Bristol Myers to buy cancer specialist Mirati for up to $5.8 billion

Updated at 9:42 am EDT

Bristol Myers Squibb  (BMY) - Get Free Report is set to buy cancer drug specialists Mirati Therapeutics  (MRTX) - Get Free Report, a $5.8 billion all-cash deal that adds to a string of recent acquisitions in the oncology sector. 

Bristol Myers will pay $58 a share for San Diego-based Mirati, a 3.65% discount to its Friday closing price and representing a market value of $4.8 billion. Mirati shareholders will also get share rights valued at $12 each, or another $1 billion, if the company reaches certain performance milestones.

Mirati's most-valuable asset in terms of near-term cash generation is likely its recently approved lung-cancer treatment. Krazati, which will provide an immediate boost to Bristol Myers' oncology division. 

Last year, Bristol Myers paid around $4.1 billion for another San Diego oncology group, Turning Point Therapeutics, which focuses on oncogenesis, or the process in which healthy cells turn cancerous.

“We are excited to add these assets to our portfolio and to accelerate their development as we seek to deliver more treatments for cancer patients,” said Bristol Myers Chief Executive Giovanni Caforio. 

"With a strong strategic fit, great science and clear value creation opportunities for our shareholders, the Mirati transaction is aligned with our business development goals. Importantly, by leveraging our skills and capabilities, including our global commercial infrastructure, we will ensure patients globally can benefit from Mirati’s portfolio of innovative medicines.” 

Mirati shares were marked 5.4% lower in early Monday trading to change hands at $56.92 each while Bristol Myers edged 0.42% higher to $56.90 each. 

Given that Bristol Myers is paying a discount for Mirati, which has around $1.1 billion of cash on its balance sheet, JMP Securities analyst Silvan Tuerkcan says a rival bidder could emerge for the group.

"We believed Merck  (MRK) - Get Free Report or Pfizer  (PFE) - Get Free Report could have also been well-equipped to extract value out of adagrasib [Krazati] and MRTX1719," another Mirati-developed lung cancer compound, he said. 

Earlier this week, pharma rival Eli Lilly  (LLY) - Get Free Report said it would pay $1.4 billion for radiation-therapies expert Point Biopharma  (PNT) - Get Free Report. That deal adds to Lilly's growing oncology portfolio, which was jump-started in 2019 with the $8 billion takeover of cancer treatment specialists Loxo Oncology.

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