Amylin May Draw Suitors After Rejecting Bristol-Myers

Amylin Pharmaceuticals Inc., maker of the diabetes drug Bydureon, may draw bids from other suitors after rejecting a $3.5 billion unsolicited takeover offer from Bristol-Myers Squibb Co. earlier this year.

Drugmakers from AstraZeneca Plc to Sanofi may be better equipped than Bristol-Myers to sell Amylin’s medicines and could make higher offers, said Joshua Schimmer of Leerink Swann. Bristol-Myers proposed an acquisition at $22 a share, which Amylin’s board turned down last month, according to two people with knowledge of the matter who declined to be identified because the approach was private.

Amylin may be worth as much as $31 a share, said Robyn Karnauskas, an analyst with Deutsche Bank. The San Diego-based company received regulatory approval for Bydureon, a once-weekly formulation of the earlier diabetes drug Byetta, in January and the therapy may draw $1.5 billion in peak annual sales in the U.S., Karnauskas said.

“The question is who can extract the most value, because this is all a commercialization story from here,” Schimmer said today in a telephone interview. “There are much bigger commercial organizations and companies that probably more than Bristol need to augment their franchises.”

Amylin jumped 54 percent to $23.77 at the close in New York for the biggest single-day increase since August 1999. The shares have more than doubled in the last 12 months. Bristol-Myers, based in New York, was unchanged at $33.67, and has gained 25 percent in the last 12 months.

Jennifer Mauer, a spokeswoman for Bristol-Myers, and Alice Izzo, a spokeswoman for Amylin, declined to comment.

AstraZeneca’s Strategy

AstraZeneca may see Amylin as an appealing target to help expand its diabetes assets, Tim Anderson, an analyst with Sanford C. Bernstein, said earlier this month. He cited the London-based drugmaker’s “subscale presence in diabetes” and its need for “late-stage/approved assets to help fill in the gaps left open by a lagging pipeline and ongoing future patent expiries.”

Bristol-Myers’s bid doesn’t negate the possibility of AstraZeneca making an offer for Amylin, Anderson said in a note to clients today.

“We’re active in looking at assets that are complementary with our disease area focus and our strategy, but of course we don’t comment on specific rumors or speculation,” Sarah Lindgreen, a spokeswoman at AstraZeneca, said in an interview.

Bristol-Myers makes sense as an acquirer of Amylin, Deutsche Bank’s Karnauskas said.

Deal Makes Sense

“The deal does not come as a surprise to us,” she said, citing prescription trends indicating Bydureon is selling well initially. “There are significant potential expense synergies.”

Bristol-Myers’s offer price is 43 percent more than Amylin’s closing stock price yesterday of $15.39. The $3.5 billion figure, based on 160.8 million Amylin shares outstanding, excludes debt.

The drugmaker hasn’t approached Amylin since the rejection of its bid made in a letter to the board, said the people familiar with the matter. Amylin is focused on finding a marketing partner for its products outside the U.S. and is speaking with several drug companies, the people said.

International Partner

Amylin has sought a partner to help market Bydureon outside the U.S. since November, when it ended a collaboration with Eli Lilly & Co. Takeda Pharmaceutical Co., Paris-based Sanofi and Merck & Co., the second-largest U.S. drugmaker, are among companies doing diligence on a potential partnership, according to the people.

Elissa Johnsen, a spokeswoman for Osaka, Japan-based Takeda, Marisol Peron for Sanofi and Ian McConnell of Merck, in Whitehouse Station, New Jersey, declined to comment.

Rejecting Bristol-Myers’s takeover offer may make it more difficult for Amylin to forge a partnership instead of selling the company, Schimmer said.

“It does kind of handcuff Amylin,” he said. “At this valuation and with this information in the public domain, management will have a hard time justifying an extreme level of downside to shares, which would almost certainly come from an ex-U.S. partnership.”

Investors have speculated Amylin’s shares may fall to $12 if the company made a partnership to market the drug now, Schimmer said.

Industry Acquisitions

There have been 16 acquisitions greater than $1 billion of biotechnology companies in Amylin’s peer group in the last five years, according to data compiled by Bloomberg. The average disclosed size was $8 billion, with an average premium of 35 percent, the data show.

At $3.5 billion, Amylin would be the largest of 19 deals amassed by Bristol-Myers under its “string of pearls” acquisition strategy since 2007. The drugmaker, losing patent protection for three of four top medicines within three years, agreed in January to buy Inhibitex Inc. for $2.5 billion to gain experimental hepatitis C drugs.

Along with diabetes, Bristol-Myers is focusing on Alzheimer’s, cancer, obesity, HIV and other diseases. The company sells Onglyza for Type 2 diabetes, which drew $473 million in revenue last year, and Avapro, for high blood pressure and kidney disease caused by diabetes, with $952 million in 2011 sales.

Amylin’s revenue has declined for the last three years as Byetta faced competition from Novo Nordisk A/S’s Victoza, driving shares down 69 percent from a high of $51.43 in August 2007. The company, with $650.7 million in revenue last year, had $496 million in long-term debt, a $924.3 million promissory note related to revenue sharing, and $204.1 million in cash, equivalents and short-term investments as of Dec. 31, according to a February statement.

Amylin also sells Symlin, for use with insulin in Type 1 or Type 2 diabetes. Bristol-Myers, with a market value of about $57 billion, had $11.6 billion in cash, equivalents and marketable securities and $5.38 billion in long-term debt as of Dec. 31, the company said in a January statement.

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