What happened
Shares of the heart disease specialist MyoKardia (MYOK) jumped by a healthy 59% in pre-market trading Monday morning. The biopharma's stock ripped higher in early-morning action today in response to a $13.1 billion definitive merger agreement with Bristol Myers Squibb (BMY -0.30%).
Bristol's buyout offer of $225 per share represents a 61% premium over where MyoKardia's shares closed last Friday. The two companies said this all-cash merger transaction should close during the fourth quarter of 2020.
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So what
Through this fairly sizable acquisition, Bristol will gain three particularly promising heart disease drug candidates: the late-stage hypertrophic cardiomyopathy (HCM) medicine mavacamten, the midstage systolic heart failure therapy known as danicamtiv (formerly MYK-491), and an earlier-stage HCM candidate dubbed MYK-224.
While mavacamten is clearly the centerpiece of this merger agreement given that it should be under regulatory review by the first quarter of 2021, Wall Street thinks all three of these experimental heart disease drugs could eventually achieve blockbuster status (sales exceeding $1 billion per year).
More specifically, Bristol is likely expecting to bank anywhere from $4 billion to $6 billion per year in total sales from this transaction. This rosy outlook, in turn, helps to explain why the drugmaker was willing to pay such a steep price for a clinical-stage biotech.
Now what
Bristol expects this deal to become accretive to its non-GAAP earnings starting in 2023. So this pricey acquisition probably won't be much of a near-term catalyst for the biopharma's stock.
