Astrazeneca/Alexion merger could drive more deals: Piper Sandler

 

• Commenting on the proposed merger between Alexion (NASDAQ:ALXN) and AstraZeneca (NASDAQ:AZN), Piper Sandler highlights the ‘durability’ of large biotech businesses, ‘with Astra pointing to double-digit EPS accretion in years 1-3’ from the deal.
• “If the market doesn’t recognize it – each and every time – someone else does”, the analysts led by Christopher J Raymond notes, as they single out BioMarin Pharmaceutical (NASDAQ:BMRN), Ultragenyx Pharmaceutical (NASDAQ:RARE), Acceleron Pharma (NASDAQ:XLRN), and Deciphera Pharmaceuticals (NASDAQ:DCPH) as compelling within a large entity.
• Notably, all companies serve the niche segment of rare therapeutics, and some might make more sense, as suggested by their valuations.
• Ultragenyx and Acceleron, two commercial-stage, rare-disease specialists, have already gained +236.6% and +144.3%, respectively, in the year so far. Comparatively, BioMarin and Deciphera look to be outliers losing -4.8% and -13.6%, respectively.
• BioMarin is worthy of particular attention. A cursory look at 2014 – 2019 financials indicates the company had more than a twofold rise in revenue with EBITDA turning positive to $0.5M compared to negative ~$98.8M five years ago. With a net cash position, the total cash and equivalents stand at $1.5B, nearly double the level in December 2019. Yet, shares in terms of EV to forward sales trade at ~7.8x compared to the five-year average of ~9.4x.
• BioMarin and Deciphera have each gained nearly +5% during the day, while Ultragenyx and Acceleron have risen +6.5% and +4.8%, respectively.
• https://seekingalpha.com/news/3644124-astrazeneca-alexion-merger-drive-deals-piper-sandler