Vertex Pharmaceuticals' takeover of Alpine Immune Sciences (NASDAQ: ALPN) is attracting attention to the biotechnology industry. Vertex offered Alpine Immune Sciences $65 per share, or $4.9 billion cash. Alpine's shares closed at $39 on April 9, before the announcement.
Government regulators rarely stop huge pharmaceutical corporations from buying clinical-stage biotechs. Alpine shareholders' stake will likely increase by 67% when the purchase concludes in a few months.
Licenses and buyouts are common for precommercial biotech stocks. New medicine launches with inexperienced sales staff often fail. To offset generic competition, established pharmaceutical businesses must constantly create new revenue streams. Vera Therapeutics (NASDAQ: VERA) is a clinical-stage firm exploring a candidate like Vertex's 67% premium for Alpine. Let's look at Vertex and Alpine to see whether Vera Therapeutics gets a big takeover offer.
Why Vertex wants Alpine The CDC estimates 37 million U.S. people have chronic renal disease. Diabetes and high blood pressure are the main causes, while 1 in 10 kidney biopsies show immunoglobulin A nephropathy.
IgAN causes most kidney failure, yet there are no effective treatments for its etiology. Vertex is buying Alpine because it believes its top candidate, povetacicept, might treat IgAN and generate over $1 billion in annual sales. Povetacicept, a dual-action antagonist, targets BAFF and APRIL proteins, which are involved in IgAN and other autoimmune disorders.
A successful IgAN therapy launch for povetacicept might make Vertex's $4.9 billion offer Alpine seem cheap in a few years. Given prospective expansions to treat related disorders like lupus, Vertex took an unusually significant move to buy Alpine altogether.
Next biotech buyout? Alpine is not the only biotech startup investigating an experimental APRIL/BAFF kidney disease treatment. Wall Street analysts were stunned Vertex didn't choose Vera Therapeutics. A 72-week Origin trial of 376 IgAN patients was presented by Vera in January. Atacicept consistently reduced kidney damage in phase 2b of the pivotal study. Most placebo-randomized patients switched to atacicept at 36 weeks and saw similar results.
Vera has started enrolling patients for the phase 3 Origin study months before Alpine and expects to finish in the second half. Vertex and Alpine plan to start a phase 3 povetacicept trial in the second half of the year.
Does Vera Therapeutics stock make sense now? Vertex believes povetacicept blocks BAFF and APRIL better than atacicept or other alternatives. Even if Vertex is right about povetacicept, atacicept may work.
Vera's $2.3 billion market cap at recent pricing seems reasonable, regardless of whether it's the next biotech takeover. By 2025, Origin will likely produce phase 3 results. A phase 2b trend continuance might take the stock through the roof. If no big pharma company offers Vera a sweet acquisition first. Nobody should base their portfolio on Vera Therapeutics because it could go wrong. Those with a high risk tolerance should consider a little stake.
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