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4 biotechs that could be the next takeout targets after AbbVie's $63 billion acquisition of Allergan
4 biotechs that could be the next takeout targets after AbbVie's $63 billion acquisition of Allergan
Clarrie Feinstein,Emma CourtJun 27, 2019, 00:15 IST
Howard Sobel, attending dermatologist and dermatologic surgeon at Lenox Hill Hospital in New York, demonstrates how botox or other anti-wrinkle medicines are applied via syringe to a patient at his office in New York City March 22, 2013. Johnson & Johnson expects to seek U.S. approval next year for a new anti-wrinkle drug that could break Botox's near monopoly, an 85 percent market share. The J&J product could be available in the United States in 2015 and overseas a few years later, the company said. REUTERS/Mike Segar
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AbbVie's recent deal for the pharmaceutical company Allergan is the latest in a string of healthcare M&A this year that has shifted the pharmaceutical industry's landscape.
AbbVie is betting on Allergan's cosmetic products, like Botox, and other medical areas like women's health, neuroscience, eye care, and more.
Analysts at Stifel say four biotechs could also be the next takeover targets: Revance Therapeutics, TherapeuticsMD, Aerie Pharmaceuticals, and Kala Pharmaceuticals.
With Tuesday's deal, AbbVie is betting on Allergan cosmetic products like the well-known filler Botox and fat-freezing procedure CoolSculpting.
But the drugmaker also clearly values Allergan's other medical treatments in areas like women's health, neuroscience, eye care and more, noted Stifel analysts Annabel Samimy and Nick Runibo.
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"This demonstration of interest could bring a host of other transactions that complement and build on franchises that [AbbVie] appears more committed to than [Allergan] has been," they said.
There is, of course, no guarantee of future dealmaking, but this latest acquisition could foreshadow a "rebalancing" in Big Pharma, opening up doors to areas that have historically not gotten much interest, the Stifel team pointed out.
Revance, based in Silicon Valley, has been around since 1999 and is developing an experimental product for frown lines, forehead lines, and crow's feet that would compete with Botox. The product, DAXI, is in late-stage development, and the company plans to submit it for FDA approval this fall.
Revance is also working with the drugmaker Mylan to develop a copycat, "biosimilar" version of Botox. The biotech also has experimental medicines in the works for a neurological movement disorder, migraines, the degenerative musculoskeletal condition plantar fasciitis, and more.
On Tuesday's conference call with investors, AbbVie CEO Rick Gonzalez questioned whether another company would be able to make a biosimilar copycat of Botox. But "the jury is still out in our view," said the Stifel analyst team.
Revance has a market value of $550 million, and the stock jumped 5% yesterday after the AbbVie-Allergan deal was announced.
The Stifel team rates Revance a "buy," with a price target of $12.14 a share.
TherapeuticsMD
TherapeuticsMD was founded in 2008 and is headquartered in Florida. It's focused on medicines for women's health, like treatments for menopause symptoms.
AbbVie's interest in women's health "bodes well for others in the space that could broaden the portfolio meaningfully," the Stifel analysts said, like TherapeuticsMD.
Other companies in women's health, like Myovant Sciences and Obseva, by contrast, compete with AbbVie drugs like the endometriosis drug Orilissa, they said.
The drugmaker has a market cap of about $610 million.
Aerie Pharmaceuticals
Founded in 2005 and headquartered in North Carolina, Aerie focuses on the development and commercialization of treatments for glaucoma, retinal disease and other eye conditions.
It already has two approved drugs, Rhopressa and Rocklatan for high eye pressure. Aerie is also developing an experimental implant for diabetic macular edema, which is currently being tested out in early and mid-stage research trials.
While Stifel analysts don't believe that eye care is of as much interest as women's health to AbbVie, the drugmaker did call Allergan "a leader in glaucoma and dry eye," the Stifel team noted.
"We see AERI, with on-market Rhopressa/Rocklatan and a self-fueling pipeline, as an interesting target to maintain that leadership," they said. The analysts rate Aerie "buy" with a $30.32 price target.
Aerie has a market cap of about $1.3 billion.
Kala Pharmaceuticals
Founded in 2009 and based in Massachusetts, Kala Pharmaceuticals was named after a famous hiking trail in Hawaii known for its views.
The drugmaker is focused on eye disease, with its furthest-along product, KPT-121, in late development for the short-term treatment of dry eye.
Because that drug is so advanced, Kala could also be of interest to a company like AbbVie, the Stifel team said.
