Ignyta, Inc. (NASDAQ:RXDX) stock has surged today on the news of its buyout from big-time cancer research company Roche Holding Ltc (OTCQX:RHHBF). While everything started off smoothly on this deal, suspicions have arisen that Ignyta’s Board of Directors may have breached their fiduciary duty and the company is now being investigated by the securities firm Monteverde & Associates PC.
Despite the investigation, Ignyta shares are still up for the day, trading at $26.80, which is up $11.25, or 72.35%, from Thursday’s close of $15.55. There has been virtually no movement in the stock since the market opened this morning, but this is the biggest jump this stock has seen in a year. Ignyta has been trending upwards this year, but could this investigation put that uptrend on halt? It really depends on the result of the investigation.
Ignyta is an oncology biotechnology company that focuses on tumor reduction and cancer treatment. The company’s current crowning achievement is the clinical candidate entrectinib. At the moment, entrectinib is at the mid-stage of a study looking into a wide range of tumors that contain an NTRK1/2/3, ROS1, or ALK gene fusion, and the study could prove to be a huge deal if successful.
Roche, which has acquired Ignyta for $1.7 billion, is a Swiss biopharmaceutical and diagnostic company. From its latest update, Roche intends to complete its purchase of Ignyta in the first half of 2018. From the sale, Ignyta investors were to get $27 a share in cash, which both boards from both companies happily agreed to at the time – but it looks like someone wasn’t happy, and that’s where Monteverde & Associates comes in.
Given the fact that the firm is looking into the potential neglect of the Ignyta Board of Directors’ fiduciary duty – or the duty to act solely in the interest of your principal (ie. the company investors) – it stands to reason that someone among the Ignyta investors may have lodged a complaint. If I had to guess, I would say that one, or more of Ignyta’s investors felt that the board could have gotten a better deal out of Roche but instead settled. Maybe the board was given some sort of deal that didn’t trickle down to the investors or maybe the board did everything in their power to get a good deal for Ignyta and its investors. That’s what Monteverde & Associates is looking into.
Check back in later to read up on the findings of the investigation.
Featured Image: twitter
