Why These 2 Biotech Stocks Might Be Next On The Takeover List (IBD).
The duo of biotech stocks fit the bill required of takeover candidates, Needham analyst Alan Carr said in a report to clients. Both have marketed drugs that treat disorders of the central nervous system. This is a prime area of interest for pharma.
He notes a broader pool of 40 biotech stocks have had new molecular entities approved since 2011. These are drugs that don’t already have a precedent among approved products. This group also has maintained full rights to those drugs, meaning they also could be targets.
“There remains a consistent bias for later-stage companies,” he said. “We continue to believe the main driver is the overlap in the supply of biotech companies with lower-risk assets and the disease focus strategy of pharma and big biotech.”
Which Areas Are Of Key Biopharma Interest?
Of 22 potential buyers ranging from AbbVie (ABBV) to Takeda Pharmaceutical (TAK), 18 are interested in immunology specialists. The same number previously professed an interest in oncology medications. A total of 17 say they have an interest in central nervous disorder drugs.
This is where Acadia and Neurocrine fit in with the biotech buying spree. Acadia has an approved drug called Nuplazid that treats hallucinations and delusions associated with Parkinson’s disease psychosis.
Neurocrine sells Ingrezza, a treatment for tardive dyskinesia. The condition is a side effect of drugs that treat schizophrenia and other mental health disorders. It results in uncontrolled, stiff or jerky movements of the face and body.
Carr also notes Intercept Pharmaceuticals (ICPT) could be a potential target. Intercept has an approved liver disease drug, Ocaliva. Interest in acquiring liver disease companies has been on the rise, as interest for infectious disease companies runs in the opposite direction.
From that broader pool of 40 biotech stocks, five are working in central nervous system disorders. A handful, eight, are working on oncology. Nine are working in rare diseases.