There are several big players in biotech who would clearly love to make a splashy acquisition. A rich Gilead ($GILD), now that the bloom is coming off its hep C rose, is one. AbbVie ($ABBV), because its last big exciting acquisition – Stemcentrx – immediately lost luster at ASCO. Allergan ($AGN) has the money and a dealmaking CEO who likes to think big.
And Pfizer ($PFE) makes the list, because, well, you name it.
None of them, though, have the increasingly sweaty appearance of Biogen ($BIIB), a prime candidate for the company most likely to need a “big and exciting” product acquisition to provide new catalysts and a reason to cheer.
Baird’s Brian Skorney hit that note hard today: “The company is ripe for an effective deal, and with valuations coming back in over the last year, we think it’s time for Biogen to buy or be bought.”
Why? Catalysts are thinning out at the Big Biotech. Biogen is swinging for the fences with Alzheimer’s, but it has a long way to go and a mine field of potential trouble to navigate. Add in the fact that its big bet on remyelination just hit a major setback, and its stock price is scraping a three-year low.
Biogen’s shares are down 44% from their 12-month high.
You can bet that Biogen execs pay careful attention to any grumbling on Wall Street. At the first sign of market trouble last year, the company immediately brought out the axe and reorganized R&D, eliminating 800 jobs. But that’s an act you can’t pull off every year.
CEO George Scangos knows how influential the analysts are. He made it to the top of Biogen almost exactly six years ago with the help of Carl Icahn, who loudly clamored for a change. Jim Mullen was booted, Scangos came in, gathered a new team and pushed Tecfidera through to an approval.
It worked like a charm, buying five years of plaudits and a soaring stock price. But that will only get you so far in the biopharma world, especially as Tecfidera has, inevitably, begun to flag and the biotech boom ran its course. Annual price hikes may help satisfy Wall Street’s hunger, but nothing says future growth like the right Phase III therapy.
Of course, in the absence of an acquisition, Biogen may always wind up in someone else’s sights, as Skorney noted. And that could bring us back to a company like…Allergan.
Carl Icahn stepped in to invest in Allergan at the end of May, carefully and repetitively pointing out in a statement just how much he admired Allergan CEO Brent Saunders. And no one knows how to make money off a change-up at Biogen quite as much as Icahn. Saunders may be held back by debt and a stock buyback plan. But unless Biogen moves, fast, someone is likely to come along with new ideas about the future.
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