Surprising and sizable injection

SAN DIEGO—A diabetes partnership initiated in 2007 byBristol-Myers Squibb Co. (BMS) and AstraZeneca PLC received a huge boost lastmonth in the unlikely form of a multi-billion-dollar acquisition—of AmylinPharmaceuticals Inc. by BMS for $31 pershare in cash, or approximately $5.3 billion.

The acquisition is pursuant to a cash tender offer andsecond-step merger, and its total value—including Amylin's net debt and acontractual payment obligation to Eli Lilly & Co.—could be about $7billion.

The acquisition is part of an ongoing diabetes alliancebetween BMS and AstraZeneca that will now will develop and commercializeAmylin's portfolio of products, which primarily consists of a franchise ofGLP-1 agonists for the treatment of type 2 diabetes. That franchise is anchoredby two such treatments: Byetta (exenatide) injection and Bydureon (exenatideextended-release for injectable suspension/exenatide 2 mg powder and solventfor prolonged release suspension for injection), both of which are approved foruse in the United States and Europe.

"Our view is that to date, the GLP-1 class has beenpredominately prescribed by endocrinologists in the United States," saysJennifer Fron Mauer, director of BMS business communications. "However, webelieve that there are many patients not treated by endocrinologists who couldbenefit from these medicines."

Other assets included in the acquisition are Metreleptin, aleptin analog currently under review by the U.S. Food and Drug Administration(FDA) for the treatment of diabetes and/or hypertriglyceridemia in patientswith rare forms of inherited or acquired lipodystrophy; Symlin (pramlintideacetate) injection, an amylin analog approved by the FDA for the treatment oftypes 1 and 2 diabetes patients with inadequate glycemic control on meal-timeinsulin; and a state-of-the-art sterile production facility in Ohio.

These assets are a good complement to BMS' portfolio of Onglyza,Kombiglyze and Forxiga, the diabetes drugs that BMS and AstraZeneca have beenworking on, says Mauer.

"By leveraging the existing AZ/BMS diabetes sales force, ourcapabilities in access/affordability and our marketing experience, we expectthat we will be able to significantly broaden the prescriber base and driveincreased adoption of Amylin's GLP-1 franchise," she adds. "We also believethat Amylin's U.S. endocrinology capability has the potential to enhance thepromotion of our Onglyza franchise business."

Following completion of the acquisition, AstraZeneca willmake a $3.4-billion cash payment to Amylin as a wholly owned subsidiary of BMS.All of Amylin's physical assets will be owned by BMS, and AstraZeneca will beentitled to 50 percent of the profits and losses arising from Amylin'sbusiness, as well as ownership of certain Amylin assets. Profits and lossesarising from the collaboration will be shared equally. In addition, AstraZenecahas the option to establish equal governance rights over key strategic andfinancial decisions regarding the collaboration upon an additional $135-millionpayment to BMS.

"This is a compelling proposition that will have animmediate positive impact on revenues and is fully in line with our statedpartnering strategy to enhance top-line growth and strengthen our late stagepipeline," said Simon Lowth, AstraZeneca's interim CEO, in a statement. "Thebroadening of our diabetes collaboration with Bristol-Myers Squibb is anotherimportant step towards creating a leadership position in the treatment of adisease with growing unmet medical need that is reaching epidemic proportionsin many areas of the world. The combined development, regulatory and commercialstrengths of the AstraZeneca and Bristol Myers-Squibb alliance for diabetesprovides an excellent platform to unlock the potential of Amylin'sdifferentiated treatments for the benefit of patients worldwide and for ourshareholders."

The boards of directors of BMS and Amylin have unanimouslyapproved the acquisition. At press time, Amylin's board had unanimouslyrecommended that Amylin's stockholders tender their shares into the tenderoffer. The deal was expected to close by the end of July.

BMS will finance the acquisition from its existing cashresources and credit facilities. The pharma said it expected the transactionsto be dilutive to non-GAAP earnings per share (EPS) in 2012 and 2013 byapproximately 3 cents, becoming slightly accretive starting in 2014 andfollowed by meaningful accretion in the later part of the decade.

As we went to press, no decisions had been made about howAmylin's San Diego headquarters will be incorporated into New York-based BMS orhow the acquisition will affect Amylin's employees.

"After the close of the acquisition, we plan to work closelywith Amylin's leaders to gain a thorough understanding of the portfolio,facilities and employees, and quickly make decisions. Our goal is to ensure therapid integration of assets into our operations," says Mauer.

As to whether BMS is eyeing other potential collaborationsor add-ons in the area of diabetes, Mauer notes, "As part of our capitalallocation strategy, business development is a priority for Bristol-MyersSquibb. We continue to look for opportunities that can deliver long-termgrowth. We focus on transactions that are strategically, scientifically andeconomically sound."

Amylin declined to comment on the acquisition.

BMS in clinical trialpartnership with Emory U

ATLANTA—Bristol-Myers Squibb Co. (BMS) also recentlyannounced that it has formed a "strategic partnership" with Emory University toconduct clinical trials involving BMS' investigational compounds.

Investigators from Emory and affiliated institutions willconduct Phase II, Phase III and pediatric clinical trials in the metropolitanAtlanta area to support the ongoing development of investigational medicinesfrom across BMS' portfolio, particularly in oncology, metabolics, hepatitis Cand immunoscience.

According to the partners, their agreement builds on recentexperiences between the two organizations in conducting clinical trials inorgan transplantation and cancer. Initially, researchers from Emory's Winship CancerInstitute will work with BMS scientists on multiple clinical trial programs inoncology.

"Through this partnership, we are working to provide aframework to improve clinical trials efficiency and to enhance the developmentof academic and industry collaborations that solve health care problems," saidDr. David S. Stephens, vice president of research in Emory's Woodruff HealthSciences Center and principal investigator of the Atlanta Clinical andTranslational Science Institute (ACTSI). "Emory's successful partnership withBristol-Myers Squibb in developing drugs for organ transplantation is anexcellent example of the benefits of these kinds of collaborations."