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

3. Incyte Corporation (NASDAQ:INCY)

My colleague Sean Williams and I see eye-to-eye on the prospects for Incyte Corporation (NASDAQ:INCY). Sean suspects that the biotech could be on the short list for Swiss drugmaker Novartis. I think Sean is on to something there.

That could especially be the case with Incyte’s latest news on JAK1 inhibitor Jakafi. The company announced positive results on Wednesday from a mid-stage study of Jakafi in treating advanced pancreatic cancer. Incyte Corporation (NASDAQ:INCY) notched sales of $136 million of the drug last year after gaining U.S. approval in late 2011. Jakafi has shown strong year-over-year revenue growth so far this year.

While the pancreatic cancer study results pushed Incyte Corporation (NASDAQ:INCY)’s market cap 33% higher in one day, we’re still only looking at a biotech valued at $5.5 billion. That’s not overly expensive considering that peak annual sales estimates for Jakafi are around $1 billion. If Novartis doesn’t buy Incyte Corporation (NASDAQ:INCY), there could be others with interest.

The best biotech buyout
Regardless of what big drugmakers with deep pockets do (or don’t do), you can mount your own biotech buyout anytime you like. Of these three, I like Medivation the best.

The average price target for Medivation from 18 analysts covering the stock is just under $70 per share. That reflects an upside potential of more than 26% from the current share price. With Medivation seeing strong growth from Xtandi and sporting a reasonable valuation compared to many biotechs, my view is that the company is worth taking a look at.

The article Biotech Buyouts: Who’s Next? originally appeared on Fool.com is written by Keith Speights.

Fool contributor Keith Speights has no position in any stocks mentioned. The Motley Fool recommends Seattle Genetics.

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