Despite the massive changes in value that some small-cap biotech companies have seen before and during this year's American Society of Clinical Oncology (ASCO) annual meeting, the big winner from the confab is actually large pharmaceutical companies.
Many of the drugs that showed promising results are already partnered up. Johnson & Johnson
But even the small drug developers with promising compounds that aren't partnered with pharmaceutical companies are good news for big pharma. When companies like Genentech or Celgene
Many pharmaceutical companies' pipelines haven't grown as fast as their revenue -- multibillion-dollar blockbusters like Pfizer's Lipitor, Merck's
And they're cheap, too. At under $200 million market caps, adding them outright or through a licensing deal would be close to a rounding error compared to the pharma megamergers we've seen recently.
Should investors jump in before pharma does? It's not a bad idea to stay ahead of the curve, but be careful. Many of these companies aren't in the best shape financially, which puts them in a precarious negotiating situation. OncoGenex, for instance, had under $10 million in cash at the end of last quarter; it needs a big pharma partner as much as big pharma needs it.