Which stocks have been the stars of 2020? Biotechs. Amid the onset of the global health crisis, companies advancing COVID-19 vaccines, treatments and testing kits have seen their shares take off rapidly on an upward trajectory. That said, Wall Street focus has locked in on the space for a different reason, namely merger & acquisition (M&A) activity.Sure, against the backdrop of the pandemic and the resulting economic downturn, some names have opted to put a temporary hold on deal activity given the uncertainty that remains. That’s not to say deals aren’t being made. Based on data from Refinitiv, in the first half of 2020, there have been 20,664 mergers announced globally, totaling $1.2 trillion as of June 30.With deals still being inked, the Street’s pros argue that there’s an opportunity for investors, as buyouts represent one of the fastest ways to see returns. Why? If a particular name is snapped up by another at a premium, the former can see its shares notch a percentage gain that’s close to that of the premium.Bearing this in mind, we used TipRanks’ database to take a closer look at two healthcare stocks that reflect strong M&A targets, according to Wall Street analysts.Cellectar Biosciences (CLRB)Using its patented phospholipid drug conjugates (PDCs) delivery platform to specifically target cancer cells, Cellectar Biosciences wants to improve the lives of patients battling the deadly disease. Should its CLR-131 candidate ultimately gain approval, some members of the Street believe it would make a great buyout target.Writing for Oppenheimer, 5-star analyst Kevin DeGeeter tells clients that several factors are driving his bullish thesis. First and foremost, CLR-131 could get the FDA’s stamp of approval by the end of 2022 for lymphoplasmacytic lymphoma (LPL). To back up this prediction, the analyst stated, “There are no approved therapies for r/r LPL. Based on 100% response rate in four patients, including one CR, we expect management to advance CLR-131 into an abbreviated registration study by the end of 2020.” On top of this, DeGeeter cites the therapy’s differentiated AE profile and competitive objective response rate (ORR) as suggesting that material off-label use could be a possibility. “While the market is highly competitive with potential for BCMA compounds to change SOC in early lines of therapy, clinical outcomes for triple refractory patients that account for about 15% of all cases remain poor with response rates of ~30% and PFS of four months,” he explained.To this end, assuming a 60%/40% revenue split for the LPL and multiple myeloma markets, CLR-131 could generate peak sales of $290 million. If that wasn’t enough, development in rare pediatric cancers, including the potential for a priority review voucher, could drive even more upside. Speaking to the possibility of M&A, DeGeeter commented, “We view M&A following CLR-131's potential FDA approval as a likely outcome. Recent consolidation in the radiopharmaceutical market includes acquisitions of Advanced Accelerator Applications for $3.9 billion and of Endocyte for $2.1 billion (both in 2018). Given complex supply chains for radiopharmaceuticals, larger companies enjoy favorable economies of scale on distribution and cost of goods, in our view.”To this end, DeGeeter rates CLRB an Outperform (i.e. Buy) rating, along with a $5 price target. This figure implies shares could soar 283% in the next year. (To watch DeGeeter’s track record, click here)The rest of the Street agrees. Only Buy ratings, 3, in fact, have been issued in the last three months, which add up to a Strong Buy analyst consensus. At $3.67, the average price target puts the upside potential at 181%. (See CLRB stock analysis on TipRanks)Immunomedics (IMMU)With the goal of providing patients with better and more effective treatments, Immunomedics