The passing of health care reform helped clear the air in the biotech space, creating a rally of M&A activity of small- to mid-cap companies, according to Dr. Jason Kantor, Ph.D., of RBC Capital Markets.
“[W]e’ve seen a number of companies taken out our proposed mergers, which have essentially caused people to look around and see who might be next,” he said. “We are seeing valuations for the small- to mid-cap stocks, which had been particularly punished, now coming back very strongly in 2010.”
And the strength of these stocks rides heavily on the potential effect future mergers could have on valuations. In the past few months, a number of companies have competed for these deals.
“[We] saw Medarex and Genentech (DNA) taken out; we’ve already seen OSI Pharmaceuticals (OSIP) in play in the past weeks, and we’ve seen Facet (FACT), which was originally a target for Biogen (BIIB), ultimately getting taken out by Abbott (ABT) at a significant premium to where the Biogen deal was proposed,” Kantor said.
Although the analyst was underweight the health care sector at the end of 2009, he expects to see a return of funds into both health care and biotech names, bringing both spaces back to at least equal weight. Kantor advises investors to take a basket approach to the biotech sector and keep their eyes on soon-to-come M&A activity.
Sabra Health Care REIT CEO Rick Matros Details the Sabra Health Care REIT Success Story
August 17, 2018
Mexican Energy Reform to Spark Exploration & Production at Pemex
February 06, 2014
Biotech IPO Activity for Professional Investors
March 23, 2021
With Financial Reform Legislation Moving Through Congress, Smaller Banks Brace For Repercussions
May 24, 2010
Federated Investors (FII) Weighed Down by Low Interest Rates and SEC-Reform Headline Risk
April 10, 2013
