M&A watch: Who will be next to fall in love in the biotech sector?
Health & Biotech
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It’s been a big six months for investors in the biotech and med-tech sectors of the share market.
A number of recent mergers and acquisitions have ended several years of inactivity — with deal activity capped off by the duelling for control of cancer treatment outfit Sirtex.
The Sirtex takeover deal announced last week — worth a mouth-watering $1.9 billion — resulted in a Chinese buyer eclipsing an earlier $1.6 billion offer from a US outfit, Varian.
So who could be next?
The sector is only selectively followed by analysts. However broker CLSA outlined recently a list of local companies that could be subject to offers as global industry players take advantage of rising cash reserves on the back of the revamp of corporate taxes in the US.
CLSA reckons Clinuvel, Ellex, Medical Developments, Pro Medicus, Telix, Mesoblast, Osprey and Nanosonics could be of potential interest to global buyers.
Earlier, Bell Potter told its clients the likes of Oncosil, Avita and Cyclopharm as being of potential interest to foreign buyers due to their intellectual property.
Of the potential targets Clinuvel has already seen bidder interest, with the bad boy of the US drug industry Martin Shkreli lodging a bid a few years back.
Shkreli was jailed recently for securities fraud. He achieved notoriety for trying to raise a drug price to $US750 a pill from $US13.50.
His interest in Clinuvel was notable, since it is selling its treatment for skin pigmentation runs to several hundred dollars.
Clinuvel is working to gain access to the US market. If it succeeds, this could trigger a re-rating of its shares by investors.
Shares in others, such as Nanosonics have rallied steadily over the past few months on rising optimism it will bring more of its trading margins in house, with the share price gains prompting a technical analyst at Morgans to tell its clients that shares in this company may have risen too far for now, leaving them vulnerable to a pull back.
Ellex, however, has been out of favour on investor wariness over soft sales with the shares hitting long term lows, with Osprey’s shares, too, deeply unpopular, and are holding around all-time lows.
The bid for Sirtex, however, has helped push the shares of Oncosil towards long term highs, since it is seeking to develop a similar cancer treatment to the larger company, by using radioactive particles to reduce the size of cancerous tumours.