Investing

Finding the Next Biotech M&A Targets (HGSI, GSK, AMLN, BMY, VRTX, CELG, CBST, AMRN, DNDN, BMRN, VVUS, ARNA, PCYC, VICL, MDGN, AFFX, THRX, RIGL)

More biotech mergers are on the way! That is the verdict of Wall St. There may be patent protection risks associated with future regulation under health care, but deals in the biotech and emerging pharma sector continue to be announced. 24/7 Wall St. has been evaluating news and trading in the biotech sector for quite some time and we have given our 360-degree review of some of the possible deals, on top of some of the deals that are believed to be already pending and some already on the books.

Human Genome Sciences Inc. (NASDAQ: HGSI) remains in the hopeful biotech merger rumor mill. The company has a low-ball tender offer from GlaxoSmithKline PLC (NYSE: GSK) valuing it at $2.6 billion. Now that the company has opened up its options, it has another week or so for pharma and biotech parties to make an offer for the company after GlaxoSmithKline has just refused to raise its offer.

While we wanted to focus on the possibility of a Human Genome Sciences deal, the real action is that many biotech outfits may be up for grabs. Amylin Pharmaceuticals, Inc. (NASDAQ: AMLN) finally got its buyout, and the deal from Bristol-Myers Squibb Co. (NYSE: BMY) came in above $5 billion. The valuation there was nearly 50% higher than where the fundamental analysts were valuing the company on a standalone basis.

It is important to keep in mind that Amylin had many “reported on” and rumored suitors as the rumor mill had mentioned companies like AstraZeneca PLC (NYSE: AZN), Sanofi (NYSE: SNY), Merck & Co. (NYSE: MRK) and Bristol-Myers Squibb Co. (NYSE: BMY) all as suitors. Pfizer Inc. (NYSE: PFE) also had reportedly been interested, but its interest waned as the price rose. If these companies were even remotely serious about buying Amylin when it was under a drug partnership, any of these other biotech targets could come up as fair game ahead.

Celgene Corporation (NASDAQ: CELG) has been cited recently as a possible buyer of Human Genome Sciences Inc. (NASDAQ: HGSI). The problem we see is that Celgene’s stock has now corrected by about 20% from its highs after massive growth was met by mixed drug news. The market cap of the shares is almost $29 billion and Wall St. analysts have a price target of about $75.50 on the stock against a current share price of $64.90 and against a high of $80.42. Would Celgene chance $3 billion or more for a lupus drug to expand its lupus ambitions and to grow its pipeline?

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