Why Incyte, Biogen and BioMarin are Hot Acquisition Targets

October 12, 2016
By Mark Terry, BioSpace.com Breaking News Staff

A recent Evercore ISI survey of 244 biotech industry observers found that the top choice for an acquisition target was Incyte and the top choice as its acquirer was Gilead Sciences . Digging a little deeper into the survey, Keith Speights, writing for The Motley Fool, takes a look at that deal as well as the next two top picks for biotech acquisitions.

Incyte

Incyte has two products on the market, Jakafi and Iclusig. Jakafi is a JAK1 and JAK2 inhibitor to treat polycythemia vera. In May, the company acquired the European rights to leukemia drug Iclusig from Ariad Pharmaceuticals .

Gilead’s overall focus and success has been in hepatitis C and HIV. However, it has been deliberately working to move beyond those indications, particularly as its HCV franchise is facing stiff generic competition with upcoming patent expirations. It currently has only a single commercial cancer drug, Zydelig, for relapsed chronic lymphocytic leukemia (CLL), non-Hodgkin lymphoma (NHL), and relapsed small lymphocytic lymphoma (SLL). It also has eight drugs in in clinical trials for hematology and oncology indications, three of which are Phase III trials. If any of those make it to market, Jakafi and Iclusig would fit right into a growing oncology portfolio.

Biogen

The next up is Cambridge, Massachusetts-based Biogen . Twelve percent of respondents in the Evercore ISI survey voted for Biogen as the most likely acquisition target. With a market cap of over $67 billion, it would have to be a mighty big company to go after Biogen.

Biogen is a dominant player in multiple sclerosis (MS) with Tecfidera and its Plegridy sales are growing, and it has a potential Alzheimer’s drug in Phase III trials, aducanumab. That’s a potential liability, though. In September, George Budwell, writing for The Motley Fool, noted that its central nervous system (CNS) pipeline was pretty high risk. On the other hand, even a modestly successful Alzheimer’s drug, if approved, would likely become a blockbuster.

Budwell thought it was a possibility that Allergan or Merck might consider buying Biogen.

Speights points out that early next year Biogen is spinning off its hemophilia business into a new company, Bioverativ. Not only will it increase value for shareholders, but make Biogen itself an easier, less pricy acquisition target.

He also likes Biogen’s pipeline. “Nusinersen, which targets treatment of spinal muscular atrophy, awaits FDA approval. Aducanumab, which has the potential to be the first effective treatment for Alzheimer’s disease, is in a late-stage study. If Biogen can successfully get these drugs across the finish line, today’s price will look like a steal.”

BioMarin

And the third most likely company to be acquired, according to the survey, is BioMarin Pharmaceutical . It’s market cap is below $16 billion. It has a strong presence in the rare disease market, which generally allows for high pricing because of limited markets.

There has been some speculation that Sanofi might go after BioMarin after it got beat out by Pfizer in its Medivation acquisition. BioMarin had a hard blow when the U.S. Food and Drug Administration (FDA) rejected its application for Kyndrisa (drisapersen) for Duchenne muscular dystrophy (DMD) back in January. Then in June it abandoned its entire DMD program.

But it’s strong in the rare diseases market, with Vimizim for Morquio A Syndrome (MPS IVA), Kuvan for PKU, Nagalzyme for MPS VI, Aldurazyme for MPS I, and Firdapse for LEMS. It also has pipeline products for achondroplasia, CLN2 disease, Hemophilia A and San Filippo Syndrome.

Speights writes, “I suspect bigger companies could be drawn to BioMarin largely because the company develops drugs for indications that few other biotechs are targeting. With this competitive moat, BioMarin, in my view, is a very likely takeover target.”