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What's Behind Bristol Myers Squibb's Latest Partnership?

Bristol Myers Squibb (NYSE: BMY) has made some big acquisitions in the past, and it's now hinting that more deals could be on the way. The pharmaceutical giant recently announced a smaller licensing agreement with Century Therapeutics (NASDAQ: IPSC) instead of a big acquisition. In this Motley Fool Live video, recorded on Jan. 12, Fool contributors Keith Speights and Brian Orelli discuss what's behind Bristol Myers Squibb's latest partnership.

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Keith Speights: We've been talking about some dealmaking. There was another deal. You mentioned, I think it was Monday or sometime recently anyway, you mentioned you'd like to see Bristol Myers Squibb make some deals this year. I think you especially like Seagen (NASDAQ: SGEN) as a takeover target for the big drugmaker.

Well, Bristol Myers Squibb's CEO said at the J.P. Morgan Health Care Conference this week that the company does plan to do some shopping. It plans to make some business development deals, but the first deal announced was not an acquisition. Bristol Myers Squibb announced a licensing agreement with Century Therapeutics. Brian, this isn't acquiring Seagen, but what do you think about Bristol's deal with Century Therapeutics?

Brian Orelli: Yeah. I mean, it looks like a good deal for Bristol Myers Squibb and for Century. Bristol Myers Squibb is paying $100 million up front and investing $50 million in Century Therapeutics. That gets access to four different off-the-shelf CAR-T cancer therapies.

Century could get up to $3 billion in milestone payments. But those are contingent on the drug working. There's also double-digit royalties, but again, the drug's actually got to get on the market.

I think Century cell therapies fit well with the cell therapies that Bristol Myers Squibb got from the Celgene acquisition. They don't really block out my thesis that acquiring drugs that could be combined with Opdivo should help Bristol Myers Squibb. I still think that it could potentially benefit from acquiring Seagen or some other companies that have cancer drugs that can be combined with Opdivo.

Speights: Would you put Seagen in parentheses there, Brian?

Orelli: Yeah. I mean, [laughs] I own it and [laughs] if they want to take it off my hands for 50 percent more than it's valued at right now, I'll support that.

Speights: You're not going to complain if that kind of deal emerges ,right?

Orelli: No.

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Brian Orelli, PhD owns Seagen Inc. Keith Speights owns Bristol Myers Squibb. The Motley Fool owns and recommends Bristol Myers Squibb and Seagen Inc. The Motley Fool has a disclosure policy.


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