- Jonathan Poyer
The Longest & Deepest Bear Market Can't Stop All Biotech Upside Surprises
The S&P Biotechnology Select Index took a pause to start the week after ripping >35% off the June low
Seagen (SGEN) remained an independent company despite several WSJ articles suggesting Merck (MRK) is closing in on a transaction.
Two smaller M&A deals were announced; however, along the thematic line of strategic synergy at an attractive valuation. Vertex Pharmaceuticals (VRTX) announced the $320 million purchase of private company ViaCyte focused on stem-cell derived therapies for type 1 diabetes (T1D). The deal compliments VRTX's ongoing strategic efforts to become the leader in cell based therapies for T1D.
Separately, Innoviva (INVA) announced the acquisition of La Jolla Pharmaceuticals (LJPC) for $6.23 per share in cash corresponding to an enterprise value of $149 million. The deal was focused on LJPC's lead commercial assets GIAPREZA® and XERAVA® , which are estimated to generate >$50 million in revenue this year and be cash flow positive. The acquisition is synergistic to INVA's existing hospital and infectious disease portfolio and was an >80% premium to LJPC's prior closing price.
Asymmetric upside from clinical data updates was showcased as Pliant therapeutics (PLRX) became the latest company to join the triple digit club. PLRX rallied >150% on announcing their Phase 2a clinical trial of PLN-74809 in patients with idiopathic pulmonary fibrosis (IPF) met the primary and secondary endpoints demonstrating a well-tolerated safety profile and benefits on clinical outcome measures over 12 weeks. Nearly 2x the total shares outstanding traded the day of the news showing broad participation from many types of traders.
Clearly upside surprises persist even in the midst of the longest and deepest bear market in biotech history.