Bristol-Myers Will Buy Amylin, After All... For $7B
Three months after rumors surfaced that Bristol-Myers Squibb was pursuing Amylin Pharmaceuticals, a deal has been struck. The big drugmaker has agreed to pay $5.3 billion - and assume $1.7 billion in debt - in hopes of strengthening its position in the competitive diabetes market. And in connection with the deal, which effectively amounts to $7 billion, AstraZeneca will pay $3.4 billion to Bristol-Myers to expand their existing diabetes partnership.
The deal is designed to help Bristol-Myers, which has been increasingly willing to bet on diabetes as a growth engine, fend off competition from Novo Nordisk and Sanofi, among others. Although the expanded collaboration with AstraZeneca is also a way to spread the risk. And at $31 a share, the acquisition is much higher than the $22 that Bristol-Myers reportedly offered earlier this year and is 10 percent more than the Amylin closing stock price at the end of the week.
Amylin became takeover bait last winter after the FDA approved its Bydureon once-weekly injectable med, a follow-up to the Byetta treatment. The approval came shortly after Amylin ended a long-running, but contentious partnership with Eli Lilly and began searching for partners to market Bydureon (see this and this). As part of the acquisition, by the way, Bristol-Myers must pay Lilly $1.2 billion.
Bristol-Myers and AstraZeneca jointly market Onglyza, a type of medication known as a DPP-4 inhibitor, and are developing dapagliflozin, which is a SGLT2 inhibitor and a first-in-class treatment, although the drug suffered a setback last year when an FDA advisory panel voted 9-to-6 not to recommend the medicine for FDA approval (back story). The panel wanted more information about risks for cancer and liver injury, particularly in elderly patients, and the FDA issued a complete response letter last January.
Just the same, the two big drugmakers will expand their relationship, and share profits and losses equally. In addition, AstraZeneca has the option, exercisable at its sole discretion following the closing of the Amylin acquisition, "to establish equal governance rights over key strategic and financial decisions regarding the collaboration, upon the payment to Bristol-Myers Squibb of an additional $135 million," according to a statement.
Ironically, the acquistion creates a marketing portfolio with the same type of key drugs that prompted Amylin to seek a divorce from Lilly. At the time, Amylin complained bitterly about a decision by Lilly to license a DPP-4 inhibitor treatment from Boehinger Ingelheim. This prompted concerns among Amylin execs that the Lilly marketing team would have to promote a fuzzy and possibly conflicted message since Bydureon is a GLP-1 medication. Now, Bristol-Myers will have both Bydureon and Onglyza, a DPP-4 inhibitorm although, Amylin execs have obviously decided the deal terms override such a scenario and the product line-up is not an impediment.
As an aside, one of the winners to emerge from the deal is Carl Icahn, who owns about 9 percent of Amylin and had filed a lawsuit against the drugmaker last April after the initial Bristol-Myers offer was reportedly rejected. At the time, he carped that the Amylin board was dysfunctional and had threatened a proxy fight.
handshake pic thx to o5com on flickr