AstraZeneca (UK) is set to acquire Bristol-Myers Squibb's (BMS; US) share in its joint diabetes venture in a transaction that is valued at up to USD4.3 billion according to estimates.
IHS Global Insight perspective | |
Significance | AstraZeneca (UK) will be acquiring Bristol-Myers Squibb's (BMS; US) stake in the companies' diabetes venture with an upfront of USD1.7 billion, and potential regulatory and sales-related payments of up to USD1.3 billion. |
Implications | AstraZeneca gains the sole rights to products such as Onglyza (saxagliptin), Forxiga (dapagliflozin), Byetta (exenatide), and Bydureon (exenatide extended-release for injectable suspension). |
Outlook | The transaction which is expected to close in the first quarter of 2014 will potentially help strengthen AstraZeneca's revenues performance. The transaction is likely to enable BMS to make further investments into its focus areas. |
UK pharma major AstraZeneca has announced today (19 December) that it will be acquire Bristol-Myers Squibb's (BMS; US) stake in the companies' diabetes venture. AstraZeneca will be making an upfront payment of USD2.7 billion to BMS, with further potential regulatory, launch and sales payments worth up to USD1.3 billion. BMS will also be receiving royalties payments until 2025. Additionally, USD225 million worth of payments will be made by AstraZeneca on the transfer of certain assets.
With the acquisition, the companies expect around 4,100 BMS employees, working in the diabetes business, including those at Amylin, will move to AstraZeneca. AstraZeneca is expected to eventually gain take on the responsibility for the manufacture as well as the supply chain of the full diabetes product portfolio. In turn, BMS is expected to continue working on some of the specified clinical trials as per the ongoing clinical trial plan, with a number of research, development, and manufacturing employees, focusing on diabetes, to remain at the company.
The companies expect that the transaction will be closed in the first quarter of 2014. AstraZeneca has said that its guidance for Core EPS for 2013 will not be affected by the transaction. It further expects the transaction, when implemented, will be neutral to Core EPS in 2014.
However, the lower-than expected sales of Bydureon (exenatide extended-release for injectable suspension), has led AstraZeneca to note that it will be incurring approximately USD1.7 billion worth non-cash, non-Core, pre-tax impairment charges in 2013, which will not affect the Core EPS for 2013.
The transaction, which is anticipated to become effective in January next year, is subject to customary terms and conditions, including clearance as per the Hart-Scott-Rodino Antitrust Improvements Act.
Outlook and implications
With the transaction, AstraZeneca gains the rights to Onglyza (saxagliptin), Kombiglyze XR (saxagliptin and metformin HCl extended release), Komboglyze (saxagliptin and metformin HCl), Forxiga (dapagliflozin), Byetta (exenatide), Bydureon (exenatide extended-release for injectable suspension), metreleptin, and Symlin (pramlintide acetate). The transaction will the serve to help potentially strengthen the company's future sales performance, with diabetes, having affected more than 370 million people globally in 2012, according to estimates, a figure which is further expected to increase to over 550 million by 2030. For instance, for the third quarter of the year AstraZeneca reported sales of USD93 million for Onglyza, USD57 million for Byetta, and USD43 million for Bydureon (see United Kingdom: 31 October 2013: AstraZeneca reports 9% fall in revenues in Q3, appoints new CFO). More recently, dapagliflozin, marketed under the brand name Forxiga outside the United States, received an approval recommendation from a US FDA advisory committee. If approved in the United States, the sales of the treatment could further be strengthened, with dapagliflozin already approved in 38 countries including those in the European Union (see United States: 13 December 2013: US FDA advisory committee recommends BMS, AstraZeneca's dapagliflozin).
In terms of BMS, the transaction is likely to enable it to invest further into developing its portfolio within it focus areas in particular immunoscience and oncology (see United States: 8 November 2013: BMS to shift R&D focus away from HCV, diabetes, and neuroscience). BMS is expecting to receive a USD2.7-billion upfront payment and another USD700 million, subject to regulatory approval of dapagliflozin, in the first quarter of 2014.
AstraZeneca and BMS entered into the diabetes alliance in 2007. BMS announced the acquisition of Amylin in July last year for USD5.3 billion, with AstraZeneca paying half the price following the completion of the acquisition, for a 50% profit share, and an option giving it equal share in making decision on Amylin's existing and experimental drugs (see United Kingdom - United States: 2 July 2012: BMS to acquire Amylin for USD5.3 bil., expanding AstraZeneca alliance).