Nixed Pfallergan Deal Has Investors Wondering if Allergan Might Target Biogen

Nixed Pfallergan Deal Has Investors Wondering if Allergan Might Target Biogen
April 6, 2016
By Mark Terry, Breaking News Staff

Before Pfizer even officially abandoned its attempt to acquire Dublin-based Allergan (AGN), analysts were speculating on who Allergan might buy instead. Now that the deal has been pronounced formally dead and Allergan will walk away with a $150 million breakup fee and another $40 billion when it finishes selling its generics business to Israel-based Teva , the speculation is heating up.

Cambridge, Mass.-based Biogen seems to be the go-to acquisition target for most investors and analysts. Biogen’s worth about $58 billion, about half of its peak value because its blockbuster drug, Tecfidera, for multiple sclerosis (MS) has slowed down. That would suggest that Allergan—or even Pfizer, for that matter—could pick up Biogen for a relatively low price.

Of course, analysts have been speculating on who should buy Biogen for a while. Early last month there was a lot of rumors about a potential Shire-Biogen deal, even as Shire recently closed on its acquisition of Bannockburn, Ill.-based Baxalta .

In July 2015, Bloomberg Intelligence conducted a phone survey, and more than 30 investors said they thought Biogen should buy a company as soon as possible in order to boost revenue.

“Investors think Biogen’s top priority should be to acquire an asset that will have meaningful top-line growth within the next 18 to 36 months,” said Asthika Goonewardene, an analyst with Bloomberg Intelligence, back in July. “So, not one of those really small biotech companies that will only deliver something very promising five to seven years down the line.”

Biogen has a dominant position in the MS market, with two drugs approved for hemophilia, and a recent shift in focus to Alzheimer’s drugs. It has three Alzheimer’s drugs in its pipeline, aducanumab, BAN2401 and E2609. It also has a drug (Nusinersen) being evaluated for spinal muscular atrophy, and a Parkinson’s disease drug (BIIB054) in clinical trials. BIIB054 was acquired from Neurimmune and is in early-stage trials.

In a February research report, Merrill Lynch wrote, “We estimate aducanumab is potentially worth $42/share on 45 percent probability of success, and $98/share if aducanumab is ultimately approved by FDA as a treatment for Alzheimer’s disease.”

And as long as Allergan has money burning a hole in its pocket—money investors are glad to spend on their behalf—Adam Feuerstein, writing for The Street yesterday offered up other potential acquisition targets. Those include Canadian firm Valeant Pharmaceuticals International , although he wrote, “Given Valeant’s myriad accounting issues and mountain of debt at risk of default, Saunders could—and should—probably wait to pick up Valeant’s best assets in a fire sale or bankruptcy.”

Valeant has already floated the idea of selling off its Bausch & Lomb unit.

Other possible targets similar in size to Biogen include North Chicago, Ill.-based AbbVie , Celgene , Bristol-Myers Squibb or AstraZeneca .

With a significant amount of cash, Allergan has options, and Saunders does seem interested in running a conglomerate. In the dermatology market, possible targets include Revance Therapeutics , Anacor Pharma or Dermira. In terms of smaller, specialty biotech companies, Feuerstein offered up Jazz Pharma , DepoMed , Endo International and Amag Pharma .

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