After selling its stake in a biosimilar joint venture with Samsung Biologics, Biogen (BIIB -0.61%) has reportedly now brought Goldman Sachs on board to identify potential acquisition targets. In this segment from "This Week in Healthcare," Motley Fool contributors Brian Orelli and Keith Speights review some of the pharmaceutical companies on Biogen's short list.
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Brian Orelli: Biogen sold off its stake in its biosimilar joint venture that it has with Samsung Biologics. What did you think of the move?
Keith Speights: I think it's probably a good move for Biogen. The company has not reported its Q4 results yet, as we're talking today, those results are coming up pretty soon. But in Biogen's Q3 update, the company's biosimilar portfolio actually fell a little year over year in terms of total revenue generated. This isn't a growth driver for Biogen, at least not right now. The company is on track to make a little over 800 million dollars in 2021 from its biosimilar business. That's a substantial amount of money, but again, it's not a big growth driver. The company's selling its part of this joint venture to Samsung for 2.3 billion dollars. That tells me that Biogen really isn't expecting its biosimilar portfolio to deliver impressive growth over the next few years. I think the company saw the future and that this isn't going to be as big of a growth drivers it had hope for and decided to sell out now.
Brian Orelli: Yeah, I think, probably, the other thing is these may not be very profitable drugs compared to its branded drugs because they have to be sold for a lower price and their biologics, so they have fairly high input costs as well.
Keith Speights: Yeah.
Brian Orelli: Then with the Biogen having some newfound cash, thanks to selling off at stake of its biosimilar's business. What do you think Biogen might do with that additional cash?
Keith Speights: All right, this is an easy one, Brian, because Biogen has reportedly brought Goldman Sachs on board to identify potential acquisition targets. I think Biogen is going to use this cash to go on a shopping spree, selling the biosimilars business, it does give it more money to spend on an acquisition.
Potential takeover targets reportedly on the shortlist and we're not for sure on this, but reportedly on the shortlist include our Aurinia Pharmaceuticals, ticker there is AUPH. Biohaven Pharmaceuticals, ticker there is BHVN, and Amylyx Pharmaceuticals, which has not conducted its IPO yet, but is hoping to do so. My view is that Biogen definitely needs an acquisition right now to provide a spark, especially considering its struggles with Ingelheim, stagnating sales force, multiple sclerosis franchise. Biohaven would be the priciest of those companies on that potential short list. Its market cap currently tops eight billion dollars. Analytics doesn't have a product on the market yet, but it has filed for FDA approval of AMX0035 and treating amyotrophic lateral sclerosis or ALS. Biohaven is maybe the in-between possibility, its market cap's around two billion dollars, company already has a drug on the market. It's a migraine drug neurotech ODT. Its sales are growing fast. I don't know if Biogen will actually buy any of these three companies, but those are the ones that are supposedly on the short list.