The year is still young, but we've already seen acquisitions of Ariad and CoLucid. Which biotechs could be scooped up next in 2017? Here's why Clovis Oncology (NASDAQ:CLVS), Intercept Pharmaceuticals (NASDAQ:ICPT), and Jazz Pharmaceuticals (NASDAQ:JAZZ) could be at the top of the list.

Clovis: Oncology space is hot

The number of big companies battling to acquire Medivation in 2016 shows that the oncology space is hot. I suspect Clovis Oncology could attract attention this year for several reasons.

Cancer cell

Image source: Getty Images.

First, the fact that Clovis already has an approved cancer drug is a big plus for prospect buyers. Clovis won accelerated approval from the Food and Drug Administration in December for Rubraca as a third-line treatment for advanced ovarian cancer. 

Second, the opportunities for Rubraca are significant. Peak sales estimates for the drug are all over the map, but some analysts project sales of $1 billion or more could be achievable. Although Clovis doesn't have any other candidates in its pipeline, the company does have a late-stage study evaluating Rubraca as a maintenance treatment for ovarian cancer and has an early-stage trial of the drug in combination with Roche's (NASDAQOTH: RHHBY) Tecentriq in treating gynecologic cancers.

Third, Clovis owns global rights for Rubraca. Many biotechs with promising cancer drugs license commercialization rights for some geographies to larger companies. Because Clovis has not done so, it should be more appealing to potential acquirers.

Intercept: The dash into NASH

Another hot therapeutic area these days is non-alcoholic steatohepatitis (NASH). There is no approved treatment for the liver disorder, but Intercept is one of a couple of small biotechs in the lead positions in the race to develop a successful NASH treatment.

Intercept's obeticholic acid (OCA) is currently in a late-stage clinical study targeting treatment of NASH. The farnesoid X receptor (FXR) agonist showed promising results in a mid-stage study in improving fibrosis in patients with NASH. So far, OCA is the only experimental NASH drug to receive the FDA's breakthrough therapy designation.

While several large drugmakers are already developing potential NASH treatments or have acquired smaller biotechs with NASH candidates, the potential market is lucrative enough that it could draw others into the fray. Intercept's headstart with OCA could make it a tempting target.

Even better, Intercept is already generating some revenue from the drug. The biotech won FDA approval for OCA last year in treating primary biliary cholangitis (PBC), another inflammatory liver disease. 

Jazz: Great bang for the buck

Like Clovis Oncology, Jazz Pharmaceuticals already has an approved cancer treatment on the market -- acute lymphoblastic leukemia (ALL) drug Erwinase. However, it's not Erwinase that could put Jazz on the radar screen for potential buyers.

Jazz's top-selling drug is Xyrem, which treats two common symptoms of narcolepsy: excessive daytime sleepiness (EDS) and cataplexy (a sudden weakening of muscles). When the company reports its full-year results for 2016, I expect Xyrem's sales will exceed $1 billion. 

There is a risk that sales for the drug could be in jeopardy. The FDA recently approved a generic version of Xyrem. However, Jazz has filed a lawsuit alleging patent infringement. Jazz doesn't think a launch of the generic drug is likely prior to a decision in this litigation.

Potential buyers are also likely to be interested in experimental acute myeloid leukemia (AML) drug Vyxeos. Jazz picked up Vyxeos in an acquisition of its own last year. The company plans to complete its submission for U.S. regulatory approval of the drug early this year. Analysts project peak annual sales approaching $400 million for Vyxeos. However, that figure could go higher if Jazz can expand the label for the drug in treating other blood cancers. 

Assuming Jazz is successful in fending off generic rivals to Xyrem, the company looks to be one of the best bargains around. The stock currently trades at less than 11 times forward earnings. Wall Street projects annual earnings growth of more than 17% over the next few years.