Kosan Acquired For Huge Premium (KOSN, BMY)

May 29, 2008 · Filed Under General 

Bristol-Myers Squibb (NYSE: BMY) has just announced a definitive merger pact where it will acquire Kosan Biosciences Inc. (NASDAQ: KOSN).  Bristol-Myers Squibb will pay $5.50 per share in cash for each share of Kosan.  The biotech’s stock was only at $1.65 yesterday and its 52-week trading range is $1.28 to $6.49.

This will equate to a purchase price of approximately $190 million after deducting Kosan’s projected net cash balance at June 30, 2008.  The deal has also been unanimously approved by the boards of directors of both Bristol-Myers and Kosan.

The acquisition of Kosan will enhance Bristol-Myers Squibb’s pipeline will get to enhance its pipeline with compounds in two important classes of anticancer agents, called novel Hsp90 (heat shock protein 90) inhibitors and epothilones.

The company believes this will result in new treatment options for patients as another important milestone in becoming a next-generation BioPharma leader.  Kosan evolved from a research platform to a development company and this should offer a timely opportunity to place its clinical programs in the hands of a much larger company to bring innovative cancer treatment options to patients.

Epothilones are microtubule stabilizers with multiple therapeutic applications in various cancers and potentially in neurodegenerative diseases.

The Hsp90 program includes a Phase III compound for the treatment of patients with multiple myeloma, which is still an unmet need.

Kosan has agreed to a provision not to solicit any competing offers for the company. Both companies also announced that they have entered into a separate license agreement where Kosan granted Bristol-Myers Squibb an exclusive worldwide license to Kosan’s epothilone compounds and related intellectual property.  Kosan will assign to Bristol-Myers Squibb its epothilone investigational new drug applications for an initial payment of $25 million and is entitled to milestone payments in connection with the development of epothilone product candidates and royalty payments on net sales of such products.  Credit Suisse Securities is serving as financial advisor to Bristol-Myers Squibb in this acquisition, and Lazard Freres & Co. LLC is the financial advisor to Kosan.

Jon Ogg
May 29, 2008

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