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BMS' Smart Buy - ZymoGenetics (peg-lambda IFN)
Bristol-Myer Squibb's new chief executive, Lamberto Andreotti, has made a clever play with tonight's $885 million acquisition of hepatitis C drug developer Zymogenetics.
The deal is expensive - Zymogenetics shares were up 20% over the past month and Bristol is paying an 80% premium - but the total sum is affordable.Bristol gets $150 million in cash as part of that deal, and Zymogenetics already has a marketed product, Recothrom, used to stop bleeding in surgery..
What makes the purchase sensible? It helps Bristol-Myers Squibb play in the emerging hepatitis C market by giving the company full control of the drug the two firms were developing together.
Bristol is already a leader in hepatitis C drug development. ISI analyst Mark Schoenebaum recently noted that Bristol has two other hep C drugs in mid-stage testing and two more in the early stages of human trials. (Schoenebaum covers Bristol's competitor, Vertex Pharmaceuticals.)
This gives Bristol three different triple-drug approaches to use in treating hepatitis C. The idea is that just as having a tolerable, combo pill regimen helped Gilead Sciences become the dominant player in HIV, so too will having potent and safe drug combinations will be the key to dominating the hepatitis C market.
By buying Zymogenetics, Bristol brings one of its hepatitis C drugs completely in house. Hopefully, it can hold onto some talent that has expertise in developing hepatitis C drugs, too. And that should help it in the long race to develop new weapons against the hepatitis C virus.
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