We've seen some decent takeout deals this year in biotech, notably Pfizer's (NYSE:PFE) $14 billion purchase of Medivation at a 180% premium to when takeover talks first started.
Critics were quick to point out that the big pharma giant overpaid for the smaller oncology firm, whose sales will only add $.05 to its earnings per share in the first year. Supporters of the deal, on the other hand, point to lead treatment Xtandi's potential for expansion into additional indications and the potential of its pipeline.
The key takeaway for investors, in my opinion, is that the upside potential in key pipeline assets or approved drugs could potentially be much more than originally projected by Wall Street analysts.
