Canaccord Hot And Cold On Deals By Teva Pharmaceutical, ImmunoGen

A spate of biotech deals took place this week as Teva Pharmaceutical Industries Ltd. TEVA agreed to acquire Auspex Pharmaceuticals Inc ASPX, and ImmunoGen, Inc. IMGN offered a far smaller sale of royalty rights on its Kadcyla breast cancer drug.

According to Canaccord's Corey Davis, "[Teva] still needs to seek a more transformative deal." Davis maintains a Hold rating on Teva, but boosted his target price by 5 percent to $63.

Davis is also skeptical of Teva's expectations for $2 billion in annual peak sales from Auspex's SD-809 drug.

Separately, Canaccord's John Newman said ImmunoGen's far smaller $200 million royalty rights deal will nearly triple its cash available for drug development.

Newman called the deal "positive," but maintained his $10 target on ImmunoGen, along with a Buy rating.

In exchange for upfront cash, ImmunoGen will grant TPG Special Situations Partners 100 percent of the royalty revenue on Kadcyla sales, which ImmunoGen would otherwise have received from Roche Holding Ltd. RHHBY.

The payments will continue until TPG has received between $235-260 million, depending on timing.