August 31, 2016
By Mark Terry, BioSpace.com Breaking News Staff
Investors and analysts love to speculate on who’s going to buy who. And although this year’s merger-and-acquisition activity has been down in comparison to the last two years, there’s still deals going on. Lee Jackson, writing for 24/7 Wall Street, takes a look at three biotech companies that are potential acquisition targets.
It’s not exactly a new thought that Novato, California-based BioMarin Pharmaceutical might be a takeover target. There were rumors in June that if Sanofi failed in its bid for San Francisco-based Medivation —which it did—that the Paris-based company might turn its gaze to BioMarin.
BioMarin is best known for its failed drug for Duchenne Muscular Dystrophy (DMD), Kyndrisa (drisaspersen). After the U.S. Food and Drug Administration (FDA) rejected the company’s application for the drug in January, the company killed the program, as well as three other first-generation follow-on products, BMN 044, BMN 045 and BMN 053, which were all in Phase II trials for specific types of DMD.
Companies interested in BioMarin would likely focus on its non-DMD programs, which are directed at rare genetic diseases. It has five products on the market, Vimizim for Morquio A Syndrome (MPS IVA), Kuvan for PKU, Naglazyme for MPS VI, Aldurazyme for MPS I, and Firdapse for LEMS. It also has pipeline products for achondroplasia, CLN2 disease, Hemophilia A and Sanfilippo Syndrome.
Jackson mentions Roche as a possible suitor.
BioMarin is currently trading for $94.51.
Incyte Corporation , headquartered in Wilmington, Delaware, has also been bandied about as an acquisition target, recently as a potential buy for Amgen . Incyte primarily focuses on oncology, and Amgen has a strong oncology presence, but is facing several patent expirations and biosimilars competition.
Incyte’s only approved drug is Jakafi, which makes up 70 percent of company revenue. It’s projected to be a blockbuster by 2020. Incyte also has nine cancer drugs in its pipeline, three of which are JAK inhibitors. Shire (SHPGY) has also been mentioned as a possible buyer.
Incyte’s is currently trading for $80.80.
And finally, another company no stranger to acquisition rumors, Tesaro , headquartered in Waltham, Massachusetts. In July its stock jumped from $37.21 on June 28 to $81.19 on July 1, largely on the basis of a Phase III clinical trial of niraparib in ovarian cancer.
The company’s PARP inhibitors are a possible new class of oncology drugs and have breakthrough potential, although to date none have been approved. Tesaro is considered to be a leader in the hunt for the market. Potential buyers include Gilead , Amgen (AMGN), Celgene or Pfizer . Medivation (MDVN) was also mentioned before, but they were recently acquired by Pfizer.
Tesaro is currently trading for $83.56.
All three of these companies’ fortunes are somewhat based on the promise of a single big drug approval. Jackson writes, “Needless to say, these are only suitable for very aggressive accounts. If a binary event goes the wrong way for a company the downside can be big. The odds are somewhat tilted in the three companies’ favor, but caution should be observed. The clinical success they have achieved could be key for a larger company to gobble one of them up.”
