Bristol-Myers Squibb, a leading pharmaceutical company, has unveiled plans to acquire Mirati Therapeutics (NASDAQ:MRTX), a prominent cancer drug manufacturer, in a deal valued at up to $5.8 billion. This strategic move aims to diversify Bristol-Myers Squibb’s oncology business and incorporate drugs that can potentially offset the anticipated revenue decline resulting from patent expirations later in the decade.
Bristol-Myers Squibb will acquire Mirati’s portfolio of drugs specifically designed to target the genetic drivers of various types of cancer. This includes Mirati’s lung cancer drug, Krazati, which received FDA approval in December.
Additionally, Bristol-Myers Squibb expressed interest in MRTX1719, a compound that holds promise for the treatment of certain forms of lung cancer. Adam Lenkowsky, Chief Commercialization Officer of Bristol-Myers Squibb, stated, “We believe this acquisition not only strategically complements our existing oncology portfolio but also provides a significant commercial advantage in the latter part of this decade.”
The transaction will see Bristol-Myers Squibb acquiring Mirati for $58 per share in cash, equivalent to approximately $4.8 billion. With Mirati holding approximately $1.1 billion in cash, the enterprise value for the deal amounts to roughly $3.7 billion, making it an attractive proposition, according to Lenkowsky.
As part of the deal, Mirati stockholders will also receive one non-tradeable contingent value right for each Mirati share held, potentially adding up to $12.00 per share in cash, representing an additional $1 billion in value opportunities, the company noted.
To finance this strategic acquisition, Bristol-Myers Squibb intends to utilize a combination of cash and debt, as outlined in their official statement.
The FDA granted approval for Krazati in December, marking a significant milestone in the treatment of advanced lung cancer. Chris Boerner, Bristol’s incoming CEO and current Chief Operating Officer, commented, “With multiple targeted oncology assets, including Krazati, Mirati represents another crucial step in expanding our diversified oncology portfolio and strengthening Bristol-Myers Squibb’s pipeline for the latter half of this decade and beyond.”
Bristol-Myers Squibb has faced challenges due to declining demand for two of its top drugs: the blood cancer treatment Revlimid and the blood thinner Eliquis, which now face generic competition.
This acquisition comes at a time when Mirati’s shares are notably more affordable compared to their 52-week high of $101.3 per share on Nov. 28. Currently, Mirati’s shares are trading at $60.2.
Bristol-Myers Squibb anticipates that this transaction will have a dilutive effect on its non-GAAP earnings per share, reducing it by approximately 35 cents per share during the first 12 months following the deal’s closure, as indicated in the official statement.
In April, Bristol-Myers Squibb announced the upcoming departure of CEO Giovanni Caforio in November, with Chris Boerner set to succeed him. Last year, the company acquired drug developer Turning Point Therapeutics (NASDAQ:TPTX) for $4.1 billion in cash, further strengthening its arsenal of cancer drugs.
