Bristol Myers Squibb Buys Private Biotech for $1.5 Billion. The Deal Wave Keeps Going.

Bristol shares were down 1.2% on Friday. (Adam Glanzman/Bloomberg)

The recent cavalcade of biotech deals continued Friday morning, when Bristol Myers Squibb said it had agreed to pay $1.5 billion to acquire Orbital Therapeutics, an early-stage, privately held biotech designing RNA-based medicines.

Orbital, founded in 2022, closed a $270 million Series A funding round in 2023. Its lead program, a potential treatment for autoimmune conditions called OTX-201, isn’t expected to enter human trials until next year.

The Orbital deal is Bristol’s largest since February 2024, when it closed a $4.1 billion acquisition of RayzeBio, a cancer-focused biotech.

The latest announcement comes in the midst of a recent wave of big biotech deals, and a run-up in biotech stocks. On Wednesday, Novo Nordisk announced a $4.7 billion proposed acquisition of Akero Therapeutics, a hot biotech working on a treatment for an obesity-linked liver condition. In late September, Pfizer said it was paying $4.9 billion for Metsera, which makes an anti-obesity pill, and Genmab announced an $8 billion acquisition of the biotech Merus.

Also on Friday, The Wall Street Journal reported that Johnson & Johnson is in negotiations to acquire Protagonist Therapeutics, which is testing a drug called JNJ-2113 as a treatment for psoriasis and ulcerative colitis in partnership with Johnson & Johnson. Protagonist shares were up more than 31%, after trading in the stock was briefly paused for volatility. Asked for comment on the Journal report, both companies declined to comment.

The accelerated dealmaking, and the favorable agreement on drug pricing and drug tariffs that Pfizer extracted from the Trump administration last month, have cleared the way for a biotech stock surge. After spending more than four years in the doldrums, the SPDR S&P Biotech ETF is now soundly beating the S&P 500 on the year, up 17.5% to the broader index’s 14.8%.

Driving the spate of biotech acquisitions is big pharma’s desperation for assets to shore up its pipeline as drug patents expire. Pfizer, Merck, and Bristol all face significant near-term patent cliffs.

For Bristol, the problem is particularly acute. Patents expire this year on its cancer drug Yervoy, and in 2028 on its two top-selling drugs, the blood thinner Eliquis and the cancer drug Opdivo. Medicare is also set to start paying a lower price for Eliquis next year under the IRA price negotiation program. Bristol revenue is set to slide 24% from 2024 through 2030, according to FactSet.

The Orbital acquisition won’t help with those near-term revenue shortfalls, but could be helpful over the longer term. Since its drugs remain in early-stage development, it’s difficult to make firm predictions about their value.

The company’s lead drug, OTX-201, is a complex medicine that uses lipid nanoparticles to deliver an RNA package into a patient’s cells, which the cells use to build specially targeted T cells that attack cells linked to autoimmune conditions. The drug is known as an in vivo CAR T treatment, meaning that it’s a form of cell therapy where cells don’t need to be removed from the patient’s body.

OTX-201 is in early-stage studies and hasn’t yet been tested in humans. In July, Orbital presented what it said was good data from tests of the treatment in nonhuman primates.

Bristol shares were down 1.2% on Friday. The stock is down more than 20% this year amid worries about the efficacy of Cobenfy, its new schizophrenia drug, after disappointing data that came in April.

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com