a publicly traded biotech company. At their peak in September 2020, shares of the combined company were worth $1,267 apiece, adjusted for subsequent reverse stock splits.

Everything changed a year later. On September 2, 2021, Forte lost 80% of its market capitalization in a day after a clinical trial of FB-401, its lead and only drug candidate, failed.

After discontinuing the development of FB-401, the company shifted its focus to another molecule, FB102, which at the time had been tested only in animals. It is a monoclonal antibody, a laboratory-made protein that mimics natural antibodies and is designed to target a specific disease.

Forte is now testing FB102 in patients with three conditions: celiac disease, an intolerance to gluten; vitiligo, an autoimmune disease that causes white patches to appear on the skin; and alopecia, or hair loss. The potential uses of the drug are not limited to these conditions, as it could also be used to treat other autoimmune diseases, according to the company’s site.

The new focus has paid off. Forte shares have surged 560% over the last 12 months, including a 270% gain since July 8. The rally followed the company’s announcement that FB102 had demonstrated statistically significant treatment benefits in patients with vitiligo in a phase I-b clinical trial.

After this data was published, Barclays initiated coverage of Forte with a “buy” rating at a target price of $74 per share. Five Wall Street firms cover the biotech. The stock has two “buy” and three “hold” ratings.