These Two Biotechs Could Get an M&A Boost
I'm eyeing these names as they're getting consistent growth and upping guidance, making them likely buyout targets.
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On Friday, I highlighted the myriad challenges that big pharma is currently facing. I expect major drug companies to take actions to mitigate these headwinds. I see American pharma companies moving to near shore some inputs to reduce their dependence on China. Large foreign-drug companies will invest more heavily in the United States to build capacity here. Examples of this include AstraZeneca AZN and Novartis NVS. Big pharma will also increasingly tighten its belt from an operational perspective. Merck MRK just announced a restructuring targeting $3 billion in annual savings by 2027. I think many other large concerns will follow suit.
Finally, I believe large pharma companies will turn to M&A to acquire assets and fill out their product portfolios. Small and mid-cap biotech/biopharma stocks should benefit should deal activity picks up. In today’s column, I will highlight a couple of names I like in this area that should be fine as standalone entities, but also make logical buyout targets. Both companies just boosted full-year guidance.
Let’s start with TG Therapeutics TGTX. This mid-cap company has a market cap of approximately $5 billion. The company’s primary asset is a monoclonal antibody called ublituximab that goes by the brand name Briumvi, which has been on the market for just over two-and-a-half years. It is approved to treat relapsing forms of multiple sclerosis, and has some advantages in a competitive space, including cost.
TG Therapeutics is pursuing a subcutaneous version of Briumvi, where a pivotal phase 3 trial is currently enrolling. The monoclonal antibody is being evaluated to treat other indications. The company missed top- and bottom-line expectations this morning with its second quarter results, as sales only grew just over 90% on a year-over-year basis. Management did boost full-year sales guidance. It also did so after first-quarter numbers came out as its franchise product is getting solid traction. Briumvi should hit blockbuster status (over $1 billion in annual sales) in fiscal 2027, and the company is already solidly profitable. TG Therapeutics could easily be folded into a larger company wanting to get a foothold in the MS market.
Aurinina Pharmaceuticals AUPH is a smaller biopharma company that is no stranger to consistent buyout rumors. The stock has an approximate market capitalization of $1.4 billion and has been on the move recently. Aurinia’s franchise drug is called Lupkynis and has been on the market since 2021. Lupkynis is the first and only Food and Drug Administration-approved oral therapy for lupus nephritis or LN.
The company reported second-quarter results last week and numbers beat top and bottom-line expectations. Management boosted full-year sales guidance by $10 million to a range of $260 million to $270 million. Aurinia is delivering solid and consistent revenue and earnings growth. The company also has over $300 million in net cash on the balance sheet and has bought back a big slug of its own stock here in 2025.
Both of these names have solid futures as their franchise drugs continue to grow at a good clip. Receiving a buyout offer would just be the icing on the cake.
At the time of publication, Jensen was long AUPH & TGTX
