Is Puma Biotechnology a Takeover Target?

Published: Mar 12, 2013

Puma Biotechnology Inc. (PBYI)’s surging valuation is stoking optimism its chief executive officer will succeed in selling his second straight drug developer to a major pharmaceutical company. Puma’s experimental breast-cancer treatment is viewed so favorably that its shares fetch $836 million after less than 11 months of trading, more than all other U.S. peers that also had no sales in the past year, according to data compiled by Bloomberg. The stock has doubled since April even though Puma only just started enrolling patients in the final stage of testing neratinib, which it licensed from Pfizer Inc. (PFE) in 2011. CEO Alan H. Auerbach sold his previous venture, Cougar Biotechnology Inc., for about $1 billion to Johnson & Johnson before U.S. regulators approved its prostate-cancer drug that’s turning into a billion-dollar product. While any oncology- focused drugmaker may consider purchasing Puma given its prospects, they may wait until its phase 3 is completed, Cowen Group Inc. said. UBS AG says Puma could fetch about $40 a share, 37 percent more than yesterday’s price. “It’s a management team that’s made people a lot of money in the past, and almost certainly will do the right thing for investors,” Eric Schmidt, an analyst at Cowen in New York, said in a telephone interview. Auerbach has “picked up another asset on the cheap from Pfizer and is doing a great job with it.” Raising Money: Puma licensed neratinib from Pfizer in 2011 and raised $60 million that year from a private placement to fund development of the experimental breast-cancer drug. After the stock began trading over the counter in April 2012, Los Angeles-based Puma collected about $129 million in October from a sale of shares, which were listed that month by the New York Stock Exchange.

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