It is possibly for Fed stop raising interest rates this year, small and medium-sized biotech stocks with historically low valuations are expected to usher in a wave of M&A. Inventory of industry mergers and acquisitions), we believe that ten companies such as Argenx, Apellis, and Sarepta have great potential to be acquired by major pharmaceutical companies.
In addition to the 10 biotech companies listed in this article, the following pharmaceutical companies or technical fields are worthy of attention:
- ADC: Mersana Therapeutics, ImmunoGen;
- CNS: Intra-cellular, Neurocrine, Sage Therapeutics;
- Rare Diseases: Mirum, Krystal Biotech;
- Others: Halozyme, Prometheus, Viridian Therapeutics.
ARGX is a Dutch pharmaceutical company that specializes in the research and development of alpaca-derived antibodies. It owns SIMPLE Antibody platform, NHance, ABEDEG and POTELLIGENT, three patented technologies related to the transformation of antibody Fc regions, which have the attributes of a technology platform.
ARGX’s already-marketed drug VYVGART for the treatment of myasthenia gravis has sold well. It only recorded a sales revenue of 131 million US dollars in the third quarter of last year, and the annual revenue is expected to reach 402 million US dollars. The rights and interests of VYVGART in China have also been won by $Zai Lab Ltd(ZLAB)$ . . In 2023, ARGX will have some important milestones:
The company has submitted the subcutaneous injection version (SC) of efgartigimod, which will be approved for marketing on June 20. Considering that VYVGART has been launched and sold well, the subcutaneous injection version of efgartigimod has a high probability of being approved, and the sales revenue is even more impressive;
The SC version of efgartigimod will also release phase III data for the treatment of chronic inflammatory demyelinating polyneuropathy (CIDP) in the second quarter;
The research drug ARGX-113 will release two phase III blockbuster data for the treatment of primary immune thrombocytopenia (ITP) and pemphigus vulgaris (PV) in the second half of the year.
ARGX has a rich pipeline, a proven technology platform, and a rapid increase in sales revenue. Coupled with the blessing of many blockbuster catalysts this year, many Wall Street investment banks have listed ARGX as one of the most promising biopharmaceutical companies this year.
2. $Apellis Pharmaceuticals Inc.(APLS)$
APLS is a biopharmaceutical company of complement technology. The main drug is the C3 inhibitor APL-2. Currently, the drug has been approved for two indications: paroxysmal nocturnal hemoglobinuria (PNH) and secondary to age-related Geographic atrophy (GA) in macular degeneration, of which the PNH indication has been approved in mid-2021, sold $65.1 million last year in the US alone (licensed to SOBI outside the US).
APL-2 has recently been approved for the treatment of GA, and it has received a wide range of labels (including foveal and extrafoveal), and the market for GA is relatively large. Wall Street investment banks even gave a peak sales forecast of US$5 billion. Physician surveys show that both physicians and patients have high expectations for APL-2, and physicians are expected to use the drug in 20-50% of patients, with an estimated EOM utilization rate of 70-80%.
In addition to the above-mentioned approved indications, the company has a layout in the fields of rare diseases, ophthalmology, nervous system, gene therapy, etc., among which the cooperation with SOBI in ALS is the most important. APLS is a very suitable choice for large pharmaceutical companies who want to enter the field of complement technology or GA.
3. $Alnylam Pharmaceuticals(ALNY)$
Founded in 2002, Alnylam is a leading company in the field of RNAi therapy. In the past five years, it has successfully launched five RNAi drugs to the market. In 2022, it will achieve sales revenue of US$892 million, a year-on-year increase of 35%.
In terms of product classification, ONPATTRO and AMVUTTRA, which have the same indications, recorded revenues of US$122 million and US$69 million in the fourth quarter of last year, and annual revenues of US$558 million and US$94 million, respectively;
GIVLAARI recorded a revenue of US$47 million in the fourth quarter of last year and achieved a revenue of US$173 million for the year; OXLUMO recorded a revenue of US$24 million in the fourth quarter of last year and achieved a revenue of US$70 million for the year.
In addition to the strong performance of existing products, relying on the RNAi therapy technology platform, ALNY has a rich pipeline under research, and many pipelines are in the late stage, which has great commercial potential in the short term:
The supplementary marketing application for Patisiran in the treatment of ATTR amyloidosis cardiomyopathy will be approved on October 8; Phase III data of Fitusiran in the treatment of hemophilia and phase III data of Vutrisiran in the treatment of ATTR amyloidosis cardiomyopathy will also be released this year.
In addition, some of the company's early pipelines have extremely broad indication markets, such as Zilebesiran for the treatment of mild and moderate hypertension, ALN-APP for the treatment of Alzheimer's disease, ALN-KHK for the treatment of diabetes and NASH, etc.
Whether it is technology platform, sales performance, or future potential, ALNY is the target of mergers and acquisitions by big pharmaceutical companies.
