Investors were none too pleased with AbbVie’s planned $63 billion buyout of Allergan, which they made clear by shaving $18 billion off the acquirer’s market cap by the end of the day Tuesday. As the analysts at RBC Capital Markets in New York watched it all play out, they wondered, will there be more Big Pharma takeouts in the weeks to come, despite the negative reaction?

So RBC dashed out a quick survey and sent it out to clients, asking them to predict whether or not M&A activity would remain strong in the sector, and if so, which companies would be most likely to emerge as top targets.

The analysts concluded in a note sent to investors on Wednesday that dealmaking would indeed remain strong for the rest of the year. But the list of possible targets was so eclectic they were left scratching their heads over the question of who would be taken out next.

The most popular takeout target cited by RBC’s survey respondents was uniQure, the gene therapy pioneer that struggled so mightily to market its $1 million product, Glybera, in Europe that it declined to renew the product’s marketing authorization when it expired in 2017. But then it engineered a turnaround, ushering a gene therapy for hemophilia into phase 3 trials.

Last week, reports emerged that uniQure is now weighing options for a sale or partnership. Analysts pegged Novo Nordisk, Pfizer and Sanofi as the most likely suitors. But they’ll have to lay out plenty to get it: uniQure’s stock has skyrocketed more than 160% this year.

The AbbVie/Allergan marriage is the latest evidence of M&A's resurgence in biopharma this year. The first hint that 2019 would be a big year for dealmaking emerged in December of last year, when GlaxoSmithKline paid $5 billion for oncology player Tesaro. Then Bristol-Myers Squibb kicked off the new year by announcing its $74 billion buyout of Celgene and Eli Lilly picked up Loxo Oncology for $8 billion. Now, Roche is trying to buy Spark Therapeutics for $4 billion and Pfizer plans to acquirecancer drugmaker Array BioPharma for $14 billion.

Several other companies, ranging in size, were cited by RBC respondents as the next most likely acquisition targets. AstraZeneca and Biogen were the most popular names among the large-cap biopharmas. Investors picked Biohaven, Blueprint Medicines and the Medicines Company as the tastiest among the smaller companies.

Biogen's appearance on the list is no surprise, given the amount of pressure the company is under to pursue deals. After the failure of its phase 3 Alzheimer’s drug, aducanumab, earlier this year, several Wall Street analysts predicted the company would either need to do a big deal itself to prop up its pipeline, or risk getting bought itself.

Biogen’s share price is down more than 25% since the Alzheimer’s failure was announced in March—underperformance that Bloomberg also noted today in a story citing the company as a top takeover target.

Biogen did buy gene therapy player Nightstar Therapeutics in March for $877 million, but most analysts concluded that wouldn’t be enough to move the needle, given that its blockbuster multiple sclerosis drug Tecfidera is facing patent challenges.

One of the investors responding to RBC’s survey on M&A sentiment had a noteworthy pick for a top target: "none." That was prompted by AbbVie’s stock slide after the Allergan deal was announced, of course. But RBC analyst Kennen MacKay didn’t agree.

The overriding sentiment in the pharma sector for the rest of 2019 "will be fueled by M&A activity," MacKay wrote, though "predicting major deals will remain difficult and a majority will be smaller, earlier stage bolt-ons in light of more favorable valuations."

-----------------------------------------------------------------------
Editor's Note:

If you have any suggestion to the content, 

please email: Julia.Zhang@ubmsinoexpo.com