Complex agreement includes expanded diabetes alliance with AstraZeneca to pay for the deal.

Bristol-Myers Squibb will acquire Amylin Pharmaceuticals for $31 per share in cash, or approximately $5.3 billion, the companies have announced. The total value of the deal, including Amylin’s net debt and obligation to Eli Lilly, is about $7 billion.

Making the deal more complex, after the merger of the two companies, AstraZeneca will pay Bristol-Myers’ Amylin subsidiary $3.4 billion to share in the profits of Amylin’s sales of drugs to treat type-2 diabetes. It is a potentially huge global market considering that one out of ten people worldwide has diabetes, according to recent statistics from the World Health Organization.

It is one of the rare instances of two Big Pharmas coming together to acquire a biotech. Bristol-Myers and AstraZeneca have been partners in developing diabetes drugs since 2007 with limited success and both needed a boost to their pipelines in the therapeutic area. Their first partnered drug Onglyza has had limited success competing against Merck’s Januvia. Their most recent diabetes compound, dapaglifloxin, was rejected by U.S. regulators in January but is likely to be approved in Europe.

Amylin makes the type 2 diabetes drug Byetta, a twice-daily injectable, and the newly approved Bydureon, a once-weekly version of Byetta. Byetta was derived from a hormone found in the saliva of the Gila monster, a poisonous lizard found in the deserts of North America. Both drugs are GLP-1 receptor agonists, which act to increase the production of insulin in the presence of high blood sugar.

Although sales of Byetta have slipped against competition from Novo Nordisk’s Victoza, which is taken only once daily, Amylin expects strong uptake of Bydureon due to its once-weekly regimen.
Besides the GLP-1 franchise, the acquisition of Amylin includes metreleptin, a leptin analog currently under review at the U.S. Food and Drug Administration for the treatment of diabetes and/or hypertriglyceridemia in patients with rare forms of inherited or acquired lipodystrophy; and Symlin, an amylin analog injection approved to treat both type 1 and type 2 diabetes patients with inadequate glycemic control of meal-time insulin.

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

Under the terms of their merger agreement, Bristol-Myers Squibb will commence a cash tender offer to purchase all of the outstanding shares of Amylin’s common stock for $31.00 per share. It will finance the acquisition from its existing cash resources and credit facilities.

Following the completion of Bristol-Myers Squibb’s acquisition of Amylin, Bristol-Myers and AstraZeneca have agreed to a collaboration based on the framework of the existing diabetes alliance, regarding the development and commercialization of Amylin’s portfolio of products. At that time, AstraZeneca will make a $3.4 billion cash payment to Amylin, as a wholly owned subsidiary of Bristol-Myers Squibb. Profits and losses arising from the collaboration will be shared equally. AstraZeneca will also have the option, exercisable at its discretion following the closing of the acquisition, to establish equal governance rights over key strategic and financial decisions regarding the collaboration, upon the payment to Bristol-Myers Squibb of an additional $135 million.

“This is a compelling proposition that will have an immediate positive impact on revenues and is fully in line with our stated partnering strategy to enhance top-line growth and strengthen our late stage pipeline,” says Simon Lowth, interim CEO, AstraZeneca. “The combined development, regulatory and commercial strengths of the AstraZeneca and Bristol Myers-Squibb alliance for diabetes provides an excellent platform to unlock the potential of Amylin’s differentiated treatments for the benefit of patients worldwide and for our shareholders.” 

By MARIE DAGHLIAN