3 of my favorite names on Wells Fargo’s biotech buy list

Late last week, Wells Fargo put up a big sum existing A potential and logical acquisition target in the biotechnology sector. They have focused on the middle class space for various reasons. He was one of the names mentioned in the report Viking Therapeutics Inc. (VKTX), which is also on my short list of potential biotech acquisitions. However, I recently covered a medium-sized GLP-1 issue on this conditionAnd I wasn’t alone (I, secondly) Here’s to Seeking Alpha to reach this conclusion.

Today, we’re highlighting three more names on Fargo’s list that I have in my portfolio and will make logical, strategic acquisitions for Big Pharma.

Let’s start with gene editing Intellia Therapeutics Inc (NTLA). Wells Fargo isn’t the only one to point out the company’s potential recently. Intellia was one of 14 biotech companies to do so Cantor Fitzgerald said it was worth it A second look In the first half of this month. Intellia Therapeutics also acquired some “Away from shouting“From the Seeking Alpha forum on the question of which gene editing concern will successfully gain FDA approval next.

With a market capitalization of about $2.4 billion, Intellia would make a small acquisition of any number of major pharmaceutical companies. The company’s most advanced gene editing candidate is NTLA-2001, which is being evaluated for the treatment of transthyretin amyloidosis (ATTR), a disease that affects 250,000 to 550,000 individuals globally. There are several approved products on the market for the treatment of ATTRv-PN and one for the treatment of ATTR-CM. However, they all require lifelong doses. NTLA-2001 targets both versions of ATTR and has the potential to be a one-time therapeutic solution. Management has identified this potential market at up to $10 billion by fiscal year 2029.

The company has just initiated a pivotal Phase 3 study “MAGNITUDE” evaluating NTLA-2001 for the treatment of ATTR-CM. Just over 750 individuals will be evaluated in this trial. The first person in the program was recently dosed. The company is currently in “to prepare” Phase III study evaluating the candidate against ATTR-PN. This program is in partnership with Regeneron Pharmaceutical Company (regen) Which shares 25% of the costs and profits of this effort. The company has a cash runway through 2026, and if all goes well, NTLA-2001 could be approved in 2027. The potential size of the ATTR market could attract interest from a larger suitor.

Arvinas Company (ARVN) Wells Fargo also made the list. This clinical-stage development company has roughly the same current market capitalization ($2.4 billion) as Intellia and also has financing ready to fund all planned activity through 2027. The company has several candidates in its pipeline that have come out of its PROTAC® platform. This technology allows Arvinas to produce protein analyzers to harness an individual’s natural protein disposition system to analyze and remove disease-causing proteins.

The company’s most advanced pipeline asset is a compound called Vepdegestrant, or ARV-471. This is an estrogen receptor (ER) targeting protein analyzer PROTAC® that is currently being evaluated for the treatment of women with advanced or metastatic ER-positive/human epidermal growth factor receptor 2 (HER2)-negative (ER+/HER2-) breast cancer.

As can be seen above, the company also has several other complexes in the pipeline, some of which are entering the third phase of development. Oncology has been one of the hottest areas for mergers and acquisitions for years, and is likely to remain so as the global oncology market estimated To $220 billion in 2024.

ARV-471 is being evaluated as monotherapy and in combination with a CDK inhibitor from IBRANCE Pfizer (PFE). Most importantly, Pfizer has put its money where its mouth is with this partnership, paying $650 million up front with a $350 million equity investment within this collaboration deal. Profits and costs are shared equally within this arrangement as well. Two Phase III studies, VERITAC-2 and VERITAC-3, are currently enrolled, the first of which is scheduled to be completed by the end of 2024.

Cantor Fitzgerald Out-of-service Arvinas as one of its top oncology biotech targets in March of this year. ARV-471/Ibrance combination therapy as well happened Fast track status in February this year as well. This combination therapy show up Good Phase 1 results in late 2023. Clearly, Pfizer would be the most logical choice for Arvinas given their deep partnership. Novartis AG (same) also I entered In a licensing agreement with Arvinas last month that involved Novartis paying $150 million up front, it’s worth noting.

Moving into the central nervous system (CNS) space, we’ll end up with Axum Therapeutics Inc. (Axism) It is slightly larger than our top two names with a market capitalization of just over $3.5 billion. Unlike Arvinas or Intellia, Axsome is a commercial biopharmaceutical company with two drugs already on the market. Both are approved in 2022. One is Sunosi, which treats sleep disorders associated with narcolepsy and obstructive sleep apnea. The other is Auvility which has been given the green light to treat major depressive disorder, or MDD. Net sales of Auvility products increased 240% in the first quarter year over year to $53.4 million. Sunosi’s revenue rose 64% year-over-year to $21.6 million.

In addition, the company has several late-stage compounds in development for the treatment of other central nervous system disorders, as can be seen above. The next most likely FDA approval is for AXS-12, which targets narcolepsy, since the compound has reached its preliminary stage. End point In a phase 3 trial in late March. The company also has promising late-stage candidates targeting migraines (AXS-07) and agitation (AXS-05) associated with Alzheimer’s disease. If all goes well, the company could have six approved drugs on the market by 2025 or shortly thereafter.

Given the depth of Axsome’s product portfolio and pipeline, it would be surprising if at least some of the larger pharma companies didn’t do so.”Kick the tires About a purchase. after Bristol Myers Squibb Company (Bmmi) Karuna Therapeutics (KRTX) was acquired by Axsome Therapeutics for $14 billion near the end of 2023. Axsome Therapeutics was on Cantor Fitzgerald’s short list existing Of potential central nervous system deals. Axsome ended the first quarter with just over $330 million of net cash on its balance sheet. Management reported within the quarterly earnings press release This should be enough to bring the company to profitability without additional capital raising.

Acquiring a portfolio property at a significant premium is always a great way to start the trading day. However, buyouts are few and far between, so it’s important that the investor likes the company as a standalone entity as well. two weeks ago, cytokinesis (CYTK) It would have been a top 10 potential biotech buyout. However, last week the company’s CEO decided to go it alone, and the company then failed to raise capital significantly, leading to a significant decline in the stock. I’ve covered these events in this condition last week.

The three companies highlighted in this article I own mostly through Covered call Collectibles. I’d love to wake up one day to see one of them acquired at a 90% buyout premium, but I also like their long-term prospects if that doesn’t happen.