Biotech small cap Vigil soars 240% on news of acquisition by pharma giant Sanofi

Shares of Vigil Neuroscience, a small drugmaker specializing in rare and common neurodegenerative diseases, skyrocketed over 240% yesterday, May 22, on news that pharmagiant Sanofi would acquire the company. This marks Sanofi’s entry into the race to develop an Alzheimer’s treatment, which, according to Bloomberg, might turn into the next obesity market.

Yesterday, Vigil jumped over 241% on the Nasdaq to $7.88 per share after the company announced it would be acquired by Sanofi. The deal values Vigil at around $600 million, or $10 per share, 333% above its closing price the day before (May 21).

Under the terms of the agreement, Vigil shareholders will receive $8 per share upon completion of the acquisition and an additional $2 per share upon commercial launch of Vigil’s lead drug candidate, VG-3927, a treatment for Alzheimer’s disease. Such terms are frequently used in biotech mergers, tying shareholder value to the success of specific development milestones, says investment bank Noble Capital Markets.

Vigil’s other program — monoclonal antibody iluzanebart (VGL101) — is not part of the Sanofi deal and will thus return to Amgen, a pharma company from which it was licensed.

The merger, which still requires approval from Vigil shareholders, is expected to close in the third quarter.

In January, Bloomberg noted that investors looking for the next obesity-like market opportunity would likely focus on developments around Alzheimer’s disease. The potential is huge: By 2030, the global Alzheimer’s drug market could reach $13 billion, according to Bloomberg Intelligence. That figure could grow even further if a strong disease-modifying drug emerges, Chris Eccles, a portfolio manager at AXA Investment Managers, told Bloomberg.

The two most recent Alzheimer’s drugs — lecanemab from Biogen and donanemab from Eli Lilly (marketed as Leqembi and Kisunla, respectively) — only slow disease progression; moreover, they can cause brain swelling and bleeding. This is why in March, the European Medicines Agency recommended against the approval of Kisunla. Leqembi, however, has been approved in the EU.

Other pharma giants have spent billions of dollars on Alzheimer’s treatments but with limited success so far, Bloomberg notes.

Alzheimer's drug trials often fail, even in the later stages, which reflects insufficient knowledge about the disease mechanism, as Freedom Finance Global analyst Boris Tolkachev has previously noted. He recommends investors focus on companies that take a systemic approach to Alzheimer's therapies.

Most existing Alzheimer’s treatments target amyloid, a substance that forms plaque in the brain. The VG-3927 molecule, however, targets the TREM2 protein, which can have a specific mutation that Vigil says is one of the strongest genetic risk factors for the disease. The drug is designed to activate TREM2 and boost the body’s natural defenses. Note that VG-3927 is being developed to be taken orally — a more scalable and convenient alternative to the injectable drugs currently used in Alzheimer’s treatment, Noble points out.