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Cancer Biotechs Pique Buyout Interest: Recent Deals in Focus
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Mergers and acquisitions (M&A) in the pharma and biotech are back in focus after two important deals were announced in a fortnight.
Bristol Myers Squibb (BMY - Free Report) announced that it will acquire commercial-stage oncology company Mirati Therapeutics for a total equity value of $4.8 billion-plus contingent value right of approximately $1.0 billion. The acquisition will add Mirati’s new 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 Mirati’s 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. Mirati had long been a buyout target.
Last week, Eli Lilly (LLY - Free Report) offered to buy POINT Biopharma , a maker of next-generation radioligand therapies for treating cancers, for approximately $1.4 billion in cash. Radioligand therapy is a type of precision cancer treatment, which combines a targeting compound (ligand) with a therapeutic radioisotope (a radioactive particle).
Point Biopharma’s lead pipeline candidate is PNT2002, which is being developed to treat metastatic castration-resistant prostate cancer after progression on hormonal treatment. The phase III SPLASH study on PNT2002 is complete and top-line data is expected in the fourth quarter of 2023. The acquisition of POINT Biopharma, if successfully closed, will bolster Lilly’s portfolio of cancer drugs.
There have been quite a few M&A deals in the pharma and biotech sector so far this year.
M&A deals in the pharma and biotech sector have been quite active this year so far.
The first half of 2023 saw some mega-merger announcements. Pfizer (PFE - Free Report) offered to buy cancer drugmaker Seagen for $43 billion in March. The acquisition is expected to be closed in late 2023 or early 2024. Merck closed the acquisition of Prometheus Biosciences (announced in April) for approximately $10.8 billion in June. Amgen’s $28 billion acquisition of Horizon Therapeutics closed last week after the companies resolved the pending Federal Trade Commission administrative lawsuit.
Generally, the drug and biotech sector is characterized by aggressive M&A activity. Given that it takes several years and millions of dollars to develop new therapeutics from scratch, large pharmaceutical companies, sitting on huge piles of cash, regularly buy innovative small/mid-cap biotech companies to build out their pipelines. Fast-growing and lucrative markets such as oncology, rare disease and cell and gene therapy are mostly the focus areas for M&A activities.
However, the M&A deals of 2023, Bristol-Myers/Mirati, Lilly/ POINT Biopharma and Pfizer/Seagen, show that there is an increasing interest of drugmakers in companies making innovative cancer treatments. In an evolving global oncology landscape, emerging biotechs making cancer drugs with novel mechanisms of action and providing better outcomes than currently available drugs are attracting buyout interest. The market for cancer medicines is expected to continue to increase as disease rates rise in leaps and bounds globally. Consequently, biotechs focused on cancer medicines are likely to see an increase in buyout interest.
Image: Bigstock
Cancer Biotechs Pique Buyout Interest: Recent Deals in Focus
Mergers and acquisitions (M&A) in the pharma and biotech are back in focus after two important deals were announced in a fortnight.
Bristol Myers Squibb (BMY - Free Report) announced that it will acquire commercial-stage oncology company Mirati Therapeutics for a total equity value of $4.8 billion-plus contingent value right of approximately $1.0 billion. The acquisition will add Mirati’s new 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 Mirati’s 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. Mirati had long been a buyout target.
Last week, Eli Lilly (LLY - Free Report) offered to buy POINT Biopharma , a maker of next-generation radioligand therapies for treating cancers, for approximately $1.4 billion in cash. Radioligand therapy is a type of precision cancer treatment, which combines a targeting compound (ligand) with a therapeutic radioisotope (a radioactive particle).
Point Biopharma’s lead pipeline candidate is PNT2002, which is being developed to treat metastatic castration-resistant prostate cancer after progression on hormonal treatment. The phase III SPLASH study on PNT2002 is complete and top-line data is expected in the fourth quarter of 2023. The acquisition of POINT Biopharma, if successfully closed, will bolster Lilly’s portfolio of cancer drugs.
There have been quite a few M&A deals in the pharma and biotech sector so far this year.
M&A deals in the pharma and biotech sector have been quite active this year so far.
The first half of 2023 saw some mega-merger announcements. Pfizer (PFE - Free Report) offered to buy cancer drugmaker Seagen for $43 billion in March. The acquisition is expected to be closed in late 2023 or early 2024. Merck closed the acquisition of Prometheus Biosciences (announced in April) for approximately $10.8 billion in June. Amgen’s $28 billion acquisition of Horizon Therapeutics closed last week after the companies resolved the pending Federal Trade Commission administrative lawsuit.
Generally, the drug and biotech sector is characterized by aggressive M&A activity. Given that it takes several years and millions of dollars to develop new therapeutics from scratch, large pharmaceutical companies, sitting on huge piles of cash, regularly buy innovative small/mid-cap biotech companies to build out their pipelines. Fast-growing and lucrative markets such as oncology, rare disease and cell and gene therapy are mostly the focus areas for M&A activities.
However, the M&A deals of 2023, Bristol-Myers/Mirati, Lilly/ POINT Biopharma and Pfizer/Seagen, show that there is an increasing interest of drugmakers in companies making innovative cancer treatments. In an evolving global oncology landscape, emerging biotechs making cancer drugs with novel mechanisms of action and providing better outcomes than currently available drugs are attracting buyout interest. The market for cancer medicines is expected to continue to increase as disease rates rise in leaps and bounds globally. Consequently, biotechs focused on cancer medicines are likely to see an increase in buyout interest.
Bristol-Myers and Eli Lilly have a Zacks Rank #3 (Hold) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.