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  • Jonathan Poyer

M&A Activity is Flurrying - Buy the Market or Buy Stocks?

The shortened Memorial Day week started with the S&P select biotech index retesting the 200-day moving average as it consolidates following the recent flurry of M&A activity.

India-based Sun Pharmaceuticals (SUNP IN) made a bid for an M&A deal of their own by offering to buy the minority stake of Taro Pharmaceuticals Industries (TARO) they do not already own for $38. The deal would be a ~30% premium to TARO's prior day closing price, but may be bargain motivated as shares are trading near $0 enterprise value.

Cost control measures continue to be highlighted as PTC Therapeutics (PTCT) announced discontinuation of preclinical and early research in gene therapy, the departure of the CFO and a 15% OPEX cut. PTCT is guiding FY23 revenue to be nearly $1 billion, but has less than one year of cash on the balance sheet at the current burn rate.

Walgreens Boots Alliance (WBA) got in on the act as well with an announcement to cut 10% of the corporate workforce. The challenge of treating amyotrophic lateral sclerosis (ALS) cane into focus with a pair of clinical trial failures.

Apellis Pharmaceuticals (APLS) disclosed the Phase 2 MERIDIAN study investigating systemic pegcetacoplan for the treatment of ALS did not meet its primary endpoint. Likewise, Wave Pharmaceuticals (WVE) announced their Ph 2a FOCUS-C9 trial did not show any clinical benefit compared to placebo thus improving the competitive positioning of Amylyx Pharmaceuticals' (AMLX) newly launched ALS drug RELYVRIO. Although FDA approved the drug in late 2022, AMLX reported EU regulators may be trending toward a negative opinion and indicated they plan to appeal. The agreement on the debt ceiling extension should help focus headlines back on company fundamentals.

2Seventy Bio (TSVT) is hoping investors will notice the real-world data from their BCMA CART Abcema appears similar to competitor Carvicti (JNJ/LEGN). Aggrege data form several key opinion leaders showed ORR rates of 84% vs 80% and CR rates of 42% vs 40% in a n=118 patient series.

Investors are generally cautioned about making cross trial data comparisons due to extensive clinical variables, but they are apparently abstaining from cross market cap comparisons too as LEGN trades at 16x the valuation of TSVT.

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