Why This Biotech, Up 300% Since May, Could be the Next Big M&A Target

Published: Oct 11, 2017

Why This Biotech, Up 300% Since May, Could be the Next Big M&A Target October 9, 2017
By Alex Keown, BioSpace.com Breaking News Staff

LOS ANGELES -- Since May of this year, shares of Puma Biotechnology have more than quadrupled in price, growing from $29 to Friday’s close of $121.40.

Could share prices grow more? Analysts at Citigroup predict share prices could go even higher, which is something that is sure to please investors. Citigroup analysts predict shares could go as high as $156. Citi’s previous price target for Puma was $114.

There are several factors that are leading to the analyst predictions. The company is soaring since the U.S. Food and Drug Administration approved the company’s breast cancer drug, Nerlynx (neratinib), a tyrosine kinase inhibitor. Nerlynx, formerly known as PB272, received support of a FDA advisory committee in May, which recommended approval in a 12-4 vote. Dissenting members in May expressed concern over some of the risks associated with the drug, particularly severe diarrhea. Despite those diarrhea concerns, in July the FDA gave full support to the drug, which is used for the extended adjuvant treatment of early-stage, HER2-positive breast cancer. HER2-positive breast cancer is an aggressive form of the disease, which affects approximately one in five people with breast cancer and is associated with a poor prognosis if left untreated. To cope with issues of diarrhea, the FDA said patients should be given loperamide for the first 56 days of treatment with Nerlynx and as needed thereafter to help manage diarrhea.

When the FDA approved the drug, Richard Pazdur, director of the FDA’s Oncology Center of Excellence, said the severity of HER2-positive breast cancer makes adjuvant therapy an important part of the treatment plan. With Nerlynx, Pazdur said patients “have an option after initial treatment that may help keep the cancer from coming back.”

The success of Nerlynx has fueled speculation that Puma Biotechnology could be the target of acquisition. Citi analyst Yigal Nochomovitz told Benzinga that with the new stock price prediction of $156, that would give Puma a value of about $6 billion. Nerlynx is predicted to generate about $1.4 billion in revenue, Nochomovitz said.

Nochomovitz certainly isn’t the first analyst to predict Puma could be snapped up. In May, following the FDA advisory panel nod, an unnamed analyst also made that prediction to Adam Feuerstein when he was still with The Street. The stakeholder had predicted that if Puma was going to be acquired, it would likely happen between July and September. The analyst said the time for a company to strike would be after approval and before commercial launch. In August, Puma announced that Nerlynx tablets were now available in the United States. It’s now October and so far there has not been any word of a deal, but that does not mean one is not being discussed.

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