It's a nice day for shareholders of Kosan Biosciences Inc. (NASDAQ: KOSN), which is a cancer therapeutics company. The stock price is up 230% to $5.44.

That is, Bristol-Myers Squibb Company (NYSE: BMY) has agreed to purchase Kosan for $190 million. The transaction will be structured as a cash tender offer.

Founded in 1995, Kosan has two key anticancer agents in clinical development -- heat shock protein 90 (Hsp90) inhibitors and epothilones. Some of the treatments include multiple myeloma and metastatic breast cancer.

Basically, Kosan didn't have the wherewithal to take these drugs to market (after all, the capital markets have been fairly skittish lately). So, a partnership with Bristol-Myers does make a lot of sense. Keep in mind that the company has a large oncology business.

Interestingly enough, the parties also announced a separate licensing agreement to market Kosan's epothilone compounds. The deal involves an upfront $25 million payment as well as milestone payments.

Although, the agreement is only triggered if the merger falls through. In other words, Kosan has a nice backstop on the transaction.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

Shares of French drug maker Sanofi-Aventis (NYSE: SNY) have been tumbling more than 5% in morning trading on news that a Swiss drug maker said it expects to receive approval to sell a generic version of Sanofi's anti-clotting agent Plavix.

History is repeating itself. After facing generic competition in the United States to its second-biggest product in 2006, Sanofi-Aventis is now dealing with a similar threat in Europe. Competition concerns came after Switzerland's Schweizerhall Holding AG announced it would launch a copy of the Plavix blood thinner that could be bought for a lower price. Schweizerhall said it expects German regulators to approve its generic version of Plavix, called clopidogrel.

Sanofi-Aventis's fears about generic competition are justified as the company had to fight against a similar situation less than a year ago. Back in 2006, Bristol-Myers Squibb Co. (NYSE: BMY), which develops the product with Sanofi, saw a big plunge in its sales after Canadian generics company Apotex Inc. launched a cut-price copy of the drug.

It's been slow, but the private equity folks are starting to warm up to dealmaking. In fact, a key deal came last week as Nordic Capital Fund VII and Avista Capital Partners agreed to plunk down $4.1 billion for ConvaTec, a division of Bristol-Myers Squibb Co (NYSE: BMY).

ConvaTec, which focuses on wound care, has been a star performer over the years. What's more, the deal will allow Bristol-Myers to devote its resources to its core pharma business, which certainly has some challenges – especially as drugs come off patent.

In addition, the deal has a global flavor as Nordic Capital is in Europe and Avista in the US.

It also looks like Bristol-Myers is not finished with its own dealmaking. For example, the company says it plans to launch a public offering of its Mead Johnson division.

What this really looks like, however, is that all these actions, for the most part, may just be a prelude for Bristol-Myers to sell itself to a mega pharma company.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

Bristol-Myers Squibb Co. (NYSE: BMY) shares are trading higher after the company reported a first-quarter profit of $661 million, or 33 cents per share. BMY's adjusted profit came in at 42 cents per share, just above analysts' estimates of 41 cents per share. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on BMY.

After hitting a one-year high of $32.35 in July, the stock hit a one-year low of $20.05 in March. BMY opened this morning at $11.66. So far today the stock has hit a low of $11.10 and a high of $11.97. As of 12:30, BMY is trading at $11.27, up 57 cents(5.3%). The chart for BMY looks neutral and improving, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

For a bullish hedged play on this stock, I would consider a June bull-put credit spread below the $20 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 12.1% return in just two months as long as BMY is above $20 at June expiration. Bristol-Myers would have to fall by more than 8% before we would start to lose money. Learn more about this type of trade here.

BMY hasn't been below $20 at all in the past year and has shown support around $21.60 recently. This trade could be risky if one of the company's drugs runs into problems with the FDA, but even if that happens, this position could be protected by the support the stock might find around $20, where it bounced in March.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in BMY.

"The stock that I think may put up the best performance in 2008 is Bristol-Myers Squibb (NYSE: BMY)," says Chuck Carlson, the industry's leading authority on dividend reinvestment plans and editor of The DRIP Investor.

