The US$9bn takeover of Juno Therapeutics Inc (NASDAQ:JUNO) by Celgene Corp (NASDAQ:CELG) has thrown the spotlight on the biotech sector’s small and mid-tier players, according to the investment bank HC Wainwright.
It singled out Sorrento Therapeutics Inc (NASDAQ:SRNE) as it reiterated its ‘buy’ advice and US$30 a share price target, which would value the business at US$5.2bn. Currently the stock is worth US$7.70, giving Sorrento a market capitalisation of just over US$600mln.
The value of the business lies in its participation in the formation of Celularity, a new privately-held company focusing on regenerative medicine, and its CAR-T technology.
Hot, hot, hot
CAR-T primes the body’s own immune system to fight cancer, which is a hot area of research at the moment.
HCW expects M&A in the biotech sector to continue. “We note that the pace of deals in 2018 has vastly outstripped that of 2017 thus far, which is a trend we expect to continue as established firms seek to shore up flagging product franchises by aggressively acquiring companies with late-stage product opportunities in high-value arenas,” it said in a note to clients.
“Celgene's public projections for Juno's lead product candidate include potential market entry next year and peak sales of roughly $3B annually; we believe this bodes well for the immuno-oncology sector overall and specifically companies with exposure to the CAR-T space.”