On Monday, Bristol-Myers (BMY) announced plans to buy MyoKardia (MYOK) for $13.1B in cash. Following the announcement, several other possible M&A targets were highlighted by Wall Street analysts, including Cytokinetics (CYTK), Epizyme (EPZM) and Karuna Therapeutics (KRTX).
BRISTOL TO BUY MYOKARDIA: Bristol-Myers said Monday that it will acquire MyoKardia for $13.1B, or $225 per share, to expand its portfolio of cardiovascular drugs. The transaction was unanimously approved by both the Bristol Myers Squibb and MyoKardia boards of directors and is anticipated to close during the fourth quarter, Bristol-Myers stated. Bristol-Myers expects to finance the acquisition with a combination of cash and debt, it added.
Bristol-Myers CEO Giovanni Caforio told The Financial Times that MyoKardia's drug mavacamten had the potential to be a "multibillion-dollar franchise in the second half of the decade."
The acquisition of MyoKardia is Bristol-Myers' first major deal since it closed the $90B acquisition of Celgene last year.
BUYOUT TO BOOST CYTOKINETICS SPECULATION: Bristol-Myers' acquisition of MyoKardia should "provide a significant boost to speculation" as to whether Cytokinetics is taken out by global partner Amgen (AMGN), or even someone else, H.C. Wainwright analyst Joseph Pantginis told investors in a research note. The analyst, who says Amgen "really makes the most sense," thinks Cytokinetics' CK-274 "is a differentiated asset, especially based on the therapeutic window, potentially reducing any drug titration issues." He reiterated a Buy rating on Cytokinetics shares with a $59 price target.
EPIZYME, KARUNA ALSO POTENTIAL TARGETS: Citi analyst Mohit Bansal said MyoKardia's deal to be acquired by Bristol-Myers for $13.1B "does not come as a surprise" as the firm has previously been highlighting the company as an M&A candidate given the de-risked program in mavacamten for hypertrophic cardiomyopathy and a pipeline opportunity that "is even bigger" in terms of peak sales potential. The price paid is slightly ahead of Bansal's previously noted range of $160-$190 per share, which the analyst reads as a sign that the process was likely competitive and big-pharma likely valued the heart failure with preserved ejection fraction, or HFpEF, indication higher than the analyst's base case. Following the news, Bansal highlights Epizyme and Karuna Therapeutics as potential targets. Bansal adds that Epizyme is a top pick given the view that the Street is underestimating the revenue potential for its lymphoma drug Tazverik. However, for M&A to happen, Bansal believes the company will likely have to show a couple of good quarters of sales after the drug's launch. Bansal sees an M&A valuation of Epizyme at $45-$55 per share, the analyst added.
PRICE ACTION: In morning trading, shares of MyoKardia gained 58% to $220.95, while Bristol-Myers shares were up fractionally to $58.74. Cytokinetics gained nearly 16%, Epizyme rose nearly 9% and Karuna Therapeutics climbed over 6%.
MyoKardia
+81.13 (+58.05%)
Bristol Myers
-0.14 (-0.24%)
Cytokinetics
+3.57 (+14.84%)
Epizyme
+1.09 (+9.87%)
Karuna Therapeutics
+4.72 (+6.22%)
Amgen
+5.14 (+2.09%)