April 6 (Bloomberg) -- Bristol-Myers Squibb Co. agreed to pay Otsuka Pharmaceutical Co. $400 million and share revenue from two cancer treatments in return for a 30-month extension on the antipsychotic Abilify.

Bristol-Myers currently receives 65 percent of U.S. sales from Otsuka’s Abilify. The share totaled $2.15 billion last year, making the product the company’s second-best-selling drug. Under the new agreement, the portion will drop to 58 percent in 2010, 53.5 percent in 2011, 51.5 percent in 2012 and about 50 percent from then until the pill loses patent exclusivity in 2015, Bristol-Myers said today in a statement.

The deal helps Bristol-Myers reduce the severity of its so- called patent cliff in 2012, when the contract to sell Abilify in the U.S. was due to expire and patent protection ends on its best-selling product, the Plavix blood thinner, which generated $5.6 billion in revenue last year. The drugmaker, based in New York, has said it has $9 billion in cash and is shopping for products to add to its pipeline.

The agreement with Tokyo-based Otsuka “will help build our earnings base for 2013 and transition us to an expected period of growth in 2014 and beyond,” said Lamberto Andreotti, Bristol-Myers’s recently named president and chief operating officer, in the statement.

Otsuka will pay 30 percent of Abilify’s costs until 2013, when the closely held drugmaker will pay 50 percent. Before the new agreement, Otsuka paid none of the costs of selling the medication, according to the statement.

Favors Bristol

“The structure of the deal, while somewhat complex, appears to favor Bristol-Myers Squibb,” said Seamus Fernandez, an analyst at Leerink Swann & Co. in Boston, in a note to clients. The deal helps Bristol-Myers “significantly reduce the severity of its patent cliff in 2013 and 2014,” and helps it expand worldwide marketing of Sprycel, he said.

Bristol-Myers rose 34 cents, or 1.7 percent, to $20.51 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have declined 7.6 percent in 12 months, compared with a 24 percent drop in the Standard & Poor’s 500 Health Care Index.

Bristol-Myers expects to increase earnings by 30 cents a share in 2013 and 2014. The company reiterated its Jan. 27 forecast for 2009 net income of $1.58 to $1.73 a share, or as much as $2 a share excluding certain items, according to the statement.

Otsuka will also help promote Bristol’s leukemia treatment Sprycel in the U.S., Europe and Japan, according to the statement. Otsuka will cover some costs related to selling the drug, and Bristol will pay Otsuka fees based on its sales of Sprycel and the breast cancer drug Ixempra beginning in 2010.

Tiered Fees

Bristol-Myers will pay Otsuka 30 percent of the first $400 million in combined sales of Sprycel and Ixempra from the U.S., Europe and Japan, the company said on a conference call today. It will pay 5 percent of the following $200 million in sales, with a tiered structure of declining fees thereafter.

“Abilify is a very exciting product that has helped many patients with serious psychiatric disorders,” Tracy Furey, a Bristol-Myers spokeswoman, said in a telephone interview. “The company is very excited to have the opportunity to continue to work on Abilify.”

Bristol-Myers and Paris-based Sanofi-Aventis SA share profits of the anti-clotting drug Plavix, the world’s second- biggest-selling drug, and of the hypertension treatment Avapro.

To contact the reporters on this story: Tom Randall in Orlando, Florida at trandall6@bloomberg.net.

Last Updated: April 6, 2009 16:34 EDT