Hedgie Warns "Big Shake-Out Looms" After Banking $480 Million On Biotech Buyout

That deal came as a result of not only of trying to add to the company's pipeline, but also as Celgene tried to appease its investors. The news that Celgene itself was going to be acquired just days ago set the tone for what is likely to become a blistering merger and acquisition pace in the biotech space in 2019.

Elms said the same thing, telling Bloomberg that he thinks the acquisition of Loxo will continue to fuel mergers and acquisitions. He notes that not all companies in the space are going to be bought out for massive premiums, however. His concerns lie with companies that have tapped the public markets recently and are already running low on capital.

He is forecasting a "big shake out on the horizon" for these types of companies in 2019.

He concluded:

 “Biotech is still a very treacherous investment. When you listen to the science, everything sounds fantastic. You really have to do a lot of work to try to divine at the end of the day which drugs are going to get approved.”

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