Timber Pharmaceuticals TMBR announced its definitive agreement to be acquired by LEO Pharma, a company focused on developing innovative solutions forpeople with skin conditions. Following this news, Timber's shares witnessed an impressive increase of more than 110% on Monday.

LEO Pharma will acquire TMBR for a total transaction value of up to $36 million, which includes an initial upfront consideration of $14 million along with the potential $22 million through contingent value rights, upon achieving specific milestones.

As part of the acquisition, all issued and outstanding shares of Timber's capital stock and other equity interests will be converted into the right to receive the initial upfront consideration. Per the Black Scholes model, 3.4 million shares of Timber common stock and restricted stock as of Aug 20, 2023, currently have an estimated per-share value of $2.62.

This acquisition will add Timber’s lead candidate TMB-001, to LEO Pharma’s portfolio. The candidate is in a late-stage ASCEND study, being developed for the treatment of moderate-to-severe subtypes of congenital ichthyosis (CI) — a group of rare genetic keratinization disorders characterized by dry, thickened and scaling skin. The candidate is a topical isotretinoin formulation using Timber's patented IPEG delivery system. 

The candidate showed a clinically meaningful reduction in targeted and overall severity of CI along with a favorable safety profile in the phase II study. Management anticipates the FDA approval of TMB-001 by October 2025.

Shares of Timber have rallied 70.9% year to date against the industry’s 13.1% decline.

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Another promising candidate in TMBR’s portfolio is TMB-003 (sitaxsentan), which is currently in preclinical studies. TMB-003 is a topical ET-A receptor antagonist being developed for the treatment of sclerotic skin diseases. In January 2021, it received orphan drug designation from the FDA for the treatment of systemic sclerosis.

Furthermore, TMB-001 received Orphan Drug designation from the European Commission in October 2022 for the treatment of autosomal recessive CI. In May 2022, the FDA granted it Breakthrough Therapy Designation for the treatment of CI.

Both Timber Pharmaceuticals and LEO Pharma's boards of directors have unanimously approved the abovementioned acquisition, highlighting their shared vision and enthusiasm for this strategic decision. The acquisition is expected to be finalized by the fourth quarter of 2023, subject to customary closing conditions.

Timber Pharmaceuticals, Inc. Price and Consensus

Timber Pharmaceuticals, Inc. price-consensus-chart | Timber Pharmaceuticals, Inc. Quote

Zacks Rank & Stocks to Consider

Timber currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the same industry are Emergent Biosolutions EBS, Annovis Bio ANVS and Corcept Therapeutics CORT, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the past 90 days, the Zacks Consensus Estimate for Emergent Biosolutions has widened from a loss of $1.32 per share to a loss of $1.35 for 2023. The bottom-line estimate has gone down from $2.06 to $1.06 for 2024 during the same time frame. Shares of the company have lost 59.7% year to date.

EBS’ earnings missed estimates in each of the trailing four quarters, delivering an average negative surprise of 577.88%.  

In the past 90 days, the Zacks Consensus Estimate for Annovis Bio has narrowed from a loss of $4.89 per share to a loss of $4.38 for 2023. The bottom-line estimate has narrowed from a loss of $3.18 to $2.77 for 2024 during the same time frame. Shares of the company have lost 4.3% year to date.

ANVS’ earnings beat estimates in three of the trailing four quarters and missed the mark in one, delivering an average surprise of 13.40%.

In the past 90 days, the Zacks Consensus Estimate for Corcept’s earnings has gone up from 66 cents per share to 78 cents for 2023. The bottom-line estimate has also improved from 64 cents to 83 cents for 2024 during the same time frame. Shares of the company have rallied 54.7% year to date.

CORT’s earnings beat estimates in two of the trailing four quarters and missed the mark in the other two, delivering an average surprise of 6.99%.

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