Bristol-Myers Squibb Acquisition Results in $1.8 Billion Loss

Bristol-Myers Squibb (BMS) has announced that they will discontinue all development of their chronic hepatitis C (HCV) treatment BMS-986094, a nucleotide polymerase (NS5B) inhibitor previously in Phase 2 clinical trials. BMS reports that nine study patients were hospitalized with heart and kidney toxicity, with one patient death due to heart failure. The exact cause of these adverse events are not yet known.

BMS states halting development of BMS-986094 has been governed by their strong commitment to patient safety. They have agreed to further investigate the toxicity profile of BMS-986094, and in cooperation with the U.S. Food and Drug Administration, share safety data with other companies involved in the development of investigational HCV compounds.

Earlier this year BMS acquired the pharmaceutical company Inhibitex Inc. for $2.5 billion, and along with that procurement came the then promising BMS-986094. BMS has now announced that they will take a $1.8 billion charge related to the collapse of the HCV treatment which will be evident in Q3 2012 results.

A failed investigational agent is not the only challenge for BMS. The expected patent loss of Plavix (clopidogrel) in May resulted in an initial 42% drop in Plavix sales in Q2 2012, and further drops are likely.

But not all news is bad: In a joint venture with AstraZeneca, BMS recently won a bid to acquire Amylin Pharmaceuticals for over $7 billion in an effort to bolster their diabetes market, a therapeutic area projected to grow rapidly in coming years. Amylin has a strong diabetes presence with Byetta and Bydureon already on the market and others in the pipeline. This acquisition was considered by some analysts to be a major coup for both BMS and AstraZeneca. Bydureon, an injectable GLP-1 agonist, pairs well with the AstraZeneca-BMS portfolio of Onglyza and investigational agent dapagliflozin.

Joint venture pharma deals are one way to recover from revenue loss due to blockbuster-to-generic switches. Other companies that have entered into agreements this summer include Johnson & Johnson and Pfizer. While the risks are substantial as proven by the BMS $1.8 billion dollar loss, gaining royalties from mid- to late stage products can often prove profitable.