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The long-predicted deal-making boom in Big Pharma started with a bang on Wednesday, as Bristol-Myers Squibb announced it will buy Celgene in a cash and stock transaction worth $74 billion. The deal values Celgene at $102.43 a share—54% higher than its closing price on Tuesday evening.
In a presentation the two companies planned for early Wednesday morning, they laid out a combined company that would be the number-one player in oncology, with products including BMS’s checkpoint inhibitor Opdivo and Celgene’s multiple myeloma blockbuster Revlimid. The combined company would also be the top player in the cardiovascular space, with BMS’s blood-thinner Eliquis—a fast-growing brand it shares with Pfizer—and it will be in the top five in immunology and inflammation, they contend (PDF).
“We will also benefit from an expanded early- and late-stage pipeline that includes six expected near-term product launches,” said Giovanni Caforio, M.D., Chairman and CEO of BMS, in a statement. They include a CAR-T treatment for multiple myeloma, ozanimod to treat multiple sclerosis and luspatercept for beta thalassemia.
Shares of Celgene skyrocketed 31% to $66.64 in premarket trading. BMS’s stock fell more than 14% to $44.80.
RELATED: After FDA rebuff, Celgene on track to refile ozanimod—in 2019
This is the type of deal many biopharma watchers had been expecting last year, after Congress passed a business-friendly tax package that gave the industry the ability to repatriate cash held overseas at a 15.5% tax rate, down from the 35% they had to pay previously. But potential acquirers largely stayed on the sidelines last year, held back by worries that included the endless talk in Washington about potential legislation to limit price hikes on drugs.
But the ever-present patent cliff in Big Pharma created a “pent-up demand for acquisitions,” said Michael Levesque, senior vice president at Moody’s, in an interview with FiercePharma in December. “The combination of that, plus lower valuations and increasing levels of cash—these are all signals for M&A.”
RELATED: Long-awaited M&A boom will hit biopharma in 2019 despite persistent worries, prognosticators predict
BMS has suffered its fair share of patent losses, to be sure. In 2017, it lost exclusivity on two drugs in its HIV portfolio, costing 58 sales reps their jobs. Before that, BMS had to say goodbye to its lock on Plavix, which at $6 billion in sales per year once accounted for nearly half of its U.S. revenues.
Celgene brings some innovation to BMS’s pipeline, most notably with two CAR-T engineered cell treatments for cancer in the near-term pipeline. There’s the CAR-T for multiple myeloma, bb2121, which Celgene has been developing in collaboration with Bluebird Bio, and JCAR017 for relapsed diffuse large B-cell lymphoma (DLBCL)—a product it picked up in its $9 billion buyout of Juno Therapeutics last January.
Today’s deal signals the appetite for big M&A is alive and well, despite some notable setbacks that may have dampened enthusiasm last year. Celgene, for example, picked up MS drug ozanimod in a 2015 acquisition of Receptos valued at $7.2 billion, but then got handed an embarrassing “refusal to file” by the FDA when it went to the agency for approval.
Clearly BMS was able to look past such disappointments for the opportunity to beef up its pipeline—a trend prognosticators said last year would prevail in 2019. “These larger, more established companies are really trying to figure out how to grow in different therapeutic areas,” said Glenn Hunzinger, a partner in PwC’s deals practice, in an interview with FiercePharma. “They want the secret sauce.”
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