With the expectation of the Fed’s interest rate hike gradually declining, and it is almost certain that it will stop raising interest rates this year, small and medium-sized pharmaceutical stocks with historically low valuations are expected to usher in a wave of mergers and acquisitions this year. Combined with the merger situation in 2022, we believe that ten companies such as Argenx, Apellis and Sarepta have great potential to be merged by large pharmaceutical companies.
In addition to the ten pharmaceutical companies listed in this article, the following pharmaceutical companies or technical fields deserve attention:
ADC domain:Mersana Therapeutics、ImmunoGen;
CNS domain:Intra-cellular、Neurocrine、Sage Therapeutics;
Rare disease field:Mirum、Krystal Biotech;
Other fields:Halozyme、Prometheus、Viridian Therapeutics.
1、Argenx(NASDAQ:ARGX)
ARGX is a Dutch pharmaceutical company specializing in the research and development of alpaca-derived antibodies. It has three patented technologies related to the transformation of antibody Fc region, namely SIMPLE Antibody platform, NHance, ABEDEG and POTELLIGENT, and has the property of technology platform.

The drug VYVGART, which has been marketed by ARGX for treating myasthenia gravis, sells well, recording a sales income of US$ 131 million only in the third quarter of last year. It is estimated that the annual income will reach US$ 402 million, and the rights and interests of VYVGART in China have also beenZaiding medicineTake it. In 2023, ARGX also had some important milestones:
The company has submitted the subcutaneously injected version (SC) of EFGARTIMOD, which will be listed for approval on June 20th. Considering that VYVGART has been listed and sold well, the subcutaneously injected version of EFGARTIMOD has a high probability of being approved, and the sales revenue is more considerable.
In the second quarter, the SC version of efgartigimod will also release the phase III data for the treatment of chronic inflammatory demyelinating polyneuropathy (CIDP).
ARGX-113, a drug under research, will release two three-phase heavy data on the treatment of primary immune thrombocytopenia (ITP) and pemphigus vulgaris (PV) in the second half of the year.
ARGX is rich in pipelines, its technology platform has been verified, its sales revenue has risen rapidly, and with the blessing of many heavy catalysts this year, many Wall Street investment banks have listed ARGX as one of the promising biomedical enterprises this year.

2、Apellis(NASDAQ:APLS)
APLS is a biomedical company with complement technology, and its main drug is C3 inhibitor APL-2. At present, the drug has been approved for two indications: paroxysmal hemoglobinuria (PNH) and geographic atrophy (GA) secondary to age-related macular degeneration, among which the PNH indication was approved in mid-2021, and it sold for 65.1 million US dollars in the United States only last year (authorized to SOBI outside the United States).
APL-2 was recently approved for the treatment of GA, with a wide range of labels (including foveal and extrafoveal), and GA has a large market. The Wall Street investment bank even gave a peak sales forecast of $5 billion. At the same time, the doctor survey conducted by the investment bank showed that doctors and patients had high expectations for APL-2. It is estimated that doctors will use the drug in 20-50% of patients, with an estimated EOD of 70-80%.
In addition to the above-mentioned approved indications, the company has a layout in the fields of rare diseases, ophthalmology, nervous system, gene therapy, etc., among which gradual freezing disease (ALS) in cooperation with SOBI is the most important. APLS is a very suitable choice for large pharmaceutical companies that want to enter the field of complement technology or GA.

3、Alnylam(NASDAQ:ALNY)
Founded in 2002, Alnylam is a leading enterprise in the field of RNAi therapy. In the past five years, it has successfully brought five RNAi drugs to the market, and in 2022, it achieved sales revenue of 892 million US dollars, up 35% year-on-year.

According to product classification, ONPATTRO and AMVUTTRA, which have the same indications, recorded revenues of $122 million and $69 million respectively in the fourth quarter of last year, with annual revenues of $558 million and $94 million respectively.
GIVLAARI recorded a revenue of $47 million in the fourth quarter of last year and achieved a revenue of $173 million in the whole year; OXLUMO recorded a revenue of $24 million in the fourth quarter of last year and achieved a revenue of $70 million for the whole year.
In addition to the strong performance of existing products, relying on the RNAi therapy technology platform, ALNY is rich in research pipelines, and many pipelines are in the later stage, which has great commercialization potential in the short term:
Patisiran’s supplementary marketing application for the treatment of ATTR amyloidosis cardiomyopathy, and the approval time is October 8; This year, the third phase data of Fitusiran in treating hemophilia and the third phase data of Vutrisiran in treating ATTR amyloidosis cardiomyopathy will also be released.
In addition, the market for indications of some early pipelines of the company is extremely broad, such as Zilebesiran for treating mild and moderate hypertension, ALN-APP for treating Al Harmo’s disease, ALN-KHK for treating NASH, etc.
Whether it is the technology platform, sales performance, and future potential, ALNY is the target of mergers and acquisitions by large pharmaceutical companies.

