Bristol-Myers Buys Amylin for $5.3B, Getting Diabetes Drugs

Bristol-Myers Buys Amylin for $5.3B, Getting Diabetes Drugs

[Updated: 9:40 pm] Bristol-Myers Squibb (NYSE: BMY) has pulled the trigger on a $5.3 billion acquisition of San Diego-based Amylin Pharmaceuticals (NASDAQ: AMLN).

The deal, announced late Friday, calls for New York-based Bristol to pay $31 a share for Amylin, or about 10 percent more than its closing price today. By taking on some of Amylin’s debt and a contractual obligation it has to Eli Lilly, the total value of the deal is actually about $7 billion, Bristol said in a statement. In an unusual twist, the deal also includes AstraZeneca, in which Astra is paying $3.4 billion to Bristol to get an equal split of the profit and loss from the Amylin subsidiary of Bristol.

Amylin, which has never been consistently profitable in its 25 year history and has run up a $2.7 billion cumulative deficit, found itself the object of a Big Pharma bidding war the past few months. The company recently extricated itself from a longtime partnership with Lilly, meaning it was in position to collect the bulk of revenue from its twice-daily injectable exenatide (Byetta) and the more commercially attractive new version of exenatide, which comes in a once-weekly form (Bydureon). Bloomberg News reported in March that Amylin rejected an earlier bid from Bristol-Myers, and then the news service followed that with reports that everyone from Merck, Pfizer, Sanofi, and AstraZeneca had shown interest in obtaining Amylin for its diabetes franchise.

Amylin suffered through two years of regulatory delays in its bid to win FDA approval for Bydureon, until it finally broke through and got clearance to sell the drug in the U.S. in January. The delays created an opening for a competing drug, liraglutide (Victoza) from Novo Nordisk to gain market share. Still, Amylin could get as much as $1.5 billion in annual sales from its diabetes treatments, according to a Cowen & Co. analyst cited by Bloomberg. About 25 million people in the U.S. have diabetes, and some estimate the prevalence of diabetes could double over the next 25 years as the nation’s obesity rate continues to surge.

“Amylin’s innovative diabetes portfolio, talented people and state-of-the art manufacturing facility complement our long-standing leadership in metabolics,” said Lamberto Andreotti, chief executive officer, Bristol-Myers Squibb, in a statement.

Amylin and Bristol didn’t say in today’s statement what will happen to Amylin’s employees or its headquarters in San Diego and manufacturing plant in Ohio. The company said it had 1,300 employees heading into this year, according to its most recent annual report. Bristol-Myers said the deal will be a drag on its profits in 2013, but that it should start to boost profits in 2014.

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