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Alpine: Elucidating The Acquisition Prospects Of A Young Sleeping Giant

|About: Alpine Immune Sciences, Inc. (ALPN), Includes: GILD, JAZZ, KITE, SGEN

Alpine is leveraging on its stellar therapeutic innovation platforms (TIP and vIgD) to deliver the next-generation immuno-oncology (I-O) therapeutics.

The current market condition is highly conducive to a buyout for a smaller company with gargantuan prospects like Alpine.

TIP and vIgD offer significant synergy to CAR-T innovators as well as other I-O focused companies.

As the positive clinical outcomes to post in 2020, more pursuers will take aim at buying out Alpine.

Based on its assets, Alpine should be acquired at a substantial premium to its current valuation.

A great business at a fair price is superior to a fair business at a great price. - Charlie Munger

Alpine Immune Sciences (NASDAQ:ALPN) is a highly promising grower that we recently featured in the prior research. Despite its nascent history, the company owns two highly valuable therapeutic innovation platforms - variant immunoglobulin domain (“vIgD”) and transmembrane immunomodulatory protein (“TIP”). The high volatility can cause the timid investors to take a pass on Alpine. Nevertheless, our analytical research revealed that the company is transitioning into the next growth phase, as its lead molecules-in-development (ALPN-101 and -202) will hit the clinics in late 2018 and early 2019, respectively. With strong data as we prognosticated, the company can either be acquired by larger firms or grow into a pharmaceutical giant one day. Acquiring shares at this stage (and to hold through all the growth spurts) can deliver a 100-bagger like Jazz Pharmaceuticals (NASDAQ:JAZZ). In this research, we’ll elucidate factors inductive to the acquisition of Alpine.

Figure 1: Alpine stock chart. (Source: StockCharts).

About The Company

Headquartered in Seattle WA, Alpine leverages on the power of the naturally-occurring immune system proteins to innovate a technology coined “direct evolution.” The aforesaid tool is used to engineer enzymes native to the immune synapses, thereby innovating them for the treatment of cancers, autoimmune and inflammatory diseases (as shown in figure 2). It is interesting to note that direct evolution is highly versatile. Accordingly, the ingenious science enabled vIgD to concurrently turn on an immune molecule while inhibiting another. Ultimately, this makes vIgD an extremely flexible designing tool with the vast applications for many autoimmune and inflammatory disorders.

Figure 2: Therapeutic pipeline. (Source: Alpine).

In addition, TIP delivers the second knockout punch for Alpine shareholders, as it enhances the functioning of next-generation cancer therapeutic, chimeric antigen receptor and T cell receptor (CAR-TCR). Consequently, the leveraging-power allowed Alpine to secure the $535M deal back in 2015 with Kite Pharma (NASDAQ:KITE), a firm under our coverage that was acquired by Gilead Sciences (NASDAQ:GILD). Of note, the company is currently brewing two stellar molecules. The most advanced is ALPN-101 (the first-in-class dual ICOS/CD28 antagonist) that has a planned initial new drug application (“IND”) in Q4 2018. The other drug (ALPN-202) is a dual PD-L1 and CTLA-4 blocker as well as a CD28 agonist (projected to be available in the clinic in 2019).

Merger & Acquisition Analysis

In the analysis of merger and acquisition (“M&A”), we follow a set of criteria to help us forecast upcoming M&As. Accordingly, the original M&A requisitions featured in a research on Seattle Genetics (NASDAQ:SGEN) were recently updated. As follows, the first requirement entails a favorable environment. Currently, the bioscience sector is operating in a climate that is highly conducive to M&As. The main reason is that giant pharmaceuticals are facing the patent cliffs. In response, these firms are executing either organic pipeline growth or growth via M&As. Consequently, Gilead Sciences is a prime candidate to acquire Alpine for various rationales. As alluded, Gilead has been facing the patent cliff re the Hepatitis C franchise (Sovaldi and Harvoni). In the valiant efforts to stave sales decline, the company acquired the leading CAR-TCR innovator - Kite Pharma - back in 2017. Interestingly, TIPs can enhance the functioning of CAR-TCR for Gilead.

Final Remarks

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Disclosure: I am/we are long ALPN.