The pace of biotech deals is likely to pick up, but investors should think about smaller targets, said Wells Fargo analyst Mohit Bansal. Bansal called out both enticing valuations for small- and mid-cap biotech companies, which are now trading at an enterprise value of about one times cash, on average, and a tough regulatory environment for his view. “Big BioPharma needs growth, and the 5 major US companies with the biggest need have $400B+ cash available from now to 2025, and revenue need of ˜$65B+,” Bansal wrote in a research note Thursday, referring to Amgen , Bristol-Myers Squibb, Gilead Sciences , Merck and Pfizer. An upcoming workshop being hosted by the Federal Trade Commission and Department of Justice on June 14-15 is likely to discourage big M & A deals, he said. Antitrust enforcement in the pharmaceutical industry will be a focal point at this event. But Bansal expects smaller transactions of less than $20 billion could still happen. This has already been the case with Pfizer scooping up migraine drug maker Biohaven in May and Bristol-Myers inking a deal to buy Turning Point Therapeutics last week to boost its oncology portfolio. Past recessions have prompted other combinations in the sector like Pfizer’s acquisition of Wyeth, Merck’s tie-up with Schering-Plough and Roche’s purchase of Genentech, which all occurred in 2009, he said. Adding to pressure is a dearth of IPOs and follow-on equity offerings this year that could prove to be another catalyst as some smaller biotechs will start to run short on cash later in 2022. Bansal didn’t name any potential targets in his research note, but CNBC Pro reported Saturday that analysts have identified companies such as Vertex Pharmaceuticals , Seagen , Horizon Therapeutics , Incyte and Neurocrine Biosciences as potential targets. Still 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 deals by dollars spent is down 4.5% from 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 which tend to follow a similar profile as M & A deal volumes are in negative territory, GDP forecasts are broadly on the lower side, and the market has generally faced more headwinds this year than was anticipated,” said Citi analysts in a research note. “Having said that, M & A events are all about finding opportunities that will always be available to those firms well-positioned to do so.”