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These Two Drug Innovators Are on Big Pharma’s Acquisition List

Are you obese?

According to the American Medical Association (AMA), one in three Americans falls into this dubious category.

Moreover, the AMA recently classified obesity as a disease – news that’s bound to trigger a renewed effort in developing treatments for the two most common conditions associated with it: diabetes and heart disease.

But for that to happen, we’ll need to see a trend shift.

That’s because Big Pharma’s research and development budgets are anything but robust right now. Take a look at the downward trend for three of the big boys…

Big Pharma companies like AstraZeneca (AZN), Pfizer (PFE) and Merck (MRK) basically have two choices here…

C’mon, Big Pharma… Dust the Cobwebs Off Those Billions

They can either open their wallets and boost their own in-house R&D spending on drug development…

Or they can open their wallets and do something else with the money. Namely, buy smaller companies that are currently developing breakthrough treatments.

They certainly have enough cash for either option.

As you can see, companies like Merck and Pfizer have been content to fatten their cash holdings through sales of existing medicines, while simultaneously chopping their R&D spending.

Two Acquisition Targets for Big Pharma

As Big Pharma hoards its billions, small biotech companies are hammering away in their labs, working on new drug treatments to combat obesity.

And given the cash that the big boys have, they’re most likely to use it to buy their way to growth in this huge market by acquiring one of their smaller counterparts.

Our job is to find out which companies are on Big Pharma’s shopping list. Here are two that have our attention…

Oramed Pharmaceuticals (ORMP) and MannKind Corp. (MNKD) have dedicated a large chunk of their R&D budgets towards new treatments for diabetes.

As you know, people suffering from type 1 diabetes inject themselves with insulin in order to regulate their bodies’ blood sugar levels.

But Oramed is currently in the second round of FDA clinical trials for an orally ingestible pill. (The first round of trials proved very successful.) And MannKind is working on an inhalable drug.

By creating innovative treatments that mean diabetics won’t have to stab themselves with needles every day, it puts both companies firmly on Big Pharma’s radar, as the sector attempts to capitalize on any increased attention in the diabetes space over the coming months.

However, while Oramed and MannKind offer potential ways to profit from advancements in diabetes treatments, we all know the biggest opportunity will hit when someone finds an actual cure for the disease.

And that might not be as far off as you think…

A Cure for Diabetes in the Works

Earlier this month, researchers at the Boston Children’s Hospital said they’ve identified the root cause of type 1 diabetes.

Dr. Paolo Fiorina of the Nephrology Division at BCH reveals it’s a particular pathway that “fires up an alloimmune response.”

(Alloimmunity is basically an adverse reaction to antigens that come from the same species. The body’s immune system incorrectly identifies them as invaders and attacks them.)

By identifying this pathway, scientists can develop treatments that could not only treat the symptoms of type 1 diabetes, but also address the root cause – and ultimately cure the disease.

While it will be a few years before any testing of new treatments can begin in human subjects, this clearly represents a giant leap forward.

In the meantime, we’re keeping an eye on Big Pharma’s next move to see if we can capitalize on the AMA’s recent obesity ruling.

Ahead of the tape,

Jason Williams

Tech & Innovation Daily Research