Dimension Therapeutics Inc (NASDAQ:DMTX) Is Soaring: Here's Why

Here is an interesting one.Back at the end of August, we published this piece in response to the announcement that biotechnology company Dimension Therapeutics Inc (NASDAQ:DMTX) was set to be acquired by Regenxbio Inc (NASDAQ:RGNX). The deal was an all-share deal, and, at close, would translate to Dimension shareholders accounting for a 10% portion of Regenxbio and, under these terms, would value the former at around $86 million.Some Dimension shareholders were a little bit disappointed with the numbers involved but the deal still represented a considerable premium on the company's early pricing and markets continued to trade up on Dimension during the week subsequent to the buyout report. DMTX Daily ChartOur take on the situation was this: that there was a degree of synergy rooted in the fact that Dimension already uses Regenxbio technology as a foundation for the majority of its pipeline and, while some shareholders might have liked a slightly more substantial premium (or an all-cash deal) that the company was still very much want to watch as we headed into the end of the year.Fast forward a few weeks and we just got word that another biotechnology company, Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE), has put forward a proposal that would see it acquire Dimension for $5.50 per share, or approximately $138m in cash.That's a circa 60% premium to the price that Regenxbio is willing to pay for the company (or, when we say willing we mean has agreed on – there may be room for upside wiggle room) and it's safe to say that a much higher portion of Dimension's shareholders than previously would be happy to ditch the initial deal and run with the Ultragenyx proposal.But it's not that simple.Dimension's Board of Directors has already voted unanimously to approve the Regenxbio setup and has urged shareholders to be the same. For the company to now back out of this initial arrangement based on what ultimately amounts to a better offer from Ultragenyx could throw up all sorts of problems. We don't know the terms of the initial deal, at least not outside of those reported in the press release and filing, but it's not unreasonable to assume that there may be some kind of legal ramifications if and when Dimension pulls out of the initial transaction.There is also an argument that the Board of Directors shouldn't have recommended shareholders vote in favor of approval without scanning the landscape for better potentially offers – of which there was one just around the corner as it turns out.Whatever the outcome of the situation, the bottom line right now is this – that anyone who picked up an exposure to Dimension when we first highlighted the company back in February is sitting on a 205% gain. Anyone who waited until our August coverage has locked-in 93% over the past two weeks.How ever this scenario plays out, there is a good chance that one or both of the offers on the table will have to become more attractive to Dimension, and, by proxy, its shareholders before the end of 2017. If it does, and especially if both of the interested parties, Regenxbio and Ultragenyx, battle it out to take over Dimension, we could see share price run considerably higher than it has done in recent weeks.The real risk here is that the initial merger has to be honored at the then proposed rates. If this is the case, we will probably see Dimension dip on market perceptions that it has had to settle for the less valuable of two options.With that said, however, the deal was early-stage and there is a good chance that Dimension is at least in a position to bargain for improvement.Our previous coverage of this stock is available here. We will be updating our subscribers as soon as we know more. For the latest updates on DMTX, sign up below!Image courtesy of Langrish Friends via FlickrDisclosure: We have no position in DMTX and have not been compensated for this article.