The Cross-Border Biotech Blog

Biotechnology, Health and Business in Canada, the United States and Worldwide

Tag Archives: Medarex

Bristol-Myers Squibb Strikes $2.1 billion Deal for Medarex

light at the end of the tunnel smallGreat news for Medarex shareholders from BMS’ $16/share offer yesterday, which clocks in at a 90% premium over Wednesday’s close.  Reports cite the value of ipilimumab, a late-stage cancer therapy being advanced as a new treatment for metastatic melanoma, as well as the value of Medarex’s transgenic mouse platform to make human antibodies.

However, the deal is better for BMS than the headline price per share indicates. 

First, discount $300 million of the $2.4 billion that pays for Medarex’s cash and liquid securities.

Second, look at BMS’ cost savings here, since they were already partnered with Medarex on ipilimumab.  According to reports at the time the partnership was struck:

“Medarex has an option to co-promote ipilimumab in the U.S., where the company would receive 45 percent of profits. Bristol-Myers Squibb would get the rest and pay an undisclosed royalty back to Medarex on overseas sales. The company received an initial $50 million payment and could earn up to $480 million in regulatory and sales milestones.”

Figure the NPV of the $480 million is a lot higher now than it was in 2005, add in 45% of the U.S. market, and the 90% premium shrinks considerably.  I also wonder if the value of Medarex’s deal with Lonza is (a) transferable (more change-of-control clause fun) and (b) higher to BMS than it is to Medarex.

Other good news: This continues the “biotech is a good investment” meme shaping up this week.  Forbes asks “who’s next” in what DailyFinance calls “[t]he heated-up biotech sector,” and Cell Therapeutics thinks this is a great time to be in the market and is looking to sell $40 million or so of equity.

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