Insights

Why Global Blood Therapeutics Stock Is Soaring Today

What happened

Shares of Global Blood Therapeutics (NASDAQ: GBT) are skyrocketing today, up by 36.6% as of 1:27 p.m. ET. The biotech’s stock is roaring higher in the wake of a report from Bloomberg News that the company is attracting takeover interest. The outlet didn’t name any specific suitors.

Global Blood Therapeutics produces the breakthough sickle cell disease drug Oxbryta. Since its approval in late 2019, the drug has raked in over $375 million in sales, according to the biotech’s latest update. Next year, Wall Street anticipates that the drug’s annual revenue will jump by a whopping 56.8%. At its peak, Oxbryta is expected to surpass $1 billion in annual sales.

Image source: Getty Images.

So what

Before investors get too excited, however, there are a few things to consider. First off, Bloomberg has named Global Blood Therapeutics a likely buyout candidate in the fairly recent past without anything coming of it. Second, the sickle cell disease space is brimming with potential competitors right now.

For example, Vertex Pharmaceuticals and partner CRISPR Therapeutics are barreling toward a regulatory filing for their one-and-done gene therapy candidate for this rare blood disorder. That’s not a favorable setup for Oxbryta’s long-term commercial potential. Now, Global Blood Therapeutics does have other sickle cell disease candidates in the clinic that could give gene therapies a run for their money, but these assets are still in early-stage development. 

Now what

Should investors buy Global Blood Therapeutics on the back of this latest buyout rumor? While the biotech’s top line has been headed in the right direction, and more growth is likely on the way, the outlook for its main value driver is a big question mark. Thus, a potential buyer would probably have to be fairly confident in Global’s early-stage pipeline. That doesn’t mean that big pharma wouldn’t take on this risk to acquire a promising set of assets, but a buyout is far from a sure thing. As such, investors may want to take a cautious approach with this takeover report.

George Budwell has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CRISPR Therapeutics and Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.

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