BMS to Acquire Inhibitex for $2.5 Billion

Bristol-Myers Squibb (BMS) has signed an agreement to acquire the clinical-stage biotechnology company Inhibitex in a deal worth approximately $2.5 billion. The transaction will provide BMS with a potential candidate currently in Phase II development for the treatment of hepatitis C. The candidate, INX-189, is an oral nucleotide polymerase inhibitor that has exhibited potent antiviral activity.

According to a joint press statement from the companies, nucleotides/nucleosides are emerging as an important class of antivirals that may play a crucial role in the future of direct-acting antiviral-only combination approaches to the treatment of hepatitis C.

“This transaction puts INX-189 and the company’s other infectious disease assets in the hands of an organization that can more optimally develop them,” Russell Plumb, president and CEO of Inhibitex, said in the statement. “Bristol-Myers Squibb’s expertise in antiviral drug development, and its existing complementary portfolio, will assure that the potential of INX-189 is realized as part of future oral combination therapies.”

BMS’s CEO Lamberto Andreotti added that the acquisition represents an important investment in the company’s long-term growth. Currently, there is significant unmet medical need in treatments for hepatitis C.

“Bristol-Myers Squibb continues to drive advances in the field of hepatitis C R&D through internal development and selective partnerships,” Elliott Sigal, executive vice president, chief scientific officer and president, R&D, at BMS, said in the statement. “The addition of Inhibitex’s nucleotide polymerase inhibitor to our own promising portfolio... brings additional options to develop all-oral regimens with better cure rates, shorter duration of therapy, and lower toxicity than the current standard of care.”

BMS is offering Inhibitex shareholders $26 in cash per share, which represents a huge premium over Inhibitex’s closing price last Friday of $9.87. The transaction has been approved by both companies’ boards of directors and Inhibitex has recommended that its shareholders tender their shares. However, according to a statement from the Pomerantz Law Firm there is concern among shareholders that the Inhibitex directors may be “breaching their fiduciary duties by failing to adequately shop the company and maximize shareholder value.” The firm adds that BMS stands to gain a “very lucrative position” in the hepatitis C drug industry. Although shareholders will receive $26 per share, at least one other analyst has set a target price of $34 per share.

The agreement also provides for the companies to effect, subject to customary conditions, a merger following the tender offer. There is also a provision under which Inhibitex has agreed not to solicit any competing offers.