The biotech sector saw a surge of M&A activity at the end of 2023. Major deals to acquire ImmunoGen, Inc. (IMGN), Cerevel Therapeutics Holdings, Inc. (CERE) and Karuna Therapeutics, Inc. (KRTX) all took place in the final five weeks of last year. Each purchase contained a substantial buyout premium as well for shareholders. The uptick in deal volume was one of key drivers of the 50% rally that took place from the SPDR® S&P Biotech ETF (XBI) off its late October lows. That rally has ebbed in recent weeks as has new deal flow. However, 2024 should be a solid year for acquisitions in the biotech/biopharma space. Big drug makers have large amounts of cash sitting on their balance sheets. Blockbuster drugs like Lynparza from AstraZeneca PLC (AZN) and Xarelto from Janssen Pharmaceuticals, a division of Johnson & Johnson (JNJ) face key patent expirations . Other large drug concerns like Pfizer (PFE) have seen Covid vaccine sales fall dramatically from their peaks. Oncology has been and will likely remain a key area for M&A activity. However, today we will highlight three non-oncology focused biotech/biopharma concerns that would make logical and speculated buyout targets. Let’s start with Cytokinetics, Incorporated (CYTK) whose CEO stated last week the company was perfectly good remaining a standalone entity. There has already been speculation that either Amgen (AMGN) or Novartis (NVS) could be possible acquirers, but the board was reportedly holding out for $130 to $145 a share, which seems a bridge too far at the moment. UBS stated in late January that $105 a share was a more reasonable buyout price. The company’s CFO resigned in early February which clouded the picture around a potential takeout. This takeout chatter was triggered when the company posted approval-worthy results from a Phase 3 study evaluating its lead drug candidate aficamten for the treatment of symptomatic obstructive hypertrophic cardiomyopathy (oHCM) in late December. All of this news flow has resulted in a wild ride for shareholders over the past three months (see above). HCM impacts just under 300,000 diagnosed in the United States. An estimated 400,000-800,000 additional patients are believed to remain undiagnosed. This is the target market aficamten is aiming for. HCM is currently addressed with cardio myosin inhibitors, non-vasodilating beta blockers, calcium and sodium channel blockers, but approximately one-third of oHCM patients do not improve, which can lead to more invasive procedures. A dozen analyst firms including Goldman Sachs, Jefferies, Barclays and Piper Sandler have reiterated/assigned Buy/Outperform ratings on the stock since Phase 3 study data was posted near the close of last year. Price targets range from $78 to $122 a share with the median price target in the high $90s. Given the size of the target market and a market cap of just less than $7 billion, CYTK would be one of least surprising acquisitions that could occur in 2024. ACADIA Pharmaceuticals Inc. (ACAD) has had the opposite journey in recent trading action compared to Cytokinetics, and for good reason. The company announced last week that its key asset pimavanserin (known by the brand name Nuplazid), that was being evaluated for the treatment of negative symptoms of schizophrenia in a Phase 3 study, did not meet the trial’s primary endpoint. Nuplazid is the only FDA-approved treatment for hallucinations and delusions associated with Parkinson’s disease psychosis. The compound did nearly $550 million in sales last year and is seeing mid-single digits sales growth. The compound has seen some patent litigation, which Acadia had a key legal victory around a few months ago. Management has stated it sees its ‘composition of matter’ patents holding, which will ward off any generic competition to 2030. In addition to Nuplazid, the company’s drug trofinetide (brand name Daybue) became the only FDA treatment for the rare disease Rett Syndrome in the spring of last year. The treatment has gained significant initial traction in the market and management has guided it sees between $370 million to $420 million in net product sales for the drug in FY2024. The company should file a marketing application for Daybue in Canada soon and one in Europe early in 2025. Daybue’s success is driving the company towards profitability. ACADIA lost 37 cents a share in FY2023 on just over $725 million in sales. The current analyst firm consensus sees the company having profits of 67 cents a share in FY2024 as revenues rise to nearly $970 million. Besides Nuplazid and Daybue, the company has a couple of other compounds in development. However, its only late-stage effort is targeting hyperphagia for Prader-Willi Syndrome patients and is currently being evaluated in an ongoing Phase 3 study. ACADIA also commenced a Phase 2 study evaluating ACP-204 for the treatment of Alzheimer’s disease psychosis in the fourth quarter. With the overall market for Nuplazid now well-defined and a successful launch of Daybue, ACADIA seems a logical buyout target. The stock has a market cap of just a tad over $3 billion and Acadia should end FY2024 with a cash pile of between $585 million to $655 million according to company guidance. ACADIA Pharmaceuticals seems a good pickup for a larger CNS focused concern with an existing sales force. That would allow the acquirer to slash SG&A costs (just over $400 million in FY2023) drastically and make a buyout in the mid to high $20s quite accretive to the acquiring company. We will end with Viking Therapeutics (VKTX), a stock that has a recent trajectory very similar to Cytokinetics in 2024. Viking is one of several smaller firms targeting the large, growing and potentially massive GLP-1 weight loss market that is currently dominated by entrants from drug giants Eli Lilly (LLY) and Novo Nordisk (NVO). In late February, Viking’s entrant VK2735, once-weekly, subcutaneously delivered dual agonist of glucagon-like peptide 1 (GLP-1) and glucose-dependent insulinotropic peptide (GIP) receptors posted very strong results in a mid-stage study. The company smartly used the spike in the stock to raise an additional $550 million of funding via a secondary offering . These proceeds extended the company’s cash runway to 2027. The GLP-1 drug class are predicted to be the biggest selling category within the pharma market by the of this year and reach $100 billion in annual sales by 2029. Results from an earlier stage trial for an oral version of VK2735 should also be out shortly. Jefferies recently speculated this compound could have $12 billion potential peak sales potential. Viking also has a pipeline candidate targeting NASH, another huge potential market. Some additional data from a promising mid-stage study for that compound ‘VK2809’ will be out before the close of the first half of this year. With a market cap of just under $7 billion, Viking would make an intriguing acquisition for a large drug company wanting to enter the burgeoning GLP-1 space and this also give the acquirer a promising NASH asset as well. Since VK2735 trial results posted, ten analyst firms including Jefferies, Oppenheimer and BTIG have reissued/assigned Buy/Outperform ratings on VKTX. Price targets proffered range from $90 to $120 a share. And those are three biotech/biopharma companies that should be on a list of logical names that could be acquired in 2024. Live Chat on The Biotech Forum has been dominated by discussion of lucrative buy-write or covered call opportunities on selected biotech stocks over the past several months. 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