Alexion Pharmaceuticals' $8.4 billion dollar deal to buy Synageva BioPharma this week has some market participants looking for the next big biotech deal, and there are three names that could soon attract more attention than others.
Among biotech observers, Gilead is mentioned as a potential suitor, largely because Vertex's roster of cystic fibrosis drugs would complement Gilead's Hep C and HIV products. In the first quarter of 2015, Vertex reported a 31 percent increase in product revenue for its lead cystic fibrosis drug, Kalydeco, versus the first quarter of 2014.
Bernstein's Geoff Porges recently published a note detailing how beneficial the acquisition of Vertex would be for Gilead— as well as a win-win for shareholders in both stocks.
"With a 50 percent premium over Vertex's recent stock price, a $45 billion cash and debt deal would be 7-8 percent dilutive to [Gilead] in 2015, but would be accretive after 2017, assuming 27 percent cost savings," Porges wrote.
"Investors could expect Gilead's stock to re-rate to $130-$140 near term," he added.
In its first-quarter earnings call with investors, Gilead CEO John Martin said he was ready to spend some cash on an acquisition or even two. "I can't tell you that we have an appetite for things large or small; it has to be kind of the right fit for Gilead," said Martin. "So, we are open to suggestion; there have been many mentioned out there."