Highlights in Small-Cap Stocks: The Merck Deal, the Success of a Hair Loss Pill, and Braze's "Wow Factor"

Germany's Merck has agreed to acquire the British biotech company Silence Therapeutics at a 130% premium to its market price—its shares have more than doubled in value. Veradermics reported successful trials of a hair loss pill, while Salesforce offered $5.66 billion for the marketing platform Braze, hoping to enhance personalization using AI. Highlights from the small-cap sector for the week of October 19–23—in the Oninvest digest.

The German group Merck is acquiring the British biotech company Silence Therapeutics. Merck has offered $20 in cash for each American Depositary Share (ADS)—130% more than the closing price on October 16, the last trading day before the deal was announced. Silence’s equity is valued at approximately $1.3 billion, while its enterprise value—which includes cash and debt—is $1.1 billion.

During trading on October 19, Silence shares soared 125.6% to $19.58.

The acquisition will add the experimental drug Divesiran to Merck’s portfolio for the treatment of true polycythemia—a rare blood cancer in which the body produces too many red blood cells. The drug is ready to move into Phase 3 clinical trials and, according to the companies, has the potential to become the best-in-class treatment.

Silence develops drugs based on RNA interference—a mechanism for suppressing the activity of specific genes. For their discovery of this mechanism, scientists Andrew Fire and Craig Mello were awarded the Nobel Prize in Physiology or Medicine in 2006.

According to MarketWatch, Silence shares have four “hold” ratings and one “buy” rating. The average target price is $20, which is virtually the same as the current price.

Biotech company Veradermics announced successful results from the Phase 3 trials of VDPHL01, a hair loss treatment in tablet form. On October 19, the company’s stock rose 12.4% to $122.28.

The study included more than 500 men with mild to moderate male-pattern baldness. The trial met all primary and secondary endpoints. According to the company, the drug was generally well tolerated.

VDPHL01 is an oral, sustained-release form of minoxidil. In the U.S., minoxidil tablets are approved for the treatment of severe hypertension; for hair loss, it is prescribed off-label. Veradermics’ product could become the first FDA-approved non-hormonal pill for male-pattern baldness, a condition that the company estimates affects 50 million men in the U.S.

All seven analysts whose estimates are tracked by MarketWatch recommend buying Veradermics stock. The average price target of $164.83 implies upside potential of approximately 22.8% by the close of trading on October 23.

Needham Investment Bank has initiated coverage of Victoria’s Secret shares with a “Buy” rating and a price target of $106. This implies upside potential of about 17% by the close of trading on October 23.

Analyst Tom Nikich believes that the popularity of weight-loss drugs is a long-term driver: after losing weight, customers may need smaller-sized lingerie. However, Victoria’s Secret CEO Hilary Super previously noted that the impact of GLP-1 drugs on sales has so far been minimal.

Nikich also expects to regain lost market share and grow the PINK brand, as well as the swimwear and athletic apparel lines. At the end of the second quarter of fiscal year 2026, Victoria’s Secret’s revenue rose 10% to $1.61 billion, while adjusted earnings per share nearly tripled to $0.95. The company raised its full-year revenue forecast to $7.1–7.18 billion.

Salesforce, a developer of cloud-based customer relationship management software, has agreed to acquire the marketing platform Braze. The deal values Braze at $5.66 billion. Holders of Class A common stock will receive $47.50 in cash—approximately 58% more than the closing price on October 19, the day before the deal was announced.

Following the announcement of the agreement, Braze's stock jumped 51.7% to $45.57 on October 21.

The acquisition is expected to strengthen Salesforce’s marketing division, whose revenue has shown little to no growth or has actually declined in recent quarters, according to Bloomberg. Braze processes real-time customer behavior data and helps companies personalize messages in apps, on websites, in emails, and in messaging apps. AI enables the selection of content, channels, and delivery times.

Salesforce expects to complete the acquisition during its 2028 fiscal year. This will require approval from Braze's shareholders and regulatory clearances.

Following the announcement of the deal, a number of analysts downgraded their recommendations on Braze shares to “neutral.” According to MarketWatch, the stock now has 19 “hold” ratings and two “buy” ratings. The average price target is $46.50—one dollar below Salesforce’s offer.