Bristol ‘take-under’ of Mirati is not so great for biotech, but company’s new cancer target has potential

Some day-after thoughts on Bristol Myers Squibb acquiring Mirati Therapeutics:

A take-under deal feels meh for biotech sector sentiment. Bristol is paying $58 per share in cash for Mirati, which closed Friday at $60. Granted, Mirati was trading in the $30 range in September, so from there, the roughly 100% premium isn’t terrible. But as Mizuho strategist Jared Holz pointed out, investors would liked to have seen Mirati go for $75-$100 per share.

With the closely watched XBI biotech index down 13% for the year, every M&A deal helps improve sentiment, but this one — maybe just a little. Bristol is paying $4.8 billion in cash to acquire Mirati, or $3.7 billion after accounting for Mirati’s cash. It’s a small bolt-on acquisition for Bristol, which isn’t overpaying.

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