Bristol-Myers Squibb (BMS) said it will sell its global diabetes business to its collaboration partner AstraZeneca (AZ), in a deal that could net the pharma giant more than $4 billion—little more than a month after BMS said it would exit broad-based discovery research in diabetes as part of an announced R&D restructuring.
AstraZeneca agreed to pay BMS $2.7 billion up front, as well as up to $1.4 billion tied to undisclosed regulatory and sales-based milestones, and up to $225 million tied to the transfer of assets. AZ also agreed to pay BMS royalties on set sales through 2025.
BMS’ global diabetes business, developed through its collaboration with AZ, includes Onglyza (saxagliptin), Kombiglyze XR/Komboglyze (saxagliptin and metformin HCl extended release), dapagliflozin (marketed as Forxiga outside the United States), Byetta (exenatide), Bydureon (exenatide extended release for injectable suspension), Symlin (pramlintide acetate), and metreleptin.
The companies said they anticipate “substantially all” 4,100 of BMS’ diabetes employees, including former Amylin staffers, will be transferred to AZ, though “a number” of R&D and manufacturing employees dedicated to diabetes will remain with BMS.
As part of the deal, BMS will sell to AZ the former Amylin manufacturing facility in West Chester, OH; BMS acquired Amylin last year in a three-company, $7 billion deal involving Eli Lilly. In addition, AZ agreed to buy BMS’ Mount Vernon, IN, manufacturing facility about 18 months following the closing of the transaction. While AZ will eventually oversee the manufacturing and supply chain of the full portfolio of diabetes products, BMS said it will continue to oversee specified clinical trials as called for under the companies’ ongoing clinical trial plan.
The transaction is expected to close in the first quarter of 2014. At that point, BMS expects to have received from AZ $3.4 billion—including the $2.7 billion up-front payment and an additional $700 million based on the assumption that dapagliflozin, which is already marketed in Europe, will finally win U.S. marketing approval.
Dapagliflozin is one of several challenges the partners have recently faced in diabetes. Another is the disappointing top-line result announced in June of saxagliptin in the Phase IV SAVOR-TIMI-53 (Saxagliptin Assessment of Vascular Outcomes Recorded in Patients with Diabetes Mellitus) trial. While the drug met the primary safety objective of non-inferiority, it did not meet the primary efficacy objective of superiority over placebo.
Last month BMS said it will continue to carry out development, regulatory, and commercial plans for several commercial and late-stage diabetes drugs.
BMS’ board of directors approved the deal, which is subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act and customary closing conditions. BMS will also have to satisfy conditions under its joint venture agreement with partners, which do business together in China as the Sino-American Shanghai Squibb Pharmaceutical Co.
“Today’s announcement puts the diabetes franchise in the capable hands of AstraZeneca and allows us to move to a more simplified operating model consistent with our pipeline and portfolio,” BMS CEO Lamberto Andreotti said in a statement. “This agreement will allow us to further evolve our business model as a leading specialty biopharma company and increase resources behind the opportunities that drive the greatest long-term value for patients, our company and our shareholders.”
AZ identified non-insulin diabetes products as one of several "growth platforms" for future success in March, when it restructured its operations by reducing in half its core therapeutic areas to three—one of them cardiovascular and metabolic disease, a category that would include diabetes.
AZ CEO Pascal Soriot said the deal “reinforces AstraZeneca's long-term commitment to diabetes, a core strategic area for us and an important platform for returning AstraZeneca to growth.”
“Together with Bristol-Myers Squibb we concluded that consolidating ownership of the diabetes portfolio would benefit both companies and allow us to better serve the needs of diabetic patients,” Soriot added.