An­a­lysts’ top 10 biotech takeover tar­gets are con­cen­trat­ed in two key ar­eas

CEO Schwan of Swiss drug­mak­er Roche ad­dress­es the an­nu­al news con­fer­ence in Basel Get­ty


While Cred­it Su­isse was siz­ing up the amount of over­seas mon­ey that will soon be avail­able to the top buy­ers in bio­phar­ma, their an­a­lysts put to­geth­er a list of top takeover tar­gets, ranked by mar­ket cap. I’m pulling out the top 10 here to go along­side the main sto­ry — for End­points News In­sid­ers — on who has $171 bil­lion to play with, along with sug­ges­tions on how they can spend that mon­ey.

A few key words leap out at us in this as­sess­ment. One is on­col­o­gy, which is grab­bing the li­on’s share of the mon­ey in the deal­mak­ing world. Two more: Rare dis­eases. Reg­u­la­tors are quick to hur­ry these new drugs along, with de­vel­op­ers us­ing small stud­ies to of­fer proof of ef­fi­ca­cy and safe­ty. And the price tags can be ex­treme. That’s a win­ning com­bi­na­tion for many of the buy­ers out there.

What’s not par­tic­u­lar­ly win­ning are the mar­ket caps you see be­low. These com­pa­nies may be at­trac­tive, but on­ly at the right price. I go through an ex­er­cise some­times where I imag­ine what Roche CEO Sev­erin Schwan would say in pri­vate about some of these num­bers.

Now add a takeover pre­mi­um.

I’m us­ing the Cred­it Su­isse num­bers for the re­port, but they’ve shift­ed a lit­tle.


1 Ver­tex $VRTX
Mar­ket cap: $37 bil­lion
Fo­cus: Cys­tic fi­bro­sis and rare dis­eases

The scoop: Ver­tex ex­ecs have been hav­ing a hey­day with new, promis­ing da­ta for their CF com­bos. The com­pa­ny pulled off a re­mark­able feat in switch­ing from hep C — now dom­i­nat­ed by Gilead — to CF. In­vestors have bid up their shares, in­trigued by the up­side of a buy­out deal for a com­pa­ny that ap­pears to some to be a tempt­ing tar­get, even at this gar­gan­tu­an val­u­a­tion. The math, though, will not be easy.


2 Alex­ion $ALXN
Mar­ket cap: $24 bil­lion
Fo­cus: Hema­tol­ogy/rare dis­eases

Lud­wig Hantson

The scoop: The big as­set here is Soliris, of course, which has a num­ber of ri­vals in the clin­ic. But Alex­ion has been turn­ing heads with ‘1210, its next-gen suc­ces­sor for PNH. And even though the rest of the pipeline has lit­tle to of­fer, with Lud­wig Hantson look­ing for new as­sets as he moves the com­pa­ny to Boston, any buy­er would have lit­tle trou­ble in swal­low­ing the op­er­a­tions. Big ques­tion re­mains the same as Ver­tex. How do you make these num­bers work?


3 In­cyte $IN­CY
Mar­ket cap: $21 bil­lion
Fo­cus: On­col­o­gy and hema­tol­ogy

The scoop: This one seems more in the realm of the pos­si­ble. The biotech has a mar­ket­ed prod­uct and a lead as­set in IDO1 that’s grabbed a lot of at­ten­tion. Pricey? And how. But this is one way to make a quick splash.


4 Bio­Marin $BM­RN
Mar­ket cap: $15 bil­lion
Fo­cus: Rare dis­eases

The scoop: Bio­Marin has been on the top 10 list of buy­out tar­gets for so long, it seems to have brand­ed it­self as an at­trac­tive ac­qui­si­tion. But through the years, it’s been all smoke and no fire. The com­pa­ny is a leader in rare dis­eases, which quite a few big buy­ers would ben­e­fit from.


5 Alk­er­mes $ALKS
Mar­ket cap: $7.9 bil­lion
Fo­cus: Schiz­o­phre­nia, de­pres­sion

The scoop: Alk­er­mes has had its ups and downs in the last cou­ple of years. which is one rea­son why the stock has nev­er ful­ly re­turned to peak form af­ter the drub­bing it took in ear­ly 2016 on the first round of bad news for ‘5461 in de­pres­sion. The biotech has since made a re­mark­able turn­around there, set­ting up high ex­pec­ta­tions that keep Alk­er­mes in the top 10. The com­pa­ny has some mar­ket­ed prod­ucts and a late-stage pipeline for po­ten­tial buy­ers to in­spect. But the stock has been much low­er with­out trig­ger­ing a bid. What’s the big mo­ti­va­tion to move now?


