Biotech is the hottest sector to invest in right now — and the stats prove it:
From the number of deals, to the size of the deals, it’s shaping up to be a record-setting year.
Even better, acquirers are paying an average premium of 114%.
That means, if you scoop up shares of the next biotech buyout in advance of a deal, you could potentially make a quick, triple-digit gain.
So today, I’m going to reveal two biotech takeover targets you should look at now.
Hot Sector Keeps Getting Hotter
484 takeover deals in biotech have been announced so far this year.
That’s up from 365 last year, according to Dealogic.
Furthermore, more than $342 billion has been deployed in these acquisitions. That’s the largest dollar amount of M&A activity in this sector in almost 25 years.
But here’s what’s most important: acquirers are paying a huge premium right now…
Over the past five years, acquirers paid an average of 67% over the target company’s stock price. But this year, they’re paying an average premium of 114%.
That explains why, if you buy shares of the next biotech buyout before a deal is announced, you could potentially make triple-digit gains.
Eager to get your share of those profits?
Here are two takeover targets to explore…
Biotech Takeover Target #1: Intercept Pharmaceuticals, Inc. (ICPT)
Earlier this month, I told you about the boom in drug development for a liver disease known as NASH.
Historically, no approved drugs existed to treat the 60 million people impacted by this disease. But then Intercept (Nasdaq: ICPT) entered the picture.
This biotech created a drug called Ocaliva, which is approved for the treatment of primary biliary cirrhosis, a liver disease. But now the company is studying the drug’s use for NASH.
With promising Phase III results now under its belt, ICPT is positioned to become the first company with an approved NASH drug. And according to Jefferies biotech analyst Michael Yee, that puts Intercept in the “sweet spot” for a takeover.
The list of potential suitors is long. It includes Novartis and Pfizer (both of whom are currently sitting on almost $9 billion in cash), as well as Gilead (which has $23 billion in cash).
Biotech Takeover Target #2: Iovance Biotherapeutics
And now let me tell you about the second potential biotech target: Iovance (IOVA).
Iovance represents a potential breakthrough in one of the most valuable segments of biotech: immunotherapies involving T-cells.
These are drugs that leverage the body’s natural defenses to fight cancer and other diseases.
This segment of the biotech market is red-hot.
For example, Kite Pharma was recently acquired by Gilead for $11.9 billion. Given that the company went public at a valuation of $128 million, early investors pocketed a windfall of 9,197%.
That’s nearly 100x their money.
Then there’s Juno Therapeutics, which was taken over by Celgene for $9 billion. It went public at a $264 million valuation, which translates into a 3,309% gain for early investors.
The thing is, most immunotherapies targeting cancers have a major drawback:
To date, not one of them has been able to treat solid tumors.
But that’s where Iovance comes into the picture…
Early Trials Show Strong Results
In two separate trials, Iovance’s tumor-infiltrating lymphocyte (TIL) immunotherapy demonstrated an ability to effectively target solid tumors.
In addition, Iovance’s approach boasts several other advantages, including a one-time treatment regimen, high-potency and persistence, and a short manufacturing turnaround time.
Much like Intercept, Iovance is on track to be first to market in a big market.
Given that analysts expect its two lead candidates to be filed for FDA approval in the coming year, now is the time to consider taking a position.
Top-Two Biotech Trades That Could Deliver 114% Returns
Biotech is a very hot sector right now for big M&A deals.
And as you learned, acquirers are currently paying huge premiums.
If you’re looking for deals that could potentially deliver big returns quickly, take a look at the two companies I told you about today:
Intercept (Nasdaq: ICPT) and Iovance (Nasdaq: IOVA).
Happy Investing.
Ahead of the tape,
Lou Basenese
