Barron's Biotech Buyout Candidates
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Date updated:08-16-2008

With patents on some major products expiring over the next few years, large pharmaceutical companies will be on the prowl for biotech outfits with promising drugs.

symbol name last price % change open
  • +
  • ONXX
    Onyx Pharmaceutic
  • $24.05
  • +0.17%
  • $23.80

Thapar and other analysts point to Onyx Pharmaceuticals (ONXX) as a potential target of Bayer. Onyx has a joint venture with the German pharmaceutical giant for Nexavar, which is used to treat kidney and liver cancers. "At some point, you could see Bayer wanting to control 100% of the assets," says Sustersic, who thinks that Bayer might pay as much as $65 per share. Nexavar is believed to have more upside, especially as it secures approval in other markets (it was recently given the green light by China as a liver-cancer treatment), and even more if it can be used for other cancers, including those of the breast, lungs and skin.

People owning ONXX also tend to own: AAADMCCRTCVXEWBCFMDMRO

TheStreet.com Rating: C- What is this?

  • +
  • VRTX
    Vertex Pharmaceut
  • $30.83
  • +2.63%
  • $29.14

Not all of the focus is on products already in the market, however. Vertex Pharmaceuticals (VRTX), another company that some investors view as an eventual takeover candidate, is developing Telaprevir, a substance that promises to reduce the time needed to treat hepatitis-C, a potentially fatal liver ailment. Telaprevir is currently in stage III testing, the last phase of the clinical- trial process. Vertex has worked with Johnson & Johnson (JNJ) in developing that drug.

People owning VRTX also tend to own: EXPEIACIMCDXECHGSIIDIXITMN

TheStreet.com Rating: D- What is this?

  • +
  • AMLN
    Amylin Pharmaceut
  • $11.26
  • 0.00%
  • $11.32

Another company that could spark an acquirer's interest is Amylin Pharmaceuticals (AMLN). It's working on a Type 2 diabetes drug that could be injected once a week instead of daily. Amylin has several development partners, including Eli Lilly, on the drug. It already markets two diabetes drugs, Symlin and Byetta. But some analysts say the product under development could boast major advantages. "A once-weekly drug that lowers glucose substantially, induces weight loss, isn't associated with hypoglycemia, and lacks a cardiovascular safety signal has multibillion-dollar potential," says Markowitz.

People owning AMLN also tend to own: ADRXAIGAMGBTUDVNEVFCX

TheStreet.com Rating: D What is this?

  • +
  • UTHR
    United Therapeuti
  • $81.08
  • +1.32%
  • $78.79

Anyone scanning the biotech ranks for potential acquisition targets shouldn't overlook United Therapeutics (UTHR). It has one characteristic that lots of other small biotechs would envy: It's in the black. One of its most promising products is Remodulin, which is used to treat hypertension in the blood vessels of the lungs. Although there are other PAH drugs, Turner Investment Partners' Sustersic says that United Therapeutics is "one of the clear leaders, and they potentially could have a big blockbuster."

People owning UTHR also tend to own: AAPLBAHONPBRRIMMRIOSNDA

TheStreet.com Rating: C+ What is this?

  • +
  • ALXN
    Alexion Pharmaceu
  • $37.91
  • +4.21%
  • $36.34

American Century's Thapar is similarly impressed by Alexion Pharmaceuticals (ALXN), which earned six cents a share in its most recent quarter, versus a loss of 75 cents a share a year earlier. Its drugs include Soliris, which treats a rare disorder called paroxysmal nocturnal hemoglobinuria, which destroys red blood cells. At $389,000 a year per patient, Soliris is hugely expensive -- but it targets a clearly defined patient base. The drug had net sales of nearly $60 million in the second quarter, up from $45.5 million in the first quarter and $9.8 million a year earlier. Regulators have approved its use in the U.S. and Europe, and it's expected to be introduced in Japan toward the end of next year. Alexion retains distribution rights in the U.S. and overseas, says Sustersic, who maintains that Soliris sales could reach at least $500 million a year.

People owning ALXN also tend to own: AIRANSSBUCYDCELDECKHKHOLX

TheStreet.com Rating: C What is this?

 

Start Price

Return Value

Start Date

ONXX 38.75 -37.94% Sep 4th
VRTX 26.32 +17.14% Sep 4th
AMLN 22.27 -49.44% Sep 4th
UTHR 108.27 -25.11% Sep 4th
ALXN 46.00 -17.59% Sep 4th

Average return:

-22.59%

Success rate:

20%

Tracking Started: 09-04-2008

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