Investors bid up post-Medivation M&A targets BioMarin, Incyte and more

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.

“Every relatively small biotech firm is up” because of the Medivation acquisition news, Jacob Kilstein, an analyst at Argus Research Company, told Bloomberg. “They could become a target as well.”

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.

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