April 6, 2009 / 8:01 AM / 11 years ago

Bristol wins Abilify extension, sees profit boost

NEW YORK, April 6 (Reuters) - Bristol-Myers Squibb Co said on Monday it will sell its Abilify schizophrenia drug about 29 months longer than expected, helping to shore up profits after the company’s $5.6 billion-a-year Plavix blood clot preventer faces generic competition in mid-2012.

Abilify, with global sales last year of $2.15 billion, is Bristol-Myers’ second-biggest product and one of its fastest growing. The company had been expected in November 2012 to return U.S. sales rights to the medicine’s discoverer, Otsuka Pharmaceutical Co of Japan.

But in a revision to the drugmakers’ decade-old licensing deal, Bristol-Myers (BMY.N) said it will now be allowed to sell Abilify in the United States until it loses patent protection in April 2015.

“The extension of the U.S. agreement for Abilify will help Bristol-Myers address an important financial need in 2013,” said company spokeswoman Tracy Furey, referring to the first full-year that Plavix faces generics in the United States.

Analysts polled by Reuters Estimates on average have predicted company profits will fall 16 percent to $1.88 per share in 2013 as Plavix — sold in partnership with Sanofi-Aventis (SASY.PA)— loses perhaps three-fourths or more of its U.S. sales to cheaper copycats.

Bristol-Myers has not made a profit forecast for 2013, but on Monday said the revised licensing deal with Otsuka will contribute at least 30 cents per share to company profit in 2013 and 2014.

“The agreement ... will help build our earnings base for 2013 and transition us to an expected period of growth in 2014 and beyond,” Lamberto Andreotti, chief operating officer of Bristol-Myers, said in a statement.

The New York drugmaker has long been considered a leading takeover candidate, with some analysts suggesting it would become a far more tempting target if it finds a way to better offset expected sales declines of Plavix.

Under Bristol-Myers’ revised deal with Otsuka, its longtime neuroscience partner will begin participating in Bristol-Myers’ oncology business, with an option to co-market its Sprycel leukemia drug and to help further develop Bristol’s Ixempra breast cancer medicine.

Sprycel, introduced in 2006, has annual sales of about $300 million and is still growing at a fast clip. Ixempra, recently launched in the United States, had sales last year of $101 million. Bristol-Myers last month withdrew its European marketing application for Ixempra, given regulatory concerns whether its benefits outweigh its risks.

Under the revised licensing agreement, Bristol-Myers said it will pay Otsuka $400 million cash upfront.

Bristol-Myers, now entitled to 65 percent of U.S. Abilify sales, will see its share decline to 58 percent in 2010, to 53.5 percent in 2011 and 51.5 percent in 2012, under the new terms. But Otsuka, which currently shoulders no expense for marketing Abilify, will be responsible during the period for 30 percent of such costs.

Beginning January 2013, Bristol-Myers will receive half of all net Abilify revenue, up to $2.7 billion of the drug’s sales, and a declining share of sales above $2.7 billion. Otsuka will assume half of Abilify marketing expenses during the same period.

Bristol-Myers reaffirmed it expects full-year 2009 earnings per share of $1.58 to $1.73 and compounded annual earnings growth of 15 percent between 2007 and 2010. (Reporting by Ransdell Pierson; Editing by Muralikumar Anantharaman)

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