Documents reveal Mirati rebuffed $140 per share offer from BMS
24 Oct 2023
Phase 3AcquisitionPhase 2Clinical ResultAccelerated Approval
Mirati Therapeutics turned down an initial takeover offer last year from Bristol Myers Squibb worth $125 per share in cash, with the company’s board deeming the bid too low to allow access for further due diligence. The first approach by Bristol Myers Squibb was revealed in a filing with the US Securities and Exchange Commission detailing the background to this month’s agreement between the drugmakers, which has a potential total value of $70 per share.
The documents show that following the rejection of its opening bid, when Mirati’s shares stood at $85.49, Bristol Myers Squibb came back with an improved offer of $140 per share in cash on April 5. In the meantime, Mirati – at this time led by CEO David Meek – had reached out to another unnamed company to gauge its interest in a transaction.
Adagrasib data proved stumbling block
While Mirati still considered the revised bid by Bristol Myers Squibb to be “insufficient,” the company allowed access to limited diligence materials focused on the latest clinical data available for the KRAS inhibitorKRAS inhibitor adagrasib and its other pipeline candidates. However, on May 9, Bristol Myers Squibb said that it was unable to improve its offer without “additional regulatory clarity” as to whether a proposed tablet formulation of adagrasib was likely to receive FDA approval, more information on dosing and more mature data in first-line non-small-cell lung cancer.
Later that month, the unnamed company decided against making a proposal, citing a need for more mature data on adagrasib. In the fourth quarter of 2022, Mirati held further discussions with both Bristol Myers Squibb and the unnamed drugmaker, providing them with preliminary results from the Phase II KRYSTAL-7 trial just ahead of their release on December 5. Around this time, takeover rumours were also surfacing.
Following this, Bristol Myers Squibb submitted a proposal to acquire Mirati for $124 per share in cash. However, after the study results were publicly disclosed, Mirati’s shares fell 53% over the next three days, prompting Bristol Myers Squibb to call a hold on its latest offer. Shortly after, the FDA granted accelerated approval to adagrasib, branded as Krazati, for adults with KRAS G12C-mutated locally advanced or metastatic NSCLC who have received at least one prior systemic therapy.
Co-development deal proposed
Despite this, on December 14, both Bristol Myers Squibb and the unnamed company communicated to Mirati that they did not intend to continue pursuing a transaction at the current time. In the following days, Bristol Myers Squibb submitted a proposal to Mirati regarding a deal to co-develop adagrasib, which included an upfront payment of $500 million, along with $485 million in regulatory milestones, $450 million in sales-based milestones and tiered sales royalties.
However, Mirati deemed that a global partnership for adagrasib was not “an attractive strategic option” for maximising value for its shareholders at that time. In May, the latest data on adagrasib were shared with Bristol Myers Squibb, which then said it was pausing its interest in acquiring Mirati “given its internal view of valuation…relative to…current trading prices” of $45.96 on May 5.
Double whammy of bad news
Later that month, Mirati announced that the Phase III SAPPHIRE trial evaluating sitravatinib in combination with Bristol Myers Squibb's PD-1 inhibitor Opdivo (nivolumab) in advanced NSCLC did not meet its primary endpoint of overall survival (OS). Then on July 21, the European Medicine Agency's Committee for Medicinal Products for Human Use issued a negative opinion regarding conditional approval of Krazati for the treatment of patients with KRASG12C-mutated advanced NSCLC, sending the company’s shares down to $31.31.
Following the setbacks, Mirati reached out to Bristol Myers Squibb and other potential suitors, but no proposals were made. On August 8, Mirati said that Meek would step down as CEO, to be replaced on an interim basis by former chief executive and founder Charles Baum.
Later that month, Bristol Myers Squibb submitted a new bid to buy Mirati for $64 per share in cash at a time when the company’s stock stood at $37.02. After reviewing the offer, Mirati countered that it would be willing to engage if the value was boosted to $82 per share. Bristol Myers Squibb responded on September 12 that it would increase its offer to $66 per share in cash, plus two contingent value rights (CVRs) each worth $5 per share.
Following back and forth between the companies - with Mirati proposing $71 per share in cash plus a CVR of $5 per share and Bristol Myers Squibb tabling $68 per share in cash - the parties met on September 23 for further discussions, which included the KRYSTAL-7 study. The trial is evaluating adagrasib combined with Opdivo for the treatment of first-line NSCLC in patients harbouring a KRASG12C mutation.
Lack of options?
Bristol Myers Squibb subsequently revised its offer on September 24 to $56 per share in cash upfront and a CVR worth $10 per share, with the reduction based on “diligence findings that impacted [its] views on Krazati programme timelines, as well as the status of one of Mirati’s early-stage pipeline programmes.” On October 2, Mirati was contacted by another unnamed company regarding a whole company transaction, although it noted that “given the relative size of the two…a transaction…would have required a significant stock component.”
Around this time, Bloomberg reported that Sanofi was interested in exploring a potential takeover of Mirati, sending the company’s shares up by 44%. However, Mirati disclosed in the SEC filing that “at that time,” it was not engaged in discussions with Sanofi related to an acquisition. Following further discussions, Bristol Myers Squibb made a proposal to buy Mirati for $58 per share in cash, plus a CVR potentially worth $12 per share in cash, with the agreement signed on October 8.
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