My trading week got off to a happy note. One of the bigger biotech holdings in my portfolio was bought out on Merger Monday.
The deal expanded Ipsen's rare disease portfolio with Albireo's drug Bylvay. This compound was recently approved to treat pruritus in certain patients with progressive familial intrahepatic cholestasis both here and in Europe.
The acquisition had better than a 90% buyout premium. It was a nice score even if the majority of my holdings in the stock were within covered call positions. Hopefully, it is another sign that M&A deal activity will pick up in the sector after a couple of subpar years. In today's column I will highlight a few of my small and midcap biotech/biopharma holdings that would also make logical buyout targets.
Let's start with BioXcel Therapeutics (BTAI) . This name is similar to Albireo in that it also has a drug that was recently approved by the FDA. That would be Igalmi which was approved for the acute treatment of agitation linked to schizophrenia or bipolar 1 or 2 disorder in adults last April.
While the initial rollout has been predictably slow, the stock got a nice upgrade in December from Goldman Sachs and the stock has been on real roll in recent months. Another of the company's compounds in development showed good results recently to treat prostate cancer as part of an early stage study within a combination therapy with Merck's (MRK) blockbuster Keytruda. I don't think I would be chasing the name after the recent rally, but would add on pullbacks as its assets could be attractive to a larger concern.
I would be remiss to not mention midcap oncology name Exelixis (EXEL) which recently was my 'stock pick for 2023'. Its key asset is CABOMETYX which is approved for several oncology indications and continues to gain market share. At this point it is a blockbuster with north of $1 billion of annual revenues, nicely profitable and still seeing sales growth in the low teens. The company also has a better than $2 billion cash hoard on its balance sheet.
A buyout at a reasonable premium would instantly be accretive to a larger name like Pfizer (PFE) that wanted to expand its footprint in oncology.
Finally, we have Replimmune (REPL) . This clinical stage concern is focused on using its proprietary Immunotherapy platform to design and develop product candidates that are intended to activate the immune system against cancer. Replimmune is specifically targeting solid tumor types (hot and cold) susceptible to checkpoint inhibitors.
The company has several compounds in development both as part of combination therapies as well as monotherapies. Replimmune recently addressed its funding needs and pick up a key collaboration deal with drug giant Roche (RHHBY) . Given oncology has been one of biggest areas for M&A in recent years, I could easily see Replimmune drawing interest should deal activity pick up in the sector.