I See Some Speculative Wins Starting to Krystal-ize
These two mid-cap biotech names could become buyout targets.
You've reached your free article limit
You've read 0 of 1 free Pro articles.
Amid a clear pick up in M&A activity in the biotech sector, my collection of small- and mid-cap biotech holdings has moved sharply higher over the past month. Nothing perks up the animal spirits in this high beta part of the market as much as increased deal volume.
Thursday, Novo Nordisk (NVO) purchased Akero Therapeutics (AKRO) for just over $5 billion. Akero was the fourth mid-cap biotech name to be acquired over the past three weeks. It was the second company primarily focused on MASH (metabolic dysfunction-associated steatohepatitis, also known as fatty liver disease) bought out, joining 89bio (ETNB). This keeps Viking Therapeutics (VKTX) on my small list of mid-cap biotech names that would make logical buyout targets. Viking has a MASH candidate in mid-stage development, even if its primary focus on developing both a subcutaneous and oral GLP-1 weight loss candidate. I am hardly the only investor with that view as VKTX has moved up nicely on this recent wave of M&A activity.
Krystal Biotech, Inc. (KRYS), is a mid-cap biotech name with an approximate $5.5 billion market capitalization. The company made the list that Goldman Sachs put out in late September, among several biotech names, the investment firm thought made logical M&A targets heading into the fourth quarter. Krystal’s main asset for the moment is a gene therapy called Vyjuvek, that is Food and Drug Administration-approved to treat dystrophic epidermolysis bullosa. This is a rare but devastating and debilitating disease. The gene therapy also got a label expansion approved by the FDA last month.
Importantly, the company is already profitable and is projected to see a large ramp up in sales and profits in the coming years. The analyst community sees Krystal hitting the $1 billion annual revenue mark in fiscal 2028. In addition to the recent label expansion, Krystal is advancing other candidates targeting respiratory, oncology, and dermatology indications.
Management recently made a decision to prioritize the development of its inhaled version of its antitumor candidate targeted at non-small cell lung cancer or NSCLC. Leadership has already conducted an end of Phase 2 study meeting with the FDA and a registrational study is the next milestone for this promising program. It also should be noted that Krystal ended the first half of 2025 with over $800 million in cash and marketable securities on its balance sheet and no long-term debt. All in all, I see a collection of assets, that could draw the interest of a larger concern at some point on the horizon.
At the time of publication, Jensen was long KRYS, NVO & VKTX
