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Bristol Myers (BMY) to Acquire Mirati Therapeutics for $5.8 B
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Bristol Myers Squibb (BMY - Free Report) announced that it will acquire commercial-stage oncology company Mirati Therapeutics, Inc. for $58.00 per share in cash, amounting to a total equity value of $4.8 billion.
Financial Terms of the Transaction
Per the terms, Bristol Myers Squibb, through a subsidiary, will acquire all of the outstanding shares of Mirati’s common stock. The offer price of $58.00 per share in cash represents a 52% premium to the 30-day volume-weighted average price of Mirati as of Oct 4, 2023. The total equity value of $4.8 billion corresponds to an enterprise value of approximately $3.7 billion, which accounts for approximately $1.1 billion of cash held by Mirati.
In addition to cash, each Mirati stockholder will also receive one non-tradeable Contingent Value Right (CVR) for each share held. This, in turn, will entitle its holder to receive a one-time potential payment of $12.00 in cash, for a total value of approximately $1.0 billion.
The payment is contingent upon a potential FDA acceptance of a new drug application for MRTX1719 for the treatment of either locally advanced or metastatic non-small cell lung cancer (NSCLC) in patients who have received no more than two prior lines of systemic therapy within seven years after the closing of the merger.
The acquisition will be completed by the first half of 2024, subject to the receipt of required regulatory approvals.
The transaction is expected to dilute Bristol Myers’ bottom line (non-GAAP) by approximately $0.35 per share in the first 12 months after closing.
Bristol Myers Squibb Company Price, Consensus and EPS Surprise
The acquisition will add Mirati’s lung cancer drug Krazati (adagrasib) to BMY’s strong oncology portfolio. The drug was approved by the FDA in December 2022 for the treatment of adult patients with KRAS-mutated locally advanced or metastatic NSCLC who have received at least one prior systemic therapy.
Bristol Myers will also get access to early-stage candidate MRTX1719, a potential first-in-class MTA-cooperative PRMT5 inhibitor. It is currently in phase I development and has shown encouraging early efficacy data across several tumor types with MTAP deletion, including NSCLC, cholangiocarcinoma (bile duct cancer) and melanoma. A phase II study of the candidate has been targeted in the first half of 2024.
Other promising pipeline candidates in Mirati’s pipeline include MRTX1133 and MRTX0902. MRTX1133 targets the KRAS mutation, which is implicated in key tumor types such as pancreatic cancer, NSCLC and colorectal cancer. MRTX0902 is a SOS1 inhibitor in phase I development with the potential for combination use with other agents targeting the MAPK/RAS pathway, including Krazati.
Our Take
Bristol Myers is currently in transition mode as it shifts its mature product portfolio, which is facing generic competition due to new drugs. The company is looking to offset its declining revenues from the blockbuster multiple myeloma (MM) drug Revlimid and blood thinner medicine Eliquis due to generic competition.
Shares of the company are down 21.3% year-to-date compared with the industry's decline of 18.3%.
Image Source: Zacks Investment Research
BMY’s strong and diverse portfolio already boasts of immuno-oncology drug Opdivo, which is approved for multiple cancer indications. The portfolio also comprises another MM drug, Pomalyst, leukemia drug Sprycel and melanoma drug Yervoy, among others. Hence, the addition of Krazati will further diversify and strengthen this franchise.
Bristol Myers earlier added repotrectinib to its pipeline with the acquisition of clinical-stage precision oncology company Turning Point Therapeutics in August 2022. The candidate is being evaluated for NSCLC.
In November 2020, BMY acquired MyoKardia for $13.1 billion. The acquisition gave BMY access to MyoKardia’s lead asset, mavacamten, a first-in-class cardiovascular medicine for the treatment of obstructive hypertrophic cardiomyopathy. Mavacamten was approved by the FDA in April 2022, under the brand name Camzyos.
On the other hand, Mirati too has been in the spotlight of late as a potential acquisition candidate.
Pharma/biotech bigwigs are constantly on the lookout to bolster portfolios through mergers & acquisitions (M&A) to diversify revenue bases in the face of dwindling sales of high-profile drugs. M&A is back in the spotlight in 2023 after a lull.
Swiss pharma giant Novartis (NVS - Free Report) recently acquired Chinook Therapeutics and added two late-stage treatments in development for rare, severe chronic kidney diseases. The acquisition added atrasentan and zigakibart (BION-1301) for immunoglobulin A nephropathy to Novartis’ pipeline.
Biogen (BIIB - Free Report) recently acquired Reata Pharmaceuticals, Inc. for $7.3 billion. The acquisition added Reata Pharmaceuticals’ lead asset, Skyclarys and other pipeline programs to Biogen’s portfolio/pipeline. Skyclarys was approved for the treatment of Friedreich’s ataxia, a rare neuromuscular disorder, in the United States earlier this year.
Biogen expects significant synergies from the acquisition with its existing rare disease portfolio and will update its guidance when it reports its third-quarter 2023 results.
