What happened to Akouos?
Eli Lilly and Co (LLY.N) will acquire genetic medicine developer Akouos Inc for $487 Million (12.5/share) or up to $610 Million(15.5/Share)
Eli Lilly and Co (LLY.N) efforts to build its gene therapies pipeline
Eli Lilly and Co’s acquired Prevail Therapeutics for a $1 billion last year.
Earlier this year, Eli Lilly made a $700 million investment in a research hub that focuses on developing gene therapies.
The $487 million cash lead to acquire Akouos Inc. is the latest effort in Eli Lilly’s focus on development of gene therapies.
(Source: Morningstar)
Akouos Inc. (AKUS.O)
Akouos Inc. develops focused precision gene therapies for forms of sensorineural hearing loss. The company's genetic medicine platform uses a library consisting of variants of a small virus commonly used in gene therapy, known as adeno-associated virus (AAV), and a novel delivery approach.
Market Reaction
Shares of Akouos soared 84%, trading 40 cents above Lilly's $12.50 price offer before the opening bell. Akouos closed the trading day up 88%.
(Source: Morningstar)
Opportunity
Based on a paper titled “Contagious Speculation and a Cure for Cancer: A Non-Event that Made Stock Prices Soar,” (with Tomer Regev, Journal of Finance, February 2001, Vol. 56, №1, pp. 387–396), and the relative valuation method, Eli Lilly’s acquisition of a gene therapeutic medicine company, Akouos, at a 100% premium increases the value of all gene therapeutic medicine companies operating in the same space. To know which companies are developing similar gene therapeutics, financial analysts study the language in every company’s description and news releases, an effort that can take multiple days or even weeks. Over this time period, the information arbitrage of which companies' prices will rise is eroded.
Capturing information arbitrage opportunities can be done using advanced techniques in the area of Natural Language Processing and Understanding (NLP/NLU). To pinpoint which of Akouos' peers will react to this news, we leverage Vectorspace AI’s Real-Time Thematic Basket Generator to identify these hidden relationships between Akouos and other stocks in the context of gene therapeutics for sensorineural hearing to the get the following basket of stocks:
Vector Score Summary
Providing near real time information, a Vector Score that indicates a correlation value between the companies is determined with the use of rich text company descriptions and articles from verified global news sources, combined with patent intellectual property.
About Vectorspace AI
Vectorspace AI develops scientific data engineering pipelines that leverage language models trained to detect hidden relationships between cryptos, stocks, themes, company specific events, and global events to uncover opportunities and enhance investor risk and return metrics. To view all of our products please visit us at www.vectorspace.ai and register for a complimentary trial of the Real-Time Thematic Basket Generator for stocks to get started.