Bristol-Myers Buys Amylin, Glaxo Eyes Human Genome, Obagi Buy-Out Rumors, Ampio Surges

by: StockMatusow

Bristol-Myers Squibb (NYSE:BMY) has agreed to pay $5.3 billion to acquire Amylin Pharmaceuticals (AMLN), a maker of diabetes therapies, as it seeks to supplement revenue from its top-selling blood thinner Plavix that went off patent in May of this year.

Bristol-Myers will pay $31 a share cash according to a statement from the companies. As part of the deal, AstraZeneca Plc (NYSE:AZN) will pay Bristol-Myers $3.4 billion to enter into a partnership to develop Amylin's drug portfolio. Also part of the deal, Bristol-Myers will assume debt and will make a payment to buy out Amylin's former partner, Eli Lilly & Company (NYSE:LLY).

Amylin rejected Bristol-Myers prior offer of $22 a share earlier this year in February.

I expect this type of consolidation to continue this year, as many large pharmas have drugs coming off patent soon. In my opinion, companies such as Antares Pharma (NASDAQ:ATRS), Amgen (NASDAQ:AMGN), and Watson Pharma (WPI) may be in a primed market position as they shift focus to emerging biosimilar and biobetter technologies.

Ampio Pharma's (NASDAQ:AMPE) shares closed Friday's trading session up 32% at $5.20, making them one of the top percentage gainers for the day on the Nasdaq. The company's shares reached a high of $5.49 earlier in the day.

Adam Feuerstein reported for in April of this year that Ampio might have been misleading investors about Zertane, claiming it had previously conducted a positive phase III study of the drug, which is simply a mint-flavored dissolvable tablet containing a low dose of a generic painkiller. In fact, this prior phase III study was actually a re-analysis of two shortened and failed studies conducted by Biovail, which ultimately gave up on Zertane.

However, positive news for Ampio might be on the way as the rally on Friday certainly looked like massive short covering in my opinion. Traders should keep a close eye on this one next week.

Human Genome Sciences (HGSI) also closed higher Friday, up $0.07 (0.54%) on the news that GlaxoSmithKline (NYSE:GSK) has extended its tender offer until July 20 in hopes HGSI shareholders finally will relent. There has been some buzz that the company may lift its bid to $15, up from the current $13 bid. I believe the buzz is likely correct, and GSK will eventually end up acquiring HGSI for at least $15 a share. GSK keeps coming back to the table after suggesting that $13 was as high as the company wishes to offer.

Obagi Medical Products, Inc. (NASDAQ:OMPI) Shares closed Friday's trading at $15.27, up 0.99 (6.93%) after making a fresh 52 week high of $15.34 on heavy volume. Buy-out rumors continue, as speculators seem to be accumulating shares in anticipation of acquisition news. With 1 million shares short, a short squeeze might be in play here as well.

Disclosure: I am long OMPI, ATRS.