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Chiasma To Merge With Amryt

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Commercial-stage biopharmaceutical company Chiasma Inc. (CHMA) announced Q1 results and has also agreed to merge with Amryt Pharma. After jumping 46% on the merger announcement yesterday, shares of Chiasma are down about 8% in Thursday’s pre-opening session.

Chiasma generated net product revenue of $1.9 million in sales of MYCAPSSA, the first oral therapy for the treatment of acromegaly, a rare condition in which the body produces too much growth tissue. Until now, therapies have involved repeated injections for the patient. The revenue number beat the consensus estimate by about $0.1 million. Its net loss per share was $0.49, which was higher than analysts’ estimates of a net loss per share by $0.18.

Significantly, Chiasma agreed to merge with Amryt Pharma. The company expects the move to form a global leader in rare and orphan diseases with a well-diversified portfolio of therapies and a strong product pipeline.

Chiasma CEO Raj Kannan said, “During the quarter we saw an increase in launch momentum as we continued to expand payor coverage for MYCAPSSA. Additionally, we submitted an IND to begin the process of expanding the potential benefits of MYCAPSSA in patients with carcinoid syndrome.” (See Chiasma stock analysis on TipRanks)

Commenting on the merger with Amryt, Kannan added, “We believe the merger with Amryt represents a transformational moment in unlocking and accelerating the potential value of Chiasma efficiently for both our patients and for our shareholders.”

Yesterday, Piper Sandler analyst Edward Tenthoff lowered the stock’s rating to Hold from Buy while also reducing the price target to $5 (25.6% upside potential) from $15.

In the merger, Chiasma investors get 0.396 of Amryt American Depository Shares (ADS) for each Chiasma share. As Tenthoff noted, this values Chiasma at $5.13 per share.

The other analyst covering Chiasma, HC Wainwright’s Douglas Tsao, has a Buy rating on the stock but has not assigned any price target.

The two ratings add up to a Moderate Buy consensus rating for the stock. Shares have dropped about 29.7% over the past year.

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