With $1.7 Trillion, Biotech M&A Could Get Explosive this Year

by | Apr 13, 2022 | Stocks to Watch

Investors may want to keep an eye on a potential biotech M&A boom.

According to FierceBiotech, “Biopharmas have $1.7 trillion to spend on deals this year, and big players like Novartis, Pfizer and Merck & Co. have made it pretty clear they’re on the hunt for acquisitions. After a slump in 2021, biopharma M&A is slated to pick up this year with an innovation deficit spurring shopping for new assets. Billions of dollars are obviously available for megadeals, and an endless sea of biotechs are giving shoppers a long list of options.”

Just today, for example, Halozyme Therapeutics (HALO) agreed to buy Antares Pharma (ATRS) in an all-cash $960 million deal. Under the terms, HALO will pay $5.60 a share to buyout ATRS, which comes out to a 49.7% premium.

“The addition of Antares, particularly with its best-in-class auto injector platform and specialty commercial business, augments Halozyme’s strategy, further strengthens our position as a leading drug delivery company and extends our strategy to include specialty products,” said Helen Torley, Halozyme CEO, as quoted by Barron’s.

In addition, GlaxoSmithKline (GSK) just agreed to buy Sierra Oncology for $1.9 billion in cash, as it boosts its specialty medicines. That’s a 39% premium to Sierra’s closing price of $39.52 on Tuesday. “Sierra’s experimental drug will boost GlaxoSmithKline’s cancer offerings as the company prepares to become a pure-play biopharma company, stripped of its legacy consumer health assets,” added Barron’s.

Even Pfizer (PFE) just may have big M&A plans in the future with new CFO David Denton. This is the same person that played a key role in the CVS acquisition of Aetna for $69 billion. “By hiring a chief finance executive with a track record of big M&A, Pfizer is hinting that it could be eying deals, especially given the huge load of cash it has generated from selling COVID-19 products,” says FiercePharma.com.

So, what’s the best way to gain exposure to biotech M&A?

One way is to spot individual opportunities that would work best for biotech behemoths, which we’re looking for. Another way is to pick up an ETF, like the SPDR S&P Biotech ETF (XBI), which is starting to pivot higher after a brief pullback.

With an expense ratio of 0.35%, the XBI ETF offers exposure to stocks, such as Iovance Biotherapeutics, Karuna Therapeutics, PTC Therapeutics, and Halozyme for example. Last checked, the XBI ETF traded at $89.36.

Sponsored Headlines