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Bristol Myers Squibb Begins a $13.1 Billion Purchase of MyoKardia

By Cory Renauer – Oct 5, 2020 at 1:26PM

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The transaction will give Bristol Myers Squibb a potential first-in-class cardiovascular drug with blockbuster expectations.

On Monday, Bristol Myers Squibb (BMY 2.16%) announced that it had agreed to acquire MyoKardia (MYOK) for $13.1 billion in cash. It's offering $225 per share for Myokardia, a 61% premium to the stock's most recent closing price.

The deal, which is expected to close before the end of the year, will give Bristol the drug candidate mavacamten, a potential first-in-class treatment for hypertrophic cardiomyopathy (HCM), a rare and lethal disease. Although often undiagnosed, this chronic disorder threatens the lives of 0.2% of the population and there aren't any effective treatment options for it on the market.

Medicine, a stethoscope, and cash money.

Image source: Getty Images.

A new drug application that could make mavacamten the first approved treatment for symptomatic obstructive HCM is expected to reach the FDA in the first quarter of 2021 and seems like a slam dunk. During the pivotal Explorer-HCM trial of the drug, 37% of patients treated with it achieved predetermined peak oxygen consumption improvements compared to just 17% of patients given a placebo.

Once an application for mavacamten has been submitted, the FDA will have 60 days to begin an official review or ask for more information. Earlier this year, the FDA granted the candidate a breakthrough therapy designation that should shorten its review process by about four months. This means HCM patients could have their first treatment option before the end of 2021.

Bristol Myers Squibb expects the acquisition to make a noticeable dent in its bottom line for at least a couple of years before the gigantic investment begins generating returns in 2023.

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Bristol Myers Squibb. The Motley Fool has a disclosure policy.

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