NBIX - Alnylam Intra-Cellular among potential biotech take-out targets - RBC

2023-04-19 09:01:34 ET

• With several large M&A deals involving biotechs being acquired so far in 2023, RBC Capital Markets says such activity could be on the rise ahead.
• Given recent M&A activity, we "remind investors that there remains M&A appetite among large pharmas, and to continue to propel the small/mid-cap biotech space off of its recent lows," RBC's Health Care Equity team wrote in an April 18 note. "This aligns with our thesis going into 2023 that attractive valuations, catalysts, interest rate hike slowdowns, and M&A will drive upside for smid-cap biotech this year-- especially as many larger pharma/biotech stocks have already appreciated."
• The most recent such deal happened on Tuesday with GlaxoSmithKline's ( GSK ) ~$2B acquisition of Canadian Biotech Bellus Health ( BLU ).
• The biggest biotech deal so far this year came in March with Pfizer's ( NYSE: PFE ) $43B acquisition of cancer-focused Seagen ( NASDAQ: SGEN ).
• Recent positive catalysts from many biotechs combined with an increase in business development activity among them means that "takeouts should once again be on investors' minds and help smid-cap shares appreciate."
• Members of the RBC team listed what they think could be the next biotech takeout targets. Luca Issi believes that Alnylam Pharmaceuticals ( NASDAQ: ALNY ) could be next given its validated RNAi platform, five approved therapies, and $1B topline.
• Also on Issi's list is Arrowhead Pharmaceuticals ( ARWR ) due to their three late-state assets and RNAi platform.
• Gregory Renza likes IDEAYA Biosciences ( IDYA ) for its synthetic lethality platform and pipeline. Its most advanced candidate, darovasertib, is in phase 2. He also noted Morphic Holdings ( MORF ) due to the demonstrated mechanism of action of phase 2 candidate MORF-057 for inflammatory bowel disease.
• Brian Abrahams highlighted Intra-Cellular Therapies ( ITCI ) due to its commercial infrastructure and Karuna Therapeutics ( KRTX ) for phase 3 candidate KarXT for schizophenia and psychosis in Alzheimer's disease.
• Abrahams added Biogen ( NASDAQ: BIIB ) and Neurocrine Biosciences ( NBIX ) could be potential biotech acquirers.

For further details see: