Bristol-Myers Squibb Co. has agreed to buy cancer drugmaker Mirati Therapeutics Inc. for $4.8 billion as the company seeks a path through looming patent losses for its top-selling drugs.
Mirati shareholders will get $58 per share in cash, the companies said in a statement on Sunday. Stockholders will also receive one non-tradeable contingent value right for each Mirati share held, potentially worth $12.00 per share in cash. That would represent an additional $1 billion of value opportunity.
The deal with Mirati will provide a boost to Bristol while it struggles with under-performing sales triggered by patent expirations that have already weighed on its aging oncology portfolio. Its top selling blood-thinner Eliquis and cancer immunotherapy blockbuster Opdivo are scheduled to face generic competition later this decade.
The company was forced to slash its revenue outlook this year after sales of Revlimid, a blood cancer drug that is its third-largest revenue driver, withered in the face of generic competition.
Eliquis has also become one of first 10 drugs to be subject to Medicare drug-price negotiations starting this year under the landmark Inflation Reduction Act. The company has turned to a raft of new products to make up the current and looming sales deficits, such as psoriasis treatment Sotyktu, but they will need time to generate demand.
The Sunday announcement ends speculation about who would purchase San-Diego based Mirati. Bloomberg earlier reported French pharmaceutical firm Sanofi, which has been criticized for becoming too dependent on its asthma blockbuster Dupixent for growth, was exploring a potential purchase.
Read more: Sanofi Is Said to Weigh Purchase of Cancer Drugmaker Mirati
Mirati is in the process of rolling out its first product to patients, a lung-cancer drug called Krazati. Shares of Mirati surged 45% on Thursday following Bloomberg’s report on the deliberations with Sanofi, giving it a market value of $4.2 billion.
A sale will give Mirati further resources to commercialize the lung-cancer treatment — a second-line therapy for a type of lung cancer in which the KRAS gene has mutated — and to fund more studies. Mirati received accelerated approval from the Food and Drug Administration in December, though European regulators have so far withheld support for the medicine.
“We view the deal as a modest positive for Bristol,” BMO Capital’s Evan David Seigerman wrote in a research note, citing challenges seen “in the early days of Krazati’s commercialization.”
Seigerman says the real value driver of the deal may be an experimental drug that targets a gene that promotes cancer proliferation called PRMT5, given recent optimism for the drug, which is in early stage trials.
“Mirati is another important step forward in our efforts to grow our diversified oncology portfolio and further strengthen Bristol Myers Squibb’s pipeline for the latter half of the decade and beyond,” said Chris Boerner, Bristol’s incoming chief executive officer, who takes over from Giovanni Caforio later this year.
The transaction was unanimously approved by both the Bristol Myers Squibb and Mirati boards of directors.
--With assistance from Michael Hytha.
(Updates with details on deal, analyst comments throughout)