The pharmaceutical space is one which is extremely difficult for many to understand - I consider the space to share many attributes to handicapping - picking companies with the best odds of finding a drug that cures, or helps minimize the symptoms, of terrible diseases is the name of the game.
For Celgene Corp. (NASDAQ:CELG), providing cancer immunotherapy drugs and other life-lengthening drugs is the company's bread and butter, providing investors with the ability to profit from an industry which has continued to benefit from upward price pressure and exclusivity relating to patents.
The ability of Celgene's management team to continue to acquire smaller drug exploration companies, or develop new drugs in-house is of paramount importance to investors, increasing risk related to high capital spend related to R&D, high debt loads due to large acquisitions, or both.
I generally steer clear of biopharmaceutical companies, for these reasons. That said, the potential combination of Bristol-Myers Squibb Co. and Celgene is one which intrigues me, as it would essentially establish the world's largest cancer drug business, if the deal should go through.
Currently, shares of Celgene are trading at a substantial discount to the offer made by Bristol earlier this year, due in part to concerns that the deal may not go through. That said, Celgene stands to benefit from a potential $2.2-billion U.S. breakup payment in the event the deal doesn't close, providing upside to investors regardless of what happens.
Celgene will remain on my watchlist for these reasons - I will continue to follow this company in the coming quarters, as I believe significant price movements may be on the horizon.
Invest wisely, my friends.
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