Here, the advisor looks at the stock's role in the defensive pharmaceutical sector, its increasing dividend yield, and its takeover potential.

"I know this may strike some of you as an odd choice, especially given the fairly mediocre performance these shares have turned in over the last several years. However, some of the uncertainty hanging over these shares has been lifted.

"The firm has won its patent suit with Apotex over its important Plavix medication. Also, Bristol-Myers has finalized a civil settlement agreement with the U.S. Department of Justice.

"I like that the firm is cutting costs as well restructuring its operations. The company plans to reduce total headcount by approximately 10% by the end of 2010. Bristol-Myers recently announced the sale of its medical-imaging business.

"And Wall Street anticipates additional asset sales, possibly the company's woundcare supplies company, ConvaTec, and its Mead Johnson nutritional business. These moves would be consistent with the company's plan to become more of a player in the BioPharma sector.

"Two additional reasons Bristol- Myers may get some play in 2008 is that 1) health-care stocks traditionally perform well during rocky market periods; and 2) high dividend yielders usually provide a buffer during tough markets.

Bristol-Myers Squibb (NYSE: BMY)'s blood thinner Plavix is the second-largest selling drug in the world. It brought in over $3.4 billion in sales during the first nine months of this year. Eli Lilly (NYSE: LLY), however, believes it has a better treatment [subscription required]. According to The Wall Street Journal, its "new drug, known as prasugrel, is intended to treat patients on the verge of a heart attack." The new treatment can stop the build-up of platelets in the blood within thirty minutes

Lilly has a number of drugs going "off patent" in the next seven years. If these are not replaced, 50% of the company's revenue is at risk. It is not clear how long it will take the FDA to approve the drug, if it ever will.

The Journal writes that "in the head-to-head study, 9.9% of patients on prasugrel suffered either a heart attack, stroke or death from a cardiovascular cause, compared with 12.1% of those given Plavix. That is a 19% reduction in risk favoring prasugrel."

With new drugs, though, there is always a catch. Prasugrel is 32% more likely than Plavix to cause major bleeding.

Now the politics of drug approval will kick in. Experts for Bristol-Myers will say the new treatment is too dangerous and that Plavix is as close to perfect as a blood thinner can be. Lilly will claim that it can adjust the dose to cut down on bleeding and will get a legion of doctors to attest to that.

In the end, the patient can bleed to death or have a heart attack. Does it matter how he died?

Douglas A. McIntyre is an editor at 247wallst.com.

Bristol Myers Squibb Co. (NYSE: BMY) opened at $29.21. So far today the stock has hit a low of $29.21 and a high of $29.96. As of 10:35, BMY is trading at $29.93, up $0.19 (0.6%).

The stock has been climbing gently over the past 10 months, reaching a one-year high of $30.55 earlier this month. Jim Cramer believes that this stock could really shoot up because struggling rival Sanofi-Aventis (NYSE: SNY) may be forced to buy BMY to make numbers. People are talking about a bid in the range of $33, but Cramer expects something closer to $40. Recent technical indicators for BMY have been bullish but deteriorating, while S&P gives the stock a 4 STARS (out of 5) buy rating.

For a bullish hedged play on this stock, I would consider a September bull-put credit spread below the $25 range. BMY hasn't been below $25 since December and has shown support around $28 recently. This trade could be risky if the FDA find trouble with one of BMY's drugs, but even if that happens, this position could find support around its 200 day moving average, which is currently at $27 and rising.

Brent Archer is an options analyst and writer at Investors Observer. DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in BMY. He does control a bullish hedged position on SNY.

Almost every single day day of last week I said the same in the morning, that futures point to a positive start. Yet it seemed the market just couldn't get a break and was hit with one economic news after another that kept bulls at bay. Once again this morning futures are positive, pointing to a higher start for stocks, and hopefully finally ending a six-day losing streak. It would be interesting to see how the market reacts a day before the midterm elections.

Part of this early positive sentiment, undoubtedly has to do with oil prices. This morning, oil prices slipped to below $59 a barrell. This is due partly due to the belief OPEC would have a hard time fulfilling its announcement to cut production and partly because the threats to disrupt production in Nigeria and the U.S. never came to pass. At the same time, OPEC President Edmund Daukoru also said this morning that there is oversupply and warned of further production cuts.

