Bristol-Myers Squibb to buy anti-cancer drug maker Kosan Biosciences for $190 million

30 May 2008

Bristol-Myers Squibb said early Thursday that it has reached an agreement to buy oncology drug developer Kosan Biosciences for $5.50 a share in cash. As per a release given out by the New York-based pharmaceutical giant, it will pay about $190 million for Kosan after deducting Kosan's projected net cash balance as of 30 June.

The offer price represents a significant premium over Kosan's Wednesday closing price of $1.65 and consequently, the price multiplied three-fold in early Thursday trading to $5.44. Bristol-Myers investors also responded positively and its stock rose about one per cent to $22.22, before extending its gains by more than two per cent on Friday.

Bristol-Myers said the deal would enhance its growing portfolio of cancer drugs. Kosan has been working on two classes of cancer-fighting drugs known as heat shock protein 90, or Hsp90, and epothilones.

One of Kosan's Hsp90 compounds is currently in Phase III clinical testing for the treatment of multiple myeloma, a type of blood cancer. Phase III is the final round of testing before a product hits the market.

Under the terms of the deal, Bristol-Myers will begin a cash tender offer on or about May 29 for all outstanding Kosan shares. Bristol-Myers said it plans to finance the transaction from its existing cash resources.

The deal has been unanimously approved by the boards of both companies and is seen closing in 30 days, pending regulatory approval.