3 Potential Biopharma Buyout Targets

seekingalpha04-24

The recent lack of M&A activity and rising interest rates have helped trigger an approximate 20% decline in small-cap biotech equities.Drug blockbusters facing key patent expirations and Big Pharma's ...

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href=https://seekingalpha.com/article/4685355-3-potential-biopharma-buyout-targets><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>The recent lack of M&A activity and rising interest rates have helped trigger an approximate 20% decline in small-cap biotech equities.Drug blockbusters facing key patent expirations and Big Pharma's ...</p>\n\n<a href=\"https://seekingalpha.com/article/4685355-3-potential-biopharma-buyout-targets\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"SG9999001176.SGD","symbol_name":"UOB UNITED GLOBAL HEALTHCARE \"SGD\" 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would make logical buyout targets.simarik Nothing kindles the \"animal spirits\" in the biotech and biopharma sector more than an uptick in M&A activity. The lack of deal volume lately has been one reason, along with rising interest rates, behind the recent swoon in small biotech names. The SPDR® S&P Biotech ETF (XBI) is down nearly 20% from its recent highs in late February. This has coincided with a rise in the yield on the United States 10-Year Bond Yield (US10Y) from just below 3.9% to just over 4.6% over that time. Seeking Alpha The last stock in my portfolio that was purchased was ImmunoGen, Inc. (IMGN), which was in the Holding Pen of our Investing Group at the time. This developer of antibody-drug conjugates or ADCs was purchased late in 2023 for roughly $10 billion in cash by AbbVie Inc. (ABBV), which included an over 80% buyout premium. With many drug blockbusters facing key patent expirations in 2024 and in coming years and Big Pharma being flush with cash, M&A volume should be solid across the sector in the coming year. Here are three smaller names that would appear to be possible and logical buyout targets. Seeking Alpha Let's start with Mirum Pharmaceuticals, Inc. (MIRM). This small biopharma has an approximate $1.1 billion market capitalization after recent weakness in its shares. Last week, Stifel Nicolaus initiated the shares as a new Buy and slapped a $48 a share price target on the equity. One of the reasons for doing so was the analyst at Stifel stated that Mirum's drug candidate volixibat reminds him of seladelpar. This was the main asset Gilead Sciences, Inc. (GILD) acquired when it purchased CymaBay Therapeutics, Inc. (CBAY) earlier this year for some $4.3 billion in cash. Mirum is currently enrolling patients in pivotal registration studies for volixibat evaluating the compound as a treatment for primary sclerosing cholangitis [PSC] and primary biliary cholangitis [PBC]. February 2024 Company Presentation The company's core revenue driver for the moment is a compound called Livmarli. It garnered FDA approval in 2021 to treat a rare genetic disorder called cholestatic pruritus for Alagille syndrome [ALGS], which affects some 30K-40K individuals in the United States. Livmarli was approved in Europe in 2022. Net product sales of Livmarli nearly 90% in FY2023. Mirum was granted a label expansion for this drug in the United States in March and Livmarli and was recently approved for reimbursement in Canada as well. February 2024 Company Presentation The analyst firm consensus has the company achieving profitability by FY2025, so Mirum is just fine as a standalone entity. However, given its market cap, one drug that should do more than $300 million in sales in FY2024 and the potential of volixibat; it would make a logical and bite-size acquisition for a larger name. Another bullish article on Seeking Alpha around Mirum was posted today. Few, if any, areas in the industry have been hotter than the GLP-1 weight loss space. Currently, this part of the market is dominated by two companies, Novo Nordisk A/S (NVO) and Eli Lilly and Company (LLY). J.P. Morgan Research has this market hitting $100 billion in annual sales by 2030. Not surprisingly, plenty of potential entrants are now eying this space. Global Data just projected that 13 new drugs targeted in this area will hit the market by 2029, including new compounds from the entrenched incumbents. One of the smallest concerns in developing a GLP-1 candidate is a company called Altimmune, Inc. (ALT), with a market capitalization of just over $500 million. The company released trial data from a mid-stage study around its dual GLP-1/glucagon dual receptor agonist pemvidutide late last year. Company Website The study data showed a mean weight loss of 15.6% that was achieved at week 48 in the highest dose cohort (2.4 mg weekly). There were also no signs of bottoming out. Results compared favorably to Wegovy 2.4 mg (15.6% at week 68; ~15% at week 48) and somewhat unfavorably to Zepbound 15mg (~18% at week 48). In addition, pemvidutide lowers LDL cholesterol levels more significantly than Zepbound or Wegovy, and less of its weight came from lean muscle than the latter. Given Altimmune's market cap and the massive potential size of the GLP-1 market, the company would make a logical target for any larger concern wanting to establish a beachhead in this space. Pemvidutide is also being developed for metabolic dysfunction-associated steatohepatitis or MASH, where it has Fast Track designation from the FDA. Finally, let's talk about 89bio, Inc. (ETNB), a clinical-stage biopharma concern with a market cap of just less than $900 million. Its main asset in development is a compound called pegozafermin, which is being evaluated to treat both severe hypertriglyceridemia, or SHTG and NASH/MASH. The latter is a potentially huge opportunity, with recent estimates projecting this will be nearly a $50 billion global market by 2035. Company Website Madrigal Pharmaceuticals, Inc. (MDGL) recently launched the first approved drug for this condition, and there are numerous firms with candidates in development for NASH as well. These include the before-mentioned Eli Lilly and Novo Nordisk as well as smaller concerns like Viking Therapeutics, Inc. (VKTX), which I recently posted an article around. Company Website Two Phase 3 studies, \"ENLIGHTEN-Cirrhosis\" and \"ENLIGHTEN-Fibrosis,\" evaluating pegozafermin to treat different NASH subtypes, should kick off in the first half of this year. Results from a Phase 3 \"ENTRUST\" evaluating this compound to treat SHTG should be out sometime in 2025 as well.  With a recent capital raise, management noted nearly $580 million worth of cash and marketable securities on its balance sheet with its Q4 results. Therefore, 89bio is well positioned to continue to develop pegozafermin on its own unless the right offer comes along, given it seems the company would make a nice \"bolt-on\" purchase for a larger name wanting to expand into NASH/MASH.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2429110059"}