What's the next big biotech target in the multibillion-dollar M&A game?

Now that AbbVie ($ABBV) has managed to astonish just about everyone in the biopharma business with its $21 billion takeover of Pharmacyclics, there's been a deluge of speculation over the next big target in the M&A game. Yesterday, Bloomberg's restless team of deal-watchers proffered Bristol-Myers Squibb ($BMY) as a possibility, seeing as how the Big Biotech is now the clear leader in immuno-oncology, where it could be in line for $15 billion in peak sales.

Today, Galapagos gets a turn in the spotlight.

Here's the reasoning via Bloomberg: Galapagos is prepping the release of key data on a drug called filgotinib, an oral rheumatoid arthritis drug that is partnered with AbbVie, which is looking at an upcoming patent loss on Humira--its main source of revenue. J&J ($JNJ), which is losing its Remicade franchise, has a stake in Galapagos. As J&J evidently was ready to pay big bucks for Pharmacyclics, but couldn't stomach a bid that would be needed to overcome a needy AbbVie, the two pharma giants may be willing to duke it out again for the much smaller Galapagos, which is worth about $650 million.

Filgotinib, by the way, is a JAK1 inhibitor also known as GLPG0634. It's also in the clinic for Crohn's disease and has applications in other inflammatory conditions. Prespinout, AbbVie agreed to a $1.35 billion deal on this drug back in 2012: $150 million upfront, a $250 million payment for a successful midstage program and a billion more in promised milestones. 

"It's all about staying ahead of the curve," Bloomberg Intelligence's Asthika Goonewardene tells his colleagues on the reporting side of the business. AbbVie and J&J "are definitely looking to reduce their reliance on their older arthritis drugs."

Whether Belgium's Galapagos finds itself in a bidding war or not, pharma's appetite for biotech assets is clearly far from being sated. J&J and Pfizer ($PFE) reportedly were finalists in the final bidding for Pharmacyclics, and if both those big players are in the market for a major acquisition, more fireworks may well be ahead.

Chris Pultz, a money manager at Kellner Capital, put it this way to Bloomberg: "Now we know J&J's in the market. They're going to be looking for somebody else to buy because they're in kind of the same situation that everybody else is--they need to fill pipeline."

Pfizer has a history of paying top dollar wherever it goes, which explains their record-setting $850 million upfront on a preclinical IO asset at Merck KGaA. Their unsuccessful $118 billion bid for AstraZeneca ($AZN) started a lot of the magical thinking that now goes into takeovers.

Following the rationale that big players are willing to pay big bucks for pipeline assets, up to and including companies like Bristol-Myers Squibb, there are quite a few biotechs that fill the bill as takeover targets. Guessing the next target will be a full-time job for many.

- here's the story from Bloomberg