Despite the markets being more uncertain than ever due to this coronavirus situation and the looming November elections, major billion-dollar-plus mergers are still going on regardless. More specifically, the healthcare sector has seen some of the largest acquisitions announced over the past 12 months, and seems likely to continue this way going forward. One of the largest pharmaceutical and biotech companies in the world, Bristol-Myers Squibb (NASDAQ: BMY), announced it would be paying out $13.1 billion to acquire another biotech, MyoKardia as well as its promising heart drug, mavacamten.
Bristol-Myers had already gone through a number of major acquisitions so far in order to bolster up its own pipeline. For the past few years, the pharmaceutical giant has traditionally focused on its lineup of cancer therapies. Last year, Bristol spent a whopping $74 billion to acquire Celgene last year, alongside its portfolio of multiple-myeloma drugs. However, the downside to this business move is that it made the company overly focused on cancer treatments.
Hence why Bristol decided to spend another $13.1 billion on this buyout. Specifically, MyoKardia’s mavacamten treats a type of chronic heart condition – hypertrophic cardiomyopathy – that can cause irregular heart rhythms, possibly leading even to death, in some cases. Following this deal, Bristol is hoping to secure U.S. Food and Drug Administration (FDA) approval for the drug sometime next year. Analysts expect that the drug could add an extra $1.5 billion in annual revenue for Bristol-Myers by 2025 once peak sales set in.
“MyoKardia is an important company because they developed a really interesting approach to the treatment of cardiovascular disease, which is a precision approach. It’s potentially a really important medicine that can be filed with the FDA in the first quarter of next and could launch at the end of next year.” said Giovanni Caforia, Bristol’s CEO. “The acquisition of MyoKardia further strengthens our portfolio, pipeline and scientific capabilities, and is expected to add a meaningful medium- and long-term growth driver,” he added.
Around 100,000 people in the U.S. have been diagnosed with hypertrophic cardiomyopathy, alongside another 100,000 or so people in Europe. While not an incredibly common condition, the disease has a particularly high morbidity rate and is usually diagnosed in older patients. According to the clinical data currently published, mavacamten has shown to be effective in stabilizing cardiac rhythm in patients, extending their expected lifespans considerably.
Shares of Bristol-Myers didn’t respond much to the news, inching up less than a percent overall on Monday. Since the start of the year, the company has stayed relatively in the same price range overall. MyoKardia, on the other hand, shot up around 59% in response to the news, making it the best performing stock on Monday.
Bristol-Myers Squibb Company Profile
Bristol-Myers Squibb discovers, develops, and markets drugs for various indications, such as cardiovascular, oncology, and immune disorders. A key focus for Bristol is immuno-oncology, where the firm is leading in drug development. Unlike some of its more diversified peers, Bristol has exited several nonpharmaceutical businesses to focus on branded specialty drugs, which tend to support strong pricing power. – Warrior Trading News
