By Peter Loftus
Bristol-Myers Squibb Co. (BMY) hopes its commercial muscle will
help accelerate sales of new diabetes drug Bydureon, which Bristol
stands to obtain with its proposed $5.3 billion purchase of Amylin
Pharmaceuticals Inc. (AMLN).
The initial performance of Bydureon since it was cleared by U.S.
regulators earlier this year hasn't exactly blown away Wall Street
analysts. Bydureon is a once-weekly version of an older diabetes
drug, Byetta.
J.P. Morgan's Chris Schott said the drug's initial uptake has
lagged that of competing drug Victoza from Novo Nordisk A/S (NVO).
Bernstein analyst Tim Anderson said in a research note Monday that
Bydureon can be cumbersome to use.
Mr. Schott said combined annual sales for Bydureon and Byetta
need to reach $1.5 billion to $2 billion to justify the price
Bristol is paying. He said in a research note that target "is not
out of the question."
Amylin reported $6.9 million in first-quarter Bydureon sales and
hasn't yet reported second-quarter results. Byetta sales for all of
2011 were $518 million. But Bristol executives said Monday that the
company and its diabetes-drug partner, AstraZeneca PLC (AZN), could
help Bydureon grow.
On a conference call with analysts, Bristol's head of research
and development, Elliott Sigal, noted that Bydureon was the first
once-weekly medicine for diabetes, giving the product a lead in the
marketplace over similar drugs still in development by other
companies. He also said a new formulation is in the works that
could improve the drug-delivery experience for patients.
Giovanni Caforio, head of Bristol's U.S. pharmaceutical
business, said he believes the U.S. launch of Bydureon has been
positive, with inroads among specialist doctors known as
endocrinologists. He expects Bristol and AstraZeneca to expand the
prescriber base to primary-care physicians.
"We think we can do much better now that we have the combined
forces of the three companies," he said.
Bristol executives also said they expect to achieve
operating-expense savings savings of about 30% from the Amylin
deal. In addition, Bristol may realize certain tax benefits
resulting from Amylin's net operating losses.
Bristol plans to account for Amylin's U.S. business by booking
100% of product sales, paying 50% of gross profits to AstraZeneca
from Bristol's cost of goods sold. Bristol will book 50% of the
operating expenses. The accounting treatment will vary outside the
U.S.
Bristol sees the deal diluting earnings in 2012 and 2013, but
adding to earnings beginning in 2014.
The acquisition of Amylin is the latest in a series of deals
Bristol has done in recent years, which have bolstered its R&D
and product portfolio. This strategy has helped cushion the recent
loss of market exclusivity for Bristol's top-selling drug, the
anti-clotting treatment Plavix.
All indications are the strategy will continue even after
Bristol shells out money for Amylin. Chief Financial Officer
Charles Bancroft said Monday the company will be in a strong
financial position after the Amylin deal, and business development
remains a top priority.
Write to Peter Loftus at peter.loftus@dowjones.com