Bristol-Myers Gets Key Assets With A Medarex Deal (BMY, MEDX, ABT, JNJ, AMGN, WYE)

Bristol Myers Inc. (NYSE: BMY) plans to spend $2.4 billion to buy partner Medarex Inc. (Nasdaq: MEDX). It will get a great deal beyond the cancer monoclonal antibody that developed together.

The Medarex pipeline has substantial value.

The monoclonal antibody ipilimumab is by far the main reason that Bristol pulled the trigger. It is currently in Phase III trials for both metastatic melanoma and hormone-refractory prostate cancer.

Last month, the U.K.’s Independent reported that patients that took a single does of ipilimumab in a trial obliterated their prostate cancer. The paper called the research a “shock breakthrough.” Researchers took the unusual step of releasing case details ahead of the drug trial in which the patients took part, mostly because the recovery of those patients was so surprising. One metastatic patient apparently had a tumor the size of a golf ball. It shrank enough to be surgically removed and the patient made a full recovery.

There could be no bigger potential cancer market for a monoclonal antibody than prostate cancer. It is the largest potential cancer market with 192,280 cases diagnosed each year, according to the National Cancer Institute — more new cases than even breast cancer.

With ipilimumab, Bristol has picked up a candidate that has the potential to become a drug in not only advanced prostate cancer, but also non small-cell lung cancer and melanoma.

The other potential products in the Medarex pipeline that show promise include MDX-1106, a fully human IgG4 antibody in patients with refractory solid tumors including non-small cell lung cancer, colon cancer, melanoma, or prostate cancer. It’s in early stage trials, but so far has shown anti-tumor activity. In the future, it may be something that Bristol tests as a combination therapy along with ipilimumab.

One additional big candidate that Bristol would own if the deal gets shareholder approval would be MDX-1100, which recently went through a Phase II study in rheumatoid arthritis. The drug met its primary endpoint; full data is expected later this year.

While rheumatoid arthritis is a crowded market with market leader Humira from Abbott Laboratories Inc. (NYSE: ABT) Johnson & Johnson’s (NYSE: JNJ) Remicade and Amgen Inc. (NYSE: AMGN) and Wyeth’s (NYSE: WYE) Enbrel, there is promise with any new arthritis drug that shows safety and efficacy.  The CDC projects that the number of people age 65 or older who have arthritis or chronic joint symptoms will nearly double from 21.4 million in 2001 to 41.4 million in 2030, as more people are living longer.

Shareholders may balk at the high price Bristol plans to pay for Medarex. But there are likely to be few questions about the strength of the Medarex pipeline, or that Bristol Myers is the natural acquirer given the strength of their partnership.

Mike Tarsala