Leading the Way in Life Science Technologies

GEN Exclusives

More »

The Lists

More »
September 30, 2013

Takeover Targets: Who Is First on the List?

Which companies are next in acquisition alley?

Takeover Targets: Who Is First on the List?

Six of the seven companies on this list focus on cancer drug development, with eye disorders, inflammation, and myelofibrosis among other treatment specialties. [© ArtFamily - Fotolia.com]

  • Below are seven biotech businesses that have been cited by analysts this year as among the most likely candidates for acquisition by larger biotech partners or pharma giants, mostly for what they have done right in recent years: successfully launching new products, building those products into successful franchises through multiple indications, and developing safe and effective new drugs, often in collaboration with larger partners.

    For each company mentioned, this list furnishes descriptions of their biopharma focus, their key product(s) and pipeline, reasons why analysts found them attractive, and reference sources—which in one case included a recent GEN interview of an analyst who contributed to her firm’s report on the topic in January.

    Interestingly, if not surprisingly, six of the seven companies focus on cancer drug development, with eye disorders, inflammation, and myelofibrosis among other treatment specialties of the potential takeover targets.

    Reflecting how fluid these analyses can be, one of the seven biotechs found itself just a few days ago as the subject of takeover speculation that led to news headlines, followed by no-comment statements from the company and its reported suitor.

  • Ariad Pharmaceuticals

    Focus: Develops and commercializes oncology drugs

    Key products and pipeline: Iclusig® (ponatinib) launched in January following December 2012 FDA approval for chronic myeloid leukemia and Philadelphia chromosome-positive acute lymphoblastic leukemia, both for patients resistant or intolerant to prior TKI therapy. Pipeline largely consists of new Iclusig indications, led by newly diagnosed patients in Phase III and seven more in Phase II. AP26113 for non-small cell lung cancer is in a Phase I/II trial, updated data for which was to be presented September 28 at the European Cancer Congress.

    Why attractive: Iclusig has been projected by Cowen & Co. to reach $625 million in 2017 and more than $1 billion ultimately in annual sales; it generated $20.3 million in the first half of 2013, but sales are expected to zoom as new indications are approved. AP26113 has been expected to enter Phase III trial by year’s end.

  • BioMarin Pharmaceutical

    Focus: Develops and commercializes drugs for “serious” diseases and medical conditions

    Key products and pipeline: Four orphan drugs on the market led by Naglazyme® (galsulfase), an enzyme replacement therapy for mucopolysaccharidosis VI (MPS VI). Pipeline led by GALNS, a treatment for rare lysosomal storage disorder Morquio A syndrome.

    Why attractive: At the center of an unconfirmed Deal Reporter story September 19 that Roche was looking to acquire the company with $15 billion in debt financing it is reportedly working to line up. BioMarin dismissed the report as “rumors” and declined comment; Roche also refused comment, with CEO Severin Schwan telling Bloomberg it doesn’t need to raise capital given its CHF 3.6 billion ($3.9 billion) in cash and equivalents as of June 30.

    Naglazyme generated $257 million in sales last year, up 14% from 2011, and is company’s best-selling product. GALNS wowed investors last year with strong Phase III trial data showing patients taking a 2 mg/kg dose walked 22.5 meters farther compared with placebo. One potential challenge, however, is its valuation of more than $9 billion: “Any premium is going to test Big Pharma's appetite for major deals,” Jim Cramer told CNBC.

    Karen Andersen, CFA and senior analyst, biotechnology at Morningstar told GEN BioMarin is attractive because “the firm has several rare disease products on the market, a large late-stage pipeline, and every indication that this pipeline growth will be sustainable. The rare disease market has been particularly attractive—less competitive, more pricing power, and cheaper/faster to navigate through the development process. BioMarin is about to launch potentially their biggest product, Vimizim, in early 2014, and we think they could turn profitable as early as 2014/2015. All of these factors make them very attractive as an acquisition target.”

  • Clovis Oncology

    Focus: Acquiring, developing, and commercializing cancer treatments

    Key products and pipeline: No marketed products. Holds global rights to three candidates in its pipeline: CO-1686, an oral epidermal growth factor receptor (EGFR), covalent inhibitor now in Phase I/II for non-small cell lung cancer (NSCLC), in patients with initial activating EGFR mutations as well as the T790M dominant resistance mutation; rucaparib, an oral, small molecule poly (ADP-ribose) polymerase (PARP) inhibitor for ovarian cancer, now in Phase I/II trials as monotherapy and with chemotherapy; and a discovery-phase cKIT inhibitor targeting resistance mutations for gastrointestinal stromal tumors (GIST).

    Why attractive: Shares of Clovis more than doubled in price, to $74.59, on June 3 after the company made two favorable announcements: CO-1686 showed encouraging results in the Phase I portion of its ongoing Phase I/II clinical study; while a Phase I trial of rucaparib alone for ovarian cancer demonstrated a clinical benefit in 89% of patients. Shares of Clovis have since inched higher, to $75.23 on September 19, more than triple the year-earlier price of $22.06.

    September 17—Bloomberg reported that Clovis “is exploring strategic options including a sale of the company,” and “working with advisers including Credit Suisse AG to help it find a buyer,” citing unnamed sources.

    September 17—“The Value Investor,” “Clovis Oncology: Biotech Bubble About to Snap as Companies Put Themselves Up for Sale?” Seeking Alpha.

    August 26—Benzinga, “These ETFs House the Next Biotech Takeover Targets”, “ETF Professor” Todd Shriber.

Related content