When asked recently about which biopharmaceutical companies will be the most likely takeout targets in 2020, analysts at J.P. Morgan were most enthusiastic about Uniqure (NASDAQ:QURE), Amarin (NASDAQ:AMRN), and Acadia Pharmaceuticals (NASDAQ:ACAD).
What do these three biopharmaceutical companies have that makes them attractive to deep-pocketed pharmaceutical giants? Here's what you need to know.
1. Acadia Pharmaceuticals: Effective and safe
This company's developing an atypical antipsychotic drug called Nuplazid, for the treatment of psychosis brought on by chronic neurodegenerative disorders. Nuplazid's already approved to treat psychosis brought on by Parkinson's disease, and Acadia would like to expand its addressable patient population to include those with Alzheimer's disease and other forms of dementia.
In September, Acadia shares rocketed higher after investigators halted the phase 3 Harmony study early. During an interim analysis, it was already clear that patients in the placebo group were significantly more likely to experience delusions and hallucinations again than those treated with Nuplazid. The stock jumped again in December, after a thorough examination of safety data from the Harmony trial continued to cast Nuplazid in a favorable light.
In the U.S. alone, an estimated 5.8 million Alzheimer's disease patients experience debilitating bouts of psychosis. Sadly, there aren't any treatments approved to treat them. The Harmony study also included patients with several other types of dementia brought on by neurodegenerative disorders that lack treatment options. There are around 50 million people living with some form of dementia, which means Nuplazid sales could skyrocket if approved to prevent psychotic episodes for all of them.
As a treatment for Parkinson's-related psychosis, Nuplazid sales are expected to reach between $330 million and $340 million in 2019. Dementia-related psychosis is many times more common, which suggests approval to treat the larger population could add several billion in annual revenue to Acadia's, or a potential acquirer's top line.
2. Amarin: Blockbuster fish oil
There's an endless array of different fish oil supplements available, but Amarin's Vascepa is the only brand backed up by compelling data. During the long-term Reduce-IT study, adding Vascepa to regular statin therapy lowered patients' risk of a second heart attack by 27% compared with statin therapy on its own.
As a treatment for patients with super-high triglycerides, Vascepa sales reached just $285 million during the first nine months of 2019. Now that it's approved to prevent heart attacks among millions of high-risk patients who are already taking statins, sales could rise tenfold in a couple of years.
3. UniQure: A better vector
Big pharmaceutical companies that want to grow their presence in the gene therapy space will find UniQure's experimental gene therapies hard to pass over. It's hemophilia B candidates employ the same viral vector to deliver genes that lead to the production of a blood-clotting factor patients can't produce on their own.
Although efficacy results for UniQure's hemophilia program are encouraging, potential buyers are more interested in the safety profile associated with UniQure's viral vector. Viruses are pretty good at injecting genetic material into living cells, but they also present a significant risk.
Over the past couple of years, a troubling number of patients with various genetic disorders have developed dangerous immune reactions to experimental gene therapies. UniQure's an attractive takeout target because treatment with its gene therapy candidates hasn't resulted in any of the dangerous side effects that have sidelined the company's peers.
How much for that biotech in the window?
The reasons investors can expect buyout offers at a premium for these three companies are fairly straightforward. Whether their recent prices are reasonable, though, is still up for debate.
Acadia's market cap has risen to $7 billion at recent prices, which could lead to a serious case of buyer's remorse if Nuplazid doesn't earn approval for dementia-driven psychosis.
At just $3 billion, Uniqure's the least expensive takeout target on this list, but it's also the riskiest. You can still count on your hands and toes the number of patients who have been exposed to the company's viral vector, which means there's a chance it could be more dangerous than available data suggests.
The FDA approved Amarin's Vascepa for the prevention of a second heart attack in December, but the fish oil supplement had already started gaining popularity. Third-quarter Vascepa sales rose 103% year over year to $112 million. Amarin's a $7.5 billion company at the moment, but it looks like a safer acquisition target for any big pharma trying to expand its product lineup.