Biotech Kosan up 230% on news of $190M takeover offer from Bristol-Myers Squibb

California, USA-based biotechnology firm Kosan Biosciences saw its shares more than treble from $1.65 to $5.43 on May 29, after it received a takeover offer from pharmaceutical major Bristol-Myers Squibb, which the boards of both companies have approved. Under the terms of the deal, Kosan's directors have also agreed to tender their shares and not to solicit any competing offers for the business.

The $5.50 per share cash bid values Kosan at around $235.0 million, but results in a net aggregate purchase price of $190.0 million after deducting the firm's projected net cash balance at June 30 this year, says B-MS, which commenced a tender offer the same day. The news also saw the latter's stock edge up 1.8% to $22.44.

The acquisition will boost the drug major's oncology drug pipeline with the addition of Kosan's two important classes of anticancer agents: novel heat-shock protein 90 inhibitors and epothilones. The company's KOS-953 (an Hsp90; also known as tanespimycin) is currently in a Phase III clinical trial in combination with leading Japanese drugmaker Takeda's Velcade (bortezomib) for multiple melanoma. The agent is also in a Phase II study combined with Genentech's Herceptin (trastuzumab) for HER2-positive metastatic breast cancer.