Today's Top Biotech Stocks to Watch: AbbVie, Merrimack Pharmaceuticals, and Shire plc

Today's top stories in health care and biotech.

Jun 20, 2014 at 9:00AM


Let's take a look at today's top stories in biotech and health care. Keep an eye out for AbbVie (NYSE:ABBV), Merrimack Pharmaceuticals (NASDAQ:MACK) and Shire (NASDAQ:SHPG)

Shire says no deal to AbbVie
Shares of Irish drugmaker Shire are up over 10% in premarket this morning after news hit the Street that the company rejected a $46.5 billion merger offer from AbbVie. Per Shire's response, this is the third offer from AbbVie in the last two months. The latest proposal comes at roughly a 25% premium compared to Shire's closing price yesterday and a 30% premium relative to the company's average share price over the last 30 days.

Shire decided to nix the deal primarily because it believes it significantly undervalues the company's recent acquisitions in the orphan drug market, which are expected to see sales reach $10 billion by 2020.

AbbVie's interest in Shire apparently centers on lowering its current tax rate. According to the press release, AbbVie planned on forming a new U.S. listed entity that would be domiciled overseas. In other words, Shire's Dublin address is attracting interest from potential buyers, not necessarily its rapidly growing product portfolio.

What's particularly interesting is that AbbVie and Shire don't have many synergies portfolio-wise, further suggesting this offer was almost exclusively about taxes. If that's the case, we will more than likely hear other offers come Shire's way in the near future. So, stay tuned. 

Sanofi bids farewell to Merrimack's once promising cancer treatment 
Merrimack shares plummeted by 11% in after hours trading yesterday following an announcement that the company reached a deal with Sanofi (NYSE:SNY) to regain worldwide rights to develop and commercialize MM-121. MM-121 is a monoclonal antibody that blocks ErbB3 activation in patients with heregulin-positive tumors and has been tested in a number of cancer types. In a particularly disappointing turn of events, however, MM-121 failed to show a clinical benefit last year for patients afflicted with treatment-resistant or refractory-advanced ovarian cancer. 

Sanofi will still fund the ongoing midstage trials for MM-121 for the next six months, which are highlighted by a triple-negative breast cancer study that the company hopes could lead to a regulatory filing down the road. That being said, the clinical update provided yesterday as part of the press release showed that the adverse event rate was nearly double in the treatment compared to the control group (28.1% vs. 15.6%). 

What's key to understand is that Merrimack is losing a major long-term partner for one its most closely watched clinical products. Moreover, Merrimack will have to take on the added expense of furthering MM-121's clinical development at a time when it's preparing for a key regulatory filing for MM-398 as a second line pancreatic cancer treatment. In short, I don't think this news bodes well for MM-121's prospects going forward and could present problems for the company from a financial standpoint as well.

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George Budwell has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

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The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

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KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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