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RayzeBio drew other pharma interest before Bristol Myers deal

Radiopharmaceutical drugmaker RayzeBio drew interest from two other large drugmakers before agreeing to a $4.1 billion buyout by Bristol Myers Squibb, newly published documents show.

The companies, which were not identified in the documents RayzeBio filed with regulators Thursday, both submitted proposals to acquire RayzeBio, but were outbid by Bristol Myers.

The new details are another sign of the pharmaceutical industry’s burgeoning interest in radiopharmaceuticals, which are designed to deliver radiation directly into tumors. They are complicated medicines, consisting of a targeting compound linked to a radioisotope. But they can deliver a powerful tumor-killing punch without some of the side effects that come with beamed or implanted radiation.

Swiss pharma Novartis has made radiopharmaceuticals a priority, and its success with approved medicines Pluvicto and Lutathera has provided a model other companies aim to follow. Eli Lilly recently stepped into the field as well via an acquisition of Point Biopharma that included one other bidder.

RayzeBio is among the field’s most well-funded startups, and successfully pulled off a larger-than-expected initial public offering in November. The company is developing a radiopharmaceutical drug, dubbed RYZ101 aimed at the same target as Lutathera, for neuroendocrine tumors. Behind RYZ101 are a pipeline of other treatments that rely on the radioisotope actinium.

According to RayzeBio’s documents, Bristol Myers CEO Chris Boerner met with the biotech’s head Ken Song in a Nov. 6 meeting that began a seven-week whirlwind of negotiations. RayzeBio connected with three other “global biopharmaceutical companies” during that time, one of which dropped out of discussions early on.

Initially, Bristol Myers offered $40 per share in a non-binding proposal to acquire RayzeBio. After informing the other parties of a competitive process, RayzeBio then set a target of Jan. 8 — the start of this year’s J.P. Morgan Healthcare Conference — as a deadline for reaching a deal, and requested initial bids by Dec. 22.

Of three bids it subsequently received, Bristol Myers’ was highest at $48 per share, significantly above the $41 proposed by “Party A” and $40 by “Party B.” Party A’s bid also contained a tool known as a contingent value right that would pay an additional $4 per share if a certain milestone was met.)

As the biotech weighed the competing bids, Bristol Myers’ Boerner called Song to speed up the negotiations. The pharma followed up the next day, Christmas Eve, with a proposal to acquire RayzeBio for $62.50 per share, a 104% premium to the biotech’s closing price the day prior.

RayzeBio’s board quickly agreed that the offer was likely the highest the company would obtain and, on Christmas morning, RazyeBio signed a merger agreement with Bristol Myers. The companies announced their deal the very next day.

Bristol Myers’ aggressive negotiating was similar to the approach it took in reaching a $14 billion deal for Karuna Therapeutics, which was announced Dec. 22. Deal documents from that transaction showed Bristol Myers outmaneuvered another large multinational pharmaceutical company that had made a bid but moved slowly through its due diligence.

To Andrew Tsai, an analyst with Jefferies, the behind-the-scenes details from RayzeBio are evidence of the “strong tailwinds” in the radiopharmaceutical field. In a note to clients, he highlighted the attractiveness of RayzeBio’s work in establishing a radioisotope supply chain and manufacturing capabilities, both of which are critical to radiopharmaceutical drug development.

Fusion Pharmaceuticals, a company Jefferies holds a “buy” rating on, is another that could draw dealmaking interest, Tsai indicated in the Jan. 25 note.

In a recent interview with BioPharma Dive, Bristol Myers Chief Medical Officer Samit Hirawat indicated they saw potential for RYZ101 in patients who already have received Lutathera, as well as in other types of tumors. RayzeBio is also working on ways to overcome challenges in drug dosing, Hirawat said.

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