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Nov. 2, 2017, 9:05 a.m. EDT

Now that Novartis is buying AAA, I’m zeroing in on this potential pharma target

Neos Therapeutics rejected a buyout offer, but it may be acquired in the end

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By Nigam Arora


Getty Images

Not long ago, French pharmaceutical company Advanced Accelerator Applications got a lot of publicity. Now it’s getting bought out.

The late Apple /zigman2/quotes/202934861/composite AAPL +0.48% co-founder Steve Jobs died from pancreatic cancer, specifically from a neuroendocrine tumor, or islet cell carcinoma. Advanced Accelerator Applications became famous because of its work on this type of cancer.

Please click here for an annotated chart of Advanced Accelerator Applications. For the sake of transparency, this chart is exactly the same as the one published on MarketWatch in March 2017 containing my call to buy this stock. Please see “Biotech firm says it’s closing in on the cancer that killed Steve Jobs.”

Arora Report subscribers have doubled their money as Novartis /zigman2/quotes/203243705/composite NVS -0.40% is now buying this company for $82 a share in cash . This is the 130th buyout of an Arora Report portfolio company. Buyouts are lucrative for investors. It is too late for those not in this stock to get in, but the question is, which company is the next buyout candidate.

The Arora Report recently took a position in Neos Therapeutics /zigman2/quotes/207937730/composite NEOS -2.11% a pharma company, not a biotech. It’s in the business of manufacturing and commercializing extended-release products using its proprietary technology.

Previously, Neos rejected a $10.25-a-share buyout offer from PDL BioPharma /zigman2/quotes/202032737/composite PDLI -2.47% . Now there is a report that the Grand Prairie, Texas-based company, whose market value is $289 million, has hired an investment banker to explore its alternatives. In plain English, this means that the company will sell itself if it gets a good price. In our analysis, if there is a bidding war, a price north of $20 is possible. One analyst has a target of $30.

This goes with the usual caveat that a buyout may not occur and the stock may go down. For this reason, to The Arora Report subscribers we provide stop zones, buy zones, recommended quantities and frequent updates.

Ask Arora: Nigam Arora answers your questions about investing in stocks, ETFs, bonds, gold and silver, oil and currencies. Have a question? Send it to Nigam Arora.

The recent acquisition by Gilead /zigman2/quotes/210293917/composite GILD -0.49% of Kite Pharma generated a lot of excitement. Kite is in the business of CAR-T cancer therapy, in which a patient’s immune cells are modified to fight cancer.

The following cancer-therapy companies are now acquisition candidates: Juno Therapeutics , ZIOPHARM Oncology /zigman2/quotes/200291745/composite ZIOP -0.38% , Bellicum /zigman2/quotes/202566367/composite BLCM -1.23% and bluebird bio /zigman2/quotes/207450173/composite BLUE -1.97% .

Disclosure: Subscribers to The Arora Report may have positions in the securities mentioned in this article or may take positions at any time. All recommended positions are reviewed daily at The Arora Report.

Nigam Arora is an investor, engineer and nuclear physicist by background, has founded two Inc. 500 fastest-growing companies, is the developer of the adaptive ZYX Global Multi Asset Allocation Model and the ZYX Change Method to profit from change in trading and investing. He is the founder of The Arora Report, which publishes four newsletters. Nigam can be reached at Nigam@TheAroraReport.com.

/zigman2/quotes/202934861/composite
US : U.S.: Nasdaq
$ 236.41
+1.13 +0.48%
Volume: 24.38M
Oct. 18, 2019 4:00p
P/E Ratio
20.15
Dividend Yield
1.30%
Market Cap
$1068.38 billion
Rev. per Employee
$1.98M
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/zigman2/quotes/203243705/composite
US : U.S.: NYSE
$ 86.88
-0.35 -0.40%
Volume: 1.02M
Oct. 18, 2019 6:30p
P/E Ratio
17.78
Dividend Yield
2.12%
Market Cap
$198.77 billion
Rev. per Employee
$415,614
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/zigman2/quotes/207937730/composite
US : U.S.: Nasdaq
$ 1.39
-0.03 -2.11%
Volume: 156,997
Oct. 18, 2019 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$69.12 million
Rev. per Employee
$232,502
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/zigman2/quotes/202032737/composite
US : U.S.: Nasdaq
$ 2.37
-0.06 -2.47%
Volume: 1.06M
Oct. 18, 2019 4:00p
P/E Ratio
7.76
Dividend Yield
N/A
Market Cap
$270.66 million
Rev. per Employee
$1.89M
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/zigman2/quotes/210293917/composite
US : U.S.: Nasdaq
$ 64.91
-0.32 -0.49%
Volume: 8.81M
Oct. 18, 2019 4:00p
P/E Ratio
14.05
Dividend Yield
3.88%
Market Cap
$82.21 billion
Rev. per Employee
$2.02M
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/zigman2/quotes/200291745/composite
US : U.S.: Nasdaq
$ 3.95
-0.02 -0.38%
Volume: 1.95M
Oct. 18, 2019 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$641.27 million
Rev. per Employee
$3,042
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/zigman2/quotes/202566367/composite
US : U.S.: Nasdaq
$ 0.80
-0.01 -1.23%
Volume: 535,837
Oct. 18, 2019 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$37.00 million
Rev. per Employee
$6,474
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/zigman2/quotes/207450173/composite
US : U.S.: Nasdaq
$ 89.53
-1.80 -1.97%
Volume: 894,424
Oct. 18, 2019 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$4.95 billion
Rev. per Employee
$71,439
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Nigam Arora is an engineer, nuclear physicist, author, and entrepreneur and the founder of two Inc. 500 fastest growing companies. He is also the developer of the ZYX Change Method to profit from change by investing. The premise is that most money is made by predicting change before the crowd. Arora is the chief investment officer at The Arora Report and the editor of four newsletters that track the ZYX Change Method. Nigam can be reached at Nigam@TheAroraReport.com

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