"Large-cap pharmaceutical companies, instead of starting from scratch on a new patent, want an easier and more effective way to replace their lost "cash-cow" revenue. They will look to acquire biotech companies—and their phase 2 or phase 3 drugs."
This could be the biggest year ever for investing in biotech takeover targets—all due to the patent cliff.
Sanofi (NYSE ADR: SNY), Novartis AG (NYSE ADR: NVS), Roche Holding Ltd. (RHHBY), AstraZeneca PLC (NYSE ADR: AZN), and Eli Lilly & Co. (NYSE: LLY)will all be losing more than $6 billion each in annual revenue this year due to expiring patents.
The ideal candidates are small-cap biotech firms whose pipelines include late-stage drug candidates or other promising pharmaceuticals.
With that criteria in mind, here are six small-cap biotech firms on the list of takeover targets to watch in 2014. . .
Biotech Takeover Targets in 2014
(top of the list)
Insmed Inc. (Nasdaq: INSM) primarily develops inhalation therapies for the treatment of lung diseases. Insmed's most notable project is ARIKACE, an inhaled antibiotic for patients suffering from cystic fibrosis and non-tuberculous mycobacteria. Currently, ARIKACE is in phase II trials in the United States and phase III trials in Canada and Europe.
INSM stock has gained an impressive 241% in the last year and currently trades at $19.73. Insmed has a market cap of just $772 million, which also makes it an attractive takeover option for large-cap pharmaceutical companies.
My thinking these last several months is that Insmed is considered a prime target by several large pharmas. If p2 is good or betterr, I expect the negotiations to start at $1.5 billion. If the results exceed expectations, the bidding should commence at $2 billion with $3billion a possibility. $75 a shrae. Would be nice.
MAYbe this is what inspired the Wedbush downgrade (and MAYbe they get a piece of the action?). By driving the PPS down, which they have, any offer that may have been "behind the scenes" also was reduced. I thought $2B would have been the overall value of patents and potential and pipeline (PPP) for INSM. That equates to about $50 per share. Now it may be $1.5B. I guess we will know in the next 6 weeks.