Bristol Myers Squibb is diversifying in oncology with the $4.8 billion acquisition of Mirati Therapeutics, a company that brings a commercialized drug for an elusive target and a pipeline of compounds that could bring additional approaches to cancer treatment in years to come.
BMS agreed to pay $58 cash for each Mirati share, a 52% premium to the stock’s average price in the 30 days before news emerged that Mirati was a potential acquisition target. Under terms of the deal announced Sunday evening, Mirati shareholders could receive more depending on the progress of one of the biotech’s key pipeline assets.
The acquisition’s near-term value comes from Krazati, a drug that San Diego-based Mirati developed to address KRAS, a cancer-driving mutation that was long thought to be undruggable. Amgen’s Lumakras was the first drug approved to target a KRAS mutation, receiving its accelerated FDA nod in 2021 for advanced cases of non-small cell lung cancer (NSCLC) characterized by KRAS G12C mutations. Mirati’s Krazati, which targets the same KRAS mutation subset as Amgen’s drug, landed its accelerated approval last December as a second-line therapy for advanced NSCLC.
Though second to market, Mirati has pointed to features of Krazati that that could help it stand apart in its class. The Mirati drug can penetrate into the brain, which is an important capability for addressing cancer that has spread to the central nervous system. The company has also showcased clinical data supporting use of the drug in combination with cancer immunotherapies, helping to build the therapy’s case for use as a first-line treatment for NSCLC. Data are set to be presented at the end of the month during the annual meeting of the European Society of Medical Oncology.
Krazati’s use could further expand to other solid tumors driven by the KRAS G12C mutation, including as a second- and third-line treatment for colorectal cancer and as a monotherapy in previously treated pancreatic ductal adenocarcinoma. Mirati also has programs in earlier stages of development that could expand its scope to other subsets of KRAS mutations.
The longer-term value of Mirati comes from its pipeline, led by MRTX1719. A Phase 1/2 study is underway in patients with solid tumors. This drug is designed to selectively block a novel target called PRMT5. Unlike other drugs that do not selectively block PRMT5, Mirati says its drug has so far shown no meaningful hematological toxicities. In August, preclinical and Phase 1/2 study results showing proof of concept for this drug were published in the journal Cancer Discovery. The company plans to start a Phase 2 study for MRTX1719 in the first half of 2024. Another program, MRTX0902, is a SOS1 inhibitor in Phase 1 development. Mirati says this drug could be used in combination with other drugs that target the MAPK/RAS pathway, including Krazati.
The Mirati acquisition is BMS’s latest move to bring in a revenue-generating cancer drug that could offset patent expirations coming to products such as Revlimid, Pomalyst, and Abraxane. Last year, BMS acquired Turning Point Therapeutics for $4.1 billion. That deal brought repotrectinib, a small molecule developed for treating NSCLC characterized by a genetic signature known as ROS1. An FDA decision for this drug is expected in November.
“With multiple targeted oncology assets including Krazati, Mirati is another important step forward in our efforts to grow our diversified oncology portfolio and further strengthen Bristol Myers Squibb’s pipeline for the latter half of the decade and beyond,” Chris Boerner, chief operating officer and CEO-elect for Bristol Myers Squibb, said in a prepared statement.
In a note sent to investors on Monday, William Blair analyst Matt Phipps wrote that the deal is largely based on the potential of Krazati, as the drug’s compatibility with current standards of care distinguishes it from Amgen’s Lumakras. However, other contenders could offer alternative approaches to KRAS. Revolution Medicines is set to present data this week for its KRAS G12C inhibitor, RMC-6291, which the Redwood City, California-based biotech said is differentiated from others in its class. The data presentation will be during the 2023 AACR-NCI-EORTC International Conference on Molecular Targets and Cancer Therapeutics, also known as the “Triple Meeting.”
“The biggest risk is the competitive landscape in KRAS G12C drug development, where multiple molecules with similar binding profiles and some with alternate binding mechanisms (such as Revolution Medicines’ RMC-6291, initial data at the Triple Meeting on October 13) could show competitive profiles and limit Krazati’s long-term opportunity,” Phipps said.
Meanwhile, Leerink Partners analyst Andrew Berens said another bidder could emerge for Mirati, as the BMS offer is “significantly below” what his firm sees as the company’s strategic value. The purchase price is well below Mirati’s 52-week high of $101.30 reached last November and lower than stock’s closing price on Friday. The value of Krazati could rise further in light of the negative vote an FDA advisory committee gave to Amgen’s Lumakras last week. That vote sets up possible potential revocation of that drug’s accelerated approval, Berens wrote in a research note. Longer-term value from the Mirati acquisition could come from the PRMT5 inhibitor. Drugs from this class are set to post data at the Triple Meeting.
The acquisition agreement includes a contingent value right tied to MRTX1719. These rights put Mirati shareholders in line for an additional $12 per share payment, which would add another $1 billion to the purchase price. Shareholders will receive the payout when the FDA accepts a new drug application for MRTX1719 in either locally advanced or metastatic lung cancer within seven years after the closing of the acquisition.
BMS is financing the Mirati acquisition with cash and debt. The boards of directors of both companies have approved the transaction, which still needs approvals from Mirati shareholders and regulators. The deal is expected to close by the first half of next year.
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