There were whispers in the marketplace that Bristol Myers-Squibb (BMY) was still looking to beef up their pipeline in NASH, but Dealreporter broke the news that the BMY's business development chief Paul Biondi is "actively looking for acquisition or license opportunities in fibrotic diseases." After this speculation broke out, it buoyed the valuations of the some of the NASH players. Keep in mind this was on the heels of Madrigal's (MDGL) favorable clinical trial announcement. In this article, we are going to explore BMY's pipeline and possible acquisition candidates. Analysis is going to look at phase 2 candidates that have some signs of efficacy.

Capacity for Deal Making

While BMY can publicly say they want a deal, it's important in the analysis to make sure they have the capacity to actually move forward. Based on their most recent 10-Q, they have approximately $9 billion in cash equivalents and marketable securities. The company is earning about $1.5 billion per quarter, including the 6% royalty from Merck (MRK) for Keytruda sales, which works out about $100 mil/quarter. They could potentially pledge this stream of payments to get an additional ~$3.0 billion. With Keytruda doing $1.5 billion/quarter, it's a safe bet for a financier. If there is a must-have acquisition target, they have the capacity to raise an additional $5.0 billion via a debt offering based on conservative cash flow estimates and suspending its dividends. This sets the stage for a significant acquisition of less than $17 billion to take place.

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