When one M&A door closes, many potential windows open. At least that was the operative theory Monday after Pfizer ($PFE) said it had wrapped up a $14 billion deal for Medivation ($MDVN), leaving a gaggle of biopharma bidders empty-handed.
Investors bid up shares in more than a half-dozen biotechs pegged as potential backup targets: BioMarin ($BMRN), said to be among Sanofi’s ($SNY) Plan B, was one of the big movers. So was Incyte, which, like Medivation, has a cancer pipeline and a marketed oncology product--albeit a smaller one--in Jakavi, which is co-marketed with Novartis ($NVS). Goldman Sachs ($GS) analysts highlighted Incyte ($INCY) in particular; that company’s shares were up more than 6% by day’s end.
Tesaro ($TSRO), the company with a PARP inhibitor that could rival Medivation’s talazoparib, also rose. So did Clovis Oncology ($CLVS), despite a big setback recently, when it canned an oncology candidate, rociletinib, that would have competed with AstraZeneca’s first-in-class lung cancer med, Targrisso.
Given that a who's who of Big Pharma and Big Biotech was apparently kicking tires at Medivation--with Sanofi, Gilead Sciences ($GILD) and Celgene ($CELG) reportedly among the last round of bidders--plenty of large-scale buyers are out there chasing deals.
It’s not as if this was the first time market-watchers thought about a post-Medivation future, however. All these targets and more have been bandied about as prospects. In a note earlier this month, Credit Suisse analysts tagged BioMarin, which focuses on drugs for rare genetic disorders, but also named Alexion Pharmaceuticals ($ALXN), whose ultra-orphan drug Soliris is noted for its status as the most expensive in the world. Alexion also has a couple of newer ultra-rare-disease meds.
Credit Suisse’s Vamil Divan predicts that all these and more are either in play already or will soon come into a larger company’s sights. He expects a series of small- and mid-sized deals up to $25 billion, given “the need many larger companies have to try and boost their growth prospects.”
BioMarin, which boasts a portfolio of 5 meds and more in the pipeline, ended Monday with a market cap of more than $18 billion, several billion larger than Pfizer’s Medivation score, while Incyte is now valued at more than $16 billion. One reason Goldman Sachs called it out is this: Its epacadostat candidate is entering Phase III combo studies alongside Merck immuno-oncology med Keytruda, and the Incyte med is under study in a range of other tumor types, too.
Alexion is a richer prospect at $27 billion. Tesaro, on the other hand, is more bite-sized: Even after yesterday’s upward tick, the company’s market cap ended at $5.3 billion. On that smaller end of the scale, Credit Suisse also pointed to Seattle Genetics ($SGEN), Alder Therapeutics ($ALDR), Intercept Pharmaceuticals ($ICPT), Ultragenyx ($RARE) and more.
After Medivation? Alexion, BioMarin, Incyte could be Big Pharma's next targets
BioMarin climbs on rumors it may be Sanofi's Medivation backup
Pay up, Sanofi: Tesaro's PARP data give Medivation deal expectations a boost
Alexion's Soliris didn't ace its myasthenia gravis trial, but it might still win big sales
Clovis bags rociletinib, leaving AZ's Tagrisso with a clear path to $3B
AstraZeneca's $3B push for Tagrisso gets leg up from Clovis setback