Why Bristol-Myers Squibb Could be a Takeover Target Soon
January 17, 2017
By Alex Keown, BioSpace.com Breaking News Staff
NEW YORK – Could pharma giant Bristol-Myers Squibb soon be an acquisition target? A recent stock purchase by activist investor Barry Rosenstein of Jana Partners may indicate such a plan.
Writing in The Street, Ronald Orol said Jana Partners has “threatened proxy contests at nine companies, engaged in director-election battles at seven companies and launched 38 campaigns overall since 2001.” Orol said Rosenstein has not “initiated a new campaign” in several months. Although speculating, Orol said Rosenstein could press for some strategic options at BMS as the company looks to nominate dissident director candidates.
Citing Steve Chesney, an analyst at Atlantic Equities, Rosenstein could take issue with Bristol-Myer’s reliance on its cancer drug Opdivo. Chesney said Rosenstein may push for BMS to become more diversified in its research or target acquisitions that can expand its pipeline. If no changes are made, Chesney said 30 percent of the BMS revenue between now and 2020 will be generated by Opdivo.
While diversification is an option, Orol said Rosenstein could push for the company to merge with another one, particularly since 2017 is expected to see heavy M&A activity in the industry. If a deal happens, only a handful of companies such as Merck , Pfizer and Johnson & Johnson have the means to acquire BMS. Of those though, Pfizer may be the only company that could actually have interest in acquiring BMS. Orol said Pfizer would see the most benefit of acquiring BMS over the other companies.
In October, BMS announced plans to undergo a reorganization of its research and development unit. The announcement came two months after BMS’ lead PD-1 inhibitor Opdivo failed to meet its endpoints of progression-free survival in patients expressing PD-L1 at 5 percent in a Phase III trial. That setback for Opdivo gave rival Merck the window it needed for its own PD-1 inhibitor, Keytruda, to grab some market share. Opdivo, which is being heavily advertised in the media, had sales near $1 billion in 2015, but analysts predict it could go much, much higher, hitting nearly $13 billion annually within a few years. Despite that failure, Opdivo is in more than 50 clinical trials, which means the drug could become one of the best-selling drugs in the world.
The company has been striking deals with other companies to develop immuno-oncology treatments, including its most recent deal with Bay Area’s Nektar Therapeutics . Under that deal, the companies will explore immunotherapy treatments for five different tumor types by combining its blockbuster immuno-therapy Opdivo with Nektar’s investigational medicine, NKTR-214.
Shares of BMS are down this morning, trading at $55.95.