Bristol-Myers to buy Medarex for $2.4 bn

The agreed offer of $16 a share represents a 90 per cent premium to Medarex’s closing share price on Wednesday of $8.40 per share on Nasdaq.

Bristol already owns a 2 per cent stake in Medarex,through its four-year-old partnership with its neighbor in Princeton,New Jersey.

Medarex has developed so-called “transgenic” mice with human immune systems that are able to generate fully human antibodies that can be used as drugs.

“The premium is not out of whack when you look at the scarcity value of this technology and the appetite for biotech companies right now,” a source familiar with the deal said. “It’s a small deal in size but a large deal in terms of the potential scope they gain with this science.”

Bristol-Myers and Medarex are developing one of the mouse-generated antibodies,called ipilimumab,as a treatment for patients in late stages of melanoma — the most deadly form of skin cancer. There are now no highly effective treatments for it.

In three mid-stage clinical trials,30 to 42 per cent of patients with metastatic melanoma treated with ipilimumab were still alive after two years,which Bristol-Myers said established a survival benefit.

The companies are now conducting a larger late-stage trial,requested by US regulators,designed to show an unequivocal survival benefit.

The partners are also conducting a mid-stage trial of ipilimumab among lung cancer patients and a late-stage study of it against advanced prostate cancer.

Medarex’s technology has been used to develop several recently approved medicines,for which the company receives royalties.

They include Johnson & Johnson’s (JNJ.N) Simponi (golimumab),approved in the United States for rheumatoid arthritis,and J&J’s Stelara (ustekinumab),recently cleared in Europe to treat psoriasis. A Medarex antibody is also the basis of Ilaris,a Novartis AG treatment for children with an inflammatory disease caused by rare genetic mutations.

“Medarex is one of the grand-daddies of the antibody research field,and it has finally come of age,” said Steve Brozak,an analyst at WBB Securities.

Bristol-Myers spokesman Brian Henry said Medarex is testing 10 other drugs in clinical trials,some with other large drugmakers.