Bristol-Myers Squibb To Buy Medarex

Ramping up its effort to focus on biopharmaceuticals, Bristol-Myers Squibb will pay $16.00 per share, or $2.4 billion, for Medarex, a Princeton, N.J.-based biotech firm that is one of the few companies left on the market with robust antibody discovery technology.

Medarex has $300 million in cash and marketable securities on hand, lowering the actual purchase price at closing to $2.1 billion. The board of directors of both companies have already approved the acquisition.

The deal builds upon a partnership formed between the two firms in early 2005 for the immunotherapy ipilimumab. BMS will now have full rights to the monoclonal antibody drug, which is in Phase III trials to treat types of melanoma and prostate cancer and in Phase II trials for lung cancer.

In late 2007, the companies said the drug failed to meet its primary endpoint in one Phase III trial for melanoma, but more recent data from other trials suggest that, two years into treatment, the drug effectively prolongs survival of cancer patients.

Medarex' pipeline also includes three antibodies partnered with other firms and seven of its own antibodies in clinical trials.

Equally important as its attractive pipeline, Medarex adds an in vivo antibody discovery platform to BMS's technology portfolio. Medarex has engineered mice to express fully human antibodies that are the same as the immunoglobulin antibodies naturally produced by humans. The company also contributes antibody-drug conjugate technology, which uses an antibody to carry a potent small molecule to its target.

In 2006, big drug companies started to snap up firms with antibody discovery technology. Amgen paid $2.2 billion for Abgenix, which also uses in vivo technology, and AstraZeneca laid out $1.6 billion for the 80% of Cambridge Antibody Technology, a phage-display technology company, it did not already own. At the time, analysts considered Medarex to be at the top of big pharma's shopping list.

Now, drugmakers are looking for firms that can add technology and also help fill their late-stage pipelines, particularly with oncology drugs, according to Mark Monane, a stock analyst at Needham & Co. Regeneron Pharmaceuticals and Seattle Genetics, he notes, both fit the bill and also have long-standing relationships with drug companies on which to build.