VLA Details

Viralytics Ltd.’s stock surged up 175% on February 22, 2018 as the group updated the market about inking a definitive agreement under which it is proposed that MSD (tradename of Merck & Co., Inc., Kenilworth, N.J., USA), through a subsidiary, will acquire Viralytics, an Australian publicly traded company focused on oncolytic immunotherapy treatments for a range of cancers by way of a scheme of arrangement (Scheme) for AUD 1.75 cash per Viralytics share, and this values VLA’s total issued shares at approximately AUD 502 million (USD 394 million). The cash consideration of AUD 1.75 per share is a premium of 160% to the one-month volume weighted average price (VWAP) of Viralytics shares.

Through this arrangement, Viralytics will become a wholly-owned subsidiary of MSD, and MSD will have full rights to CAVATAK® (CVA21), which is VLA’s investigational oncolytic immunotherapy. VLA will dispatch a scheme booklet to its shareholders in April 2018.
 

Schedule (Source: Company Reports)
 
In January this year, Viralytics received $6.4 Million as R&D Tax Incentive. This with investment by Lepu Medical Group leaves the company have over $57 million in total cash to fund current and planned clinical activities into 2020.VLA now can focus on its CAPRA and MITCI clinical studies in melanoma with collaborative KEYNOTE-200 study in lung and bladder cancer with Merck while a new small early phase signal seeking studies in Head & Neck cancer, Colorectal cancer and Uveal melanoma has been highlighted.

Although any superior proposal can boost the stock price further, the existing opportunity looks good in terms of making profits. We give a “Sell” recommendation at the current price of $1.69
 

VLA Daily Chart (Source: Thomson Reuters)

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