Radiopharmaceuticals continue to be one of the hottest area of cancer drug research, and Bristol Myers Squibb is joining in with a $4.1 billion deal to acquire clinical-stage RayzeBio.
According to deal terms announced Tuesday, BMS will pay $62.50 cash for each share of RayzeBio, a more than 100% premium to the biotech’s closing stock price on Friday. When RayzeBio went public in a $311 million IPO in September, it priced its shares at $18 apiece.
Like other radiopharmaceutical companies, RayzeBio develops therapies that kill cancer cells through the targeted delivery of radioactive particles. San Diego-based RayzeBio’s therapies employ actinium-225, an alpha particle that offers higher energy, and therefore better tumor-killing ability, compared to radiopharmaceuticals based on beta particles, such as FDA-approved Lutathera from Novartis.
Lutathera is approved for treating gastroenteropancreatic neuroendocrine tumors (GEP-NETs), a type of gut cancer. Lead RayzeBio program RYZ101 in in Phase 3 testing as a treatment for GEP-NETs that has progressed after treatment with Lutathera. Preliminary data are expected in late 2025 or early 2026. This radiopharmaceutical is also in Phase 1b testing in small cell lung cancer. The RayzeBio pipeline includes earlier-stage programs in liver and kidney cancers.
BMS’s RayzeBio acquisition is the latest big pharma move into radiopharmaceuticals. Novartis’s lutetium-177 radiopharmaceuticals Lutathera and Pluvicto both came from acquisitions. In October, Eli Lilly announced a $1.4 billion deal for Point Biopharma Global, whose lead program is a lutetium-177 radiopharmaceutical in development for prostate cancer. Though this Point radiopharmaceutical candidate recently posted disappointing data, Lilly still gains a platform technology for developing radiopharmaceuticals as well as the infrastructure for manufacturing them. From that perspective, the RayzeBio acquisition is similar while also signaling a shift in the radiopharmaceutical field, William Blair analyst Andy Hsieh wrote in a note sent to investors on Tuesday.
“We believe the acquisition provides another big pharma with an entry point into the radiopharmaceuticals industry and is an indication of Bristol’s (and the biotech sector more broadly) bullish view of the burgeoning radiopharmaceutical industry,” he said. “On a broader level, it is our view that the deal emphasizes the migration in the field from beta-emitting isotopes, like lutetium-177, to alpha-emitting isotopes, like actinium-225, given that RayzeBio’s pipeline is currently focused solely on actinium-225 assets.”
The boards of directors of BMS and RayzeBio have approved the transaction, which is expected to close in the first half of 2024. It’s the second big BMS acquisition announcement of the past week. Last Friday, the pharma giant made a big move back into neuroscience with a deal to acquire Karuna Therapeutics for $14 billion. Karuna’s lead program is a first-in-class schizophrenia drug under currently FDA review. A regulatory decision is expected in September 2024.
The RayzeBio and Karuna deals add to a busy business development streak for BMS, which has committed to about $24 billion in acquisition and licensing deals in the second half of 2023 alone, William Blair analyst Matt Phipps wrote in a separate research note. Those deals include the $4.8 billion Mirati Therapeutics acquisition as well as deals for rights to clinical-stage antibody drug conjugate cancer therapies from Orum Therapeutics and SystImmune. Phipps added that patent expirations facing key BMS products mean that the company needs additional revenue growth drivers in the latter part of this decade.
Regarding the RayzeBio assets, Phipps said RYZ101 has been de-risked by the success of Novartis’s Lutathera, which addresses the same target. But development of the lead RayzeBio radiopharmaceutical in other indications as well as success with the earlier-stage assets will likely be needed to justify the acquisition price, he said.
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