The Wall Street Journal's Health Blog briefly discusses this week's acquisition of Medarex by Bristol-Myers Squibb here.
The article describes BMS as "an old-line pharma company sitting on a lot of cash ($8.1 billion as of the end of the second quarter, according to Bristol’s latest earnings report this morning) and facing the generic competition for its blockbuster Plavix in a couple of years." On the other side of the aisle, you have Medarex, which is more of the 'New Kid on the Block...the hot upstart Biotech with promising cancer meds in late stage development and testing.
The reality is this....The potential rewards of this acquisition are promising...but the price of admission is high.
According to the WSJ article..."Bristol is paying a 90% premium to Medarex's Wednesday closing price,..."
And a quick glance at Google Finance shows that Medarex earned $10 Million last quarter...but lost almost $47 Million.
So while the potential is there...the question is...Did BMS pay too much for some potential?
Is this a strategically brilliant move? Or is it one that smacks of desperation?
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