NEW YORK (TheStreet) -- Shares of Tobira Therapeutics (TBRA) are skyrocketing on heavy trading volume on Tuesday morning by over 700% to $39.24, after it was announced the clinical-stage biopharmaceutical company will be acquired by Allergan (AGN) in a deal valued at up to $1.7 billion.
"With this acquisition, Allergan will now have one of the strongest portfolios of development stage programs for the treatment of NASH, with Cenicriviroc as the cornerstone. We will continue to look for differentiated development-stage assets that can bolster this position and enhance our commitment to innovation in this disease," Allergan CEO Brent Sanders said in a statement announcing the deal.
The transaction is expected to close at the end of this year.
"The premium is what's truly striking," BloombergTV's Alix Steel said on "Bloomberg Go" this morning. "The premium right now, almost 500%. If all the goals for Tobira are met it could be as much as [a] 1,500% premium."
"Allergan is really setting themselves up right," Bloomberg Intelligence's Elizabeth Krutoholow told Steel. "And the deal is really structured smart, because they've done it so that they're paying a third now and two-thirds later if it's successful."
Allergan stock is lower on Tuesday morning.