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(Bloomberg Gadfly) -- After losing $30 billion in market value, Bristol-Myers Squibb Co. is starting to hear buyout drums.

Activist investors are circling, with both Jana Partners and Carl Icahn recently taking stakes in the drugmaker. The latter believes the company is a potential acquisition target, The Wall Street Journal reported on Tuesday.

At first glance, Bristol is prime deal bait. It has valuable assets and high growth potential, but its market cap has been crushed by strategic missteps, bad luck, and shifting market dynamics. Unfortunately, Bristol’s problems may not be the kind a new owner can fix. 

Bristol's fortunes rest largely on Opdivo, the best-selling of a new crop of so called immuno-oncology (IO) drugs, which turn patients' immune systems against tumors. It got out to an early market lead over Merck & Co. Inc.'s competing drug, Keytruda.

But an overly ambitious trial in treating newly diagnosed lung cancer failed in August, giving Merck the advantage in treating the largest single group of cancer patients. That misstep, along with a growing list of approvals for Roche Holding AG's competing drug, Tecentriq, have curtailed once-buoyant hopes for Opdivo. 

Bristol's best hope in the near term is to combine Opdivo with another immune-boosting drug called Yervoy to reach a broader set of patients. Most of its combo trials focus on this duo. But it has given up on seeking quick FDA approval for that combo in treating newly diagnosed lung cancer. AstraZeneca PLC, meanwhile, recently delayed trial data for an IO combination similar to Bristol's. Both setbacks raise questions about the effectiveness of this approach. 

Merck, on the other hand, may get a possibly safer and cheaper combination of Keytruda and chemotherapy to the market to treat lung cancer as soon as this spring. That could be devastating to Opdivo's sales potential.

For the longer run, Bristol is trying out other combos and IO drugs. So is everyone else, according to a Bloomberg Intelligence analysis. There are many overlapping trials, and not everyone can win.

The future of IO is likely to be messy, with different combinations treating particular cancers and no single drug dominating. For big markets with multiple entrants, pricing pressure is all but inevitable, given that the list price for combo therapy can exceed $200,000 per year. 

Bristol's $90 billion market cap is another sizable deal barrier, particularly if you add a premium. Among those with the financial firepower to make a bid conceivable, Roche and Merck are out of the running, given the amount they've invested in their own IO drugs. Pfizer Inc. likes megamergers, but it may decide it prefers its own competing IO drug and combination strategy.

There are other potential suitors, including Sanofi, Johnson & Johnson, Gilead Sciences Inc., and Novartis AG. But this deal would be a financial stretch for just about any firm. And despite its recent troubles, Bristol trades at a notably high multiple relative to other large U.S. pharma companies. 

The IO market may be too unstable and crowded right now to justify what might be the biggest pharma deal in history. No buyer is likely to jump in without waiting to see how the landscape shapes up, or whether they can get a cheaper deal. Icahn and other activists will be disappointed if they think anyone's going to make an attractive offer any time soon. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

Max Nisen is a Bloomberg Gadfly columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.

To contact the author of this story: Max Nisen in New York at mnisen@bloomberg.net.

To contact the editor responsible for this story: Mark Gongloff at mgongloff1@bloomberg.net.

©2017 Bloomberg L.P.

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