The possibility of a tax bill being passed has many investors and analysts forecasting 2018 to be a big year for mergers and acquisitions.
The possibility of a tax bill being passed has many investors and analysts forecasting 2018 to be a big year for mergers and acquisitions. Not only does the proposed tax plan bring corporate taxes down to about 21 percent, but it proposes a one-time amnesty of about 10 percent for repatriated overseas funds. This would likely bring in billions of dollars in cash that larger companies could use to acquire companies to bolster their bottom line and pipelines. Although the tax bill is not a done-deal and there is some question as to whether the corporate tax rates will change until 2019 or later, investors are revving their engines for 2018. Here’s a look at eight potential takeout targets for next year.
Dublin-based Allergan was built on a number of acquisitions over a short period of time, and has sold off chunks of itself in a strategic manner, notably, the sale of Bausch & Lomb to Valeant Pharmaceuticals. Lisa Lamotta, writing for BioPharmaDIVE,says, “Now that the company is set to face generic competition for the eye drug Restasis, (CEO) Saunders will be looking for a sale. The company has been building up its R&D program and has created expertise in six therapeutic areas, including dermatology (and the blockbuster Botox), eye care, gastroenterology, women’s health, CNS and anti-infectives. Each piece of the Allergan puzzle could fetch a pretty penny and bolster a number of other big pharma pipelines.”
Headquartered in Cambridge, Mass., Alnylam and Sanofi Genzyme recently announced the submission of a Marketing Authorization Application (MAA) to the European Medicines Agency (EMA) for patisiran, an investigational RNAi therapy for hereditary transthyretin-mediated amyloidosis (hATTR amyloidosis). It also completed its filing for the therapy with the U.S. Food and Drug Administration (FDA) this month. If approved, it would be the company’s first product.
RNAi has been a tough area to break into, but Alnylam looks like it could be the one to make it happen. Lamotta writes, “Making the biotech particularly attractive, though, is its ability to outperform the competition. Results reported earlier this year from RNAi competitor Ionis Pharmaceuticals were not as strong as the data for patisiran.”
Based in San Rafael, Calif., BioMarin focuses on rare diseases. It recently updated positive data about its valoctocogene roxaparvovec gene therapy for severe hemophilia at the American Society of Hemophilia meeting. Lamotta points out that any company that shows progress in hemophilia is going to be a takeover target these days, and BioMarin is one of the leaders. It’s also a powerhouse in the lucrative rare-diseases market. Karen Andersen, an analyst with Morningstar, recently wrote in a note, “BioMarin offers the greatest growth potential … the company’s strong entrenchment in rare disease drug development should lead to strong pricing power and higher valuation in the stock price.”
Bristol-Myers has been the target of numerous acquisition rumors this year. Whoever did buy it would have to have deep pockets, with most speculation revolving around Pfizer as a potential suitor. The two companies already have a partnership for Eliquis (Apixaban), which is projected to bring in $6 billion in 2018. And Bristol-Myers Squibb has Opdivo, one of the top checkpoint inhibitors on the market.
Headquartered in Wilmington, Delaware, Incyte has been rumored to be a hot takeover target for several years. The primary reason is because of Jakafi (ruxolitinib), its cancer treatment for polycythemia vera, myelofibrosis, and post-essential thrombocythemia MF. Lamotta writes, “Incyte has made itself one of the hottest companies in immuno-oncology—partly by standing on the shoulders of giants. Instead of focusing on oncologics that target PD-1/L1, one of the company’s lead pipeline drugs is the IDO-1 inhibitor epocadostat. The drug is thought to boost the potential of checkpoint inhibitors. So Incyte has hedged its bets and is testing the drug with both of the market-leading drugs in the space, Merck & Co.’s Keytruda (pembrolizumab) and Bristol-Myers Squibb Co.’s Opdivo (involumab)—making epacadostat an incredibly valuable asset.”
Based in West Conshohocken, Penn., Madrigal focuses on cardio-metabolic and fatty liver diseases. Its lead product candidate is MGL-3196 for non-alcoholic steatohepatitis (NASH) and familial dyslipidemias/hypercholesterolemias. It recently provided positive data for a mid-stage trial in NASH, which has no current therapies. A number of companies are turning their attention towards NASH, with Allergan, Gilead Sciences and Novo Nordisk at the top of the list. Any one of them might view Madrigal as yet another shot on goal for the NASH market.
Located in Philadelphia, Spark is a gene therapy company making headway in the hemophilia arena. It is currently expecting the FDA to approve its therapy, Luxterna, for biallelic RPE65-mediated inherited retinal disease (IRD). It is partnered with Pfizer on its product for hemophilia. Lamotta writes, “Acquirers have been taking the ‘wait and see’ approach. Many companies are interested in the gene therapy space but have been holding off until data has shown the technology is mature enough to pan out. An approval for Spark’s blindness treatment Luxturna will likely get that ball rolling—especially if Spark chooses a savvy pricing strategy.”
Based in Rockville, Maryland, Sucampo announced in September that the FDA had accepted its filing for a supplemental New Drug Application (sNDA) for lubiprostone (Amitiza) for pediatric functional constipation. Earlier the same week, the company had announced positive Phase III data of the drug in adults with chronic idiopathic constipation (CIC). The company has a market cap of about $724 million and already has deals with generic drugmakers to slow competition for Amitiza. It has two compounds for rare diseases in its pipeline with data readouts expected in 2018.
