Yesterday, Bristol-Myers Squibb Co. (BMY) extended its cash tender offer to purchase all outstanding shares of Medarex Inc. (MEDX) by two days to Aug. 26. Bristol-Myers offered to buy Medarex for $16 per share, or $2.1 billion in July. However, less than 9% of Medarex’s outstanding shares have been tendered till now. Last week, antitrust regulators approved the deal.

With the acquisition of Medarex, Bristol-Myers will get the UltiMAb Human Antibody Development System, which produces high affinity, human antibodies for use in a broad range of therapeutic areas, including immunology and oncology. It will also obtain Medarex’s next-generation Antibody-Drug Conjugate (ADC) technology, which is a novel and proprietary platform that could open new fields in cancer treatment.

Medarex’s has seven antibodies in clinical trials under its sole funding and is developing three other antibodies under partnership contracts. Importantly, Bristol-Myers will acquire full ownership and rights to ipilimumab, which, if approved, could be a major contributor to the company’s future growth.

Ipilimumab, a novel immunotherapy, is currently in phase III development for metastatic melanoma. It is also undergoing phase II study for lung cancer and other late-stage studies for adjuvant melanoma and hormone-refractory prostate cancer.

The Medarex acquisition should help Bristol-Myers offset the loss of revenue after its key product Plavix loses exclusivity in 2011. The company is building a strong pipeline of candidates to boost sales in the coming years. Additionally, management is working on reducing costs and shedding less profitable and non-core businesses.

We currently have an Outperform rating on the stock. We believe that the current price represents an attractive entry point for long-term investors.

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