How to spot a biotech takeover candidate

It’s takeover season again in biotech, and this has been great news for me and my subscribers.

So far this fall, six of my favorite biotech names in my stock letter have been bought out for nice gains: Medicines Company (MDCO), Dova Pharmaceuticals, Genomic Health, Audentes Therapeutics (BOLD), Alder BioPharmaceuticals (ALDR) and Achillion Pharmaceuticals (ACHN).

These were all enormous winners for my subscribers. Three of these names advanced 100% to 400% some in less than a year. Two were up 78%-89% in a single day. One was up 66% in four months after I suggested it.

* MDCO advanced 200% in seven months after I suggested it in April 2019 (“might be a buyout”).

* MDCO advanced 342% in 11 months after I introduced in January 2019 (“a solid name to own”).

* DOVA advanced 66% in the four months after I introduced it as a new stock in July 2019 (“one to own and overweight”).

* GHDX advanced 174% after I suggested it in October 2016 (“key biotech name which should be an overweight core biotech holding”).

* GHDX gained 410% from where I first suggested it in September 2010.

* BOLD advanced 296% since I suggested it in May 2017.

* Alder BioPharmaceuticals (ALDR) shot up 89% on takeover news in September, and it was up 89% from where I last highlighted it in August 2017.

* Achillion Pharmaceuticals (ACHN) advanced 78% on takeover news in October, and it was up 112%-178% on the news from where I last highlighted it at $2.30-$3 in November 2013. (It had gone up 433%-600% in a year after that November 2013 reiteration.)

To find winning biotech names my model considers five factors: My assessment of the potential for the science. The path to approval at the FDA. Management experience. Insider behavior. And what other companies are on board with the science.

This brings me to a select group of the best biotech stocks, so naturally some get bought out. Even when they do not, they can do very well.

A Brush Biotech 7 Portfolio I put in my stock letter in August 2017 has done quite well. It was up 151% by December 13, 2019, compared to 17% gains for the iShares NASDAQ Biotechnology Index (IBB), 23% gains for the SPDR S&P Biotech exchange traded fund (ETF) (XBI), and 34.9% gains for the S&P 500.

Big winners in my Brush Biotech 7 portfolio included Sarepta Therapeutics (SRPT), BeiGene (BGNE) and Ascendis Pharma (ASND). I consider them holds and not buys, at current levels.

For insights on biotech names that are about to get bought out, or will otherwise perform well because they rank well in my model, consider subscribing to my stock letter here.

Look around, you will see that my letter is priced much more reasonably than most investment letters which typically cost two to four times as much. I am completely independent and objective in my analysis as I take no outside money from companies, PR firms, or any other entities, not even in the form of soft affiliate, advertising or sponsorship dollars on YouTube channels or social media, one of the conflicts of interests you now have to look closely for in the “journalism” landscape these days.

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