Almost every week there are a handful of merger and acquisition deals announced, and the biotech sector is one of the most interesting sectors for future buyout deals.
Biogen Idec Inc. (NASDAQ:BIIB) is considered to be very likely to acquire or partner with biotechs that have candidates treating conditions such as multiple sclerosis, Parkinson's, Alzheimer's and hemophilia. Because of this, I have been researching small biotech companies that might be the next possible buyout or partnership deal for Biogen based on pipeline compatibility and analyst reports.
Demand for biotech companies with multiple sclerosis (MS) treatments has been heating up in general. Just last year, Abbott Laboratories (NYSE:ABT) agreed to buy Facet Biotech (which has a multiple sclerosis drug called "daclizumab" under development) for about $27 per share or $450 million. Biogen had also tried buying Facet Biotech with a hostile bid that failed. Read about the deal for Facet here. Biogen's attempts to buy Facet confirms their active pursuit of companies with MS treatments in their pipeline.
A recent article titled "Biogen Seeking Deals to Expand Pipeline of MS Treatments" on Bloomberg, states that: "Biogen Idec, Inc., the world’s largest maker of multiple sclerosis medicines, is on the hunt for new compounds to treat MS and other neurodegenerative diseases, and may purchase companies outright or partner with them, the company’s research chief said. Biogen is “very actively” reviewing licensing and acquisition possibilities with companies that have drugs in the first two stages of testing needed for regulatory approval, Doug Williams, executive vice president of the Weston, Massachusetts-based biotechnology company said. "Treatments for immunology and hematology are areas of interest," he said.
Below, I detail why these biotech stocks could be poised for a partnership or buyout deal with Biogen or another company:
Adeona Pharmaceuticals, Inc. (AEN) is trading just under $1 and has a candidate called "Trimesta" which is a potential MS treatment that recently received an additional grant from the National Institute of Health for clinical trials. A recent press release states: " The 150-patient, randomized, double-blind, placebo-controlled clinical trial of Trimesta is currently underway at 15 centers in the United States ... We are very pleased that the Trimesta MS clinical trial has been awarded over $8 million in grant funding by organizations such as the NIH, NMSS and other third party groups. This support demonstrates independent scientific review of the clinical work being conducted by Dr. Voskuhl and provides funding for our MS program that is non-dilutive to our shareholders," stated James S. Kuo, M.D., M.B.A., Adeona's Chairman and CEO. "We are also excited to be exploring new opportunities with Dr. Voskuhl that could further expand our MS clinical program beyond the current trial."
Why Adeona shares could surge higher: Adeona could be a target for Biogen or another company to buyout or partner with for their MS and other candidates. AEN shares spiked up to $2.25 on April 4, 2011, and with the market decline, have now come down to very undervalued levels. There are several catalysts that could send these shares higher in the near future including pipeline and partnership news. In addition to the MS treatment, Adeona has multiple candidates that look promising. This company already has an existing partnership with Sweden-based Meda AB, to develop flupirtine for the treatment of fibromyalgia syndrome which could lead to payments to Adeona of up to $17.5 million in payments, plus royalties. This company has a solid balance sheet and in April, Adeona raised capital at about $2.07 per share, the stock has dropped with the markets since then and this is an incredible opportunity to pay less than half of what investors paid for these shares just months ago. With the MS candidate, Adeona has the type of pipeline that could spark a partnership or buyout deal from Biogen or another company, and these cheap shares could turn into a multi-bagger if good pipeline news, a partnership or buyout deal is announced.
Elan Corporation (NYSE:ELN) is trading around $11.22. Elan is a biotechnology company, based in Ireland. These shares have traded in a range between $4.25 to $11.50 in the last 52 weeks. The 50 day moving average is $10.84 and the 200 day moving average is $7.64. ELN is estimated to earn about 4 cents per share in 2011 and about the same in 2012. Elan is known for Tysabri which is used to treat relapsing forms of Multiple Sclerosis (MS) as well as other treatments.
Why Elan shares could surge higher: A recent article on Bloomberg states that Biogen is “very actively” reviewing licensing and acquisition possibilities with companies that have drugs in the first two stages of testing needed for regulatory approval according to Williams. Treatments for immunology and hematology are areas of interest, he said. It goes on to say that one analyst believes Elan and Accorda could be of interest to Biogen.
Acorda Therapeutics (NASDAQ:ACOR) is trading around $27.29. Acorda is a biotechnology company, based in New York. These shares have traded in a range between $20.43 to $37.29 in the last 52 weeks. The 50 day moving average is $31.05 and the 200 day moving average is $26.63. ACOR is estimated to earn about 61 cents per share in 2011 and 98 cents in 2012.
Why Acorda shares could surge higher: Acorda has seen a surge in revenues from sales of their multiple sclerosis drug called "Ampyra." Acorda also has another potential MS treatment in early stages.
Disclosure: I am long AEN
Disclaimer: The data is sourced from Yahoo Finance, and Stockcharts.com. The information and data is believed to be accurate, but no guarantees or representations are made. Rougemont is not a registered investment advisor and does not provide specific investment advice. The information contained herein is for educational purposes only.