develops immunotherapeutics that target cancer, autoimmune and other serious diseases. Following a recent pipeline win that de-risked one of its assets, M&A discussions could be on the horizon.5-star analyst Michael Schmidt, of Guggenheim, points to the recent FDA approval of Trodelvy in triple-negative breast cancer (TNBC) as reflecting a “major de-risking pipeline event,” and as such, he thinks “IMMU could potentially be perceived as a theoretical acquisition candidate by investors.”Expounding on this, Schmidt stated, “In addition, we think IMMU is well-positioned as a potential acquisition candidate based on our analysis of 69 new chemical entities and new biologics US-approved in the past 12 months given that it ranks 3, only after Vertex Pharmaceuticals’ Trikafta and Seattle Genetics’ Padcev in terms of product revenue potential, while being the smallest among these three companies.”After assessing the clinical pipelines and commercial presence of 19 large-cap biopharmaceutical companies for potential synergies and strategic fit with IMMU, Schmidt argues several have significant overlap with Trodelvy’s potential target markets. Scoring each name based on their late-stage clinical pipeline in breast cancer, bladder cancer and lung cancers as well as their existing commercial footprint in those indications and revenue growth rates, the analyst concluded Pfizer, Merck, Rogers and Eli Lilly are the most likely to acquire IMMU.How much would IMMU actually be worth in an M&A scenario? $50-$60 per share, in Schmidt’s opinion. That being said, even if IMMU isn’t ultimately acquired, the analyst still likes what he’s seeing.“We currently value IMMU at $41/share as a standalone company, based on probability-of-success (PoS) adjusted peak U.S. sales of Trodelvy of $790 million, $354 million, and $1,465 million, in 3rd-line TNBC, 2nd/3rd-line bladder cancer, and 4th-line HER2-/HR+ breast cancer, and 100%, 50%, and 80% PoS, respectively… Other signal finding studies are exploring opportunities in multiple tumor types, including NSCLC, endometrial, earlier lines of metastatic breast cancer and bladder cancer, as well as early stage breast cancer, which represent potential sources of upside for the stock,” he explained.In line with his optimistic take, Schmidt stayed with the bulls. In addition to reiterating a Buy recommendation, he left the price target at $52, which implies nearly 23% upside from current levels. (To watch Schmidt’s track record, click here) The bulls represent the majority on this one. Out of 9 total reviews published in the last three months, 8 analysts rated the stock a Buy, while 2 said Hold. So, IMMU gets a Strong Buy consensus rating. The $46.44 average price target suggests shares could rise nearly 10% in the next twelve months. (See IMMU stock analysis on TipRanks)To find good ideas for healthcare stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
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Every investor in Lumber Liquidators Holdings, Inc. (NYSE:LL) should be aware of the most powerful shareholder groups…
Amazon founder and CEO Jeff Bezos testifies before the House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law.
German lawmakers on Wednesday questioned Finance Minister Olaf Scholz over his failure to detect and prevent the Wirecard [WDIG.DE] accounting scandal, one of the biggest in post-war history. Payment services company Wirecard filed for insolvency last month after admitting that 1.9 billion euros ($2.2 billion) supposedly held in trustee accounts by overseas partners probably did not exist. Prosecutors have arrested former Wirecard Chief Executive Markus Braun and two other former executives on suspicion of orchestrating a years-long criminal racket to inflate revenue and balances to hide losses dating back at least to 2015.
