Healthcare Business

3 Biotech Stocks Could Be the Next Big Takeover Targets

Incyte focuses on the discovery, development and commercialization of proprietary therapeutics in oncology. It offers Jakafi for the treatment of myelofibrosis and polycythemia vera cancers. Its clinical stage products include ruxolitinib cream, which is in Phase 2 clinical trial for the treatment of alopecia areata; and INCB52793, which is in Phase 1/2 for the treatment of advanced malignancies. The company’s clinical stage products also comprise baricitinib, which is in Phase 3 trial for rheumatoid arthritis, as well as a completed Phase 2 trial for psoriasis and diabetic nephropathy.

The company announced earlier this summer new 28-week data from a Phase 3 study (RESPONSE-2) on Jakafi for the treatment polycythemia vera (PV). The multi-center, open-label, randomized study evaluated the safety and efficacy of Jakafi, in comparison to the best available therapy, in patients with PV who are resistant to or intolerant of hydroxyurea, dependent on phlebotomy for hematocrit control and do not have an enlarged spleen.

The Baird analysts don’t cover the company but think it’s a possible target. The Wall Street consensus price target for the stock is $98.71, and the stock closed most recently at $80.98.

Tesaro

This is another biotech the Baird team likes that could be in the sights of another company. Tesaro Inc. (NASDAQ: TSRO) is an oncology-focused biopharmaceutical company that identifies, acquires, develops and commercializes cancer therapeutics and oncology supportive care products in the United States and internationally.

Its product portfolio consists of Rolapitant, a neurokinin-1 receptor antagonist, which is in Phase 1 intravenous clinical trials for the prevention of chemotherapy induced nausea and vomiting; Niraparib, an orally active and potent poly polymerase inhibitor to treat ovarian or breast cancers; and TSR-011, an anaplastic lymphoma kinase inhibitor, which is in phase 1/2a dose escalation clinical trial in cancer patients. The company also offers Keytruda and Opdivo, an anti-PD-1 antibody products, for the treatment of certain non-small cell lung cancers.

In a huge clinical victory, the company announced in late June that the Phase 3 NOVA trial of niraparib successfully achieved its primary endpoint of progression-free survival (PFS). This trial demonstrated that niraparib significantly prolonged PFS compared to control among patients who are germline BRCA mutation carriers, among patients who are not germline BRCA mutation carriers but who have homologous recombination deficient tumors as determined by the Myriad myChoice HRD test, and overall in patients who are not germline BRCA mutation carriers.

Baird has a price target of $105, and the consensus target is at $104.23, The shares closed most recently at $86.09.

Needless to say, these are only suitable for very aggressive accounts. If a binary event goes the wrong way for a company the downside can be big. The odds are somewhat tilted in the three companies’ favor, but caution should be observed. The clinical success they have achieved could be key for a larger company to gobble one of them up.