Flurry of Biotech Mergers and Acquisitions Bodes Well for PharmaCyte Biotech
It is no secret that the best performing sector for some time has been healthcare. A recent flurry of M&A deals has proven that this trend is primed to continue. Moreover, given the premiums paid in these transactions, PharmaCyte Biotech, Inc. (OTCQB – PMCB – $0.1394 – Spec Buy) may be sitting in the catbird seat as an unusually attractive potential target.
Major pharmaceutical companies are in panic mode. They are staring in the face of patent expirations on key products representing hundreds of millions or billions in revenue on one side, and competition for their big sellers from peers and upstarts in mid-late stage clinical trials on the other side. To fend off these attacks, management teams have entered into a quasi-arms race in their quest to rapidly add companies via acquisition that complement their current therapeutic categories. This environment has led to a 59% increase in healthcare M&A for the quarter to $89 billion, up from $56 billion in 1Q14. As noted in a recent Marketwatch.com article (http://www.marketwatch.com/story/three-health-care-deals-today-are-paying-huge-premiums-2015-03-30), the premiums paid on recent acquisitions, including two of the three just announced this week, represent an average 30-day premium of 60%. Teva Pharmaceutical is buying Auspex Pharmaceutical for more than $3 billion, which represents a 50% premium to the previous day’s close for a non-revenue generating company with products in a series of clinical trials.
Since the Company’s Cell-in-a-Box(R) live cell encapsulation technology has such broad potential applications, it could emerge as a universal therapy for the treatment of multiple forms of cancer and diabetes and compete with a number of existing, billion dollar products, potentially making PharmaCyte Biotech the prototypical acquisition target.
Most early stage and mid-stage companies such as PharmaCyte Biotech are keenly aware of big pharma’s desire to acquire firms with unique technology that can potentially treat diseases representing billions in market opportunity, and are therefore wisely built for potential sale. As a result, early and mid-stage clinical trials are designed not just for maximum efficacy and safety but to attract the attention of the world’s biggest pharmaceutical players. With three separate clinical trials this year featuring its proprietary technology, PharmaCyte Biotech could be high on the industry’s radar screen once the trials are completed and the results are released.
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Senior Analyst: Robert Goldman
Rob Goldman founded Goldman Small Cap Research in 2009 and has over 20 years of investment and company research experience as a senior research analyst and as a portfolio and mutual fund manager. During his tenure as a sell side analyst, Rob was a senior member of Piper Jaffray's Technology and Communications teams. Prior to joining Piper, Rob led Josephthal & Co.'s Washington-based Emerging Growth Research Group. In addition to his sell-side experience Rob served as Chief Investment Officer of a boutique investment management firm and Blue and White Investment Management, where he managed Small Cap Growth portfolios and The Blue and White Fund.
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