Bristol-Myers Squibb ( BMY) is buying biotech firm Medarex ( MEDX) for $2.1 billion to bolster the U.S. drugmaker's drug pipeline and capability to produce biologic drugs.

The deal, announced Wednesday night, values Medarex at $16 a share, a 90% premium to the company's $8.40 a share closing price. A $2.4 billion purchase price, which Bristol-Myers will pay in cash, is offset by $300 million on Medarex's books.

Medarex specializes in the production of protein-based drugs made in living cells engineered to produce human antibodies. These so-called biologic drugs are different from the chemical-based drugs typically developed and marketed by large pharmaceutical companies.

Bristol-Myers and Medarex already were partners on one such drug, ipilimumab, currently in a phase III study of skin cancer patients.

"Medarex's technology platform, people and pipeline provide a strong complement to our company's biologics strategy, specifically in immuno-oncology," said Bristol-Myers CEO James Cornelius, in a statement.

Medarex hasn't successfully developed any drugs on its own yet, but three drugs it helped manufacture for partners have been approved recently -- Johnson & Johnson's ( JNJ) Simponi and Stelara and Novartis' ( NVS) Ilaris. Medarex receives royalties on the sale of these products.

The company has seven drugs of its own in current clinical trials and another three under development by partners.

Bristol-Myers' decision to acquire Medarex, a biotech drug development partner, comes a little less than a year after Bristol-Myers was outbid to acquire another partner, the biotech firm ImClone Systems.

Eli Lilly ( LLY) purchased ImClone, developer of the cancer drug Erbitux, for $6.5 billion -- a bid that trumped Bristol-Myer's $4.7 billion bid.

Medarex is run by CEO Howard Pien, who in a previous stint as CEO of Chiron, sold that biotech firm to Novartis.

Bristol-Myers' purchase of Medarex takes the form of an all-cash tender offer starting on July 27. As part of the agreement, Medarex has pledged not to solicit any competing offers for the company. Bristol-Myers is paying for the deal with its cash on hand.
Adam Feuerstein writes regularly for In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.