4. $Axsome Therapeutics(AXSM)$
AXSM is a model of biotech in the central nervous system field in recent years. The stock price has risen more than 30 times in the past 4 years, and it also allowed CFO Nick Pizzie, who defected from the position of vice president of Pierre Fabre USA in 2018, to gain wealth freedom. AXSM has a market cap of less than $100 million.
Behind the stock price rise is the success of AXSM's clinical trials:
- Phase III trials of AXS-05 in the treatment of major depressive disorder (MDD) and Alzheimer's bipolar disorder have all been successful, and the MDD indication has been approved for marketing;
- The phase III trial of AXS-07 in the treatment of migraine was successful and plans to submit NDA this year;
- The drug AXS-12 for the treatment of narcolepsy has also received the FDA's breakthrough therapy certification. It is currently in the second phase of clinical trials and will release data this year.
In addition to its impressive research and development, the company is also good at business development (BD): in March 2022, AXSM bought Sunosi, a marketed drug for narcolepsy, from JAZZ for US$53 million, and in February this year , AXSM announced that it will award Sunosi's rights and interests in Europe and the Middle East and North Africa to Pharmanovia. AXSM will receive an upfront payment of US$66 million and milestone payments of up to US$101 million.
For large pharmaceutical companies that favor the commercialization stage, AXSM, which has two CNS drugs on sale and multiple late-stage pipelines, is undoubtedly one of the most worthy of consideration for M&A targets.
5. $Ascendis Pharma A/S(ASND)$
Ascendis Pharma is a long-acting drug company with TransCon, a long-acting drug technology platform. At present, it mainly focuses on various rare diseases, reducing the frequency of medication, improving patient compliance, reducing side effects, and improving treatment effects. With multiple drugs With the success of the Phase III clinical trial, ASND's technical platform has also been verified.
The company currently has three drug candidates, TransCon hGH (long-acting growth hormone), TransCon PTH (treatment of hypoparathyroidism) and TransCon CNP (treatment of chondrodysplasia).
In 2021, the company's drug Skytrofa for the treatment of pediatric growth hormone deficiency (GHD) has been approved for marketing. On April 30 this year, the FDA will approve the company's drug TransCon PTH for the treatment of adult hypoparathyroidism. By the end of the year Phase 3 data from TransCon hGH in adults with growth hormone deficiency will also be released earlier. In addition, the company is also advancing pipelines in the field of achondroplasia and tumors, and will provide updates on relevant clinical trials this year.
ASND’s marketed drug Skytrofa has achieved good performance growth, achieving a revenue of 35.7 million euros in 2022, with a quarterly revenue growth rate of 39% quarter-on-quarter.
In 2018, ASND also co-founded VISEN Pharmaceuticals with Vivo Capital, and VISEN Pharmaceuticals obtained the rights and interests of ASND's three drugs in Greater China. In November 2022, Weisheng Pharmaceutical submitted a prospectus to the Hong Kong Stock Exchange, planning to be listed on the Hong Kong Main Board. In view of the vast domestic long-acting growth hormone market, companies such as Changchun High-tech and Anke Biological have already deployed, and Weisheng Pharmaceutical The arrival of the industry will intensify the competition in the industry.
In view of the company's long-acting drug technology platform, as well as its commercialization and late-stage R&D pipeline, Ascendis Pharma is also one of the potential acquisition targets of major pharmaceutical companies.
6. $Sarepta Therapeutics(SRPT)$
Sarepta Therapeutics is a leading company in the treatment of Duchenne muscular dystrophy syndrome (DMD). The company currently has 3 approved DMD drugs: EXONDYS 51, AMONDYS 45 and Vyondys 53. In addition to the marketed drugs, the company revolves around DMD, New therapeutic drugs such as gene therapy and gene editing are being developed, and there are also plans for indications such as limb-girdle muscular dystrophy (LGMD).
In the third quarter of 2022, the company recorded product sales revenue of US$207 million, and is expected to reach US$843 million in annual revenue, a year-on-year increase of 38%. In addition to strong sales performance, the company's R&D pipeline is also worth looking forward to.
In the third quarter of last year, the company submitted a marketing application for the gene therapy drug SRP-9001 jointly developed with Roche for the treatment of DMD, and the FDA granted it priority approval, and the approval time was May 29. The marketing application of SRP-9001 is supported by multiple clinical trial data, and the probability of approval is high.
For big pharmaceutical companies who want to enter the DMD field, SRPT is the best choice. However, the overseas rights and interests of SRP-9001 have been authorized to Roche, which may reduce the expectations of mergers and acquisitions.
7. $Karuna Therapeutics(KRTX)$
KRTX is a company that develops drugs for the treatment of neurological diseases. Its flagship drug KarXT is an oral M1/M4 preferred muscarinic agonist, which consists of the muscarinic agonist xanomeline and the muscarinic antagonist trospium. Stimulation of muscarinic receptors in the central nervous system has the potential to achieve dopaminergic or serotonin-independent treatment of severe psychiatric disorders, including schizophrenia and psychosis in Alzheimer's disease.
