Biotech Stocks Pin Bouncing Back Hopes on M&A Boost
Biotech stocks are hoping for a bounce back after a rough start to the year, but there are some cautions. Some biotechs are facing regulatory hurdles. For example, the FDA has held up a phase 3 trial of a gene therapy for hemophilia B until late 2020, but uniQure expects to resume the study in late April 2021. Its management has experience with M&A, having recently acquired the French gene therapy company Corlieve Therapeutics for $55 million last year. However, investors should keep an eye on safety concerns and the company’s early-stage pipeline.
Biotech valuations have plunged, making them attractive targets for big pharma companies. This has prompted a wave of deals by cash-rich companies. The latest is Pfizer’s $5.4 billion acquisition of International Blood Therapeutics, the fourth deal in the industry this year. The deal is a sign that big drugmakers are again interested in snapping up smaller companies, as they did in the past.
Adaptimmune is another biotech stock with an M&A boost. The company has struck a $150 million deal with Roche, which could yield up to $3 billion in sales. In addition, the company has delivered clinical trial data that puts it on track to win FDA approval. However, this progress has not translated into a meaningful increase in share price, with a market cap of less than $500 million.
Several smaller biotechs have also signed recent deals. Ionis, for example, has an opt-in from Biogen in January. Another big biotech, Karuna Therapeutics, recently landed a $2.9 billion deal with AstraZeneca. It is also close to data from its phase 3 clinical trials for schizophrenia.
Another promising company, CRISPR, is working on CRISPR gene editing for cystic fibrosis. The firm has already shown promising results for treating the sickle cell disease. In addition, CRISPR is working on two CAR-NG cell candidates for CF.
Organon, the company behind the Humira biosimilar Nexplanon, is also prepping for a big launch next year. Its executives are forecasting up to $6.4 billion in revenue in 2022. They have discussed their pricing strategy for the biosimilar drug.