Bristol-Myers Buys Cormorant, Focus On Immuno-Oncology

Bristol-Myers Squibb Company (NYSE:BMY) announced that it has acquired all of the outstanding capital stock of Cormorant Pharmaceuticals – a privately held Stockholm, Sweden-based pharmaceutical company focused on the development of treatments targeting cancer and rare diseases.

Bristol-Myers has agreed to make upfront and near-term milestone payments of up to $95 million and an additional consideration of up to $425 million depending on the achievement of certain development and regulatory milestones.

With this acquisition, Bristol-Myers has gained full access to Cormorant’s HuMax-IL8 antibody program and to its lead candidate HuMax-IL8. The candidate is a phase I/II monoclonal antibody targeted against interleukin-8 (IL-8) and has the potential to enhance immune response along with increasing the efficacy of existing cancer medicines through a combination therapy.

We note that Cormorant had gained the rights to HuMax-IL8 from Genmab A/S GNMSF under an exclusive license agreement in 2012. Genmab had acquired the candidate via an asset exchange agreement with Medarex in 2007. Medarex was acquired by Bristol-Myers for $2.4 billion in 2009.

We believe that the Cormorant acquisition is in line with Bristol-Myers’ strategy of boosting and strengthening its immuno-oncology pipeline. It will enable the company to expedite the development and help bring to market transformational immunotherapies. The company’s immuno-oncology portfolio currently consists of immunotherapies like Yervoy, Opdivo and Empliciti.

Bristol-Myers is collaborating with several companies for the evaluation of Opdivo in combination with other cancer regimens. Last week, the company announced an exclusive clinical collaboration agreement with PsiOxus Therapeutics for the evaluation of the latter’s enadenotucirev in combination with Opdivo for the treatment of a range of tumor types in late-stage cancer patients.

Meanwhile, Bristol-Myers has been active on the acquisition front. Notably, the Cormorant acquisition is Bristol-Myers’ second in as many months and it is not just immuno-oncology that is in focus. In a bid to strengthen and accelerate the development of its immunoscience pipeline, Bristol-Myers acquired privately held biotech company, Padlock Therapeutics, in Apr 2016.

We expect to see the company continuing to pursue acquisitions/deals over the coming quarters across a range of therapeutic areas.

Bristol-Myers is a Zacks Rank #2 (Buy) stock. A couple of better-ranked stocks in the health care sector are Innoviva, Inc. (NASDAQ:INVA) and Pfizer Inc. (NYSE:PFE) . While Innoviva sports a Zacks Rank #1 (Strong Buy), Pfizer carries the same rank as Bristol-Myers.