The Zhitong Finance App learned that Wells Fargo released its annual list of potential mergers and acquisitions in the biopharmaceutical industry, adding diet drug developers Viking Therapeutics (VKTX.US), gene editing company CRISPR Therapeutics (CRSP.US), and Intellia Therapeutics (NTLA.US) to the list of potential acquisition targets in 2024.
The investment bank identified 31 such companies in the biopharmaceutical small to medium cap sector, which are highly or moderately suitable for the following large pharmaceutical companies: ABBV.US (ABBV.US), Amgen (AMGN.US), Squibb (BMY.US), Gilead Sciences (GILD.US), MSD (MRK.US), and PFE.US (PFE.US).
At the time of publication of the report, biopharmaceutical mergers and acquisitions were on the rise. Data analysis company GlobalData said in a recently released report that compared to the same period last year, transactions worth $1 billion and more in the pharmaceutical and biotech industry increased 71% in the first quarter of 2024.
In detailing its screening methods, Wells Fargo said it initially selected biopharmaceutical companies with a market capitalization of $750 million to $20 billion, then selected those that met its revenue and growth criteria.
The final list includes companies that are strategically suited to large biopharmaceutical companies, as well as companies that are unlikely to raise antitrust concerns during mergers and acquisitions.
Wells Fargo believes small to medium cap stocks likely to be acquired in 2024 include argenx SE (ARGX.US), Aliram Pharmaceuticals (ALNY.US), Viking Therapeutics, Intra-Cellular Therapies (ITCI.US), Revolution Medicines (RVMD.US), Blueprint Medicines (BPMC.US), and Cytokinetics ( CYTK.US), BridgeBio Pharma (BBIO.US), Apellis Pharmaceuticals (APLS.US), Madrigal Pharmacecals (MDGL.US), ImmunityBio (IBRX.US), CRISPR Therapeutics, Krystal Biotech (KRYS.US), Immovant (IMVT.US), Insmed ( INSM.US), Axsome Therapeucs (AXSM.US), Biohaven (BHVN.US), Arrowhead Pharmaceuticals (ARWR.US), IDEAYA Biosciences (IDYA.US), Xenon Pharmacecals (XENE.US), Iovance Biotheraputics (IOVA.US), Amicus Therapeutics (FOLD.US), Avidity Bioscience (RNA.US), Immunocore (IMCR.US), TG Therapeucs (TGTX.US), Intellia Therapeutics, MoonLake Immunotheraputics (MLTX.US), Rhythm Pharmaceuticals (RYTM.US), Arvinas ( ARVN.US), Ardelix (ARDX.US), and Verona Pharma (VRNA.US).
Analysts led by Mohit Bansal wrote, “These are mid to late stage companies with relatively low risk, which may complement the growth of the companies we cover from 2025 to 2030.”
Additionally, the team identified another group of companies that were strategically suited to large-cap stocks but failed to meet size and other screening criteria.
These companies include Neurosecretory Biosciences (NBIX.US), New Zealand Pharma (ZLDPF.US), Arcellx (ACLX.US), Denali Therapeutics (DNLI.US), Apogee Therapeutics (APGE.US), Beam Therapeutics (BEAM.US), Bavarian Nordic (BVNKF.US), CG Oncology (CGON.US), Agios Pharmaceuticals (AGIO.US), Edgewise Therapeutics (EWTX.US), Harmony Biosciences (HRMY.US), Arcus Bioscience (RCUS.US), Morphic Holding (MORF.US), Xencor (XNCR.US), Day One Biopharmaceutics (DAWN.US), Cullinan Therapeucs (CGEM.US), Mirum Pharmaceuticals (MIRM.US), Arcutis Biotheraputics (ARQT.US), Nurix Therapeutics (NRIX.US), and Bicycle Therapeucs (BCYC.US).
As for the future of mergers and acquisitions, Wells Fargo anticipates that given MSD's strong financial position and potentially low competition, the company will dominate the deal.
Analysts believe that although MSD has the ability to carry out large-scale transactions worth more than $10 billion, it is often conservative in its transactions. Earlier this year, the pharmaceutical giant bought immunotherapy developer Harspoon Therapeutics for $680 million.
Meanwhile, Wells Fargo believes that as biopharmaceutical mergers and acquisitions hit a record high in 2023, “constraining balance sheets and/or prioritizing deleveraging and execution” has become the dominant theme for large-cap stocks.
Therefore, with the exception of MSD, Wells Fargo expects small-scale mergers and acquisitions (worth about US$5 billion) to be the main element of recent transactions.
According to information, many companies on Wells Fargo's forecast list last year were successfully acquired, including: 8 highly or moderately suitable companies entered its 2023 biopharmaceutical merger and acquisition list, and these companies were also acquired last year. In addition, other companies, including Point Biopharma acquired by LLY.US (LLY.US), entered its list of strategic suitability but not the valuation and growth criteria.