(Bloomberg Opinion) — Kodak, the once-iconic photo company that’s been languishing for years, surprised the world this week by announcing a pivot into the pharmaceuticals business with a $765 million head start from the U.S. government. Somehow, that was enough to send the stock soaring more than 1,000% and add more than $1 billion to the company’s market value. Really? Let’s discuss. The Defense Production Act loan, announced Tuesday, is part of a Trump administration effort to bring the manufacture of drug ingredients back to U.S. shores to reduce dependence on other countries and ensure consistent supply. It's a reasonable if challenging policy goal. The loan and new business line for Eastman Kodak Co. isn't, however, anything close to a justification for its massive share-price gains — whatever day traders and Robinhood investors may say.Kodak is attempting to enter a low-margin commodity market with no particular advantage outside of the current administration's industrial policy. Unless the government money spigot keeps flowing, it's hard to imagine the company ever living up to its lofty valuation.Many of the world's pharmaceutical ingredients come from China or India. This has become a concern in recent years because of quality-control issues and the recent specter of pandemic-related shortages. However, shifting the supply chain back to the U.S. isn't the work of a few loans or a few years.Re-shoring sounds appealing, but it's challenging to successfully break into a commodity business from a standing start even with a boost from the government. And drug ingredients made in America by an inexperienced new entrant are likely to be more expensive than those available abroad in the absence of extreme and rare supply shocks. Many large generic drugmakers that also make and use drug ingredients have been facing significant pricing pressure and slashing costs for years; few are likely to consistently buy American from a new source unless the government forces them. What’s more, higher ingredient costs would potentially filter through to higher drug prices, which is not exactly a popular idea.Part of the enthusiasm may stem from the fact that Kodak reportedly aims to make drug ingredients used in the fight against Covid-19, including hydroxychloroquine, a medicine that President Donald Trump continues to tout as a possible treatment even though it has repeatedly failed to show a benefit in clinical trials. To turn that into an investment thesis for Kodak, you have to believe that the medicine will finally succeed in a well-controlled trial, or that off-label prescriptions will be common. You have to think that the company, which has been out of the drug business for decades, will be able to retrofit factories and significantly ramp up production before vaccines or more effective treatments emerge. You have to believe that the company can compete on cost giants that have been in this business for decades or that Congress will pass a mandate handing it a market. It's unclear if anyone's buying Kodak because they truly believe in the long-term potential of this project, as opposed to just day trading. Either way, good luck. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Max Nisen is a Bloomberg Opinion columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Inovio Pharmaceuticals Inc (NASDAQ: INO) shares were volatile Wednesday after the company announced Orphan Drug Designation for one of its pipeline drugs.What Happened: The Plymouth, Pennsylvania-based company said the FDA granted ODD for INO-3107, a DNA medicine that's being evaluated in a Phase 1/2 trial for treatment of recurrent respiratory papillomatosis, or RRP.RRP is a rare disease caused by human papillomavirus types 6 and 11 infections that causes non-cancerous tumor growths leading to life-threatening airway obstructions, the company said.Why It's Important: The ODD from the FDA qualifies INO-3107 for various development incentives, including a tax credit on expenditures incurred in clinical studies; a waiver of the new drug application fee; a research grant awarded by the FDA; and most importantly, seven years of U.S. market exclusivity upon approval for the treatment of RRP, Inovio said."Receiving FDA's orphan drug designation for INO-3107 is an important milestone in the development of Inovio's DNA medicine for this rare disease and clearly underscores the importance of addressing the unmet medical need for this debilitating condition," Ami Shah Brown, Inovio's senior vice president fo regulatory affairs, said in a statement.Inovio is developing a DNA vaccine for SARS-CoV2, the virus that causes COVID-19. The vaccine program is embroiled in litigation with its CDMO partner, as well as a shareholder lawsuit accusing the company of stock pumping.The company is scheduled to report second-quarter results Monday, Aug. 10.INO Price Action: At last check, Inovio shares were sliding 4.23% to $19.91.Related Links: The Week Ahead In Biotech: Spotlight On GW Pharma, Ultragenyx FDA Decisions, Pfizer Earnings Inovio Analyst Downgrades COVID-19 Vaccine Developer, Says Risk Higher After Rally See more from Benzinga * Inovio Subcontractor Hits Back With Lawsuit Against Coronavirus Vaccine Developer * The Week Ahead In Biotech: Endo, Eagle Pharma FDA Decisions, ObsEva Late-Stage Readouts In Focus(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Kodak's stock skyrocketed by over 500% in intraday trading, taking Wall Street by surprise after mostly flatlining in recent years.
The Republican proposal on coronavirus relief puts all the risk from catching COVID-19 on workers.
The Federal Reserve on Wednesday maintained interest rates at near-zero, noting that economic activity and employment have “picked up somewhat in recent months” but cautioning that the virus needs to be contained. Yahoo Finance’s Brian Cheung joins Akiko Fujita to discuss. Tech CEOs push America-first narrative in antitrust hearing to sway lawmakers.