6 Tesaro $TSRO
Mar­ket cap: $4.5 bil­lion
Fo­cus: Can­cer

The scoop: Tesaro has been on the top buy­out list ever since Ze­ju­la was ap­proved. But no one has come up with the cash so far, and every­one has had a chance to run the num­bers. A leader in the PARP field, the biotech would seem to have the per­fect pro­file for an ac­qui­si­tion by any­one in the mar­ket look­ing to pay a pre­mi­um for a can­cer drug. But the top team has yet to make a deal work, de­spite all the buzz.


7 Gala­pa­gos $GLPG
Mar­ket cap: $3.9 bil­lion
Fo­cus: In­flam­ma­tion and im­munol­o­gy

The scoop: Gala­pa­gos finds it­self in a late-stage race with fil­go­tinib on rheuma­toid arthri­tis and Crohn’s, which earned a $725 mil­lion up­front for a part­ner­ship with Gilead. That’s helped keep this biotech in the big leagues among buy­out tar­gets, though it’s a wild­ly com­pet­i­tive field with lots of out­stand­ing play­ers. In­vestors seem to ei­ther love this com­pa­ny or hate it. We’ll find out soon enough who was right. But no one is ig­nor­ing Gala­pa­gos.


8 Puma $PBYI
Mar­ket cap: $3.8 bil­lion
Fo­cus: Can­cer

The scoop: Talk about love and hate. The shorts loved to hate on Puma, cit­ing some is­sues ner­a­tinib had with di­ar­rhea. The FDA wasn’t too con­cerned, though, and the ex­perts on the agency pan­el bare­ly men­tioned an is­sue that they felt could be suc­cess­ful­ly man­aged while treat­ing pa­tients. Puma now has a prod­uct on the mar­ket, and like Tesaro looks like the kind of bolt-on that revs up a lot of the big buy­ers in the on­col­o­gy field.


9 Sarep­ta $SRPT
Mar­ket cap: $3.7 bil­lion
Fo­cus: Duchenne mus­cu­lar dy­s­tro­phy, rare dis­eases

The scoop: What­ev­er you think about Sarep­ta, and every­one thinks some­thing, they have a DMD drug on the mar­ket and it isn’t go­ing any­where. Sure, there was plen­ty of con­tro­ver­sy about the FDA ap­proval on sus­pi­cious da­ta from on­ly 12 pa­tients, but the agency shows no sign of back­ing away now. The biotech, mean­while, has been mak­ing progress with the pipeline, de­ter­mined not to lose its edge as a long list of ri­vals take a shot at DMD. Now that the con­tro­ver­sy has died down, will a big buy­er step in, or do they want to avoid the headache?


10 Por­to­la $PT­LA
Mar­ket cap: $3.2 bil­lion
Fo­cus: Car­dio­vas­cu­lar

The scoop: Last year the com­pa­ny re­port­ed that its an­ti­co­ag­u­lant has just bare­ly failed a key end­point in ex­am­in­ing the drug’s ef­fi­ca­cy (p=0.054) among a key co­hort of pa­tients with el­e­vat­ed D-dimer lev­els. The com­pa­ny went on, though, to do an ex­plorato­ry analy­sis of the re­sults, claim­ing a win in re­duc­ing the risk of ve­nous throm­boem­bolism — or sim­ply, blood clots — for their drug com­pared to enoxa­parin. Reg­u­la­tors agreed, ap­prov­ing the ther­a­py last sum­mer for acute­ly ill pa­tients. Now an­oth­er drug could be poised for an OK, leav­ing Por­to­la in the top 10. Car­dio is one of the tough­est fields in R&D, and some big play­ers may find it eas­i­er to mar­ket these drugs more ef­fi­cient­ly.

Con­quer­ing a silent killer: HDV and Eiger Bio­Phar­ma­ceu­ti­cals

Hepatitis delta, also known as hepatitis D, is a liver infection caused by the hepatitis delta virus (HDV) that results in the most severe form of human viral hepatitis for which there is no approved therapy.

