Bristol-Myers, Five Prime Join Forces, Shares up - Analyst Blog
March 18 2014 - 12:00PM
Zacks
In a bid to strengthen its oncology
pipeline, Bristol-Myers Squibb Company (BMY)
joined forces with Five Prime Therapeutics, Inc.
(FPRX).
The oncology deal grants Bristol-Myers access to Five Prime’s
immuno-oncology platform. Bristol-Myers is also responsible for
identifying the most promising candidates which will be developed
either as monotherapies or in combination with the drug major’s
existing immuno-oncology treatments based on two undisclosed immune
checkpoint pathways. Furthermore, the deal grants Bristol-Myers
full worldwide rights to market these therapies on approval.
Deal Boosts Five Prime’s Balance sheet
According to the financial details of the deal, Five Prime is
eligible to receive an upfront payment of $20 million from
Bristol-Myers in addition to $9.5 million as research funding.
Under the terms of the deal, Bristol-Myers will have a 4.9% stake
in Five Prime shares through an investment of $21 million
(representing a premium of 30% to Five Prime’s closing price on
Friday). Five Prime is also eligible to receive milestone payments
up to $300 million from Bristol-Myers under the deal apart from
royalties on the sales of the drugs following their approval.
Mutually Beneficial Deal Lifts Shares
The deal with a major biopharmaceutical company is a major
achievement for Five Prime which went public last year in
September. The news caused a significant upward movement (more than
22%) in Five Prime’s shares. Bristol-Myers also benefits as
it has bolstered its immuno-oncology pipeline without investing a
huge amount. Consequently, shares of Bristol-Myers too gained
(albeit marginally) on the news.
Eliquis’ Label Expanded
Bristol-Myers was also in the news when the U.S. Food and Drug
Administration (FDA) approved blood thinner Eliquis for an
additional indication. The drug is already marketed to reduce the
risk of stroke and systemic embolism in patients suffering from
nonvalvular atrial fibrillation. Atrial fibrillation refers to a
cardiac rhythm disorder characterized by an erratic heartbeat.
The FDA cleared Eliquis, co-developed by Bristol-Myers with
Pfizer (PFE), to bring down the risk of blood
clots in patients who have undergone hip or knee replacement
surgery. The label expansion will boost the sales potential of the
drug which came in at $71 million in the final quarter of 2013.
The companies are also looking to get Eliquis approved for treating
deep vein thrombosis (DVT) and pulmonary embolism (PE) and for the
reduction in the risk of recurrent DVT and PE. (U.S. target date:
Aug 25, 2014).
Bristol-Myers carries a Zacks Rank #3 (Hold). A better-ranked stock
in the biopharma space is Alexion Pharmaceuticals
(ALXN), carrying a Zacks Rank #1 (Strong Buy).
ALEXION PHARMA (ALXN): Free Stock Analysis Report
BRISTOL-MYERS (BMY): Free Stock Analysis Report
FIVEPRIME THERA (FPRX): Free Stock Analysis Report
PFIZER INC (PFE): Free Stock Analysis Report
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