Iomai shares surge on premium buyout offer

The stock rose $3.42, more than doubling to close at $6.34, approaching Intercell's proposed buyout price of $6.60 per share. The offer amounts to a 126 percent premium from Monday's closing price of $2.92 per share.

"This strategic combination with Intercell will create a stronger, more diversified vaccine company and will accelerate the development of Iomai's vaccine programs and fully leverage our innovative TCI technology," Iomai President and Chief Executive Stanley C. Erck said in a statement.

The deal will bring together Austria-based Intercell's Japanese encephalitis vaccine with Gaithersburg, Md.-based Iomai's needle-free travelers' diarrhea vaccine, expected to enter late-stage studies in the first half of 2009. Combined, both vaccines represent a market opportunity of about $1 billion annually, Iomai said.

The buyout deal will involve a stock-for-stock exchange for about 41 percent of Iomai's outstanding shares held by major shareholders for about 1.7 million Intercell shares. That represents about 4 percent of Intercell. The remaining Iomai shares will be bought in a cash deal.

Rodman & Renshaw analyst Vernon T. Bernardinom reaffirmed "Market Perform" rating for Iomai and said the deal will likely close without a competing bid, as Intercell is capable of increasing its offer if it has to.

"The value of Iomai's highly leverageable and monetizable immune response-enhancing technology is validated by this proposed acquisition by InterCell," Bernardinom said in a note to investors. "The impressive field results with the company's pandemic flu vaccine and the interim results in February 2008 with its travelers' diarrhea vaccine patch are signs of further positive news to come for the combined companies."