The biotech industry is rapidly consolidating as big pharma companies put their cash stash to use in deals ranging from well-known large caps all the way down to unknown micro-caps in an effort to bolster their range of marketed products, late stage pipeline candidates, and drug discovery technology platforms.
Genentech (DNA) has rejected Roche's (RHHBY) $89 bid to acquire the remaining 44% of DNA it does not already own as insufficient. I think DNA could easily get $100 per share based on Eli Lilly's (LLY) $70 buyout of ImClone Systems (IMCL), which trumped Erbitux marketing partner Bristol-Myers' (BMY) raised bid of $62 per share. Also, several buyouts in the out-of-favor small and micro-cap biotech space have been announced over the past year with 100%-plus takeover premiums, including under-the-radar names such as:
(1.) SGX Pharma (SGXP) was acquired for $64M cash by Lilly for its cancer drug discovery platform
(2.) Kosan Biosciences (KOSN) was acquired by Bristol-Myers for its cancer drug pipeline
(3.) Barrier Therapeutics (BTRX) was acquired by privately-held Stiefel Labs
(4.) Pfizer's $164M cash buyout of cancer drug developer Coley Pharma (COLY)
(5.) Shionogi (Tokyo: 4507) recently closed its $1.4B cash buyout of Sciele Pharma (SCRX)
My guess as to who may be next is based on the following factors:
(1.) existing big pharma partnerships: Bayer + Onyx Pharma (ONXX)
(2.) high margin orphan drugs: Kuvan – BioMarin (BMRN) & Soliris – Alexion (ALXN)
(3.) revolutionary drug discovery technology platforms: RNAi for Isis Pharma (ISIS) & Alnylam (ALNY)
(4.) a late-stage pipeline + approved biological agents: Biogen (BIIB)
$28.86 (10/13/08)
