SA Asks: Which biotechs are most likely to be acquired near-term?

Last year's first quarter saw a flurry of biotech takeover deals, starting off with Johnson & Johnson (JNJ)/Ambrx, Merck (MRK)/Harpoon, GSK (GSK)/Aiolos and Novartis(NVS)/Calypso in early January.

Other major deals announced before the end of the quarter included Gilead (GILD)/CymaBay, Novartis (NVS)/MorphoSys, AstraZeneca (AZN)/Fusion, Novo Nordisk (NVO)/Cardior, AstraZeneca (AZN)/Amolyt and Novartis (NVS)/IFM.

Recently, we asked which Big Pharmas were most likely to announce a big M&A deal near-term. Today, we ask: which biotechs are most likely to be acquired near-term?

We asked Seeking Alpha analysts Edmund Ingham and Terry Chrisomalis for their thoughts on the topic. 

Edmund Ingham: There are several companies that present interesting acquisition targets – Viking Therapeutics (NASDAQ:VKTX) and its GLP-1 dual agonist weight-loss drug candidate, Madrigal Pharmaceuticals (NASDAQ:MDGL) and its approved MASH drug Rezdiffra, and Summit Therapeutics (NASDAQ:SMMT) and its lung cancer drug ivonescimab, for example – that may be sold for $10B-$20B. 

Sarepta Therapeutics (NASDAQ:SRPT) and its DMD franchise is often spoken of as a likely M&A target and would fetch a similar amount, while any company developing a GLP-1 agonist drug besides Viking (NASDAQ:VKTX) – Structure Therapeutics (NASDAQ:GPCR), for example, or Terns Pharmaceuticals (NASDAQ:TERN) – will be carefully monitored by Big Pharma in 2025.

I will also throw three more names in the hat –  uniQure (NASDAQ:QURE), as its Huntington’s disease candidate advances towards potential FDA approval; Scholar Rock (NASDAQ:SRRK), which has a late-stage spinal muscular atrophy drug and a weight-loss candidate; and Novocure (NASDAQ:NVCR), whose tumor-treating fields technology would likely appeal to any major medical device enterprise.

Terry Chrisomalis: One biotech for sure that I know is highly likely to be acquired is Viking Therapeutics (NASDAQ:VKTX). There are actually two good reasons why I believe it will be bought out. 

The first reason is a proven drug development model in using THR-beta agonists in treating patients with Metabolic-Dysfunction Associated Steatohepatitis, or MASH. That's because Rezdiffra (resmetirom) has already been approved by the FDA to treat patients with MASH. Viking's VK2809 is a drug with the very same mechanism of action, thus why I believe in this potential development path. It is my belief that an acquisition of this alone is a reduced risk event for any Big Pharma company wanting to acquire it. 

The second reason is that this small-cap biotech has established a solid obesity drug pipeline. As a matter of fact, it is developing dual GLP-1/GIP agonist VK2735 both as an injectable and oral drug for the treatment of obesity. It anticipates beginning a Phase 2 study for oral VK2735 before the end of 2024. For a Phase 3 study for the injectable version of VK2735 targeting patients with obesity, it needs to meet with the FDA first to discuss such advancement. 

With Viking Therapeutics (VKTX) doing well with VK2809 in targeting the large MASH market and the possible FDA approval of VK2735 for the ever-growing obesity market, I truly believe that this biotech is next in line to be acquired.

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