BMS enters radiopharma race with $4.1B acquisition of RayzeBio just 3 months after biotech went public

There’s been no festive respite for Bristol Myers Squibb’s M&A team as the Big Pharma follows up its acquisition of Karuna Therapeutics with the announcement straight after Christmas that it's also buying radiopharmaceuticals-focused RayzeBio for cash.

In a sign of how much the radiopharma race has heated up in recent months, BMS is paying $62.50 per share of the San Diego-based biotech, which equates to an equity value of $4.1 billion. This share price is over triple the $18 that RayzeBio secured for its IPO as recently as September, and is even double the $30.50 that the stock was trading at by market close on Friday.

Despite the high price tag, BMS executives sounded happy with their purchase, which allows them to go up against leading radiopharma player Novartis and potentially in the near future, Eli Lilly. Unlike Novartis’ approved radiopharma therapies Lutathera and Pluvicto, which use a beta-emitting isotope called lutetium, RayzeBio’s platform is based on an alpha-emitting isotope called actinium-225.

“Acquiring RayzeBio’s differentiated actinium-based radiopharmaceutical platform will 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—delivering radioactive payloads to cancer cells in a targeted manner,” BMS’ Chief Medical Officer for Drug Development Samit Hirawat, M.D., said in the Dec. 26 release.

“In addition, RayzeBio’s platform has the potential to be a significant IND engine, generating several therapeutic candidates in the future by leveraging our global drug development capabilities and infrastructure,” Hirawat added.

RayzeBio’s lead asset is RYZ101, which targets somatostatin receptor 2 (SSTR2), a protein that is over-expressed in gastroenteropancreatic neuroendocrine tumors (GEP-NETs) and extensive stage small cell lung cancer (ES-SCLC). A phase 3 trial of the drug is already enrolling patients with SSTR-positive GEP-NETs who have previously been treated with lutetium-177 based somatostatin therapies.

The late-stage study follows interim results from a phase 1b trial with the data “suggesting encouraging efficacy and tolerability,” BMS pointed out. Another phase 1b trial is underway to assess RYZ101’s effectiveness as a first-line treatment of ES-SCLC in combination with standard-of-care therapy, the Big Pharma noted.

While RayzeBio doesn’t yet have any other assets in the clinic, a peptide targeting glypican-3 called RYZ801 is currently in IND-enabling studies with the aim of developing the therapy to treat hepatocellular carcinoma. Also being lined up for a potential move into the clinic is an asset targeting CA9, a protein that is expressed in renal cell cancer, BMS said.

But it’s not only the company's pipeline that has caught the eye of the Big Pharma. BMS highlighted in the release that RayzeBio is close to completing construction of a “state-of-the-art” manufacturing facility in Indianapolis with GMP drug production scheduled to begin in the first half of 2024.

Analysts at William Blair suggested this in-house manufacturing capability was one factor in why BMS had seized on RayzeBio.

“On a broad level, we view the acquisition announcement as validation of the potential of actinium-225 and believe the deal reemphasizes the premium value ascribed to pure-play radiopharmaceutical companies that have ownership over manufacturing,” the analysts wrote in a Dec. 26 note.

BMS’ move on RayzeBio came just four days after the Big Pharma put up $14 billion to acquire Karuna Therapeutics, which sits on the cusp of having the first schizophrenia treatment approved in years.

The one-two hit of high-profile company acquisitions by BMS “highlight[s] the company’s (and new CEO’s) proactive approach to mitigating upcoming losses of exclusivity through M&A in new therapeutic areas or therapeutic modalities,” William Blair analysts said in a separate note.

Radiopharmaceuticals have been one of the hottest M&A areas of 2023, with Global Data reporting earlier this month that venture capital deals in the space had grown 550% to $408 million compared to 2017 levels. Until yesterday, Lilly had been the standout new entrant by offering $1.4 billion for Point Biopharma Global, a biotech focused on radioligand therapies with in-house manufacturing capabilities. However, that deal run into trouble, with Point investors dragging their heels while they waited for a phase 3 readout that finally arrived last week.

RayzeBio was another of the biotechs helping to maintain the radiopharma buzz this year. The company raised $160 million in a series D in 2022 before making a run for an IPO in September. The upsized offering ended up being one of the biggest of the year at $311 million—a unicorn in an exceptionally tough market for biotechs. The company’s total fundraising has been $418 million since 2020 over four rounds.