There have been a lot of high-profile acquisitions in the biopharmaceutical space, and it probably isn't going to stop at AbbVie's $63 billion offer for Allergan.
These two biotech stocks are widely considered next in line to receive juicy buyout offers from larger drugmakers blessed with profits now, but unlikely to launch enough new blockbuster drugs to keep their bottom line moving in the right direction.
|Company||Lead Asset||Indication||Market Cap|
|Amarin (NASDAQ:AMRN)||Vascepa||Dyslipidemia||$5.9 billion|
|Blueprint Medicines (NASDAQ:BPMC)||avapritinib||Cancer||
Before the end of 2019, these stocks could jump in response to a buyout offer at a premium price. Here's what you need to know about the opportunities and potential challenges facing these takeout targets.
1. Amarin: Fish oil for the masses
In May, Amarin told investors that the Food and Drug Administration accepted its supplemental new drug application (sNDA) for Vascepa, the company's purified, EPA-only fish oil formulation, and even promised a speedy review of six months or less.
You may remember that this stock rocketed 600% higher in 2018 after the company announced surprising results from a long-term outcome study with Vascepa and people who have stubbornly high triglyceride levels despite managing their cholesterol with statin therapy. That was because the group of patients who added Amarin's fish oil to their daily regimen were 26% less likely to suffer a heart attack or stroke.
The results received so much attention that annual Vascepa sales soared 27% to $229 million in 2018, and it finished the first quarter on pace to record $300 million in 2019. A big pharmaceutical company with a heavy hand in the cardiovascular space, for example, Novartis, might like to add Vascepa to their lineup.
If the FDA expands Vascepa's prescribing label to include statin-using patients with high triglycerides, annual sales could reach $2 billion at their peak. At recent prices, Amarin sports a $6.1 billion market cap, offering a modest premium to recent prices would make it tough to earn a return unless Vascepa exceeds expectations.
2. Blueprint Medicines: Array BioPharma 2.0?
Eli Lilly's $8 billion acquisition of Loxo Oncology and Pfizer's recent $11.4 billion splurge for Array BioPharma (NASDAQ:ARRY) shined a light on an important industry trend that doesn't get nearly as much attention as it deserves. Small-molecule drugs performing jobs that are too delicate for huge biologics are some of the most successful new cancer treatment options.
Blueprint Medicines is on its way to becoming the next big player in this field now that Array probably isn't taking new customers. For a long time, we've known of different proteins that can go haywire and start promoting tumor growth, but inhibiting their activity has long been considered impossible. For the past several years, Array Biopharma's been the place to go for drug candidates aimed at difficult-to-reach targets, and Blueprint Medicines looks like it's got the secret sauce for developing them, too.
Blueprint's lead candidate, avapritinib, shrank tumors or stopped them from growing for 22% people with gastrointestinal stromal tumors (GIST) with a 10.2-month median duration of response. That might not seem too impressive at first, but bear in mind that these were patients who had already failed at least three previous lines of treatment and often more.
A group of first- and second-line GIST patients with tumors that harbor a specific mutation were treated with avapritinib as well. An impressive 86% of this group showed stable disease or tumor shrinkage.
Blueprint has submitted an application to the FDA for avapritinib, and we should know by mid-August if the agency will agree to review that application. Since there aren't any effective treatment options for this patient group, a speedy approval seems likely.
Blueprint Medicines may need to prove itself successful more than once, and it will have a chance soon. A new drug candidate aimed at lung cancer patients with RET-altered tumors will begin a phase 3 study in the second half of 2019, and the FDA could receive a second application from the company in the first half of 2020.
There's a solid chance that both of these biotechs will receive buyout offers. Amarin's chances of attracting a buyer ready to pay a premium to acquire one drug, Vascepa are not great. Although heart disease is still the leading cause of death in the U.S., new cardiovascular drugs have had trouble getting off the ground in recent years.
Blueprint doesn't have anything to sell now, which makes it a riskier option. It still has a pretty good shot at receiving an acquisition offer at its lower price. That's because in just four years as a publicly traded company, its pipeline boasts a targeted cancer drug at the gates of commercialization, one in phase 3, plus two more in phase 1 clinical trials.
With all the excitement over the kind of drugs that Blueprint seems pretty good at discovering, the phone's probably been ringing off the hook. It will be surprising to see 2019 finish without a juicy buyout offer. Even if it doesn't, Blueprint Medicines looks like a stock worth buying for the long haul.