Small biotech Ventyx soars 70% amid 'advanced talks' with Eli Lilly to be acquired

Shares of Ventyx Biosciences, a small-cap developer of anti-inflammatory drugs, jumped nearly 70% in early trading on Wednesday, January 7, after the Wall Street Journal reported that Eli Lilly is in talks to acquire the biotech.

Ventyx shares surged almost 68% to about $17 per share in early trading on Wednesday. The rally extended gains from the previous session: on Tuesday, roughly 20 minutes before the close, the stock jumped 28.5% to $10 per share.

Investors were reacting to a Wall Street Journal report, citing people familiar with the matter, that Lilly is in advanced negotiations to acquire the small-cap company.

The deal, which could be announced soon, is valued at more than $1 billion, the newspaper reported. That represents a premium of about 40% to Ventyx’s market capitalization of $717 million at the close of trading on Tuesday.

Ventyx operates in one of the most promising areas of drug development, focusing on oral therapies for inflammatory diseases such as Crohn’s disease and rheumatoid arthritis, the Journal writes.

The company’s pipeline has two main components. One targets inflammatory bowel disease, while the other focuses on drugs aimed at inhibiting a protein complex known as NLRP3. While NLRP3 plays a role in the body’s immune defense, excessive activity has been linked to autoimmune and inflammatory conditions. Ventyx is studying NLRP3 inhibitors across several indications, including cardiovascular disease, Parkinson’s disease, and obesity. All of these candidates are currently in mid-stage clinical trials.

Major pharmaceutical companies, including Roche and Novo Nordisk, have shown interest in this emerging drug category, according to Jefferies, the Journal notes. Acquiring Ventyx would help Lilly compete in the space and, if the experimental therapies succeed, would strengthen its product portfolio.

Over the last 12 months, Ventyx shares have surged about 315%.

Eight Wall Street analysts rate the stock “buy” versus one “hold” recommendation, according to MarketWatch data. The average target price of $14.63 per share implies upside of more than 46% versus the Tuesday closing price.