2020 was somewhat of a low year for M&A in the biotech industry. Given the problems from the pandemic, and energy being re-focused on creating vaccines, it is certainly understandable.
But this year should be much better as normal mergers return across the globe. There is enough money going through the economy to believe we will witness a large pick-up in companies buying other companies this year.
In fact, Global M&A reached $1.4 trillion in Q1 according to Dealogic. This is higher by 110% from last year for the same time period. And it’s actually an all-time record.
So, let’s look at three companies who could be the target of an upcoming acquisition. A move that could send their stocks sky-rocketing.
1. TG Therapeutics
In February, TG Therapeutic’s top drug umbralisib got FDA approval to help with marginal zone lymphoma and resistant follicular lymphoma. This mid-cap stock also finished its Biologic License Application (BLA) at the end of Q1 for its combination of umbralisib with ublituximab as treatment for people with chronic lymphocytic leukemia (CLL). Based on results, I anticipate the FDA to give its approval, and the company is ramping up its capacity in expectation of this.
Three weeks after the firm sent in their BLA, it announced very positive data for ublituximab from two trials in people with returning multiple sclerosis, which caused some analyst upgrades and is a great addition on top of its oncology possibilities. The company seems poised for success and has lots of cash to pursue commercialization. However, with a value of around $6 billion, I would not be surprised if a larger company scooped up TG Therapeutics before any of this happens.
2. Clovis Oncology
Clovis is a smaller name in oncology that I see as a possible acquisition target this year. The launch of Clovis’s Rubraca franchise has lagged more than initially expected. However, their revenues did reach almost $165 million last year and managed to give sales growth of 15% compared to 2019. This is despite the pandemic.
Clovis is pushing forward to increase the population for Rubraca with data from a Phase 3 study to treat maintenance ovarian cancer, due out sometime in the second part of 2021. The company has a market cap right over $600 million and ended 2020 with around $240 million in cash. The firm could make a perfect bite-size acquisition for a larger biotech company wanting to expand their oncology footprint.
3. Axsome Therapeutics
Moving away from the oncology sector, Axsome Therapeutics is set for a great year. This central nervous system focused company has a great pipeline and many catalysts that could happen this year. Its top candidate is called AXS-05, which is a drug targeting many indications including agitation associated with Alzheimer’s disease and treatment-resistant depression. The company submitted its New Drug Application for the drug to the FDA for treatment of depression just last week, and it is now under priority review, with approval likely coming in August.
More than this, Axsome started a Phase 3 study for an Alzheimer treatment late last year. There are no currently approved therapies for such an indication. I also love the possibilities of AXS-12, which was granted FDA Orphan Drug designation for narcolepsy treatment, and Breakthrough Therapy designation for cataplexy treatment in people suffering from narcolepsy. Axsome seems like a great “sum of the parts” purchase with a value of right under $2.5 billion.
And those are three biotech companies I love and feel very good about their future in 2021. If they get purchased in 2021, their stock prices could go even higher.
Author: Scott Dowdy
