In this series, I have focused on six of the smaller biotechs the Jeffries health care analyst thinks are most likely to be acquired by members of Big Pharma. Now let's look at the final four of the 10 takeover targets Jeffries' Jaret Holtz provided to FierceBiotech.
Global Blood Therapeutics Inc. (GBT, Financial) – South San Francisco
The company's new treatment for sickle cell disease was approved by the Food and Drug Administration less than a year ago. Oxbryta is expensive at a cost of $125,000 a year. Despite bumping up against the coronavirus pandemic, the drug logged more than $31 million in sales in the second quarter.
The medication has only scratched the surface. There are around 100,000 people in the U.S. living with SCD, and more than 20 million globally, according to the FDA. The European Medicines Agency has also included Oxbryta in its Priority Medicines program, which could speed up approval. Global plans to file for EU authorization next year, FierceBiotech reported.
In Global, an acquirer gets an approved drug that is already doing well with substantial upside. The company is also working on other treatments for SCD.
Global's shares have traded as high as $88 during the past year, but can now be had for about $55. In the second quarter, the company beat Zacks' estimates for both sales and earnings. It lost 86 cents per share versus the Zacks Consensus Estimate of a loss of $1.18. This compares to a loss of $1.01 per share a year ago.
Analysts certainly think the company's a bargain. They tab the stock as a buy with a median 12-month target of $115, a high of $152 and a low of $64.
Immunomedics Inc. (IMMU, Financial) – Morris Plains, N.J.
The acquisition of Immunomedics is about as close as you can get to a sure thing, considering the company's $21 billion buyout by Gilead Sciences Inc. (GILD, Financial) is expected to close before the end of the year. Holtz included the company on the list since the transaction has yet to be completed.
The pearl in the oyster was the Immunomedics drug Trodelgy, which is used to treat patients with a type of breast cancer known as triple-negative. Sales of the drug were $20 million after only two months on the market, but that's a pittance compared with what at least one analyst is projecting. RBC Capital Markets' Brian Abrahams thinks Trodelgy could hit peak sales of nearly $5 billion based on additional indications for the medication.
Iovance Biotherapeutics Inc. (IOVA, Financial) – San Carlos, California
Many on Wall Street are surprised Iovance hasn't been gobbled up by now. Early this year, the company's stock jumped on rumors it was in discussions with buyers, but nothing materialized. Some see the company as a nice fit for Takeda Pharmaceuticals Inc. (TAK, Financial) or Gilead.
A buyer would gain access to Iovance's wealth of drug candidates for several types of cancer, including melanoma, cervical, head and neck and, most importantly, lung cancer.
The greatest chance of a deal may be right now, as it's unlikely a buyer will make a move after commercialization, according to FierceBiotech. Of course, that assumes lifileucel is green-lighted by the FDA.
At nearly $37, Iovance stock is less than $5 away from its 52-week high. The 11 analysts offering a 12-month price forecast set a median target of $43, a high estimate of $60 and a low of $35. The company is rated a buy.
Reata Pharmaceuticals Inc. (RETA, Financial) – Plano, Texas
Coming in at number 10, only because the list is in alphabetical order, is Reata, which specializes in kidney medications. As such, it's likely to attract suitors with a stake in that market already.
Reata is readying an application for approval of two drugs, one for chronic kidney disease and the other for Friedreich's ataxia, a rare inherited disease that causes progressive nerve damage. The filings are expected to be made over the next several months.
Approval could result in launch late next year and a nice addition to pharma companies with established sales and marketing resources in renal disease.
At about $114, Reata stock is well off its 52-week high of $258. The company posted a second-quarter loss of $2.03 per share versus the Zacks Consensus Estimate of $2.22. Sales of $3 million also topped the Zacks forecast.
Given the lofty target prices set by eight analysts, it's not surprising the stock is rated a buy. Investment professionals set a median target price for Reata at $231, with a high of $345 and a low of $169.
Disclosure: The author has a position in Gilead Sciences.
Read more here:
- Bristol-Myers' Acquisition of Bluebird Seems to Make Sense
- Analyst's Potential Buyout List Includes Alexion, Amarin and Biomarin​
- Look Past Covid Vaccine to Johnson & Johnson's Drug Portfolio​
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