Two factors –lower interest rates and the low valuation of many biotech stocks — are likely to result in many biotech companies being acquired in 2024. Lower interest rates will result in many drug maker stocks being acquired because cheaper borrowing costs will make it cheaper for firms to borrow the money that they need to finance deals.

And with the Global X Genomics & Biotechnology ETF (NASDAQ:GNOM) having dropped 10% in 2023 and down over 50% from its January 2021 peak, the valuations of many biotechs are quite low. Usually, when biotech firms are acquired, their stocks soar tremendously. As a result, if you invest in one or more drug makers that are acquired, the return on your investment will probably be huge. Here are three biotech firms that very well could become takeover targets in 2024.

ImmunityBio (IBRX)

Last May, the Food and Drug Administration rejected ImmunityBio’s (NASDAQ:IBRX) bladder cancer treatment, citing issues with the partners that IBRX had designated to manufacture the drug, which is called Anktiva.

But as I’ve pointed out in past columns, it’s usually relatively easy for drug makers to fix manufacturing issues. Alternatively, ImmunityBio may have elected to choose new manufacturing partners altogether.

In any case, in October, the company resubmitted its application for the approval of Anktiva to the FDA, and the agency accepted the application.

Anktiva is well-positioned to become a blockbuster, since “Data from (a) Phase 2/3 trial showed 91.4% of patients (who were given the drug) were able to avoid having their bladder removed and…none of the patients died.” What’s more, all of the patients who participated in the trial “had been unresponsive to standard treatments.”

Meanwhile, since IBRX had over $720 million of debt and only $190 million of cash as of the end of the third quarter. It may very well prefer to sell itself at a very high price than to go into more debt to hire the large sales team that will be needed to market Anktiva.

Moreover, the $3.3 billion market capitalization of IBRX is relatively low, and many large biotech companies could afford to pay as much as $10 billion for the firm. All of these characteristics make IBRX one of the drug maker stocks most likely to become a takeover target.

Viking Therapeutics (VKTX)

Viking Therapeutics (NASDAQ:VKTX) owns a potential weight-loss, cholesterol, and liver-disease treatment called VK2735. In a Phase 1 trial of the drug, the liver fat of patients taking VK2735 fell “up to 47.2%.” Moreover, the cholesterol levels of the four patients taking the highest dose of the drug dropped by an average of 21%.

Also noteworthy is that the drug was found to be “well-tolerated.”

Last month, Barron’s stated that ” Pfizer could look to make a deal with a biotech developing an anti-obesity pill, given the roadblocks its own internally-developed anti-obesity pill has hit. ”

Given the fact that weight-loss drugs are expected to be very lucrative, while Viking’s VK2735 performed quite well in its Phase I trial, I believe that Viking could easily be acquired by Pfizer (NYSE:PFE) or another large company that does not have its own highly effective obesity treatment.

Exscientia (EXAI)

As I noted in a previous column, “Exscientia (NASDAQ:EXAI) uses AI to make the drug-discovery process cheaper, faster, and more efficient.”

Providing evidence that the company’s AI platform is quite potent, Germany-based Merck KGaA (OTC: MKKGY) in September disclosed that it would partner with EXAI on the development of drugs. The two firms “will focus on the areas of oncology, neurology, and immunology, with three targets identified for the initial stages of the collaboration,” Seeking Alpha reported.

Moreover, Exscientia developed one drug candidate with Bristol-Myers (NYSE:BMY) and another with a major Japanese biotech firm, Sumitomo. Both drugs are currently undergoing clinical trials.

By acquiring EXAI, a major drug maker could get immediate access to the firm’s potent AI platform, as well as its drug candidates and partnerships.

EXAI has a relatively low market capitalization of $800 million.

On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.