Bristol-Myers, Five Prime Join Forces, Shares up - Analyst Blog

In a bid to strengthen its oncology pipeline, Bristol-Myers Squibb Company (BMY) joined forces with Five Prime Therapeutics, Inc. (FPRX).

The oncology deal grants Bristol-Myers access to Five Prime’s immuno-oncology platform. Bristol-Myers is also responsible for identifying the most promising candidates which will be developed either as monotherapies or in combination with the drug major’s existing immuno-oncology treatments based on two undisclosed immune checkpoint pathways. Furthermore, the deal grants Bristol-Myers full worldwide rights to market these therapies on approval.

Deal Boosts Five Prime’s Balance sheet

According to the financial details of the deal, Five Prime is eligible to receive an upfront payment of $20 million from Bristol-Myers in addition to $9.5 million as research funding. Under the terms of the deal, Bristol-Myers will have a 4.9% stake in Five Prime shares through an investment of $21 million (representing a premium of 30% to Five Prime’s closing price on Friday). Five Prime is also eligible to receive milestone payments up to $300 million from Bristol-Myers under the deal apart from royalties on the sales of the drugs following their approval.

Mutually Beneficial Deal Lifts Shares

The deal with a major biopharmaceutical company is a major achievement for Five Prime which went public last year in September. The news caused a significant upward movement (more than 22%) in Five Prime’s shares. Bristol-Myers  also benefits as it has bolstered its immuno-oncology pipeline without investing a huge amount. Consequently, shares of Bristol-Myers too gained (albeit marginally) on the news.

Eliquis’ Label Expanded

Bristol-Myers was also in the news when the U.S. Food and Drug Administration (FDA) approved blood thinner Eliquis for an additional indication. The drug is already marketed to reduce the risk of stroke and systemic embolism in patients suffering from nonvalvular atrial fibrillation. Atrial fibrillation refers to a cardiac rhythm disorder characterized by an erratic heartbeat.

The FDA cleared Eliquis, co-developed by Bristol-Myers with Pfizer (PFE), to bring down the risk of blood clots in patients who have undergone hip or knee replacement surgery. The label expansion will boost the sales potential of the drug which came in at $71 million in the final quarter of 2013.

The companies are also looking to get Eliquis approved for treating deep vein thrombosis (DVT) and pulmonary embolism (PE) and for the reduction in the risk of recurrent DVT and PE. (U.S. target date: Aug 25, 2014).

Bristol-Myers carries a Zacks Rank #3 (Hold). A better-ranked stock in the biopharma space is Alexion Pharmaceuticals (ALXN), carrying a Zacks Rank #1 (Strong Buy).

ALEXION PHARMA (ALXN): Free Stock Analysis Report

BRISTOL-MYERS (BMY): Free Stock Analysis Report

FIVEPRIME THERA (FPRX): Free Stock Analysis Report

PFIZER INC (PFE): Free Stock Analysis Report

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