Shares of biotech Revolution Medicines (RVMD) rallied more than 13% in Friday’s pre-market trading, after rising 4.6% yesterday in reaction to news of a potential acquisition by pharma giant Merck (MRK). Citing sources, the Financial Times reported that Merck has not finalised a deal yet and that a potential transaction could take at least several weeks.
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Interestingly, earlier this week, AbbVie (ABBV) denied that it is in talks to acquire Revolution Medicines, following a report by the Wall Street Journal that the drugmaker was in advanced discussions to acquire the cancer-focused biotech.
Revolution Medicines Sees Takeover Buzz
According to the Financial Times, the potential acquisition of Revolution Medicines by Merck is valued in the range of $28 billion to $32 billion. If the deal goes through, it would be the largest healthcare acquisition since Pfizer (PFE) took over cancer biotech Seagen for $43 billion.
Reportedly, other large pharma companies are also interested in acquiring Revolution Medicines. RVMD’s pipeline is focused on innovative treatments targeting RAS-addicted cancers.
Several pharma giants are seeking attractive targets, as they face the risk of patent expirations and competition from generics. In particular, Merck has been making strategic acquisitions ahead of the loss of patent for its blockbuster cancer treatment Keytruda. Last year, the company bought flu prevention company Cidara Therapeutics for $9.2 billion and respiratory drug company Verona Pharma.
Is RVMD a Good Stock to Buy?
Remarkably, Revolution Medicines scores Wall Street’s Strong Buy consensus rating based on 20 unanimous Buys. The average RVMD stock price target of $81.88 indicates 24% downside risk from current levels. As of Thursday’s closing, RVMD stock has risen 142% over the past year.
