Just as the biotech segment was starting to regain lost ground, and was fast approaching 2016 highs, yet another speed bump was hit. The EpiPen controversy, and the resulting commentary again from presidential candidate Hillary Clinton on drug pricing, as well as a petition by Congress, quickly put the brakes on the advance. Despite stalling, a major acquisition was finally completed, and now all eyes are on who could be next.
In a new research report, Baird notes that with Pfizer Inc. (NYSE: PFE) finally outbidding a host of other companies for Medivation Inc. (NASDAQ: MDVN), eyes on Wall Street are focused on who could be the next target. They note that two of the companies in the firm’s research coverage universe may be considered speculative takeover targets, and a third is a possible target as well.
It is important to note that these companies have been mentioned in the past by other firms as possible takeover candidates, and it is possible that none of them receive a bid.
This is a Wall Street favorite, and first- and second-quarter earnings were outstanding. Analysts remain very positive on the rest of 2016. BioMarin Pharmaceuticals Inc. (NASDAQ: BMRN) develops and commercializes innovative biopharmaceuticals for serious diseases and medical conditions. Its product portfolio comprises five approved products and multiple clinical and preclinical product candidates.
Over the past decade, BioMarin has become one of the top orphan drug companies, and it looks poised to stay there. The company is expected to post around $1.09 billion in revenue this year and possibly around $1.32 billion next year following the approval of Vimizim, an enzyme replacement therapy for Morquio syndrome, which posted big results in the quarter.
Roche recently has been mentioned as a company that could be looking at BioMarin. Roche is focused on oncology drugs and invests heavily in early-stage molecules. Although the company is growing consistently, there is a major biosimilars threat to its three big drugs — Rituxan/MabThera, Herceptin and Avastin. These three drugs accounted for 42% of Roche’s total revenue during the first half of 2016. So an acquisition makes sense should the biosimilars eat into current profits.
The Baird price target for the stock is $115, and the Wall Street consensus target price is at $119.29. The shares closed Tuesday at $94.95 apiece.
This company often is rumored to be in the sights of a larger biotech company. Incyte Corp. (NASDAQ: INCY) has a current validated approach in hematology-oncology, and there’s reason to believe the three wholly owned clinical-stage assets the company has could drive several billion in revenue, something important for an acquiring company looking to acquire assets. Many on Wall Street are bullish on the company’s rich pipeline of small molecule therapies in all stages of development, and they see the company as a key player in the cancer space.