A deluge of dollars pouring into biotech deals helped lift shares of L.A. biotech companies last week.
Four of the 10 biggest local stock gainers came from the sector, among them Puma Biotechnology Inc. The Westwood company’s shares popped 17 percent March 5, the day after North Chicago, Ill.’s AbbVie Inc. said it would pay $21 billion for Sunnyvale cancer treatment maker Pharmacyclics Inc. Fed by investors who thought the deal bode well for acquisition targets such as Puma, the company closed the week ended March 11 up 15 percent to close at $237.77. (See page 50.)
Puma has been a rumored acquisition target, said RBC Capital Markets analyst Simos Simeonidis, “and I think this is one of the few cases where the thinking is probably right.”
Simeonidis thinks Puma is a likely mark because its breast cancer drug neratinib has already cleared most clinical hurdles. The therapy also addresses an unmet medical need for women who have had a tumor removed and have been treated for one year with the drug herceptin.
The analyst added that because Puma has just one product, a potential suitor would know exactly what it is purchasing.
“It’s a single drug in a company whose CEO sold a very, very similar company in terms of structure in the past,” Simeonidis said, referring to Alan Auerbach’s $1 billion sale of Cougar Biotechnology Inc. in 2009. He added that Auerbach, who’s a significant shareholder, has never said he wants to sell Puma, but neither does he appear to want to build a pharmaceutical giant.
“This is the case of a CEO who’s more pragmatic,” he said.
Auerbach could not be reached for comment.
The only caveat, Simeonidis said, is even though Puma has reported positive results from its late-stage trial for its therapy, the company has yet to share the full results at a medical meeting. It’s set to do so in May at a meeting of the American Society of Clinical Oncology.
Other local biotech companies whose shares popped on the AbbVie deal news included Kythera Biopharmaceuticals Inc. of Westlake Village, which finished the week up more than 30 percent; Sylmar’s Second Sight Medical Products Inc., which finished up 7 percent; and Santa Monica’s Kite Pharma Inc., which rose by about 4 percent.
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