Following a hot year of M&A with biotech stocks, we’ll see more of the same in 2024 as drug makers look to build their pipelines ahead of a massive patent cliff.
Between now and 2028, pharmaceutical giants stand to lose billions in revenue as blockbuster drug patents expire. According to EY analysts, the top 20 pharmaceutical giants could lose about $180 billion in sales by the end of the decade.
It’s part of the reason Johnson & Johnson (NYSE:JNJ) said it would acquire antibody-drug conjugate (ADC) company Ambrx Biopharma (NASDAQ:AMAM) for $2 billion. And, Pfizer (NYSE:PFE) just obtained Seagen for $43 billion. Sanofi (NASDAQ:SNY) even said it was purchasing Inhibrx for about $2.2 billion. Additionally, Novartis (NYSE:NVS) just bought German biotech MorphoSys for $2.9 billion.
If you’re looking for the next potential buyout among biotech stocks, examine these three.
Viking Therapeutics (VKTX)
The last time I mentioned Viking Therapeutics (NASDAQ:VKTX), it traded at around $26 on Feb. 8. Today, the stock is up to $32.23, thanks to explosive demand for weight loss treatments. Plus, speculation abounds that VKTX could be a potential takeover target by a major company like Pfizer.
Specifically, Pfizer is focusing on the obesity treatment market, even after dropping its high-profile drug candidate last year because of side effects.
“Pfizer missed out on the first wave of the global obesity drug market. Peers Eli Lilly and Novo Nordisk are much further ahead with the injectable drugs Zepbound and Wegovy, respectively,” as reported by FierceBiotech.com.
Moving forward, the company will release Phase II results for its GLP-1/GIP Agonist VK2735 for obesity this quarter. Also, expect VKTX to release results for its Phase 1 trial of oral VK2735 this quarter.
ADC Therapeutics (ADCT)
A week ago, ADC Therapeutics (NYSE:ADCT) traded at $3.90, but today it’s up to $4.86. It may become a takeover target on news it just saw trial success with a combination treatment for relapsed follicular lymphoma, as noted in a company press release.
“ADCs have become one of the hottest opportunities in biotech,” according to Pfizer CEO Albert Bourla.
In addition, ADCs are being referred to as a “new era in cancer therapy,” as noted by Dr. Giuseppe Banna, a Consultant Medical Oncologist for lung and urology tumors and Molecular Lead at the Department of Oncology at Portsmouth Hospitals University.
With a potential ADC treatment in hand, ADCT is another one of the top biotech stocks to buy and hold.
Arcellx Inc. (ACLX)
Finally, Arcellx‘s (NASDAQ:ACLX) lead product candidate, CART-ddBCMA (now known as anitocabtagene autoleucel, or anito-cel), is showing potential as a game-changer treatment for relapsed or refractory multiple myeloma.
“We are pleased to see the momentum with the CART-ddBCMA multiple myeloma program, enabling Kite to enter an area of high unmet need and bring a new, potentially best-in-class cell therapy to patients,” according to the Executive Vice President of Kite, a Gilead company. “Given this, we are deepening our relationship with Arcellx to further support advancement of CART-ddBCMA, bolster our pipeline in multiple myeloma, as well as access opportunities in lymphoma.”
Also, while the company’s EPS loss of 81 cents missed expectation by 12 cents, revenues of $14.96 million beat by $2.37 million. And, as of Sept. 30, ACLX had cash, cash equivalents, and securities of about $482.7 million, which will fund operations through 2026 at this time.
On the date of publication, Ian Cooper did not hold (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