4、Axsome Therapeutics(NASDAQ:AXSM)
AXSM is a model of Biotech in the field of central nervous system in recent years. Its share price has risen more than 30 times in the past four years, and it has also enabled CFO Nick Pizzie, who defected from Pierre Fabre USA in 2018, to gain wealth freedom. At that time, the market value of AXSM was less than 100 million US dollars.
Behind the stock price rise is AXSM’s successive clinical trials:
The third phase trial of AXS-05 in the treatment of major depression (MDD) and bipolar disorder in Az Harmo was successful, and the indication of MDD has been approved for marketing.
The third phase trial of AXS-07 for migraine was successful, and it is planned to submit NDA; this year;
The drug AXS-12, which is used to treat narcolepsy, has also been certified by FDA as a breakthrough therapy. It is currently in the second phase of clinical practice, and data will be released this year.
In addition to its own research and development, the company is also adept at business development (BD): in March 2022, AXSM bought Sunosi, a listed drug for treating narcolepsy, from JAZZ for $53 million, and in February this year, AXSM announced that it would grant Sunosi’s rights and interests in Europe, the Middle East and North Africa to Pharmanovia, and AXSM would receive an advance payment of $66 million and a milestone payment of up to $101 million.
For large pharmaceutical companies that favor the commercialization stage, AXSM with two CNS drugs on sale and multiple later pipelines is undoubtedly one of the most worthy M&A targets.

5、Ascendis(NASDAQ:ASND)
Ascendis Pharma is a long-acting drug company with a long-acting drug technology platform TransCon. At present, it mainly focuses on various rare diseases, reducing the frequency of drug use, improving patients’ compliance, reducing side effects, and thus improving the treatment effect. With the success of the third phase clinical trials of several drugs, the technical platform of ASND has also been verified.
At present, the company has three drugs under research: TransCon hGH (long-acting growth hormone), TransCon PTH (treatment of hypothyroidism) and TransCon CNP (treatment of achondroplasia).
In 2021, Skytrofa, the company’s drug for treating children’s growth hormone deficiency (GHD), has been approved for marketing. On April 30 this year, the FDA will approve the marketing of TransCon PTH, the company’s drug for treating adult hypoparathyroidism, and will also release Phase III data of TransCon hGH for treating adult growth hormone deficiency before the end of the year. In addition, the company also has pipeline promotion in the field of achondroplasia and tumor, and will provide updates of related clinical trials this year.

The performance of Skytrofa, a drug listed by ASND, grew well. In 2022, it achieved a revenue of 35.7 million euros, with a quarterly revenue growth rate of 39%.
In 2018, ASND also co-founded VISEN Pharmaceuticals with Vivo Capital, and Visen Pharmaceuticals acquired the rights and interests of ASND in Greater China. In November 2022, Weisheng Pharmaceutical submitted a prospectus to the Hong Kong Stock Exchange, intending to be listed on the main board of Hong Kong. In view of the vast domestic long-acting growth hormone market, Changchun Gaoxin, anke biotechnology and other companies have already laid out, and the arrival of Weisheng Pharmaceutical will intensify the competition in the industry.
In view of the company’s long-term drug technology platform and the pipeline in the late stage of commercialization and research and development, Ascendis Pharma is also one of the potential acquisition targets of large pharmaceutical companies.
6、Sarepta(NASDAQ:SRPT)
Sarepta Therapeutics is a leading enterprise in the field of treating Duchenne muscular dystrophy (DMD). At present, the company has three approved DMD drugs: EXONDYS 51, AMONDYS 45 and Vyondys 53. In addition to the drugs already on the market, the company is developing new therapeutic drugs such as gene therapy and gene editing around DMD, and at the same time, it has a layout for the indications such as limb muscular dystrophy (LGMD).
In the third quarter of 2022, the company recorded a product sales income of 207 million US dollars, and it is estimated that the annual income will reach 843 million US dollars, a year-on-year increase of 38%. In addition to strong sales performance, the company’s R&D pipeline is also worth looking forward to.
In the third quarter of last year, the company submitted the application for the marketing of gene therapy drug SRP-9001 for treating DMD, which was jointly developed with Roche. The FDA granted it priority approval, and the approval time was May 29th. The marketing application of SRP-9001 is supported by many clinical trial data, and the probability of approval is high.
For large pharmaceutical companies that want to enter the DMD field, SRPT is the best choice. However, the overseas rights and interests of SRP-9001 were authorized to Roche, which may lower the expectations of the acquirer.

