Shares of many biotech companies have rallied following the announcement of the Pfizer PFE – Array BioPharma ARRY deal. Announced earlier this week, the deal has an enterprise value of approximately $11.4 billion. The deal is likely to strengthen Pfizer’s oncology portfolio as Array BioPharma is focused on developing targeted small molecule drugs for treating cancer and other high-burden diseases. Its first commercial therapy, Braftovi plus Mektovi, approved as a treatment for BRAF-mutant melanoma, was approved July last year and has shown encouraging uptake. Cancer has become the area of focus of several pharmaceutical companies due to unmet needs and lucrative market opportunities.
In a move to bolster their oncology pipelines, several pharmaceuticals companies may acquire or collaborate to gain rights to prospective cancer treatments. Major drug/biotech players struggling with organic growth need an infusion of new growth drivers into their pipeline/product portfolios — either from internal development or from the purchase of assets. Amgen, Biogen and Gilead are the forerunners with huge cash pile. These companies are also looking to expand their pipeline to continue on growth path.
As expected, there has been an accelerated pace of merger and acquisitions (M&A) activity in pharma space this year, especially in cancer. We have already seen some major deals this year. In January, Bristol-Myers offered to buy Celgene for $74 billion, followed by Lilly’s acquisition of Loxo Oncology for $8 billion in February.
Apart from cancer-focused stocks, pharmaceuticals companies are also targeting biotechs with transformative, next-generation gene therapies in their pipeline. Gene therapies targeting rare diseases are expected to achieve better efficacy. Moreover, rare diseases with high unmet need can also lead to high asking price for these therapies.
The performance of the Zacks Biomedical and Genetics industry has not been impressive as a whole. However, the industry has gained 4% so far this year, after falling more than 25% in 2018, driven by increased M&A activity this year, pipeline successes and frequent new drug approvals. Moreover, certain stocks in the sector with innovative pipelines or commercial drugs with significant sales potential have seen their share price rise. Some of these companies have already been acquired.
We have chosen four companies among the stocks that surged following the Pfizer-Array BioPharma deal and have an encouraging cancer/gene therapy pipeline or portfolio of drugs, making them potential acquisition targets.
Incyte’s strong oncology portfolio makes it a lucrative target for companies like Gilead, Amgen and Bristol Myers. The market cap of Incyte is around $14 billion.
The primary reason behind Incyte being a strong buyout target is its key marketed product, Jakafi, a JAK inhibitor. It is the first and the only product to be approved for polycythemia vera (PV) and myelofibrosis (“MF”) — two rare blood cancers. Jakafi is seeing strong sales performance driven by strong patient demand for both indications. In order to expand the patient population and increase commercial potential of the drug, the company is working on expanding its label further.
Another asset of interest to investors is Olumiant, also a JAK inhibitor, marketed in the EU and the United States (only the lower 2 mg dose) for rheumatoid arthritis (RA). Meanwhile, Incyte’s pipeline boasts interesting targeted therapies like pemigatinib, itacitinib and capmatinib among others.
Incyte currently carries a Zacks Rank #3 (Hold). The stock is up 32.5% so far this year and up 8.5% so far this week. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Incyte Corporation Price
Incyte Corporation price | Incyte Corporation Quote
Blueprint Medicines BPMC
Blueprint Medicines’ lead pipeline candidate, avapritinib, is being developed for various oncology indications. The candidate has been successful in three pivotal studies. Earlier this month, Blueprint Medicines announced encouraging data from the registration-enabling NAVIGATOR study, which evaluated avapritinib for treating patients with PDGFRA Exon 18 mutant gastrointestinal stromal tumors (“GIST”). The company is planning to file a new drug application later this month, seeking approval for avapritinib as a treatment for the aforementioned indication. The company is also developing avapritinib in combination with Pfizer’s Sutent and Bayer’s Stivarga for second-line and third or fourth-line GIST, respectively, in phase III studies.
The company has other pipeline candidates – BLU-667 and BLU-554 – which are being developed for carcinoma and other cancer indications. The company intends to submit an NDA for BLU-667 for the NSCLC indication in the first quarter of 2020 while the NDA for the MTC indication is expected to be filed during the first half of 2020.
So far this year, shares of the company are up 81.4% and up 7.8% so far this week. Blueprint Medicines currently carries Zacks Rank #3.
Blueprint Medicines Corporation Price
Blueprint Medicines Corporation price | Blueprint Medicines Corporation Quote
Verastem is a small biotech company, which focuses on developing treatments targeting oncology indications. The company has one commercial drug, Copiktra, and an oncology candidate in its pipeline. Copiktra was approved for relapsed or refractory chronic lymphocytic leukemia/small lymphocytic lymphoma and refractory follicular lymphoma in September 2018. The drug targets a patient population with significant unmet need. The company is also developing the drug to support its label expansion in non-Hodgkin lymphoma, T-cell lymphoma, lung cancer, mesothelioma, ovarian cancer and pancreatic cancer. Data from studies have shown promising efficacy in patients.
The company’s pipeline candidate defactinib is an oral small molecule kinase inhibitor, which is being developed for ovarian cancer, pancreatic cancer, mesothelioma, NSCLC, and other solid tumors. The candidate also enjoys orphan drug designation in ovarian cancer and mesothelioma.
Meanwhile, shares of Verastem have been on a downtrend in 2019, which makes the price attractive for potential bidders. The stock was however up 30% so far this week for its buyout potential. The company currently carries a Zacks Rank #3.
Verastem, Inc. Price
Verastem, Inc. price | Verastem, Inc. Quote
uniQure N.V. QURE
The company is a promising player in the gene therapy space. It is engaged in creating a pipeline of innovative gene therapies that have been developed both internally and through its collaboration, focused on cardiovascular diseases, with Bristol Myers-Squibb.
The company’s lead candidate AMT-061, an experimental AAV5-based gene therapy incorporating the FIX-Padua variant, is being evaluated in the phase III HOPE-B pivotal study for the treatment of patients with severe and moderately severe hemophilia B. In January 2019, the company received clearance from the FDA to initiate clinical study for AMT-130 for the treatment of Huntington’s disease.
uniQure’s stock has surged 170.6% so far this year and up 7.5% so far this week. The company currently carries a Zacks Rank #3.
uniQure N.V. Price
uniQure N.V. price | uniQure N.V. Quote
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