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The Zacks Analyst Blog Highlights: Roche, InterMune, Achillion Pharmaceuticals, Puma Biotechnology and Intercept Pharmaceuticals

CHICAGO, Aug. 27, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Roche (OTC:RHHBY-Free Report), InterMune (Nasdaq:ITMN-Free Report), Achillion Pharmaceuticals (Nasdaq:ACHN-Free Report), Puma Biotechnology (NYSE:PBYI-Free Report) and Intercept Pharmaceuticals (Nasdaq:ICPT-Free Report).

Zacks Investment Research, Inc., www.zacks.com.

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Here are highlights from Tuesday's Analyst Blog:

3 Biotechs Surging on InterMune Takeover

Roche's (OTC:RHHBY-Free Report) $8.3 billion deal, announced over the weekend, to take over biotech firm InterMune (Nasdaq:ITMN-Free Report) triggered significant stock price appreciation in many mid-cap firms in the space on Aug 25.

Recap of the Deal

Switzerland-based Roche is looking to strengthen its respiratory portfolio through the impending InterMune buy. The offer price of $74.00 per share represents a premium of 37.5% to InterMune's closing price on Aug 22, 2014. In the event of the deal going through, Roche's respiratory portfolio would be bolstered by the addition of Esbriet (idiopathic pulmonary fibrosis). The drug, already approved in Canada and Europe, targets a market with significant unmet medical need (read our Detailed Coverage on the Deal: Roche to Boost Respiratory Product Lineup with InterMune Buy).

The deal did not come as a surprise as rumors regarding it have been doing the rounds for a couple of weeks.

Midcap Biotechs Ignited by InterMune Deal

The imminent takeover by a company as large as Roche caused the shares of Brisbane, CA based InterMune to jump 35.1% to $72.85. InterMune was not the only mid-cap biotech company to gain on the news. New Haven, CT based Achillion Pharmaceuticals (Nasdaq:ACHN-Free Report), Los Angeles, CA based Puma Biotechnology (NYSE:PBYI-Free Report) and NY-based Intercept Pharmaceuticals (Nasdaq:ICPT-Free Report) were the other notable gainers in the mid-cap biotech space on Aug 25. All these stocks are also potential buyout candidates.

Achillion Pharmaceuticals, Puma Biotechnology and Intercept Pharmaceuticals gained 10.45%, 5.14% and 2.59%, respectively, on Aug 25. The surge in these mid-cap stocks led the NASDAQ Biotechnology Index higher by 2.41% to end the trading session yesterday at $2,850.43.

Shares of Achillion Pharmaceuticals have gained over 16% ever since it announced positive data from a phase II study on its hepatitis C virus (HCV) candidate, ACH-3102. The HCV space offers significant commercial potential. Consequently, the company represents an attractive M&A target. Achillion Pharmaceuticals holds a Zacks Rank #2 (Buy).

Puma Biotechnology also appears to be another attractive buyout candidate. The company's share price has been on an uptrend ever since it reported positive top-line results from a phase III trial on its breast cancer candidate neratinib (PB272) last month (read more: Puma Biotech Surges on Positive Results on Neratinib). Puma Biotechnology carries a Zacks Rank #3 (Hold).

Intercept Pharmaceuticals, a Zacks Rank #3 stock, has jumped over 24% from the announcement of positive data from a phase II study on obeticholic acid (OCA) for the treatment of nonalcoholic steatohepatitis (NASH) earlier this month. This too marks Intercept as a lucrative buy.

Conclusion

With many large companies eyeing smaller companies with promising pipelines or products we believe that deals similar to the one broached between Roche and InterMune will be common in the months ahead. The substantial premium offered by Roche to buy a one-drug company further highlights the importance attached to companies with high potential products/candidates. We expect investor focus to remain on the next such M&A deal in the biotech space.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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