Home Business 4 biotechs that could be the next takeout targets after AbbVie’s $63 billion acquisition of Allergan

4 biotechs that could be the next takeout targets after AbbVie’s $63 billion acquisition of Allergan

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4 biotechs that could be the next takeout targets after AbbVie’s $63 billion acquisition of Allergan
  • AbbVie’s recent deal for the pharmaceutical company Allergan is the latest in a string of healthcare mergers and acquisitions this year that have shifted the pharmaceutical industry’s landscape.
  • AbbVie is betting on Allergan’s cosmetic products, such as Botox, and other medical areas, including women’s health, neuroscience, and eye care.
  • Analysts at Stifel said four biotechs could be the next takeover targets: Revance Therapeutics, TherapeuticsMD, Aerie Pharmaceuticals, and Kala Pharmaceuticals.
  • Click here for more BI Prime stories.

The US drugmaker AbbVie just announced a megadeal to buy the pharmaceutical company Allergan for about $63 billion.

It’s only the latest in a string of active healthcare deals this year, with Bristol-Myers Squibb’s $74 billion proposed acquisition of Celgene and Eli Lilly’s $8 billion agreement to buy the biotech Loxo Oncology in January.

With Tuesday’s deal, AbbVie is betting on Allergan cosmetic products, including the well-known filler Botox and the fat-freezing procedure CoolSculpting.

But the drugmaker also clearly values Allergan’s other medical treatments in areas like women’s health, neuroscience, and eye care, the Stifel analysts Annabel Samimy and Nick Rubino said.

“This demonstration of interest could bring a host of other transactions that complement and build on franchises that [AbbVie] appears more committed to than [Allergan] has been,” they said.

There is, of course, no guarantee of future dealmaking, but this latest acquisition could foreshadow a “rebalancing” in Big Pharma, opening up doors to areas that have historically not gotten much interest, the Stifel team said.

Read more: 3 biotechs that investors should buy next after Pfizer’s $11 billion deal for cancer drugmaker Array BioPharma

Here are four biotechs that could also get acquired by AbbVie, thanks to its new focus.


Dave Kotinsky/Getty Images

Revance, based in Silicon Valley, has been around since 1999 and is developing an experimental product for frown lines, forehead lines, and crow’s feet that would compete with Botox. The product, Daxi, is in late-stage development, and the company plans to submit it for Food and Drug Administration approval this fall.

Revance is also working with the drugmaker Mylan to develop a copycat “biosimilar” version of Botox. The biotech also has experimental medicines in the works for a neurological movement disorder, migraines, the degenerative musculoskeletal condition plantar fasciitis, and more.

On Tuesday’s conference call with investors, AbbVie CEO Rick Gonzalez questioned whether another company would be able to make a biosimilar copycat of Botox. But “the jury is still out in our view,” the Stifel analyst team said.

Revance has a market value of $550 million, and the stock jumped 5% yesterday after the AbbVie-Allergan deal was announced.

The Stifel team rates Revance a “buy,” with a price target of $12.14 a share.

Women’s health clinic.

Dusan Petkovic/Getty Images

The Florida-based TherapeuticsMD was founded in 2008. It’s focused on medicines for women’s health, like treatments for menopause symptoms.

AbbVie’s interest in women’s health “bodes well for others in the space that could broaden the portfolio meaningfully,” the Stifel analysts said.

Other companies in women’s health, like Myovant Sciences and ObsEva, by contrast, compete with AbbVie drugs like the endometriosis drug Orilissa, they said.

The drugmaker has a market cap of about $610 million.


Dmitry Kalinovsky/Shutterstock

Founded in 2005 and headquartered in North Carolina, Aerie focuses on the development and commercialization of treatments for glaucoma, retinal disease, and other eye conditions.

It already has two approved drugs, Rhopressa and Rocklatan, for high eye pressure. Aerie is also developing an experimental implant for diabetic macular edema, which is being tested out in early- and mid-stage research trials.

While Stifel analysts don’t believe that eye care is of as much interest as women’s health to AbbVie, the drugmaker did call Allergan “a leader in glaucoma and dry eye,” the Stifel team said.

“We see AERI, with on-market Rhopressa/Rocklatan and a self-fueling pipeline, as an interesting target to maintain that leadership,” they said. The analysts’ rating for Aerie is “buy,” with a $30.32 price target.

Aerie has a market cap of about $1.3 billion.


Wikipedia

Founded in 2009 and based in Massachusetts, Kala Pharmaceuticals was named after a famous hiking trail in Hawaii known for its views.

The drugmaker is focused on eye disease, with its furthest-along product, KPT-121, in late development for the short-term treatment of dry eye.

Because that drug is so advanced, Kala could also be of interest to a company like AbbVie, the Stifel team said.

Kala has a market value of about $190 million.

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