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It may have been a day late, but Bristol Myers Squibb (BMY -2%) gave RayzeBio (RYZB +101%) investors a nice stocking stuffer today. BMY will acquire RayzeBio for $62.50 per share in cash, for a total equity value of $4.1 bln, or $3.6 bln net of cash. RayzeBio closed at $30.57 on Friday, so that is a whopping 104% premium. The deal has been unanimously approved by both boards of directors and is expected to close in 1H24.

• RayzeBio is a clinical-stage radiopharmaceutical therapeutics ("RPT") company with a focus on actinium-based RPTs and a pipeline of development programs.
• What seems to make RayzeBio so attractive to BMY is the potential for RPT technology to attack various cancerous tumors. The companies explain that there is a need for more effective treatments in solid tumors. RPTs bind to tumor cells and deliver targeted radiation to induce cancer cell death. Actinium-based RPTs offer potential advantages over currently available RPTs since the high potency and short firing range of the alpha-emitter create the possibility for stronger efficacy and more targeted delivery.
• RayzeBio does not yet have products commercially available. However, its lead program, RYZ101 is in phase 3 development for treatment of gastroenteropancreatic neuroendocrine tumors and early-stage development for small cell lung cancer and potentially other tumor types. So while BMY will not get an immediate financial bump, the company sees the deal as bolstering its oncology portfolio and strengthens its growth opportunities in the back half of the decade and beyond.
• Bristol Myers explains that RPTs are already transforming cancer care, and RayzeBio is at the forefront of pioneering the application of this novel modality. BMY would seek to accelerate RayzeBio's preclinical and clinical programs. Also, acquiring RayzeBio's RPT platform would establish Bristol Myers Squibb's presence in one of the most promising and fastest-growing new modalities for the treatment of patients with solid tumors. Besides just the RPT technology, BMY will also be gaining a manufacturing facility. RayzeBio is completing construction of a state-of-the-art in-house manufacturing facility in Indianapolis. GMP drug production is expected to begin in 1H24.

Clearly, BMY sees a lot of potential in RayzeBio's RPT platform. Paying such a rich premium, and all in cash, speaks volumes about how management sees this potentially transformational technology. BMY currently has a $105 bln market cap, so while RayzeBio's roughly $4 bln price tag is not gigantic, it is still pretty significant.

RayzeBio benefits not just from the premium, which is great. However, having a larger pharma company with deeper pockets like BMY should accelerate its development pipeline and open many doors with potential new customers, assuming approval down the road. On a final note, Fusion Pharma (FUSN) is trading higher in sympathy. It also is a clinical-stage oncology company focused on radiopharmaceuticals as precision medicines.