Big biotech is about to go on a shopping spree to replenish their pipelines as many small cap biotechs are selling for lows not seen since 2011. Here are three likely candidates that might get snatched up soon for big premiums.

Few sectors of the stock market have been hit harder in 2016 than the biotechnology space. Through the first week of February, the bellwether biotech ETF, iShares NASDAQ Biotechnology (NYSE: IBB) is down 27% and recently hit a new 52-week low. In contrast, the S&P 500 Index has dropped by over 8% during the same time period.

With unfettered panic sweeping the market over the past few weeks, many investors have been wringing their hands about risk and valuation which is why biotech stocks have been hammered so hard. Interestingly, the swift decline in the value of small cap and microcap biotech stocks in particular could result in an M&A run on stocks in this segment given that they offer a great value following the steep drop in stock prices. After all, Big Pharma could enhance its drug development portfolio faster and cheaper by acquiring select revenue-generating companies or those with drugs in the middle-to-later stages of development rather than spending years and potentially greater funds on its own development. With that in mind, I have identified 3 small biotech companies that could emerge as takeover candidates this year.

Inovio Pharmaceuticals Inc. (NASDAQ: INO)

As a leading immunotherapy company, Inovio’s treatments target cancer and as a vaccine developer, the company seeks to fight various infectious diseases. Inovio boasts many high profile partners and collaborators including MedImmune, Roche, University of Pennsylvania, DARPA, NIH, National Cancer Institute, the U.S. Military HIV Research Program, and others. The company has over a dozen studies in varying stages from preclinical to Phase II, most of which are funded with partner entities cited above.

With so many arrows in its quiver, it is easy to say why a potential acquirer would consider circling the wagons on this one. The stock is very active, trading over 1.5 million shares daily and on the strength of its portfolio, I could see INO potentially spinning off or selling the company in two pieces (cancer and infectious diseases) down the road or at the very least sell the licensing technology to two buyers thereby creating the greatest shareholder value. With a series of potentially favorable development milestones ahead, my near term target price is $9, a 50% rise from current levels.