January 3, 2019 / 10:48 PM / 3 months ago

Factbox: Bristol-Myers' $74 billion Celgene buy has investors looking for next deal

(Reuters) - Bristol-Myers Squibb Co’s (BMY.N) announcement that it would buy Celgene Corp (CELG.O) for $74 billion (59 billion pounds) has raised investors’ hopes that a wave of consolidation among drugmakers could be coming. The following are some of the companies in the sector whose shares rose on Thursday on takeover speculation following the deal announcement:

INCYTE CORP (INCY.O), ENDED TRADING UP 7 PERCENT

The failure of an Incyte immunotherapy drug in combination with Merck & Co’s (MRK.N) Keytruda in a melanoma trial last year sent its shares reeling. But analysts have said its bone marrow disorder treatment, Jakafi, has become a meaningful new revenue opportunity for the company. At a $15 billion market capitalisation, Incyte remains a digestible size for larger players such as Gilead Sciences Inc and Sanofi SA (SASY.PA). RBC analyst Brian Abrahams said in a research note on Thursday that Incyte is an acquisition target because it is undervalued and has an oncology and inflammation pipeline.

GILEAD SCIENCES INC (GILD.O), ENDED TRADING UP 3 PERCENT

Gilead has a hefty $85 billion market capitalisation, making it only a target for the largest global drugmakers. Its product portfolio targets HIV/AIDS, hepatitis C, cancer, inflammatory and respiratory diseases, and cardiovascular conditions. The company recently named a new CEO, Daniel O’Day, who previously headed Roche Holdings AG’s (ROG.S) pharmaceutical business. O’Day is expected to help Gilead build out its global presence, especially in liver disease beyond hepatitis C, oncology and inflammation.

ALEXION PHARMACEUTICALS INC (ALXN.O), ENDED TRADING UP 2 PERCENT

Rare disease specialist Alexion, which has faced pressure from activist hedge fund Elliott Management could be an acquisition target for companies such as Amgen Inc (AMGN.O) or Pfizer Inc (PFE.N), analysts have said. Extremely expensive drugs for ultra rare diseases have become increasingly attractive to larger drugmakers.

NASH COMPANIES

Raymond James analysts said in a research note that M&A could happen this year involving companies focused on the huge unmet need for treating the progressive fatty liver disease known as NASH (non-alcoholic steatohepatitis), which does not yet have any approved treatments. Even though their shares did not get a boost on Thursday, Madrigal Pharmaceuticals (MDGL.O) and Intercept Pharmaceuticals (ICPT.O) are among the leaders developing treatments to tap a market that could eventually be worth $30 billion. As they race towards regulatory approval for NASH, these companies could become targets for larger biotechs. Allergan, for example, bought Tobira in 2016 for its experimental NASH drug for $1.8 billion, 19 times what the stock market was valuing the company. RBC’s investor survey showed Intercept, which was a market value of $2.8 billion, was a favoured takeout candidate by investors for this year. Several other small companies are also developing promising NASH drugs.

Reporting by Liana B. Baker in New York; Editing by Bill Berkrot

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