Image: Bigstock
Bristol Myers (BMY) to Acquire Mirati Therapeutics for $5.8 B
Bristol Myers Squibb (BMY - Free Report) announced that it will acquire commercial-stage oncology company Mirati Therapeutics, Inc. for $58.00 per share in cash, amounting to a total equity value of $4.8 billion.
Financial Terms of the Transaction
Per the terms, Bristol Myers Squibb, through a subsidiary, will acquire all of the outstanding shares of Mirati’s common stock. The offer price of $58.00 per share in cash represents a 52% premium to the 30-day volume-weighted average price of Mirati as of Oct 4, 2023. The total equity value of $4.8 billion corresponds to an enterprise value of approximately $3.7 billion, which accounts for approximately $1.1 billion of cash held by Mirati.
In addition to cash, each Mirati stockholder will also receive one non-tradeable Contingent Value Right (CVR) for each share held. This, in turn, will entitle its holder to receive a one-time potential payment of $12.00 in cash, for a total value of approximately $1.0 billion.
The payment is contingent upon a potential FDA acceptance of a new drug application for MRTX1719 for the treatment of either locally advanced or metastatic non-small cell lung cancer (NSCLC) in patients who have received no more than two prior lines of systemic therapy within seven years after the closing of the merger.
The acquisition will be completed by the first half of 2024, subject to the receipt of required regulatory approvals.
The transaction is expected to dilute Bristol Myers’ bottom line (non-GAAP) by approximately $0.35 per share in the first 12 months after closing.
Bristol Myers Squibb Company Price, Consensus and EPS Surprise
Bristol Myers Squibb Company price-consensus-eps-surprise-chart | Bristol Myers Squibb Company Quote
Strategic Implications
The acquisition will add Mirati’s lung cancer drug Krazati (adagrasib) to BMY’s strong oncology portfolio. The drug was approved by the FDA in December 2022 for the treatment of adult patients with KRAS-mutated locally advanced or metastatic NSCLC who have received at least one prior systemic therapy.
Bristol Myers will also get access to early-stage candidate MRTX1719, a potential first-in-class MTA-cooperative PRMT5 inhibitor. It is currently in phase I development and has shown encouraging early efficacy data across several tumor types with MTAP deletion, including NSCLC, cholangiocarcinoma (bile duct cancer) and melanoma. A phase II study of the candidate has been targeted in the first half of 2024.
Other promising pipeline candidates in Mirati’s pipeline include MRTX1133 and MRTX0902. MRTX1133 targets the KRAS mutation, which is implicated in key tumor types such as pancreatic cancer, NSCLC and colorectal cancer. MRTX0902 is a SOS1 inhibitor in phase I development with the potential for combination use with other agents targeting the MAPK/RAS pathway, including Krazati.
Our Take
Bristol Myers is currently in transition mode as it shifts its mature product portfolio, which is facing generic competition due to new drugs. The company is looking to offset its declining revenues from the blockbuster multiple myeloma (MM) drug Revlimid and blood thinner medicine Eliquis due to generic competition.
Shares of the company are down 21.3% year-to-date compared with the industry's decline of 18.3%.
Image Source: Zacks Investment Research
BMY’s strong and diverse portfolio already boasts of immuno-oncology drug Opdivo, which is approved for multiple cancer indications. The portfolio also comprises another MM drug, Pomalyst, leukemia drug Sprycel and melanoma drug Yervoy, among others. Hence, the addition of Krazati will further diversify and strengthen this franchise.
Bristol Myers earlier added repotrectinib to its pipeline with the acquisition of clinical-stage precision oncology company Turning Point Therapeutics in August 2022. The candidate is being evaluated for NSCLC.
In November 2020, BMY acquired MyoKardia for $13.1 billion. The acquisition gave BMY access to MyoKardia’s lead asset, mavacamten, a first-in-class cardiovascular medicine for the treatment of obstructive hypertrophic cardiomyopathy. Mavacamten was approved by the FDA in April 2022, under the brand name Camzyos.
On the other hand, Mirati too has been in the spotlight of late as a potential acquisition candidate.
Pharma/biotech bigwigs are constantly on the lookout to bolster portfolios through mergers & acquisitions (M&A) to diversify revenue bases in the face of dwindling sales of high-profile drugs. M&A is back in the spotlight in 2023 after a lull.
Swiss pharma giant Novartis (NVS - Free Report) recently acquired Chinook Therapeutics and added two late-stage treatments in development for rare, severe chronic kidney diseases. The acquisition added atrasentan and zigakibart (BION-1301) for immunoglobulin A nephropathy to Novartis’ pipeline.
Biogen (BIIB - Free Report) recently acquired Reata Pharmaceuticals, Inc. for $7.3 billion. The acquisition added Reata Pharmaceuticals’ lead asset, Skyclarys and other pipeline programs to Biogen’s portfolio/pipeline. Skyclarys was approved for the treatment of Friedreich’s ataxia, a rare neuromuscular disorder, in the United States earlier this year.
Biogen expects significant synergies from the acquisition with its existing rare disease portfolio and will update its guidance when it reports its third-quarter 2023 results.
Bristol-Myers currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.