Biotech Stock

Biotech Stock News: A Look At The Best Prospects For The Week

Tax inversion deals are no longer looking so attractive given the notice issued by the U.S. Department of Treasury in September. In fact, AbbVie (ABBV) has dropped its plans to acquire Shire and will be paying a break-up fee. Meanwhile, Amgen (AMGN) is being urged to consider splitting into two companies which would create more value.

AbbVie called off its plans to acquire Shire – the company’s decision to step back from the deal had a lot to do with the Sep 22 notice issued by the U.S. Department of Treasury related to tax inversion deals. The Shire acquisition would have allowed AbbVie to benefit from lower tax rates. However, the changes proposed by the Department of Treasury could very well destroy the financial benefits of these types of transactions.

With the termination of the deal, AbbVie will have to pay a breakup fee of $1.635 billion. Although the company announced a $5 billion share buyback plan and boosted its dividend, AbbVie remains highly dependent on Humira for growth. While the pipeline should start delivering, quite a few companies are working on developing biosimilar versions of Humira.

Biotech Stock News

Amgen is being urged by hedge fund manager Daniel Loeb to split into two companies. This is not the first time that this opinion has been voiced. Loeb suggested that Amgen is likely to benefit if it splits into two companies with one focusing on the cash-generative mature products and the other on R&D-intensive growth products. Amgen’s shares were up almost 5%. Companies that adopted the split route in the recent past include Abbott Laboratories and Theravance.

Repros Therapeutics’ (RPRX) shares plunged almost 40% on news that its upcoming meeting with the FDA for its testosterone treatment, Androxal, scheduled for the first half of November, will be a Type C guidance meeting instead of a Type B Pre-NDA meeting. According to the FDA, a preliminary review of the company’s briefing document showed that there was not enough clinical information for the meeting to be a Type B Pre-NDA meeting. The news is disappointing as this may well lead to a delay in the company’s plans to file for regulatory approval by year end.

Biotech Financial News

Last week, Regeneron was the biggest gainer among the major biotechs with share price increasing 16.14%. Meanwhile, Vertex recorded the highest gain (65.21%) among major biotechs over the last six months.
Overall, it was a good week for the biotech sector with the NASDAQ Biotechnology Index gaining 8.94% .

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