Thinking about the munch scene, it seems to me that currently there are five different munch scenarios:
1. Pharma buys a smaller pharma.
Mostly we don't care about this, except for the fallout for the biotechs they have partnered with. Usually this is negative, but sometimes there can be a bonanza if they have to cut a good program to satisfy the FTC. (Think PFE and OSIP).
There are some "mini-pharmas" that could easily be on someone's menu - in particular, Elan, Forest Labs and Allergan.
2. Near-profitable biotech
This is the classic biotech munch. The target is near profitability so the quarterly bean counters don't get too upset. The target typically only has one major product. Currently in or approaching this category are CORR, CEPH, KOSP, SCIO, CVTX, CELG, and perhaps ITMN and AVIR a little down the road. GELX is the most recent example here.
3. Deep pipeline biotech
We haven't yet seen one of these, perhaps because the pharma are not quite desperate enough yet. However, as the pharma get bigger and bigger, the earnings impact of buying a biotech grows somewhat less. An acquisition in this category would have the most impact on the overall sector.
In this category would be stocks such as SEPR, NBIX. Companies such as VRTX or MLNM are not good candidates here because they have so many deep partnerships.
4. Delivery Companies
These have always been popular acquistion targets (AZA was the most recent target). ALKS, ARDM, INHL, ENZN and SKYE are always possibilities.
5. Failing Biotechs
Finally, when all else fails, you flutter your eyes at all eligible suitors and exclaim how very cheap you somehow happen to be. FOCL is the latest example.
Comments and suggestions for further categories and entrants in any categories are welcomed.
Peter |