In August 2022, the company released the phase 3 clinical data of KarXT in the treatment of schizophrenia. The problems of poor compliance and low coverage in therapy, especially the clinical P value of KarXT <0.0001, are extremely rare in the field of CNS.
This data has been released. KarXT is regarded by investment banks such as Mizuho as a game changer in the field of schizophrenia. It is expected to reach US$1.7 billion by 2028, with peak sales of more than US$5 billion.
The company plans to submit a marketing application for KarXT in the middle of this year and release the results of another phase III trial called Bu EMERGENT-3 in the first quarter of this year, which is similar to the previous EMERGENT1 (Ph2b) and EMERGENT-2 (Ph3) studies , the probability of success is high, but initially the experiment was mainly carried out in Ukraine, and now most of the research has been transferred to the United States, so there are certain uncertainties.
8. $Revance Therapeutics(RVNC)$
RVNC is a pharmaceutical company dedicated to the development of aesthetic medicine products. Relying on its unique TransMTS® peptide technology, it has developed a differentiated botulinum toxin for injection DAXXIFY, which has been approved in the third quarter of last year.
Different from the existing Dysport, Xeomin, Jeuveau and other products on the market, DAXXIFY is a new product that truly differentiates itself from BOTOX, the number one product in the field of botulinum toxin. In terms of treating frown lines, DAXXIFY’s curative effect time is almost as long as BOTOX 1.5 to 2 times of that, while the latter's annual revenue is 14.6 billion US dollars.
Due to the remarkable effect, DAXXIFY is targeting the top one-third of high-quality customers among the existing medical beauty users. The investment bank predicts that DAXXIFY will occupy 30% of the U.S. market, with annual sales exceeding US$1 billion. In the first quarter (the fourth quarter of last year), the sales of DAXXIFY experience users have been estimated to be between US$10.5 million and US$11.5 million.
In addition to DAXXIFY, the company also has RHA fillers with less side effects and better effects than hyaluronic acid. The sales revenue in the first year after listing was more than 70 million US dollars, and the year-on-year growth rate remained at 40%+ last year. Different from other small pharmaceutical companies, the company also has a business platform OPUL™ in terms of commercialization, which is a cloud platform that integrates customer relationship maintenance and financial payment functions, providing services for various medical beauty merchants. As of the third quarter of last year Platform GPV totaled over $630 million over the past twelve months.
In the environment of raising interest rates, big pharmaceutical companies facing the cliff of blockbuster drug patents are likely to have an interest in mergers and acquisitions of RVNC, which has great sales revenue potential and quick results.
9. $Krystal Biotech Inc.(KRYS)$
KRYS is a relatively unique gene therapy company. Instead of using the common adeno-associated virus or lipid nanoparticles to deliver genetic material, it loads the gene into the herpes simplex virus (HSV-1) to reach its target in the body. HSV-1 has a higher carrying capacity than other gene therapy technologies, which not only broadens the range of potential diseases that KRYS may treat, but also enables repeated administration.
Based on its gene therapy technology platform, KRYS has developed a series of drugs for skin diseases and respiratory diseases, The most important of these is B-VEC for the treatment of dystrophic epidermolysis bullosa (DEB), which is currently awaiting PDUFA.
B-VEC has obtained the priority review qualification granted by the US FDA. Due to the reasons of CMC, the approval time was postponed to May 19 this year, and the probability of approval is relatively high. If approved, it would be the first approved gene therapy to treat DEB.
Although the market for DEB is not very large, B-VEC has proved the feasibility of the company's technology platform to a certain extent. In addition to the skin diseases and respiratory diseases that have been deployed so far, the company has also started clinical trials for the treatment of cystic fibrosis , In addition, Jeune Aesthetics, a subsidiary of KRYS, is also trying to enter the field of medical beauty.
With its unique technology platform value and multiple promising research pipelines, KRYS is expected to become an M&A option for major pharmaceutical companies.
10. $Xenon Pharmaceuticals(XENE)$
XENE is a company focused on the treatment of neurological diseases by modulating ion channels, the main indication is epilepsy. There are currently four drug candidates in the pipeline, XEN1101, XEN496, XEN901 and XEN007, and they have cooperated with well-known companies in the CNS field, Neurocrine and Alexion (acquired by AstraZeneca).
In October 2021, the company announced that the main pipeline XEN1101 announced the success of the Phase II clinical trial for the treatment of partial epilepsy in adults. The FDA requires the company to do another Phase III before applying for a marketing application. Another XEN496 for the treatment of infantile epilepsy is also in the third phase of clinical trials, and it also has a higher probability of success.
In addition, the company's drug XEN1101 is still in the second clinical phase for the treatment of major depressive disorder (MDD). MDD has a larger market than epilepsy. If the data released in the second half of the year is good, it will increase the probability of the company being acquired.
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