7、Karuna Therapeutics(NASDAQ:KRTX)
KRTX is a company that develops drugs for the treatment of nervous system diseases. KarXT, its main drug, is an oral first-choice muscarinic agonist for M1/M4. It consists of xanomeline, a muscarinic agonist, and trospium, a muscarinic antagonist. It aims to preferentially stimulate muscarinic receptors in the central nervous system, and has the potential to treat serious mental diseases without relying on dopaminergic or serotonin, including schizophrenia and psychosis in Alzheimer’s disease.
In August, 2022, the company released the phase III clinical data of KARST in the treatment of schizophrenia, which not only reached the end of the trial, but also was superior to the existing therapies in terms of therapeutic effect, safety and patient coverage, and solved the problems of poor compliance and less coverage in the existing therapies, especially the clinical P value of KARST < 0.0001, which is extremely rare in the CNS field.
This data has been released, and KarXT is regarded as a game changer in the field of schizophrenia by investment banks such as Mizuho. It is estimated that it will reach $1.7 billion by 2028, and its peak sales will be above $5 billion.
The company plans to submit the listing application of KarXT in the middle of this year, and release the results of another phase III test named Buergent-3 in the first quarter of this year. This experiment is similar to the previous studies of EMERGENT1(Ph2b) and EMERGENT-2(Ph3), with a high probability of success, but initially the experiment was mainly conducted in Ukraine, and now most of the research is transferred to the United States, which has certain uncertainties.

8、Revance(NASDAQ:RVNC)
RVNC is a pharmaceutical company dedicated to developing cosmetic medical products. Relying on the unique TransMTS? peptide technology, it has developed a differentiated botulinum toxin for injection, which was approved in the third quarter of last year.
Different from the existing Dysport, Xeomin, Jeuveau and other products on the market, DAXXIFY is a new product that is truly different from BOTOX, the number one product in the field of botulinum toxin. In the treatment of brow wrinkles, the curative time of DAXXIFY is almost 1.5 to 2 times that of BOTOX, while the annual income of the latter is 14.6 billion US dollars.
Because of its remarkable effect, DAXXIFY aims at the top one-third of the existing users. Investment banks predict that DAXXIFY will occupy 30% of the US market and its annual sales will exceed $1 billion. In the first quarter (the fourth quarter of last year) just after it was approved, the sales of DAXXIFY experience users were already expected to be between $10.5 million and $11.5 million.
In addition to DAXXIFY, the company also has RHA fillers with less side effects and better effects than hyaluronic acid. The sales revenue in the first year after listing was more than 70 million US dollars, and the growth rate last year remained at 40%+. Different from other small pharmaceutical companies, the company also has a commercial platform OPUL?, which is a cloud platform integrating customer relationship maintenance and financial payment functions, providing services for all kinds of medical and beauty businesses. As of the third quarter of last year, the total platform GPV in the past 12 months exceeded 630 million US dollars.
In the environment of raising interest rates, large pharmaceutical companies facing the cliff of heavy drug patents are likely to be interested in mergers and acquisitions of RVNC with great sales revenue potential and quick results.
9、Krystal Biotech(NASDAQ:KRYS)
KRYS is a unique gene therapy company, which does not use the common adeno-associated virus or lipid nanoparticles to deliver genetic material, but loads the gene into herpes simplex virus (HSV-1) to make it reach its target in vivo. HSV-1 has higher carrying capacity than other gene therapy technologies, which not only broadens the scope of potential diseases that KRYS may treat, but also can realize repeated administration.
KRYS has developed a series of drugs for dermatoses and respiratory diseases on its gene therapy technology platform, among which the most important one is B-VEC for the treatment of dystrophic epidermolysis bullosa (DEB), which is currently in the waiting stage for PDUFA.

B-VEC has obtained the priority evaluation qualification granted by FDA. Due to CMC, the approval time was postponed to May 19th this year, and the probability of approval was high. If approved, this will be the first approved gene therapy for DEB.
Although the market of DEB is not very large, B-VEC has proved the feasibility of the company’s technology platform to some extent. Besides the skin diseases and respiratory diseases that have been laid out at present, the company has also started clinical trials to treat cystic fibrosis. In addition, Jeune Aesthestics, a subsidiary of KRYS, is still trying to enter the field of medical beauty.
With its unique technology platform value and several promising research pipelines, KRYS is expected to become an M&A option for large pharmaceutical companies.
10、Xenon(NASDAQ:XENE)
XENE is a company that focuses on the treatment of neurological diseases by regulating ion channels. The main indication is epilepsy. At present, there are four drugs under research in the pipeline, XEN1101, XEN496, XEN901 and XEN007, which have cooperated with well-known enterprises in CNS field, Neurocrine and Alexion (acquired by AstraZeneca).
In October, 2021, the company announced that XEN1101, the main pipeline, announced the success of the second phase of the clinical treatment of adult local epilepsy, and the FDA required the company to make another third phase to apply for listing. XEN496, another treatment for infantile epilepsy, is also in the third clinical stage, and it also needs a greater probability of success.
In addition, the company’s drug XEN1101 is still in the second phase of clinical treatment for major depression (MDD), and the market of MDD is bigger than that of epilepsy. If the data released in the second half of the year is good, it will increase the probability of the company being acquired.

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