Elan Corporation, plc (ADR) (ELN), VIVUS, Inc. (VVUS), MannKind Corporation (MNKD): Three Biotech Companies to Watch This Summer

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The news flow from biotech companies might slow down during the summer, but it won’t stop. In fact, a few biotechs are expecting news that could move their stock substantially. Here are three biotech companies to keep your eye on while you’re hanging out at the beach.

Up for sale
After Elan Corporation, plc (ADR) (NYSE:ELN) failed to convince its shareholders that its new business model was the right one, the biotech company formally put itself up for sale last Friday.

Elan Corporation, plc (ADR) (NYSE:ELN)

I figured it would take a couple of months for the bankers to start dropping hints as to who might be interested. Instead, it we got the first one in less than a week, as Reuters reported Wednesday that Forest Laboratories, Inc. (NYSE:FRX) was mulling a bid according to “people familiar with the situation.” I expect we’ll get a lot more unnamed sources paraphrased in articles as the summer progresses and as Elan Corporation, plc (ADR) (NYSE:ELN)’s bankers try to get the most bidders to the table.

Royalty Pharma previously offered $13 per share plus $2.50 in contingent value rights if Tysabri hits certain milestones. Since management wasn’t willing to accept that offer, we can assume an acquisition offer will have to be higher than that.

My guess is that any offer that Elan Corporation, plc (ADR) (NYSE:ELN) gets, will probably similarly contain a CVR, which allows the two sides to agree to disagree to the potential upside, while still getting the deal done. The only question now is whether Elan can find someone willing to pay a base price above the current market price.

A take-under — where CVR helps make up the price difference — is certainly an option and is the biggest risk to owning the stock beyond Elan Corporation, plc (ADR) (NYSE:ELN) not being able to find a bidder altogether.

Obesity catfight
VIVUS, Inc. (NASDAQ:VVUS)
will launch fights on two fronts this summer.

The biotech company’s obesity drug Qsymia now has direct competition from Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) and Eisai‘s recently launched Belviq. I continue to think there’s plenty of room for both drugs on the market; obesity is an epidemic after all. But in the short term, it’s going to be interesting to see if the launch of Belviq cuts into Qsymia sales.

VIVUS, Inc. (NASDAQ:VVUS) will also be waging a proxy war against the largest shareholder, First Manhattan, which is trying to unseat the board at the company’s annual meeting on July 15. First Manhattan claims that Qsymia’s slow launch is because the board doesn’t have the commercial expertise.

I’m not sure if VIVUS, Inc. (NASDAQ:VVUS)’ shareholders will buy it, and even if they do, it’s not clear that a change will make a material difference on the launch. Nevertheless, the fight will be a distraction for the next month, which certainly isn’t going to help with the biotech company’s launch.

Last clinical trials!
MannKind Corporation (NASDAQ:MNKD)
has been developing its inhaled insulin product Afrezza for years. The FDA rejected the drug-device combo in 2010, requesting additional information on the clinical utility of Afrezza.

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