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Strategies & Market Trends : Speculating in Takeover Targets -- Ignore unavailable to you. Want to Upgrade?

To: richardred who wrote (556)	2/1/2008 8:05:19 PM
From: richardred	Respond to of 7265

Bristol-Myers' Potential Acquisitions Cantor Fitzgerald THURSDAY MORNING, Bristol-Myers Squibb discussed its planned divestiture/acquisition strategy -- a critical juncture in the BMS transformation, in our view -- which could position Bristol-Myers as a leading biopharma company, given the right acquisitions. Bristol-Myers recently sold its medical-imaging business and plans to sell [ostomy subsidiary] ConvaTec to go after long-term growth via complementary pipeline products focused on unmet medical needs to position Bristol-Myers for 2012 and beyond. While certain obvious acquisition targets come to mind, like Biogen Idec, we believe smaller-cap companies with enabling platform technologies and robust pipelines provide the sustainability Bristol-Myers needs. Bristol-Myers' product lifecycle management strategy -- "building pipelines within products" -- of continuously layering new innovative, high-margin products into its current product franchises, first as combination therapies and migrating toward broad indications, we think, is a sustainable business model if there are underpinnings of technology diversity. Bristol-Myers' focus on expanding biologics capabilities and innovative products, we think, will require investments in enabling platform technologies that move the company into next-generation biologicals, like its acquisition of Adnexus that provides a new molecular class combined with a low-cost manufacturing opportunity for Mabs [monoclonal antibody therapies for cancer], a critical factor for long-term success in Mab therapies as governments and other third-party payers continue to pressure prices and margins. We think the need for Bristol-Myers and other pharma companies to cost-effectively innovate for long-term sustainability will drive demand for enabling technology platforms. We think the Adnexus acquisition is an indicator of the types of strategic acquisitions and/or alliances to expect from Bristol-Myers which point to companies like Sangamo BioSciences, Cell Genesys and ImmunoGen as likely targets due to their pipeline fit and next-generation technology platforms. Again, we remind investors that technology-driven growth is not linear -- it is market-disruptive. We think that major corporations seeking sustainable top-line and bottom-line growth will continue to rely on access to technology platforms that can be deployed widely throughout the corporation to achieve the efficient, cost-effective product innovation required to maintain long-term market leadership. We think that companies providing market-disruptive technologies will provide top-line and bottom-line growth that promises to reinvigorate pharma, food, energy and industrial processes -- providing a source of unique, human- and earth-friendly products while decreasing costs. For investors, we believe our universe of platform technology companies provides a value foundation which lowers investment risk. We think the December/January selloff has created opportunities for significant upside in 2008, and we reiterate our Buy rating on our universe of market-disruptive platform technology companies: Sangamo, Cell Genesys, ImmunoGen, Alnylam Pharmaceuticals, Rosetta Genomics, Senomyx, Metabolix and Verenium. online.barrons.com