Nuvelo, Inc. (NUVO) is a biopharmaceutical company that makes drugs for acute cardiovascular and cancer therapy. On September 25, the San Carlos, California-based company announced that it has entered into a definitive merger agreement with privately held ARCA Biopharma, Inc. Under the terms of the agreement, ARCA will become a wholly owned subsidiary of Nuvelo.
The deal will result in the creation of a late-stage biotechnology company which will focus on the treatment of cardiovascular diseases. This deal makes sense for both companies in our view. While Nuvelo will get the chance to transform itself into a late-stage biotech company, ARCA should be able to put Nuvelo's significant cash balance to good use towards the commercialization of its lead pipeline candidate, Gencaro, which is currently under FDA review for the treatment of chronic heart failure.
The transaction is expected to close later this year/early next year, subject to customary closing conditions, including shareholder approval. Meanwhile, in order to comply with NASDAQ listing requirements, Nuvelo intends to seek stockholder approval to affect a reverse stock split of its common stock in conjunction with the closing of this transaction. The company will provide updated guidance once the deal goes through. We are leaving our model unchanged for the time-being. We maintain our Hold rating on the stock with a $1 target price.
Arpita Dutt, CA, contributed to the report.
Read the full analyst report on NUVO
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