12:00 AM
Aug 04, 2008
 |  BioCentury  |  Strategy

BMS: It's about the cash

Although buying ImClone Systems Inc. has always been an obvious option for Bristol-Myers Squibb Co., and even though the biotech was far cheaper months ago, the pharma company said it didn’t have the cash to pull the trigger until it began a process of unloading assets.

Last week, armed with free cash from the recent sale of its ConvaTec business, and looking to make strategic moves ahead of patent expirations for its three key drugs between 2011 and 2014, BMS bid $4.5 billion for the 83.4% of ImClone it doesn’t already own.

The pharma’s stake dates from 2001, when the companies announced their blockbuster multi-billion dollar deal to develop and commercialize ImClone’s Erbitux cetuximab in the U.S. and Canada.

Erbitux remains ImClone’s driver. The chimeric mAb against EGFR is approved to treat squamous cell carcinoma of the head and neck (SCCHN) and as a second-line treatment for EGFR-expressing metastatic colorectal cancer (mCRC). Merck KGaA markets the drug in Europe, and the three companies share rights in Japan. Global sales were $1.2 billion in 2007 and $840.6 million in 1H08.

With the acquisition, Bristol-Myers will save a 39% royalty it pays ImClone, which totaled about $269.8 million in 2007 and $149.2 million in 1H08. The pharma also will collect the 9.5% royalties from Merck KGaA, which totaled about $62.3 million in 2007 and $43.6 million in 1H08.

BMS did not say when it expects the deal to be accretive to earnings but did reiterate its 2008 non-GAAP guidance of $1.60-$1.70 and three-year guidance for 2007-10 of a minimum 15% compound annual growth rate.

SVP and CFO Jean-Marc Huet noted the ImClone deal would help the pharma meets its goal of saving an additional $1...

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