This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Biotech Stock Mailbag: Amarin or Arena Takeout?

BOSTON ( TheStreet) -- Marlie Y. kicks off this week's Biotech Stock Mailbag: "Can you talk about the stocks that most interest you today and that may have big moves in the coming months? Thank you for your work and response to this question."

Clinical trial results send biotech stocks soaring (or sinking) more than FDA drug approvals, so keep the following stocks on your radar screen -- all of which should have data from important clinical trials released in the third quarter.

Vertex Pharmaceuticals (VRTX - Get Report) (proof of concept results from its hepatitis C "nucs"); Amicus Therapeutics (FOLD - Get Report) (migalast in Fabry disease); Acadia Pharmaceuticals (ACAD) (pimavanserin in Parkinson's disease psychosis); and Zalicus (ZLCS) (Synavive AR in rheumatoid arthritis.)

I'd say the most highly anticipated clinical data release remaining this year is from Johnson & Johnson (JNJ), Pfizer (PFE) and Elan (ELN) -- the bapineuzumab phase III studies in Alzheimer's disease.

LIR asks, "Which stock gets bought first, Arena Pharmaceuticals (ARNA - Get Report) or Amarin (AMRN - Get Report)?"

If forced to choose, I'll vote Amarin, mainly because selling the company is widely known to be an exit strategy sought by management. It helps that Amarin's prescription fish-oil pill AMR101 is highly effective and has blockbuster potential -- assuming approval on July 26, an eventual expanded label and long-term market exclusivity. All three of those goals are attainable.

What worries me about making this prediction? An Amarin takeout now, or soon after AMR101's approval, would buck precedent. Most bio-pharma M&A occurs early in a drug's clinical development or well after approval, history shows. A buyout premium of 50% to 100% today implies an Amarin price of $23 to $30 per share, which is a lot to swallow without more definitive proof that AMR101 is the billion dollar-plus drug it's built up to be. At $30 per share, Amarin's market cap would be $4 billion.

While I expect rumors of an Arena takeout to crop up with mind-numbing regularity (just like Dendreon (DNDN)), a real deal in the near term is unlikely. Too many question marks surround the commercial potential of Arena's weight-loss drug, Belviq, to believe that a large drug company would risk buying the company now, if ever.

I'll go with Amarin and cross my fingers.

1 of 5

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
CHTP $0.00 0.00%
AFFY $0.11 0.00%
AMRN $2.33 0.00%
ARNA $4.64 0.00%
FOLD $12.00 0.00%

Markets

DOW 17,826.30 -279.47 -1.54%
S&P 500 2,081.18 -23.81 -1.13%
NASDAQ 4,931.8150 -75.9760 -1.52%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs