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Bristol-Myers Squibb to Acquire Kosan Biosciences for $190 million

Written by on Saturday, May 31st, 2008

Bristol-Myers Squibb has agreed to acquire Hayward-based Kosan Biosciences for $190 million, reported the San Francisco Business Times.  Both boards of directors have approved the deal.

The deal will pay investors $5.50 per share, which amounts to a "huge premium" according to BioHealth Investor, which indicated that the stock was only at $1.65 on the day the deal was made, and that its 52-week trading range was $1.28 to $6.49.

BioHealth Investor reported on the acquisition as follows:

The acquisition of Kosan will enhance Bristol-Myers Squibb’s pipeline will get to enhance its pipeline with compounds in two important classes of anticancer agents, called novel Hsp90 (heat shock protein 90) inhibitors and epothilones.

The company believes this will result in new treatment options for patients as another important milestone in becoming a next-generation BioPharma leader.  Kosan evolved from a research platform to a development company and this should offer a timely opportunity to place its clinical programs in the hands of a much larger company to bring innovative cancer treatment options to patients.

According to the San Francisco Business Journal, a separate exclusive worldwide license agreement was signed simultaneously, which will remain in effect even if the acquisition does not go through.  The terms of that agreement are $25 million up front plus milestones for rights to Kosan’s epothilone compounds.

The In Vivo Blog reported on the Kosan deal that while some were underwhelmed by the price Bristol-Myers Squibb paid to acquire Kosan, "The market–and, probably Bristol as well–attached very little value to Kosan’s unpartnered projects beyond the epothilones."  In Vivo Blog further explained:

That the deal isn’t centered more around tanespimycin probably says more about the difficulties Kosan has faced with this particular molecule than it does about the value of Hsp 90 inhibitors generally. Remember Hsp90, as a target class, has been the driver of multiple buyouts and licensing deals in the past couple years. . . . Instead it probably has more to do with the fact that tanespimycin is one of several Hsp90 inhibitors in development that are derived from geldanamycin, a natural compound relatively high in molecular weight that might have trouble reaching an important hotbed of Hsp90 activity, the interior of the mitochondria. . . .

Meanwhile, Kosan’s epothilones are clearly commanding more interest. These molecules target a tumor cell’s skeletal infrastructure, much like taxanes, but via a different mechanism, and molecules like Ixempra have been specifically designed to overcome drug resistance. . . . Cornelius and co. are counting on Ixempra as a key part of its strategy to regain leadership in the cancer arena.

So, while this deal may not have resulted in a huge payoff for Kosan investors, there does seem to be a perception among at least some industry watchers that the deal–providing a 230% premium over the stock price–achieved a good result for both sides. 

Category: Biotech Deals  |  Comments Off on Bristol-Myers Squibb to Acquire Kosan Biosciences for $190 million

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