Big Biotech M&A Targets: Who Could Follow Astellas' $3.5B Bid for OSI?

Last week's news that Astellas Pharma had launched a $3.5 billion hostile takeover of cancer firm OSI Pharmaceuticals (OSIP) sparked speculation about which other big biotechs could be acquisition targets.

Last year was all about mega-mergers: Pfizer/Wyeth, Merck/Schering and Roche/Genentech. The experts don't expect much of that this year, mainly because there are fewer mega-players left to consolidate. Super-sized biotechs still on the table include Amgen (AMGN), Gilead Sciences (GILD), Celgene (CEGE), Biogen Idec (BIIB) and Genzyme (GENZ). The latter two may wind up on the block thanks to involvement by activist investor Carl Icahn, but the former three are several times bigger and more likely to be acquirers than acquirees.

Those big biotech acquirers -- along with the big pharma contingent -- are expected to gobble up a number of mid-to-large biotechs this year, of which OSI may be the first if Astellas has its way. Others appearing on multiple acquisition watch lists include:

• Vertex Pharmaceuticals (VRTX), $8.3B market cap: Investors are psyched about Vertex's Phase III telaprevir, a potential game-changing new approach in the $4 billion hepatitis C market. The firm's rich pipeline also includes drugs for cystic fibrosis, epilepsy and inflammatory diseases.
• Human Genome Sciences (HGSI), $5.13B market cap. This $31-per-share stock was trading under 50 cents a year ago, and the company's lupus drug Benlysta (belimumab) is the reason. Analysts say it could bring $4 billion in annual sales. The drug is partnered with GlaxoSmithKline (GSK).
• Alexion Pharmaceuticals (ALXN), $4.78B market cap: Sales of Soliris (eculizumab) for the rare blood disorder paroxysmal nocturnal hemoglobinuria are running about $100 million per quarter, and four Phase II trials for new indications are underway.
• United Therapeutics (UTHR), $3.19B market cap: This big bio boasts $370 million in annual revenues thanks to Remodulin (treprostinil injection) and Tyvaso (treprostinil), both for pulmonary arterial hypertension. New formulations and label expansions are in the works.
• Onyx Pharmaceuticals (ONXX), $1.89B market cap: kidney and liver cancer drug Nexavar (sorafenib), partnered with Bayer, sold $844 million last year, of which Onyx got to pocket $250 million. Despite some setbacks in other types of cancer, four more Phase III Nexavar trials are ongoing as a handful of other compounds enter early clinical trials.
• Auxilium Pharmaceuticals (AUXL), $1.46B market cap: Testim testosterone gel brought in $160 million last year, and yesterday marked the launch of newly-approved Xiaflex (collagenase Clostridium histolyticum) for a hand contracture disease, which analysts say could be worth upwards of $350 million. Label expansion plans are underway.
• Allos Therapeutics (ALTH), $750M market cap: last year's approval of Folotyn (pralatrexate) for peripheral T-cell lymphoma put Allos on the map, and the firm is already in pivotal studies for cutaneous T-cell lymphoma. Together, those indications represent about a $500 million market, and solid tumor trials are underway as well.