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Biotech Daily Digest: Government To The Rescue For Gilead? Decision Day Approaches For Sarepta. Buyout For Synergy Pharmaceuticals?

In an ironic twist the NY AG's office is stepping in to sue a health insurer for delaying hepatitis C treatment, a development that could help Gilead Sciences.

Valeant is looking more and more likely to put some assets up for sale as the company needs to address its $30 billion debt load.

The most attended Ad Comm panel in history approaches for Sarepta and its drug eteplirsen aimed at Duchenne muscular dystrophy. Likely to be make or break moment for the company.

Late breaking rumor Friday has Allergan reportedly interested in small cap biopharma Synergy Pharmaceuticals which is our spotlight feature today.

The biotech indices had another up week as both the S&P 500 and oil hit yearly highs. The biotech sector has been one of the strongest performers so far in the second quarter but still is off some 30% overall from its peaks in July.

This week could get off to a somewhat rocky start as oil is down below $39 a barrel again as talks over the weekend in Doha failed to achieve an agreement on production freezes. Throughout 2016, falling crude prices have created a headwind in general for the market and in particular for high beta sectors within equities such as biotech. We will have a chance to see if this trend holds today.

Countering this is increasing speculation about M&A picking up. The Sunday times reported AstraZeneca (NYSE:AZN) has held internal talks about acquiring Medivation (NASDAQ:MDVN) in what could be a $10 billion deal but has not made a formal offer yet. Possible M&A activity is also a key theme in this Monday's Biotech Forum Daily Digest.

The IPO window might have closed for small biotech companies so far in 2016 and demand for secondary offerings is much more tepid than it was during the same period of 2015. However, "animal spirits" for the small companies in this innovative part of the industry are alive and well in the venture capital space. VC's pumped some $1.8 billion into 118 biotech deals tracked in the first quarter, according to the MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association, based on data from Thomson Reuters.

Now that large mergers seem to off the table thanks to the derailment of Allergan (NYSE:AGN) and Pfizer (NYSE:PFE) tie up by the Treasury Department, I think we will see an uptick in M&A activity in small and mid-caps in the sector. If that occurs, expect the biotech sector to continue to recover from its bear market lows and eventually IPOs to return in the second half of the year. The demand for promising young biotech concerns still is out there, just not in the public markets at the moment.

A program initiated at the FDA to speed up generic drug approvals seems to be working as intended - nice to say that about a government program every now and again. The agency approved slightly more than 700 generic drug applications in 2015; an all-time high.

This included 99 in December alone the highest monthly number of approvals and tentative approvals since the generic drugs user-fee program started a few years ago. Interesting factoid, generics account for 88% of the scripts dispensed in the United States last year.

Reuters reported that Valeant Pharmaceuticals (NYSE:VRX) has called in the investment bankers to look at what assets it could sell to help it bring down its $30 billion in debt without impairing the long term growth opportunities of the company.

Valeant renegotiated a good portion of its debt with creditors earlier this month in order not to go into default due not being able to file its annual report yet. Those discussions resulted in higher debt servicing costs including a fee of $50,000 per $10 million of loans and another 1% on the overall interest rate. I would expect the company to have numerous bidder for...