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Bristol-Myers Buys Amylin in Deal Worth $7B

Bristol-Myers Squibb of New York City agreed to buy locally based Amylin Pharmaceuticals Inc. for $5.3 billion in a deal that will give the global biopharmaceutical company access to a portfolio of diabetes therapies.

Bristol-Myers will pay $31 a share in cash, a 10 percent premium to Amylin’s closing price June 29 of $28.20, according to a statement from the companies. The total value of the transaction, including about $1.7 billion of combined Amylin debt and a contractual payment obligation to Eli Lilly & Co., is $7 billion.

When the acquisition is completed, in about 30 days from the offer date, AstraZeneca Plc will pay Amylin, as a wholly owned subsidiary of Bristol-Myers Squibb, $3.4 billion in cash to enter into a partnership to develop Amylin’s drug portfolio, which largely consists of diabetes treatments Bydureon and Byetta.

Bydureon, the first and only once-weekly treatment for type 2 diabetes, was first approved in Europe in June 2011 and then FDA-approved in the U.S. in January 2012. Bydureon builds upon Amylin’s twice-daily Byetta, which has been available in the U.S. since June 2005. Byetta was the first GLP-1 receptor agonist to be approved by the FDA for the treatment of type 2 diabetes, and it is the first and only GLP-1 receptor agonist approved for use in the U.S. as an adjunct to insulin glargine with or without metformin and/or thiazolidinedione.

Bristol-Myers spokeswoman Jennifer Fron Mauer said Bristol-Myers and AstraZeneca have had an alliance in diabetes for five years. The two companies came together in 2007 to co-develop and co-commercialize two medicines for type 2 diabetes discovered by Bristol-Myers — Onglyza, a DPP4 inhibitor, and dapagliflozin, an SGLT2 inhibitor, she said. The acquisition expands their partnership and gives AstraZeneca the option to pay Bristol-Myers an additional $135 million in consideration for equal decision rights regarding the collaboration.

The Sales Force

“We are excited to bring together the sales forces of all three companies,” Fron Mauer said via email. “We believe that there is leverage in offering a combination of DPP4, SGLT2 and GLP-1 products to the entire spectrum of prescribing physicians including PCPs (primary care physicians) and endocrinologists.”

Fron Mauer said Bristol-Myers has been attracted to Amylin’s talented staff and state-of-the-art manufacturing facility and perceives Amylin’s GLP-1 franchise as a strategically important addition to its diabetes portfolio.

“We believe that AstraZeneca’s and Bristol-Myers Squibb’s commercial experience would put considerable global marketing capability behind Amylin’s diabetes franchise, which will help to maximize the value of those assets,” she said. “Furthermore, we believe that Amylin’s U.S. endocrinology capability has the potential to enhance the promotion of our Onglyza franchise business.”

“Over the last several months, our board of directors, with the assistance of our financial and legal advisers, has been actively engaged in a robust and thorough strategic process designed to maximize the value of our unique diabetes franchise,” Amylin President and CEO Daniel M. Bradbury said in a statement. “I strongly believe that we have accomplished that objective. Our recent U.S. launch of Bydureon, the first ever once-weekly therapy for patients with type 2 diabetes, solidified our position as a driving force in the fight against this rising global epidemic.

“Importantly, this transaction with Bristol-Myers Squibb and their alliance with AstraZeneca provide the means to maximize the potential and impact of Amylin’s innovative diabetes therapies and reach more patients around the world with treatment options to help manage their disease.”

Amylin Executive Director of Corporate Affairs Alice Izzo said diabetes affects an estimated 347 million adults worldwide and nearly 26 million people in the U.S.

Carol Werther, an analyst with Summer Street Research, said Bristol-Myers’ Onglyza has not done as well as investors had hoped and its dapagliflozin failed to win approval from U.S. regulators in January and therefore is seeking approval in Europe.

Amylin’s products are competitive with Novo Nordisk’s Victoza, a once-daily injectable that was approved in 2010 and had worldwide sales in 2011 of just over $1 billion, Werther said.

“A lot of the Wall Street community thought part of the reason Amylin’s Byetta sales weren’t better for whatever reason was because the partnership between Amylin and Lilly didn’t go that well,” Werther said, commenting on Amylin’s split with longtime partner Eli Lilly & Co. in November 2011. “I was nervous for Amylin to launch (Bydureon) on their own, but now there’s opportunity for the product to achieve $1 billion to $2 billion easily.

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