Bristol-Myers to Invest in Imclone
Bristol-Myers Squibb Co., moving to protect its oncology business, said Wednesday that it will invest up to $2 billion in a tiny New York biotechnology company that is developing a breakthrough medication for colon cancer that is currently untreatable.
The deal between Bristol-Myers and Imclone Systems Inc., believed to be the largest involving a biotech company, underscores the emerging importance of therapies that specifically target cancer tumors. The Imclone drug, known as C225, blocks a protein that spurs tumor growth in half a dozen types of cancer.
The agreement also demonstrates Bristol-Myers’ need to rebuild a product portfolio weakened by patent expirations on key drugs. Sales of its blockbuster cancer drug Taxol dropped 21% to $325 million in the second quarter because of generic competition, for example.
“Big drug companies will continue to hunger for new products, and Bristol-Myers is the hungriest of the hungry because it doesn’t have many products in its pipeline,” Sushant Kumar, an analyst with Mehta Partners in New York, told Reuters.
Bristol-Myers said it believes C225 has the potential to be a blockbuster drug, with sales of at least $1.5 billion in the United States, Canada and Japan by 2005. The pharmaceutical company expects sales to grow until the drug’s patent expires in 2018.
“It represents a rare and exciting opportunity for us,” Richard Lane, Bristol-Myers’ president of worldwide medicine, told analysts in a conference call. The company is the leading seller of cancer drugs.
Bristol-Myers and Imclone expressed confidence that the Food and Drug Administration would approve C225 for colon cancer treatment, perhaps as early as April. The FDA has granted the experimental drug “fast-track” status, which ensures a quick review.
Bristol-Myers said it will spend $1 billion to buy a 19.9% stake in Imclone. The $70-a-share purchase price represents a 24% premium over Imclone’s close Wednesday of $56.60, up $6.59 on Nasdaq. Bristol-Myers closed at $56, off 49 cents on the New York Stock Exchange.
In addition, Bristol-Myers agreed to pay Imclone another $1 billion--$200 million immediately and the rest when the company meets specific milestones. Imclone stands to receive $300 million when the FDA accepts its completed drug application and the final $500 million when C225 is approved for sale.
Imclone Chief Operating Officer Dr. Harlan Waksal called the deal “extremely significant.”
The deal means Imclone won’t have to build its own oncology sales force, an area in which the small science-based company has little expertise, Waksal said. Bristol-Myers has the expertise to build market share quickly, Waksal said, adding that’s important because two rival drugs are in the works.
AstraZeneca and OSI Pharmaceuticals are developing drugs that use the same protein as C225, known as the epidermal growth factor. The rival medications are easier to take--they can be taken orally, but C225 is administered by injection--though they are at least one year behind C225 in development.
Imclone’s experimental drug draws on technology developed at UC San Diego in the late 1980s. In a clinical trial presented at the Society of Clinical Oncology in May, C225 shrunk tumors in 22.5% of colon cancer patients who used it--patients who showed no improvement on other therapies.
The company has spent $100 million to develop the drug and an additional $50 million to build a facility to produce the medication, which it believes will be useful in cancers of the lung, pancreas, head and neck.
Under the deal, Bristol-Myers will record sales in the United States, Canada and Japan. Bristol-Myers will book 40% of the profit from those sales with Imclone taking the rest. Significantly for Imclone, Waksal said, much of the company’s share will come off the top in the form of a distribution fee.
Imclone has a separate marketing deal with Germany-based Merck Kga that covers Europe.
