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Why Janux Therapeutics Stock Is Soaring This Week

Janux's silence on potential acquisition deals may be a good idea.
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Janux Therapeutics (Nasdaq Resonancestock (market)(Code: JANX)The company's stock price has soared. As of Thursday's close, the company's stock price had risen 42.41 TP3T for the week, according to S&P Global Market Intelligence.

The sharp rise comes after Bloomberg reported Wednesday that Janux is exploring potential sale options. Large drugmakers have expressed interest in buying Janux, according to anonymous sources interviewed by Bloomberg.

Silence is golden?

Janux has not publicly commented on the reports of takeover talks. Some investors may think that management's silence hints at the truth of the rumors.

It would not be surprising if one or more of the major biopharmaceutical companies had their eye on Janux. In February, Janux announced positive results from a Phase 1 clinical study evaluating the efficacy of the investigational drug JANX007 in treating prostate cancer and other solid tumors. The company said the data showed that the treatment "has best-in-class potential".

Although Janux's stock price has risen more than 360% so far this year, its market capitalization is still below $3 billion. Many large drugmakers with tumor lines have the ability to easily acquire Janux in an all-cash transaction.

Should You Buy Shares of Janux Therapeutics?

Some investors may follow the proverbial "buy the rumor, sell the news" approach. However, there are potential downsides to this approach. Where rumors don't turn out to be true, gains in biotech stocks can evaporate in an instant.

I wouldn't buy shares of Janux Therapeutics simply because of reports of a potential acquisition. However, the company's stock may attract some activist investors who are betting that JANX007's encouraging early results will be replicated in further clinical trials. However, most investors are best advised to remain on the sidelines for now.

Should you invest $1,000 in Janux Therapeutics now?

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Keith Speights does not hold any of the shares mentioned above.The Motley Fool does not hold any of the shares mentioned above.The Motley Fool has a disclosure policy.

Why Janux Therapeutics Stock Is Soaring This Week

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