Medivation Inc (MDVN), Seattle Genetics, Inc. (SGEN) – Biotech Buyouts: Who’s Next?

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There’s been plenty of buzz lately about the continuing saga of the possible buyout of Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX) by Amgen, Inc. (NASDAQ:AMGN). After initially rebuffing Amgen, Inc. (NASDAQ:AMGN), Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX) warmed up to the possibility — for a higher price, of course — although its hesitancy to share ongoing trial data for blood cancer drug Kyprolis temporarily muddied the waters yet again.

All of the drama has prompted me to think about the inevitable question: Who’s next? Biotech buyouts sometimes beget other buyouts. Even when they don’t, they get people thinking about acquisitions. Here are three companies (from lowest to highest market cap) that I think could be possible pick-ups for the right buyer.

1. Medivation Inc (NASDAQ:MDVN)

Several big drugmakers could be kicking themselves for not buying Medivation Inc (NASDAQ:MDVN) already. The biotech landed the top spot on a recent ranking of the best-performing biotech stocks of the last decade. How good was Medivation Inc (NASDAQ:MDVN)’s performance? Only an 11,000% gain over 10 years!

Medivation Inc (NASDAQ:MDVN)’s success has been powered by prostate cancer drug Xtandi. Approved by the Food and Drug Administration a year ago, Xtandi racked up sales of nearly $158 million in the first half of 2013. Medivation Inc (NASDAQ:MDVN) splits the revenue, though, with partner Astellas Pharma.

Analysts peg Xtandi’s peak annual sales potential between $1 billion and $2 billion. Medivation Inc (NASDAQ:MDVN)’s market cap is currently a little more than $4 billion — just two-to-four times those peak sales estimates. That valuation isn’t bad for a big pharmaceutical company looking to buy growth potential.

2. Seattle Genetics, Inc. (NASDAQ:SGEN)

Another biotech that I suspect could be on the radar screen for potential acquisition is Seattle Genetics, Inc. (NASDAQ:SGEN). The stock has been on a tear so far in 2013, with shares soaring 78%.

Seattle Genetics, Inc. (NASDAQ:SGEN)

The crown jewel for Seattle Genetics, Inc. (NASDAQ:SGEN) is Adcetris, which treats Hodgkin lymphoma and anaplastic large cell lymphoma, or ALCL. Adcetris generated nearly $70 million in sales for the biotech during the first half of 2013. Seattle Genetics, Inc. (NASDAQ:SGEN) markets the drug in the U.S. and Canada, while its partner Takeda/Millenium owns the rights to market Adcetris in the rest of the world.

With a current market cap of $5 billion, Seattle Genetics, Inc. (NASDAQ:SGEN) wouldn’t be too much of a stretch for a buyout by several large players. One thing I could see getting in the way of any deal, though, is concern that the stock is priced too highly right now.

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