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Are stellar gains ahead for $BMY?
While $LLY and $NVO see stellar returns as their weight loss drugs take off in popularity, $BMY has seen itself struggle. While it offers an attractive dividend yield to investors and has a long history of being profitable, investors wonder if it will one day provide stellar returns like the other big biotech stocks.

Near the end of 2023, Bristol-Myers announced that it would buyout $MRTX for $5.8 billion, RayzeBio for $4.1 billion, and $KRTX for $14 billion. In total, that's nearly $24 billion in M&A activity. While Mirati Therapeutics and RayzeBio focus on creating cancer drugs, Karuna Therapeutics develops medications to treat neurological and psychiatric conditions. Karuna gets a larger buyout offer than Mirati and RayzeBio because Karuna's medication, KarXT, is expected to treat schizophrenia as well as psychosis in Alzheimer’s patients without some of the side effects of other antipsychotic drugs, such as weight gain.

The ROI analysis

Mirati - $5.8B
  • Lead asset: Adagrasib for colorectal cancer
  • Peak sales estimate: $4B
  • After tax profit at 70% margin: $2.8B
  • At 8x multiple, justifies $5.8B value

RayzeBio - $4.1B
  • Lead asset is RZE-501 for amyloid related imaging abnormalities
  • Estimated peak sales: $2 billion
  • After tax profit at 70% margin: $1.4 billion
  • At 7x multiple, supports $4.1 billion value

Karuna - $14B
  • Lead asset: KarXT for schizophrenia
  • Peak sales estimate: $6B
  • After tax profit at 70% margin: $4.2B
  • At 10x multiple, supports $14B

To summarize, the hypothetical ROI would be:
  • Mirati: 48% ROI
  • RayzeBio: 34% ROI
  • Karuna: 30% ROI

Even though these peak sales and profit margins are optimistic, Bristol-Myers Squibb has already built its sales network and is able to ramp up production of all FDA-approved medicines from these biotech startups. Many large biotech companies see similar ROI numbers from the companies they've acquired as their leading drug candidates improve with access to more resources. The future for Bristol-Myers Squibb got brighter with these acquisition deals.
Bristol-Myers CEO talks new acquisitions: 'We are writing the next chapter of this company'
Bristol-Myers Squibb CEO Chris Boerner detailed the pharmaceutical giant's slew of recent acquisitions in a Monday interview with CNBC's Jim Cramer.

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