Small drugmaker Medivation ( MDVN ) continued to battle Sanofi ‘s ( SNY ) hostile takeover bid Wednesday as the latter tried to replace its board, while big biotechs Celgene ( CELG ) and Gilead Sciences ( GILD ) were said to be thinking of joining the fray. Sanofi proposed eight candidates “who are willing to fully and fairly evaluate all of Medivation’s strategic options,” which it believes Medivation’s current board did not do when it unanimously rejected Sanofi’s unsolicited $9.3 billion bid on April 29. Medivation responded with a statement urging shareholders to reject the attempt, which it called “a tactic for Sanofi to facilitate its substantially inadequate and opportunistically timed proposal to acquire Medivation.” While Sanofi is the only suitor that’s gone public, anonymous sources have been telling the media that a variety of other companies are thinking of making a bid. On May 9, Medivation reportedly signed non-disclosures agreements with Pfizer ( PFE ) and Amgen ( AMGN ), implying that it is open to being bought by somebody other than Sanofi. On Wednesday Bloomberg said that Celgene and Gilead were talking to advisors about the idea, though they hadn’t actually approached the company. Both Celgene and Gilead have been urged by investors and analysts to make a sizable acquisition — especially Gilead, as its massive hepatitis C franchise is already eroding in the face of competition. Medivation’s current $1 billion in 12-month sales wouldn’t make that big of an impact on Gilead’s $33 billion top line, but much of the interest comes from Medivation’s future prospects: its prostate-cancer drug Xtandi is still ramping while the company studies its use in other diseases, and it also has a few earlier-stage drugs in the pipeline. Medivation stock, which has lately gone tight after a sharp run-up amid the buyout speculation, was down a fraction, near 62, in late morning trading on the stock market today . Sanofi was up 2%, near 41. Gilead was flat, near 86, and Celgene was up 1%, near 105.
Sentiment on biotech stocks overall ebbs and flows, but biotech companies can carve very individual paths. Drug company investors look to product pipelines to spot potential growth, especially for scientifically novel assets that can stand out from the pack. These three biotech stocks have outperformed the group in the past few months thanks to potential blockbuster drugs. • Juno Therapeutics ( JUNO ) is up 68% since its early February all-time low — which was also the IBD Medical-Biomed/Biotech group’s nearly two-year low point — as investors have regained confidence in its cancer-fighting pipeline. Juno is working in the cutting-edge field of cell therapy, in which patients’ own cells are re-engineered to help their immune systems kill cancer cells, in this case the chimeric antigen receptor (CAR) T cells. Juno’s leading candidate, JCAR015, is in midstage testing for acute lymphoblastic leukemia, for which it showed stunning success rates in earlier trials. Last month, its partner Celgene ( CELG ) said it would exercise its option to commercialize JCAR015 and two similar candidates outside of North America and China, under a 10-year, $1 billion partnership that the two companies inked last summer. Also last month, Juno showed off some of its earlier-stage CAR-T candidates at the annual meeting of the American Association for Cancer Research, targeting different receptors in other types of blood cancer. When the abstracts for the meeting were released in March, Leerink analyst Michael Schmidt wrote that Juno’s stock should be supported by “clinical data readouts supporting Juno’s business strategy to develop differentiated, potentially best-in-class CAR-T products that could generate translational insights in hematologic and solid tumor indications.” • BioMarin Pharmaceutical ( BMRN ) is up 29% since its early February 20-month low as it recovered from the FDA’s rejection of its muscular-dystrophy drug Kyndrisa in January. At its R&D day last month, BioMarin rolled out strong early data for two pipeline candidates, one for hemophilia and one for achondroplasia, a form of dwarfism. The hemophilia data brought particular attention, as it was the first-ever evidence on gene therapy for the disease in humans. After the therapy, BMN 270, was delivered once to eight patients, all of their conditions went from severe to mild-to-moderate. This was far better than expected. In a video recorded for clients a couple of weeks later, Evercore ISI analyst John Scotti described the mood at BioMarin’s event: “When they started presenting (the data), jaws just went to the floor. There was an audible gasp in the room.” The market for hemophilia A, the most common type, runs at $4 billion a year. Analysts say a successful gene therapy could massively disrupt the market of clotting factors that have to be infused weekly at least. • Intercept Pharmaceuticals ( ICPT ) is up 52% from its 28-month low in February, after its lead drug Ocaliva passed a major hurdle to market last month. An FDA advisory committee voted to grant it accelerated approval for a liver condition called primary biliary cholangitis (PBC), which the agency has until May 29 to decide on. While the PBC market is expected to bring in a healthy revenue stream for Intercept, the potential blockbuster indication is in nonalcoholic steatohepatitis (NASH), a liver-scarring disease that affects millions of Americans but has no treatment. Intercept is conducting a large phase-three trial of Ocaliva in the disease, with a launch not expected for several years. But the FDA panel vote did imply that the experts see the benefits as outweighing the drug’s known safety issues. Ocaliva’s potential has driven buyout speculation around Intercept stock, which has also helped to push up shares. A particular burst of this came on Feb. 12 when anonymous sources suggested that the company was exploring a sale, though nothing’s yet come of it.
The new IBD Tech Leaders Index looks at companies in the technology field that are highly rated using IBD’s proprietary ratings. With the current market condition being Uptrend Under Pressure, these names should be approached with higher caution, especially since they will be tied more to the performance of the Nasdaq composite. As of the April 29 list, the electronics sector stands out with a dominant representation by two industry groups making up more than 25% of the list: the scientific measurement electronics group, at No. 10 of IBD’s 197 industry groups, and the electronics parts manufacturers, at No. 23. Many of the stocks in the sector serve in support roles, so part of your analysis should include the areas of exposure for the companies. Are they focused on life sciences with exposure to the biotech industry? Biotechs had a great run in 2014, but the group has fallen considerably, with big winners like Celgene ( CELG ) and Gilead ( GILD ) topping in the summer of 2015. A company like Danaher ( DHR ) has exposure to multiple industries, with segments that serve life sciences and diagnostics vs. its segments focused on industrial technologies and petroleum businesses. Danaher will make the analysis a little easier when they complete a tax-free spinoff in the third quarter of 2016. The company retaining the Danaher name will keep the life science exposure and the new spinoff, named Fortive, will take the industrial side. What about the exposure to foreign markets? Bruker ( BRKR ) not only has strong links to the life sciences and pharmaceutical research but also, according to the company website, 80% of its revenue comes from outside the U.S. As the first-quarter earnings season has unfolded, companies have often pointed to currency headwinds created by a strong dollar as being the culprit behind soft earnings.