The accompanying table (click to enlarge) includes 52 companies with market caps below the $150M minimum for inclusion in the ETF Innovators (ETFI) Emerging Bio-Pharma Index. While the performance is terrible with an average loss of nearly 50%, keep in mind that several buyouts in the out-of-favor 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 Eli Lilly (NYSE:LLY) for its cancer drug discovery platform
2.) Kosan Biosciences (KOSN) was acquired by Bristol-Myers (NYSE:BMY) for its cancer drug pipeline
3.) Barrier Therapeutics (OTC:BTRX) was acquired by privately-held Stiefel Labs
4.) Pfizer's (NYSE:PFE) $164M cash buyout of cancer drug developer Coley Pharma (COLY)
5.) The most recent and extreme example includes GlaxoSmithKline's (NYSE:GSK) $57M buyout of Genelabs (GNLB) for an astounding premium of over 400% for the latter's hepatitis C clinical development assets
The common theme for these buyouts includes spending a very small amount of money relative to the huge size of the acquiring big pharma companies to acquire assets and expertise for early stage drug discovery and development – with three of the five aforementioned deals focused on cancer drug development.
As a starting point for further investment research, companies on the list of 52 with market caps below $150M which have cancer drug candidates and/or discovery platforms include Cytokinetics (NASDAQ:CYTK), ArQule (NASDAQ:ARQL), Immunomedics (NASDAQ:IMMU), Infinity Pharma (NASDAQ:INFI), Ardea Biosciences (NASDAQ:RDEA), Xoma Ltd. (NASDAQ:XOMA), SuperGen (SUPG), Ariad Pharma (NASDAQ:ARIA), Celldex Therapeutics (NASDAQ:CLDX), and Vical (NASDAQ:VICL).