HDV is a single-stranded, circular RNA virus that requires the envelope protein (HBsAg) of the hepatitis B virus (HBV) for its own assembly. As a result, hepatitis delta virus (HDV) infection occurs only as a co-infection in individuals infected with HBV. However, HDV/HBV co-infections lead to more serious liver disease than HBV infection alone. HDV is associated with faster progression to liver fibrosis (progressing to cirrhosis in about 80% of individuals in 5-10 years), increased risk of liver cancer, and early decompensated cirrhosis and liver failure.
HDV is the most severe form of viral hepatitis with no approved treatment.
Approved nucleos(t)ide treatments for HBV only suppress HBV DNA, do not appreciably impact HBsAg and have no impact on HDV. Investigational agents in development for HBV target multiple new mechanisms. Aspirations are high, but a functional cure for HBV has not been achieved nor is one anticipated in the forseeable future. Without clearance of HBsAg, anti-HBV investigational treatments are not expected to impact the deadly course of HDV infection anytime soon.

No­var­tis is ax­ing 150 ear­ly dis­cov­ery jobs as CNI­BR shifts fo­cus to the de­vel­op­ment side of R&D

Novartis is axing some 150 early discover jobs in Shanghai as it swells its staff on the drug development side of the equation in China. And the company is concurrently beefing up its investment in China’s fast-growing biotech sector with a plan to add to its investments in local VCs.

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Democratic presidential candidate, U.S. Sen. Elizabeth Warren (D-MA) speaks during the Nevada Democrats' "First in the West" event at Bellagio Resort & Casino on November 17, 2019 in Las Vegas, Nevada (Getty Images)

Eliz­a­beth War­ren pro­pos­es us­ing com­pul­so­ry li­cens­ing, an­titrust ac­tions to break bio­phar­ma’s con­trol of drug pric­ing — and here are the block­busters she’s tar­get­ing first

Nancy Pelosi’s drug pricing bill may have sparked some industrial strength headaches on the money side of biopharma, but Elizabeth Warren seems determined to become biopharma’s Nightmare on Pennsylvania Avenue.
Warren, one of the top-ranked candidates for the Democratic presidential nomination backing Medicare for all, is circulating a new plan that promises to break the industry’s grip on drug prices — and she has some very specific examples of how she would do it.
The Warren plan would rely on the federal government’s compulsory licensing powers to seize the IP of blockbuster drugs like Truvada and Harvoni to provide them at a fraction of what Gilead sells them for in the US. And she would throw some antitrust actions in as needed to rein in the price of Humira, AbbVie’s cash cow that continues to dominate the list of the most profitable therapeutics on the market.
Notably, she plans to rely on the powers already vested in the federal government, rather than suggest remedies that would require the assent of a deeply divided Congress.
In addition to the blockbusters on the list, Warren sends a clear signal that the same tactics would be used to beef up the supply of cheap antibiotics, as needed. And the same action could befall any other therapy patients can’t afford.

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Mer­ck’s $1B cash gam­ble pays off with a sur­pris­ing PhI­II car­dio suc­cess for Bay­er’s heart drug veri­ciguat

More than 3 years after Merck stepped up and paid $1 billion in cold, hard cash to gain the US commercial rights to Bayer’s high-risk heart drug vericiguat in a broad-ranging cardio alliance, the partners say their Phase III study has come through with promising data and a date with regulators.
We don’t have the data, and won’t until they put it out at an upcoming scientific session, but Merck touted the results, saying that their big Phase III VICTORIA study hit the primary endpoint  — with vericiguat combined with available therapies reducing “the risk of the composite endpoint of heart failure hospitalization or cardiovascular death in patients with worsening chronic heart failure with reduced ejection fraction (HFrEF) compared to placebo when given in combination with available heart failure therapies.”
Depending on the hard data, and how it breaks out with the combinations used, this drug could pose a threat to Novartis’ blockbuster drug Entresto, currently at $1.6 billion while analysts expect peak sales to hit $4 billion.
The drug is a soluble guanylate cyclase (sGC) stimulator, which Bayer and Merck have had high hopes for. Evidently, so did cardiologists. Cowen’s last analysis set potential sales at $400 million in 2024, but that number could go up significantly now.
Cowen’s Steve Scala noted this morning:
Vericiguat could be a lucrative product for Merck, and one with potentially under-appreciated value. At Cowen’s Therapeutics Conference in September 2019, 80% of specialists anticipated a positive result from VICTORIA whereas only 51% of investors shared this optimism.
Investigators recruited more than 5,000 patients at more than 600 centers in 42 countries for this study — one of the most expensive propositions in R&D. Millions of people in the US suffer from heart failure with reduced ejection fraction when the failing heart fails to contract properly to eject blood into the system. Bayer holds ex-US rights to the drug and also stands to earn cash from the $1.1 billion in milestones Merck agreed on for their collaboration.
Remarkably, the drug was pushed into Phase III despite failing the mid-stage trial — though investigators flagged a success at the high dose of 10 mg. In VICTORIA, researchers started patients at 2.5 mg and then titrated up to 5 and then 10 mg.

