Bristol Myers Squibb buys Mirati for up to $5.8B as I-O giant branches out into targeted therapy for cancer

After years serving as a rumored target of Big Pharma M&A, Mirati Therapeutics has finally made its sale a reality.

The buyer, Bristol Myers Squibb, will pay up to $5.8 billion for the California-based cancer drug developer, the two companies said Sunday. The price marks a 52% premium to a 30-day average of Mirati’s stock before a Bloomberg report of a potential takeover boosted the company’s market performance.

Through the acquisition, BMS will gain FDA-approved non-small cell lung cancer (NSCLC) drug Krazati, which the companies billed as the best-in-class KRAS G12C inhibitor.

On top of the current equity value of $4.8 billion, the deal also includes a non-tradeable contingent value right term. It promises to pay Mirati shareholders $1 billion if the FDA accepts an application for the company’s pipeline drug MRTX1719 for NSCLC in patients who’ve received no more than two prior lines of therapy within seven years of deal closure.

BMS expects to close the transaction by the first half of next year. 

The purchase comes as BMS’ own portfolio struggles to meet expectations. In the second quarter, BMS cut its 2023 sales projection from a 2% increase to a low-single-digit decline following disappointing performance from its three top-selling drugs—Eliquis, Revlimid and Opdivo. The company is currently under pressure to beef up its near-term revenue and pipeline as those three key products lose patent protection this decade.

Before the Mirati buy, BMS’ solid tumor franchise is heavily focused on immuno-oncology compared with targeted therapies. Aiming to diversify beyond I-O, BMS is expecting an FDA decision for repotrectinib, which is under priority for a decision in ROS1-positive NSCLC by Nov. 27.

“With multiple targeted oncology assets including Krazati, Mirati is another important step forward in our efforts to grow our diversified oncology portfolio and further strengthen Bristol Myers Squibb’s pipeline for the latter half of the decade and beyond,” BMS’ CEO-elect, Chris Boerner, Ph.D., said in a statement Sunday.

Krazati in December 2022 won an FDA accelerated approval for previously treated KRAS G12C-mutant NSCLC. In the first half of 2023, the drug sold $19.7 million and has captured over 40% of new patient starts.

Two months ago, Mirati unveiled a plan to launch in the fourth quarter a phase 3 trial for a combination of Krazati and Opdivo’s PD-1 rival, Merck & Co.’s Keytruda, in newly diagnosed NSCLC with high tumor PD-L1 expression levels. An FDA filing for an accelerated approval in late-line colorectal cancer is also expected by year-end 2023.

According to an investor presentation BMS made for the Mirati deal, the New York pharma doesn’t seem to plan to change the Keytruda component in the upcoming Krazati combination study.  But it did highlight the combination opportunities between BMS’ immunotherapies with Mirati’s targeted drugs.

The potential to be combined with a PD-1 inhibitor in NSCLC gives Krazati an edge over Amgen’s rival drug Lumakras thanks to their different liver toxicity profiles.

Both KRAS inhibitors are marketed under accelerated approvals, but a panel of FDA-invited outside experts just suggested that Lumakras’ positive confirmatory trial couldn’t be reliably interpreted. Although the FDA said it doesn’t plan to pull Lumakras off the market right away, the negative review could help pull Krazati further ahead of Amgen’s first-to-market offering.

Krazati’s own confirmatory trial, KRYSTAL-12, is expected to read out early next year. That study doesn’t have the design issues that plagued the Lumakras study, Mirati management has highlighted, according to William Blair analyst Matt Phipps, Ph.D.

In a Monday note to clients, Phipps said BMS valued the deal largely based on the potential of Krazati. But he also pointed out potential long-term threats from rival KRAS G12C inhibitors, including Roche’s divarasib, Eli Lilly’s LY3537982 and Revolution Medicines’ RMC-6291.

As for MRTX1719, the PRMT5 inhibitor is expected to enter phase 2 testing in the first half of 2024. The drug is designed to target MATP-deleted tumors, which make up about 10% of cancers. There, Mirati will also compete against Amgen, which has AMG 193 in early-stage development.

Mirati has been a regular guest on biopharma’s M&A rumors list. Before BMS’ announcement, Bloomberg reported last week that Sanofi was weighing whether to purchase Mirati. If Sanofi made a buyout offer, it would’ve marked another major deal that the French pharma has missed. Sanofi previously targeted Horizon Therapeutics but lost to Amgen; it also lost a bid for Reata Pharmaceuticals to Biogen.

Editor's Note: The story has been updated with additional comments from a William Blair note by Matt Phipps.