On Saturday evening, it was announced that Bristol-Myers Squibb (NYSE:BMY) has agreed to acquire Inhibitex Inc. (Nasdaq:INHX) for about $2.5 billion in order to gain access to its promising hepatitis C treatment.
Bristol-Myers Squibb Company and Inhibitex announced over the weekend that the companies have signed a definitive agreement under which Bristol-Myers Squibb will acquire Inhibitex for $26.00 per share in cash pursuant to a cash tender offer and second step merger.
The transaction, with an aggregate purchase price of approximately $2.5 billion, has been approved by the boards of directors of both companies. The board of directors of Inhibitex has agreed to recommend that Inhibitex’s shareholders tender their shares in the tender offer. In addition, shareholders with beneficial ownership of approximately 17% of Inhibitex’s common stock have entered into agreements with Bristol-Myers Squibb to support the transaction and to tender their shares in the tender offer.
At $26 per share, the deal is a huge 163 percent premium to Inhibitex's closing price of $9.87 on Friday.
Recent years have seen significant advances for treating hepatitis C - a serious liver disease that afflicts an estimated 180 million people worldwide - while setting off a scramble among large drugmakers to secure the most promising products.
The Bristol-Inhibitex deal comes on the heels of Gilead Sciences Inc's (NASDAQ:GILD) $11 billion acquisition in November of Pharmasset Inc (VRUS), which has its own promsing hepatitis C therapies. That deal was at an 89 percent premium.
San Diego-based Anadys Pharmaceuticals (NASDAQ: ANDS) was only valued at about $60 million before being acquired for $230 million in October. It has agreed to be acquired by pharmaceutical giant Roche (OTCQX:RHHBY) for $3.70 a share, a 256 percent premium over its closing price of $1.04 at the close of trading the day before the announcement.
Said Lamberto Andreotti, chief executive officer, Bristol-Myers Squibb:
The acquisition of Inhibitex builds on Bristol-Myers Squibb’s long history of discovering, developing and delivering innovative new medicines in virology and enriches our portfolio of investigational medicines for hepatitis C. There is significant unmet medical need in hepatitis C. This acquisition represents an important investment in the long-term growth of the company.
Russell Plumb, President and Chief Executive Officer of Inhibitex, said:
This transaction puts INX-189 and the Company’s other infectious disease assets in the hands of an organization that can more optimally develop them and which believes as strongly as we do in INX-189’s potential in the treatment of chronic HCV. Bristol-Myers Squibb’s expertise in antiviral drug development, and its existing complementary portfolio, will assure that the potential of INX-189 is realized as part of future oral combination therapies for millions of patients in need around the world.
Inhibitex has been focused primarily on developing drugs for the treatment of bacterial and fungal infections. Analysts on average expect Bristol to earn $2.01 per share in both 2012 and 2013, according to Thomson Reuters I/B/E/S.
Shares of Inhibitex, traded on the Nasdaq exchange, more than tripled in value last year, boosting the company’s market capitalization to $772.8 million as of Jan. 6. Back in early October, when shares were trading just under $3 we told our premium scubscribers that prices were starting to climbing quietly. The stock had battled back from an insider sale scare, and despite the fact that nearly 3 million shares were short, pressure to cover was mounting as bulls continued to push the stock price higher.
Analysts had suggested that a Hepatitis C drug makers like Inhibitex could taken over, especially after the Gilead Sciences acquisition. Several biotech firms have unpartnered Hepatitis C drugs and treatments in various phases of pipeline development and many of them will surely call attention from speculators in the days ahead. We will be filing a report featuring other HCV players in this space shortly.
Yes, the Hepatitis C space has been very active this past year and it will likely continue to be with good reason. Hepatitis C kills at least 10,000 Americans each year and is a leading reason for liver transplants in the country. Also, in the U.S., it is estimated that four million people are infected with with only a quarter of them properly diagnosed. Even fewer receive treatment.
Surely this deal will be the talk of the town in San Francisco where we will be covering three simultaneous health care conferences which are being held this week: The Biotech Showcase, The J.P. Morgan Healthcare Conference and The OneMedForum.
Many firms talk deals at these types of events. In fact, precisely that type of behavior is encouraged. Outside the Hepatitis C space, we are already hearing rumors about several new drug partnerships which may be announced during the first half of 2012. As always, we will inform our readers the moment we are able to confirm more details.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.