Four Boston Biotechs That Could Make M&A Moves This Year
July 29, 2015
By Alex Keown, BioSpace.com Breaking News Staff
BOSTON – It’s been the year of deal making with more than $220 billion spent on mergers and acquisitions in the biotech industry, and it’s not over yet.
Although no M&A activity has been announced, at least as of this writing, but given the atmosphere that could change quickly, Don Sieffert, biotech editor at the Boston Business Journal, put on his pharmaceutical prognostication hat and made his predictions of future M&A activity in the Boston hub of the industry.
1. Vertex Pharmaceuticals
The Boston-based company is poised to become profitable following approval of its newest cystic fibrosis medication Orkambi, a treatment which is widely expected to have a broad impact on the cystic fibrosis market – and a treatment widely expected to sharply boost revenues. The drug is expected to earn $5 billion by 2018. The company is widely thought to be a target of acquisition by California-based Gilead Sciences , which was bolstered by an impressive second quarter financial report that showed earnings of $8.2 billion, nearly $2 billion over the same quarter in 2014. Gilead has a market value of $139 billion and “could easily swallow” Vertex , which has a value of $31 billion, Sieffert said.
Following a massive stock plummet that resulted in an approximate $20 billion loss in valuation, Biogen is a ripe target. On July 20, 2015, Biogen’s shares traded for $408.93 and plunged on July 24, 2015 to $300.03. In the last year, shares spiked on March 20, 2015 at $475.98, up significantly from a Nov. 20, 2014 of $299.53. The selloff was spurred in part by lower than expected sales of Tecfidera. Sales of the drug rose from $700 million in the second quarter of 2014 to $883 million this year. However, analysts were expecting quarterly sales of $909 million instead of $883 million for Tecfidera. In addition to Tecfidera not meeting analysts’ expectations, investors were also disappointed with the latest results of an Alzheimer’s drug treatment that had been quite promising earlier this year. There have been rumors that Ireland-based Allergan Plc could be looking at Biogen as a target for that company’s very active M&A activities.
While Biogen may be a target, it’s also possible that Biogen could also make an M&A move to bolster its own pipelines. The company could have its eyes set on one of three companies – Isis Pharmaceuticals , BioMarin Pharmaceuticals or Alkermes Plc .
3. Shire Pharmaceuticals
Shire has been looking to make an M&A move, Sieffert said. Shire has been driving growth through acquisitions. In January, Shire agreed to buy U.S. group NPS Pharmaceuticals, Inc. for $5.2 billion. Shire has been involved with more than $250 billion worth of acquisitions this year, Reuters noted. A $50 billion deal between Shire and AbbVie to merge fell apart last year after the U.S. government changed the tax rules on companies relocating their corporate headquarters overseas to receive tax breaks. That breakup provided $1.6 billion for Shire in fees. That money could be fuel for possible acquisitions. One company that could be a target for Shire is BioMarin , Sieffert said.
4. Ariad Pharmaceuticals
Ariad Pharmaceuticals could be a target for acquisition due to troubles between management and Alex Denner, a member of the company’s board of directors. Denner, who is a hedge fund manager, has had success in helping bring about the sale of troubled companies like Genzyme , ImClone and Amylin , Sieffert noted. He added that Denner could plan to do the same with Ariad. While Ariad has not named a successor to CEO Harvey Berger, the company did receive some necessary capital after striking a deal worth $200 million with PDL BioPharma, Inc. . PDL is providing the capital to Ariad in exchange for royalties on the net revenues of Iclusig (ponatinib), for the treatment of leukemia.