Wells Fargo analyst Mohit Bansal said the pace of biotech deals is likely to pick up, but investors should look at smaller targets. Bansal called for both attractive valuations for small- and mid-cap biotech companies, which are now trading at an enterprise value of nearly one times cash on average, and a tough regulatory environment for his consideration. In a research note on Thursday, Bansal wrote, referring to Amgen, Bristol-Myers, “Big Biopharma needs growth, and the 5 major US companies with the greatest need have $400B+ in cash from now to 2025, and Revenue requirement of $65B+.” Squibb, Gilead Sciences, Merck and Pfizer. An upcoming workshop organized by the Federal Trade Commission and the Justice Department on June 14-15 is likely to discourage large M&A deals, he said. Antitrust enforcement in the pharmaceutical industry will be a focal point at the event. But Bansal expects smaller transactions of less than $20 billion to still happen. In May, Pfizer struck a deal with migraine drug maker BioHaven and Bristol-Myers to buy Turning Point Therapeutics last week to boost their oncology portfolio. He said the previous recession has prompted other combinations in the sector such as Pfizer’s acquisition of Wyeth, Merck’s tie-up with Schering-Plough and Roche’s purchase of Genentech, all of which occurred in 2009. Adding to the pressure is the lack of IPOs and follow-on equity offerings this year that could prove to be another catalyst as some of the smaller biotechs will start running low on cash later in 2022. Bansal did not name any potential targets in his research note. , but CNBC Pro reported Saturday that analysts have identified companies such as Vertex Pharmaceuticals, Cizen, Horizon Therapeutics, Incyte and Neurocrine Biosciences as potential targets. Yet it’s worth noting that M&A activity has been muted so far this year. In a separate research note, Citigroup said the value of dollar spent deals are down 4.5% compared to last year on a global basis. “The current economic environment is not highly supportive of M&A activity, which tends to be cyclical; earnings revisions that follow a similar profile to M&A deal volumes are in negative territory, GDP forecast broadly in the lower side.” , and the market has generally faced more adverse conditions than anticipated this year,” Citi analysts said in a research note. “Having said that, M&A events are all about finding opportunities that will always be available to firms that are well positioned to do so.”