The biopharmaceutical mergers and acquisitions landscape has been piping hot over the last few years.
Names such as Avexis, Clementia, Kite Pharma, Juno Therapeutics, Nightstar Therapeutics, and Spark Therapeutics have been acquired in recent years, some at jaw-dropping premiums.
A few trends have emerged in the past few years in the biotech M&A space that can help investors identify other companies that could be more likely to be acquired.
Among them, much of the recent M&A activity has happened with companies that have IPO’d within one to five years of being acquired. Companies that work on orphan drugs, genomics, and gene/cell therapies have also been hot buyout targets for the last several years. And companies that have candidates in late-stage clinical trials or have recently gained an approval have also been scooped up quickly by bigger fish.
There are two companies that meet this set of criteria currently, and both look like attractive possible takeover targets.
The first is Crispr Therapeutics (NASDAQ: CRSP). CRSP went public in 2016, and as its name suggests, it is in the gene editing business by way of CRISPR, which is short for “clustered regulatory interspaced short palindromic repeats.” CRISPR is a family of DNA sequences that allow researchers and drug developers to manipulate longer spans of genetic material rather than repair one small segment of genetic material.
The company’s pipeline includes treatments for hemoglobinopathies, several cancers, diabetes, and other genetic diseases. Crispr partnered Vertex Pharmaceuticals (NASDAQ: VRTX) to evaluate their CRISPR/cas9 treatment CTX001in two rare blood disorders, beta thalassemia and sickle cell disease.
The experimental gene therapy involves editing a patient’s stem cells outside of their body with the CRISPR/cas9 technology before then reintroducing the cells back into the patients to allow for the production of fetal hemoglobin to begin again. The treatment is meant to help patients with transfusion-dependent thalassemia and severe sickle-cell disease reduce their dependence on frequent blood transfusions. As frequent transfusions are expensive and painful, a one-time treatment such as CTX001 would be a game-changer for both insurers and patients.
Crispr treated its first patient with CTX001 in February. It plans to treat two thalassemia patients first, and then wait for the safety data before adding additional patients. If CTX001 successfully helps these patients produce enough fetal hemoglobin to negate the need for transfusions, Crispr’s stock is likely to skyrocket and such a success would certainly put the company’s name at the top of the buyout rumor stack.
The second company that could see some buyout offers is Atara Biotherapeutics (NASDAQ: ATRA).
Atara is known for its off-the-shelf allogeneic T-cell immunotherapy platform. Gilead Sciences (NASDAQ: GILD) and Novartis both boast anti-cancer cell therapies with fantastic efficacy profiles however, both have problematic safety issues and are difficult to manufacture at commercial scales. Atara’s tabelecleucel treatment, which is currently in the middle of two late-stage trials, should solve both of these issues.
The company is expected to report top-line data from tabelecleucel’s late-stage trials within the first half of this year, which sets up a possible regulatory filing by mid-2020. What’s exciting about that is that the first company to market with an off-the-shelf T-cell immunotherapy will be an enticing buyout candidate, and both Gilead and Novartis could be promising suitors.