Bristol-Myers Squibb Company BMY announced yet another deal to strengthen its heart failure pipeline. The company has signed a definitive agreement to acquire Cardioxyl Pharmaceuticals, Inc.
Through this acquisition, Bristol-Myers will gain complete rights to CXL-1427, the lead candidate at Cardioxyl. CXL-1427 is in phase II development for the treatment (intravenous formulation) of acute decompensated heart failure (ADHF).
Terms of the Deal
Per the deal, Bristol-Myers will make upfront and near-term milestone payments of up to $300 million apart from additional development, regulatory and sales milestones-based payments of up to $1.775 billion. Bristol-Myers expects minimal dilution to earnings per share in both 2015 and 2016 due to this transaction.
The transaction is expected to close by the year end.
According to Bristol-Myers, heart failure is the most common cause of hospitalization in the U.S. for patients aged over 65 years and involves a direct cost of more than $34 billion each year. The company also stated that there are limited therapies available for ADHF patients. Moreover, the available therapies work by increasing the heart rate and/or oxygen consumption to improve heart muscle function, which may increase the risk of ischemia or arrhythmias, thereby leading to increased mortality.
On the other hand, based on early data Bristol-Myers said that CXL-1427 improves the process in which the heart muscle contracts and relaxes without increasing the heart rate or demand for oxygen. Hence, if successfully developed, CXL-1427 will offer a new treatment option for patients.
We remind investors that in May 2015, Bristol-Myers had signed a collaboration and license agreement with uniQure N.V., which granted the company access to uniQure’s proprietary gene therapy program for congestive heart failure.
Bristol-Myers carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the health care sector are Eli Lilly and Co. LLY, Anacor Pharmaceuticals, Inc. ANAC and Aerie Pharmaceuticals, Inc. AERI. All these stocks carry a Zacks Rank #2 (Buy).
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