For Immediate Release
Chicago, IL – January 10, 2012 – Zacks.com announces the list of
stocks featured in the Analyst Blog. Every day the Zacks Equity
Research analysts discuss the latest news and events impacting
stocks and the financial markets. Stocks recently featured in the
blog include Bristol-Myers Squibb
Company ( BMY),
Sanofi ( SNY), Inhibitex,
Inc. ( INHX), Gilead Sciences,
Inc. ( GILD) and Pharmasset,
Inc. ( VRUS).
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Here are highlights from Monday’s Analyst
Blog:
BMY Kicks Off 2012 Pharma Deals
The spate of acquisitions in the pharma industry continues in
2012 with Bristol-Myers Squibb Company (
BMY) announcing the first major deal of the new year. Major merger
and acquisition (M&A) deals have taken place in the pharma
sector over the last couple of years.
With most of the big pharma players already facing or likely to
face generic threats to their key products, the companies are
resorting to M&As and in-licensing deals to counter the loss of
revenues that will arise following the genericization of its key
drugs. Pharma major Bristol-Myers is no exception as the generic
threat looms over many of its key drugs, including the blockbuster
blood-thinner Plavix, co-developed
with Sanofi ( SNY).
Bristol-Myers is looking to combat the generic threat through
partnering deals and acquisitions, and is introducing new products
to augment its product portfolio. The announcement of the $2.5
billion deal to acquire biopharmaceutical
company Inhibitex, Inc. ( INHX) is a
step in that direction. Over the weekend, Bristol-Myers and
Inhibitex entered into a definitive merger agreement whereby the
former decided to acquire the latter at $26.00 per share.
Offer Price Represents Huge Premium
The offer price represents a premium of 163% on Inhibitex’s
closing price as of January 6, 2012. The Boards of both companies
have approved the deal, which is expected to hurt Bristol-Myers’
earnings until 2016. The company expects the deal to negatively
impact its 2012 and 2013 earnings per share by approximately $0.04
and $0.05, respectively. The pharma major intends to finance the
deal through its available cash balance.
Deal Targets Lucrative HCV Market
By inking this deal, Bristol-Myers has made it clear that it
wants a piece of the hepatitis C virus (HCV) market pie. The deal
will bolster Bristol-Myers’ pipeline significantly with the major
attraction being HCV candidate INX-189 (phase II). We note that
this is the second deal in successive months inked by Bristol-Myers
targeting the HCV market.
In December 2011, Bristol-Myers and Tibotec Pharmaceuticals
announced their decision to join forces for the development of
Bristol-Myers’ daclatasvir (BMS-790052) in combination with
Tibotec’s TMC435, for the treatment of chronic HCV. What the
partners are aiming to do is create an oral once-daily
interferon-free cocktail treatment for HCV patients.
We note that other major companies are also targeting the HCV
market. In November 2011,Gilead Sciences,
Inc. ( GILD) announced an $11 billion deal to
buy Pharmasset, Inc. ( VRUS), a company
focused on developing HCV treatments. Gilead intends to further
strengthen its HCV pipeline through this deal.
Why Is the HCV Market So Attractive?
The market is characterized by a significant unmet need. It is
estimated that approximately 170 million people suffer from HCV
infection across the world. However, the treated population is much
lower. This leaves the field open for new treatments.
Secondly, the current standard of care comes with several side
effects which make it difficult for patients to remain on
treatment. A 48-week course of both peg-interferon (peg-INF -
weekly injections) and ribavirin (RBV - oral drug), are the
standard treatment for genotype 1 HCV infection.
Our Take
We believe that the announcement of the deal with Inhibitex
offers twin advantages to Bristol-Myers. The deal, on completion,
will not only provide Bristol-Myers the opportunity to be a lead
player in the lucrative HCV market but also allow it to combat the
significant loss of revenues due to the impending genericization of
key drugs particularly Plavix.
We believe that Bristol-Myers will continue signing deals and
making acquisitions throughout 2012 to strengthen its portfolio
thereby minimizing the impact of genericization.
We prefer to remain on the sidelines with a long-term Neutral
view on the stock. The stock carries a Zacks #3 Rank (Hold rating)
in the short run.
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BRISTOL-MYERS (BMY): Free Stock Analysis Report
GILEAD SCIENCES (GILD): Free Stock Analysis Report
INHIBITEX INC (INHX): Free Stock Analysis Report
SANOFI-AVENTIS (SNY): Free Stock Analysis Report
PHARMASSET INC (VRUS): Free Stock Analysis Report
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