After Ariad (ARIA), These 3 Drug Cancer Firms Could be Taken Out Next
1/11/2017 6:02:01 AM
January 11, 2017
By Mark Terry, BioSpace.com Breaking News Staff
Even though 2016 marked an off-year for mergers and acquisitions in the biopharma industry, analysts are looking toward at least two acquisitions and their seemingly premium prices as signs 2017 might be a bigger year. Todd Campbell, writing for The Motley Fool, picks three companies that he thinks should go on the market.
The first deal to give everyone a head’s-up for 2017, was Takeda Pharmaceutical Company (TKPYY)’s deal yesterday to buy Ariad Pharmaceuticals (ARIA) for $24 per share, or about $5.2 billion. Campbell notes that the price was a 75 percent premium to Ariad’s prior closing price.
That feels like something of a bookend to Pfizer (PFE)’s acquisition in August of San Francisco’s Medivation (MDVN) for about $14 billion, a price that most investors felt was too high—it was a 120 percent premium.
Here are three biotechs Campbell thinks might go on the market.
1. Array BioPharma
Array BioPharma (ARRY) is expecting a decision by the U.S. Food and Drug Administration (FDA) in the second quarter of 2017 for its melanoma drug binimetinib. Also, on November 9, 2016, the company announced that its Phase III COLUMBUS trial of binimetinib plus encorafenib (bini/enco) treatment in BRAF-mutant melanoma met its primary endpoint. There are about 76,380 new cases of the cancer each year, with more than 10,130 deaths. About a fifth, or 20 percent, of those cases show the NRAS-mutation.
Campbell writes, “Making Array Biopharma even more attractive to a potential suitor, though, is the potential for binemetinib’s use beyond nRAS-mutated patients. Phase III trial results suggest that using binimetinib alongside Array Biopharma’s exploratory drug, encorafenib, can improve progression-free survival for melanoma patients with BRAF-mutations, too.”
Array BioPharma stock is currently trading for $9.66.
2. Seattle Genetics
Seattle Genetics (SGEN) has been on a bit of a roll this past year. In July, along with Takeda Pharmaceutical Company (TKPYY), it announced positive final data for its Adcetris (brentuximab vedotin) monotherapy Phase II clinical trial. It showed positive results in patients with relapsed or refractory classical Hodgkin lymphoma. The U.S. Food and Drug Administration (FDA) approved Adcetris to treat classical Hodgkin lymphoma after failure of autologous hematopoietic stem cell transplantation, for the treatment of classical Hodgkin lymphoma patients at high risk of relapse or progression, and accelerated approval in patients with systemic anaplastic large cell lymphoma (sALCL) after a failure of at least one prior multi-agent chemotherapy regimen.
Adcetris is being evaluated in more than 70 ongoing clinical trials. Its third-quarter sales in the U.S. and Canada, were $70.1 million last year, and it brought in $12.2 million in royalties from Takeda on Adcetris sales outside those two markets.
Campbell writes, “Seattle Genetics is also evaluating Adcetris as a front-line therapy in Hodgkin lymphoma, and results are anticipated later this year. Assuming Adcetris can continue to win use in its current approved setting, and results from the front-line trial pan out, it wouldn’t surprise me if another company acquires this one.”
Seattle Genetics stock is currently trading for $58.26.
In October 2016, Exelixis (EXEL) announced results from its CABOSUN Phase II trial of cabozantinib in previously treated advanced renal cell carcinoma (RCC) with intermediate- or poor-risk disease. The drug was compared to patients receiving Pfizer (PFE)’s Sutent (sunitinib), and it was bad news for Pfizer. Median progression-free survival (PFS) for patients on cabozantinib was 8.2 months. The PFS for patients on sunitinib was 5.6 months.
So far, Cabometyx has annualized sales of $120 million in the third quarter of 2016, but much higher sales are expected. It has the potential to unseat Sutent and Afinitor. Campbell writes, “If the FDA gives Cabometyx the OK for first-line patients, then its efficacy advantage over Sutent may be worth hundreds of millions of dollars. Through the first nine months of 2016, Sutent’s sales totaled $823 million. Cabometyx’s potential undeniably makes this company intriguing, and while Exelixis won’t come cheap, Takeda paid 22 times forward sales to buy Ariad Pharmaceuticals (ARIA), and that multiple suggests Exelixis’ take-out valuation could be as high as $7.1 billion.”
Exelixis stock is currently trading for $19.
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