Monday Merger Mania Just Made These 2 Biotech Stocks Big Winners

Wall Street came into the new week with a lot of anxiety about bank stocks, and there was a ton of volatility in the markets as a result. In the end, major stock indexes were mixed, with the Nasdaq Composite (^IXIC -1.05%) managing to post a solid gain. Things weren't as good for the Dow Jones Industrial Average (^DJI 0.40%) and S&P 500 (^GSPC -0.33%), but their losses were still fairly modest.

Data source: Yahoo! Finance.

With so much attention on the financial sector, it might seem strange that companies in other sectors tried to go forward with business as usual. In fact, a pair of biotech stocks saw their shares rise sharply because of acquisition bids they received. Read on to learn why Provention Bio (PRVB) and Seagen (SGEN) were big winners on a tough day for the markets.

Sanofi buys up Provention Bio

Shares of Provention Bio more than tripled on Monday. The biopharmaceutical company got a buyout bid from Sanofi (SNY 1.92%) for far above the market capitalization that Provention shareholders had put on the company at the end of last week.

Sanofi and Provention reported Monday morning that they had reached agreement on a deal valuing the smaller biotech at $2.9 billion. Under the terms of the deal, Provention shareholders will receive $25 per share in cash for their stock. That compares to a closing stock price last Friday of just $6.70.

Sanofi said that Provention makes a smart strategic fit. Sanofi has tried to focus on growing its expertise in treating immune-mediated diseases and producing disease-modifying therapies where needs are greatest, and it also has significant experience in diabetes treatment. That makes Provention's TZield therapy, which got approval last year from the Food and Drug Administration (FDA) for delaying the onset of stage 3 Type 1 diabetes, a valuable addition to Sanofi's overall arsenal.

Paying more than triple the share price for an acquisition might seem expensive, but Sanofi shareholders didn't seem upset, as the larger stock was down just 0.5% on the day. Biotech seems ripe for consolidation, and Sanofi is working hard to preserve its competitive position against other large pharmaceutical companies worldwide.

Pfizer pays up for Seagen

Shares of Seagen were up just 15% on Monday. But the acquisition bid that Seagen got from Pfizer (PFE 1.46%) was much larger and could have an even bigger impact in treating one of the most common and deadly diseases.

Pfizer and Seagen announced a $43 billion merger Monday morning, with Seagen shareholders set to receive $229 per share in cash for their stock. Pfizer cast the move as an investment in fighting cancer, highlighting Seagen's focus on coming up with innovative and transformative cancer medicines.

Pfizer was incredibly optimistic about how Seagen will help its business. The larger drug giant believes that Seagen could add more than $10 billion in revenue by 2030 and foster further growth beyond that date. In particular, Seagen's antibody drug conjugate (ADC) technology has been part of multiple FDA-approved treatments, and ADCs are proving to be a crucial tool in fighting cancer.

Some might fear that a larger deal could draw antitrust scrutiny, but at least so far, few investors seem concerned about the merger being blocked. Nevertheless, shareholders should be prepared to wait, since the deal might not close until the end of the year or even into early 2024.