ANCN Stock: Anchiano Therapeutics Announces Merger News

Anchiano Therapeutics Ltd (NASDAQ: ANCN) is screaming for the top in the market this morning, trading on gains that are better stated in multiples than in percentages. The gains come after the company announced that it has entered into a definitive merger agreement with Chemomab. 

Here’s what’s going on:

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Anchiano Therapeutics Announces Definitive Merger Agreement

In the press release, Anchiano Therapeutics said that it has entered into a definitive merger agreement with Chemomab Ltd. Upon the closing of the transaction, shareholders of Chemomab will become the majority shareholders of the combined company. 

The company said that shareholders for both companies that hold sufficient shares to approve the transaction have entered into shareholder support agreements in order to support the transaction. 

ANCN went on to explain that the proposed merger will create a company that’s focused on CM-101, Chemomab’s lead product candidate. 

As part of the agreement, Chemomab plans to complete a PIPE financing to advance its lead candidate into Phase 2 clinical trials in rare fibrotic indications. The funding will also be used to further the development of the company’s early-stage pipeline. 

The combined company expects to advance CM-101 into a Phase 2a trial to evaluate the treatments effect on patients diagnosed with non-alcoholic steatohepatitis, also known as NASH. 

Upon the closing of the transaction, the combined company will be named Chemomab Therapeutics and will be led by Chemomab’s management team. Neil Cohen, CEO at ANCN, will join the board of directors at Chemomab upon the closing of the transaction. 

Management Commentary

In a statement, Stan Polovets, chairman of the board of directors at ANCN, had the following to offer:

Following a comprehensive review of strategic alternatives, Anchiano’s board of directors has concluded that the proposed transaction with Chemomab is in the best interest of our shareholders. Chemomab’s CM-101 has demonstrated positive clinical results, with a novel mechanism of action that has potential to become an important option for patients with debilitating fibrotic diseases. We intend to hold a special meeting of Anchiano’s shareholders in the first quarter of 2021 to vote on this merger.

The above statement was followed up by Dr. Adi Mor, co-founder and CEO at Chemomab. Here’s what he had to say:

Our lead compound, CM-101, has shown very positive safety and anti-fibrotic biomarker activity in a Phase 1b study, and with the antibody advancing into Phase 2 trials in two orphan fibrotic indications, we believe it is the right time in our lifecycle to move into the public equity markets. We are excited about the next chapter of growth for Chemomab, and the ability to bring the important effects of CM-101 through clinical development and to patients.

Finally, Stephen Squinto, Ph.D., Chairman of Chemomab and Executive Partner at OrbiMed, had the following to offer:

There is an urgent need for treatments that address fibrotic diseases such as PSC and SSc, and the promising early data for CM-101 suggest that this compound has potential to become a meaningful therapeutic option for patients suffering from these conditions. I am pleased with the progress that the Chemomab team has made so far, and we look forward to a productive year in 2021 with significant anticipated advancement of our clinical programs.

Why This Merger Is Big News

Mergers happen all the time in the stock market, but they don’t always lead to gains in multiples. So, why is it that ANCN investors are so excited here?

Well, Chemomab is much further along in development than Anchiano Therapeutics is. Moreover, NASH is a very high value indication. 

So, with the merger, those who own ANCN stock will gain exposure to the pipeline at Chemomab, one that’s incredibly promising and has caught the attention of investors at OrbiMed. 

All in all, this is great news for ANCN shareholders. 

Risks to Consider Before Buying ANCN Stock

Any time you make the decision to purchase a stock, you’re accepting the risks associated with your purchase. While ANCN stock is heating up today, before you buy it, you should consider the following risks. 

  • Profit Taking. First and foremost, the market has a tendency to overreact to news. While the news surrounding Anchiano is overwhelmingly positive, I’m not sure it’s quite worth gains in multiples. As a result, we can expect to see profit taking. So, if you buy on highs, you may take pretty harsh short-term losses. 
  • Transaction Failure. I’ve seen it several times. A company will announce a definitive merger agreement as Anchiano did, only to hear a couple of months down the line that the merger would no longer take place, leading to significant declines. That could be the case here. 
  • Clinical Risks. Even if the transaction goes through, there’s always the potential for a clinical trial failure. If a failure happens in the clinic, significant declines will likely be the result. 
  • Capital Risks. We already know that the combined company will look for PIPE financing. However, moving down the road, if the company doesn’t have enough money in the bank to get it to commercialization, it will be forced to raise more funds, which will result in dilution. 

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Final Thoughts

Any investment comes with risks. So, I don’t want the section above to scare you off. It’s there so you understand what you’re getting into. All in all, if you wait for the profit taking to take place and dive in at the bottom, you’re likely in a good place. 

All in all, this merger is a great thing for ANCN stock and those who own it, opening the door to exposure to a strong pipeline of clinical and preclinical assets that could result in incredible profits down the line.