| | | Jefferies - Americas / Biotechnology: Repatriation/M&A Related to SMID-Cap Biotech and Our Coverage Universe - SGMO mention
Americas / Biotechnology: Repatriation/M&A Related to SMID-Cap Biotech and Our Coverage Universe
| | | Key Takeaway
Given recent M&A reports, initial activity in 2018, and favorable dynamics for large biotech/pharma w/ repatriation, we explored perspective and strategic fit for SMID-cap cos in our coverage. We highlight three points below: 1) Updated ests on net cash to be repatriated; 2) Gene-editing cos could augment cell therapy platforms; 3) Specific assets (KPTI's selinexor)/platforms (ALNY's RNAi) could gain appeal as 2018 catalysts could de-risk potential.
**The Jefferies healthcare team will be hosting multiple senior experts from the KPMG Healthcare M&A advisory team for a conference call Today, January 22nd @ 2pm ET to discuss key themes and issues this year**. Please contact your Jefferies Salesperson for Details/Dial-in.
Tax reform could enable repatriation this year, which could return ~$140B back to the U.S. for 10 large pharma/biotech companies of which several have indicated could be used for BD. Share buybacks and internal investment are other potential uses of cash. Focus on M&A speculation has largely been on cos with later-stage/approved therapeutics, though we anticipate SMID-cap biotech could be a beneficiary of activity to augment larger acquisitions or following de-risking events. Our ests of cash repatriation (assuming a 15% rate) are: AMGN $33B, GILD $28B, CELG $7.7B, BIIB $3.7B, MRK $17B, JNJ $14B, PFE $12B, BMY $8.0B, ABBV $7.8B, and LLY $7.7B.
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I'm not advocating for a buyout, but IMMU strikes me as a quintessential type of target for a company awash with cash and in need of augmenting its pipeline. MAF
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