Alk­er­mes forges $950M biotech buy­out deal in a bold bet on an ear­ly-stage CNS drug plat­form

Alkermes $ALKS is investing $100 million cash and committing up to $850 million more in milestones in a big wager on a very early-stage CNS discovery platform. And the biotech is adding $20 million more to fund next year’s new research work on the platform it’s acquiring in today’s buyout with an eye to expanding the research work in oncology.

The biotech, helmed by Richard Pops, is buying Rodin Therapeutics, which had focused early on Alzheimer’s disease. Pops’ buyout, though, isn’t focused solely on the most troublesome sector in pharma R&D.

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Left to right: Arthur Pappas, Robert Nelsen, Peter Kolchinsky Doug Cole and David Beier

In rare po­lit­i­cal for­ay, top biotech in­vestors urge Con­gress to re­ject drug pric­ing bill

Thirteen of the top biotech venture capitalists in the country wrote a letter last week warning lawmakers that if Congress passes a drug pricing bill House Speaker Nancy Pelosi has put before lawmakers, they won’t be able to invest in biomedical research at their current rate, and patients will suffer.

“If policies such as those included within H.R. 3, the Lower Drug Costs Now Act, are passed, our ability to continue to invest in future biomedical innovation will be severely constrained, thus crushing the hopes of millions of patient waiting for the next breakthroughs to treat or cure their cancers, rare genetic diseases, Alzheimer’s, or other serious and life-threatening conditions,” they wrote in a letter addressed to the highest-ranking Democrats and Republicans in the House and Senate and acquired by Endpoints News. 

Dicer­na scores broad, 'rest of liv­er' deal with No­vo Nordisk, bag­ging $225M in cash to hit some 30 tar­gets with RNAi plat­form

Turns out Dicerna wasn’t done with deals yet after locking in $200 million upfront from Roche for a hepatitis B cocktail two weeks ago.

Novo Nordisk has signed on as the latest partner to its GalXC RNAi platform, handing over $175 million in cash to claim any and all targets of interest in liver-related cardio-metabolic diseases that are not already reserved in previous pacts. The Danish drugmaker — which has signaled its interest to expand considerably beyond its core diabetes franchise into areas like NASH — is also purchasing $50 million worth of Dicerna’s equity at a 25% premium of $21.93 per share. More research payments and milestones extending to the billions are on the line.

Gene ther­a­py wins the in­side track at EMA; PPD files for IPO

→ Gene therapy maker Orchard Therapeutics has been granted an accelerated assessment for OTL-200 by the EMA’s Committee for Medicinal Products for Human Use (CHMP). The gene therapy — in development in partnership with the San Raffaele-Telethon Institute for Gene Therapy (SR-Tiget) in Milan, Italy — being used towards the treatment of metachromatic leukodystrophy.

→ Pharmaceutical Product Development has announced that its parent company, PPD, Inc has submitted a draft to the SEC relating to the proposal of an IPO of the parent company’s common stock. Number of shares and price range have not yet been determined.

Pfiz­er gets biosim­i­lar ap­proved for Hu­mi­ra, set­ting up com­pe­ti­tion — in 2023

In the story lawmakers and drug pricing reform advocates have told about the drug industry, there are perhaps few greater villains than Humira and its maker AbbVie.

Between 2012 and 2018, AbbVie upped the drug’s annual after-rebates cost from $19,000 to $38,000 in the US, with sticker prices now over $60,000 per year — increases that led to accusations of price gouging, most recently from Democratic presidential frontrunner Elizabeth Warren.