The report from Citigroup analyst Andrew Baum sent Bristol shares toppling 2.2% to close at 58.85 on the stock market today. Pfizer stock advanced 1.5% to 36.32. Broadly, drug stocks rose a collective 3.1%.
Pfizer Chief Executive Ian Read isn’t interested in buying Bristol unless it has transformational data or a derating in shares, Baum said, according to The Fly. Citigroup didn’t respond to a request from Investor’s Business Daily for a copy of the report.
Investors and analysts have long played with the question of whether Pfizer would take over Bristol. Pfizer’s latest big acquisition was the takeover of Medivation when it forked over $14 billion for the cancer drugmaker in 2016.
According to Baum, Pfizer sees the return on risk as much higher in the immuno-oncology space. Bristol, though, has doubled down in recent history on immuno-oncology matchups, particularly between its drugs Opdivo and Yervoy.
Bristol is pairing Opdivo and Yervoy as a first treatment for advanced lung cancer. Earlier this year, that regimen outperformed chemotherapy by improving progression-free survival in some patients. Next up, the firm will unveil overall survival data for the combo.
Dow Jones component Merck (MRK) already has an immuno-oncology regimen approved as a first treatment in advanced lung cancer. Its drug Keytruda grabbed accelerated approval in 2017 as a combination with chemotherapy for this use.
The data could be transformational — or cause Bristol’s stock to dive — making it an easier target for a takeover. Pfizer, though, does have its own immuno-oncology program. As of last April, the firm had 11 compounds in immuno-oncology studies.
Citigroup’s Baum has a sell rating on Pfizer. He cut his price target on Bristol to 70 from 78, but kept his buy rating on the stock.