Today there are no economic data due, and this week in general will have little from the economic front. On Thursday, trade balance will be reported and that would be the major report to note. However, a number of Federal Reserve will be speaking today and the market could very well react to that.

In Corporate news:

Some companies due to report today: Anadarko Petroleum Corp. (NYSE:APC) - estimated $1.35 earnings per share, El Paso Corp. (NYSE:EP) - estimated $0.16 earnings per share, RealNetworks Inc. (NASDAQ:RNWK) - estimated $0.22 earnings per share, and XM Satellite Radio Holdings, Inc. (NASDAQ:XMSR) - estimated -$0.46 earnings per share.

Google Inc. (NASDAQ:GOOG) yesterday announced that it will test expansion of its business into offline media and will now be helping customers buy advertisements in 50 U.S. newspapers. More than 100 advertiser were invited to join the three-month test of a Print Ads service that places ads in daily papers such as the New York Times Co. (NYSE:NYT), Gannett Co. (NYSE:GCI) and the Washington Post.

Ryanair Holdings Plc (NASDAQ:RYAAY), Europe's largest low-cost airline, posted a 24% gain in quarterly profit and lifted its 2007 guidance. Shares rose more than 3% in London.

The Wall Street Journal reported this morning that General Motors Corp.'s (NYSE:GM) Rick Wagoner said that a deal between $6 billion to $7.5 billion could be reached soon with Delphi Corp. (OTC:DPHIQ) over GM's contribution on labor costs at auto-parts maker. Wagoner is touring China where GM also displayed the company's hydrogen fuel cell-powered Sequel.

Again, according to the Wall Street Journal the U.S. Justice Department, informally probing anti-competitive behavior in the private equity sector, has requested information from Merrill Lynch's (NYSE:MER) private equity arm.

ImClone Systems Inc. (NASDAQ:IMCL) and Bristol-Myers Squibb Co. (NYSE:BMY) reported mixed results from a pair of Phase III trials of Erbitux, the cancer drug.

In the radio market, in attempt to to defend its eroding market share from satellite radio and iPods, U.S. radio operators said sales of its high-definition radios will expand to Circuit City Stores, Inc. (NYSE:CC), and stations are set to air some 75,000 ads a week pushing HD Digital radio.

I guess I shouldn't be surprised; it was the obvious, logical next move. Not too long ago, on October 10th, Carl Icahn, the activist investor, has finally got his wish as Kies, the former ImClone Systems Corp. (NASDAQ: IMCL) chairman, resigned. Icahn, who owns about 14% of the company, had several issues with a few of ImClone's management and board members as to how the company is run, among them low sales of Erbitux, the cancer drug.

This morning, ImClone reported third-quarter results that blew expectations. Not only did net income rise 85.2% to $57.3 million, or 65 cents a share, but revenue rose 41.5% to $150.7 million. Analysts were expecting earnings of 45 cents a share on revenue of $162 million. What's more, sales of Erbitux got a push from a a 63% rise of Bristol-Myers Squibb Erbitux sales. ImClone receives a 39% share of that in way of royalty revenue.

Yet, IMCL stock is up a modest 0.75%. (Update: I guess it took some time until the Street digested the news and decided it approved -- IMCL stock is now up around 2.5%).

Remeber that back in September Icahn filed a proxy statement to remove half of ImClone's board stating "they have done a deplorable job running the company." After these results, I find that somewhat odd. The filing eventually led to Kies and other board members resigning. Among their biggest rows was Icahn derailing a $36 a share buyout offer. Icahn claims he didn't think the offer was serious. Well, he now has an almost free hand to do as he pleases, as most of ImClone's board members are his allies.

One of Icahn's first priorities would be to restore ImClone's relationship with Bristol-Myers Squibb Co. (NYSE:BMY), which not only markets ImClone's product but also holds 17% of ImClone. It has been speculated that Bristol-Myers might eventually buy out ImClone. Icahn's other priority would be to hire a CEO. Since Icahn also complained that the board couldn't/didn't recruit talented management, I can't wait to see who he chooses to run operations at ImClone.