Seth Klarman (Trades, Portfolio)’s 2015 investment in pharmaceutical company Biotie Therapies Corp. (BITI, Financial) paid off this week when the company was bought out at a premium.
The founder of investment adviser Baupost Group held 2,158,889 shares of the company after increasing the position by 54.8% Jan. 19, giving him about 11.4% of its total shares. He disclosed the increase the same day Acorda Therapeutics Inc. (ACOR, Financial), a developer of treatments for neurological disorders, announced a tender offer to acquire all of the company’s existing common stock, American Depository Shares, options and warrants.
On news of the buyout, Biotie’s share price jumped 77.8%. Acorda offered to buy the shares for $26.50 per ADS, an approximately 94% premium on its closing price Jan. 15, the last day it traded before the announcement.
Klarman gave up 381,945 common shares, 1,395,999 ADSs and 381,945 warrants of Biotie to Acorda in the buyout, and the transaction closed April 11.
In a total average, Klarman had paid $21.17 per share for his holding of Biotie Therapies. At a closing cost of $26.43 Thursday, Klarman had a total estimated gain of 26% on the investment.
The board of directors’s decision to accept Acorda’s tender offer was unanimous. Biotie’s drug, tozadenant, a Parkinson’s treatment in Phase 3 development, would be the first approved treatment in the U.S. for the disease in over 20 years. The company developed another drug in Phase 2 for the treatment of Parkinson’s-related dementia.
“Our acquisition of Biotie positions Acorda as a leader in Parkinson’s disease therapeutic development, with three clinical-stage compounds that have the potential to improve the lives of people with Parkinson’s. Tozadenant, Biotie’s most advanced clinical program, is a promising therapy being developed to reduce daily OFF time,” said Ron Cohen M.D., Acorda president and CEO.
Acorda’s shares did not move significantly on news of the acquisition and are down 34.3% year to date, closing at $28.10 year to date. Jim Simons (Trades, Portfolio), John Hussman (Trades, Portfolio) and Steven Cohen (Trades, Portfolio) are the only gurus with positions. Its price-earnings ratio is 112.8 and price-book is 2.02.
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