Cancer drug maker Mirati on Sunday announced that it will be acquired by an American pharmaceutical giant Bristol-Myers Squibb in a deal for $5.8 billion. This acquisition will help Bristol-Myers Squibb to diversify its oncology segment and is hoping to offset the expected loss in revenue from patent expirations later in the decade.
Bristol will take up Mirati’s key drugs that targets the genetic drivers of specific types of cancer including Krazati, for lung cancer, which got approved in December 2022. As per Bristol executives in an interview, they were keenly interested in another compound – MRTX1719, used in some types of lung cancer.
Bristol has been under immense pressure due to declining demand of two of its top drugs the blood thinner Eliquis and the blood cancer treatment drug Revlimid, amid fierce competition.
The US Food and Drug Authority (FDA) approved the drug in December to treat lung cancer in adults.
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The Financial aspect
The Chief Commercialization Officer at Bristol-Myers Squibb, Adam Lenkowsky said that, “we think this acquisition will really help us strategically complement our oncology portfolio but also, from a financial standpoint, it helps out commercially in the back half of the decade.”
According to the deal, Mirati is to be acquired for $58 per share in cash, making it around $4.8 billion by Bristol-Myers Squibb. To add into this, Mirati currently holds $1.1 billion cash in hand which means that they are essentially paying nearly $3.7 billion in enterprise value… which is a pretty attractive deal from their standpoint.
Furthermore, every Mirati shareholder will be entitled to receive a non-tradeable contingent value token for each Mirati share in cash, worth around $12, representing another $1 billion of value. Bristol will finance the deal partly by cash and debt, the company announced in a statement.
This deal comes at a period when the company is extremely undervalued than they were a few months back. The Mirati’s shares touched their 52-week high of $101.3 in November and are now trading at $60.2.
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In the past week
Mirati had witnessed a share price spike on Thursday after rumors started coming about a potential acquisition by various pharmaceutical companies, including the French giant Sanofi. Sanofi had been evaluating a potential buyout of Mirati, as per the reports from Bloomberg.
Although the spike witnessed in the share price on Thursday was huge, it did not changed the fact that Mirati’s shares are currently trading 76% low than what it was three years back.
The transaction is expected to reduce the EPS (dilute) Bristol’s non-GAAP earnings by approximately 35 cents a share a year from the deal.
To bolster its arsenal of cancer drugs, Bristol had acquired Turning Point Therapeutics last year for $4.1 billion.
