The economic crisis, emptying of large companies' product pipelines, and the paucity of products in advanced development stages will likely drive a wave of mergers and acquisitions in the biomedical industry, says Bernstein Research. Two Israeli companies are included in the firm's list of possible takeover targets, which would give investors big returns: Protalix Biotherapeutics Inc. (AMEX:PLX) and Savient Pharmaceuticals Inc. (Nasdaq: SVNT).
Bernstein Research says that its analysis is not based on rumors or definite information about any possible pending deals, but solely on the companies' profiles. The takeover targets are companies undergoing Phase IIb or Phase III clinical trials for products, which are due to provide clinical information by the end of the first quarter of 2010. Bernstein Research filtered out companies that have a large number of partnerships or a dominant partner, which the firm says lowers the companies' chances of being sold at a high premium.
Bernstein Research divided the remaining companies into two categories: candidates for takeover and candidates for a rally. Protalix is waiting for the results of its Phase III clinical trial for its Gaucher's disease treatment. It is included in both categories. Protalix could be acquired by a company interested in its biopharmaceutical capabilities, or it might sign a distribution agreement with a mid-sized or large pharmaceutical company, on the basis of the advanced stage of the drug. Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) and other companies have been mentioned as possible buyers of Protalix.
Bernstein Research believes that Saveient is a good takeover target. The company is developing a drug for the treatment of chronic gout, Krystexxa.
Protalix's share closed on the American Stock Exchange on Friday at $8.10, giving a market cap of $620 million. Savient share closed on at $14.41, giving a market cap of $888 million.
Published by Globes [online], Israel business news - www.globes-online.com - on October 5, 2009
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