Analysts not sure BMS is for sale

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A federal judge's decision yesterday to uphold the patent on blood thinner Plavix has revived speculation that the drug's co-marketers could join forces. Analysts, however, cast doubt on the idea that Bristol-Myers Squibb would merge with its larger partner Sanofi-Aventis.

US District Judge Sidney Stein said that BMS and Sanofi are entitled to a permanent injunction barring generic drug firm Apotex, which had brought the challenge, from infringing on its patent. Apotex faces no significant damages for its at-risk launch, since ex-Bristol CEO Peter Dolan negotiated away those rights in a settlement which was designed to keep generic Plavix off the market but fell apart. Thanks to the ruling, though, and the recent sunset of a two-year federal probation period that had weighed on BMS, rumors are once again flying of a takeover.

Meanwhile, a recent setback for Sanofi could push the Franco powerhouse to acquire new products via buyout: last week’s rejection by an FDA advisory panel of its experimental obesity drug Zimulti, once deemed a possible $3 billion-a-year blockbuster.

New CEO James Cornelius may be more comfortable going it alone. Why? He just signed drug-development deals with Pfizer and AstraZeneca. "The fact that some of Bristol’s interesting products had already been licensed out undercut its value as a pipeline-booster for Sanofi," said an analyst with Aurel Leven who was quoted by Reuters.

Bristol management also may feel less pressure to sell out given the success of newer drugs like Abilify for schizophrenia, Orencia for rheumatoid arthritis and Sprycel for cancer, Reuters pointed out. Sanofi management, on the other hand, aren’t in agreement that a deal makes sense. "Chief Executive Gerard Le Fur is said to be cool to the idea."

Besides, wrote Forbes, a sale by Bristol "would run the risk of derailing the company’s pipeline." The firm recently launched medicines for rheumatoid arthritis and leukemia, and yesterday it received FDA six-month review status for a new chemotherapy for breast cancer (ixabepilone). Diabetes and breast cancer compounds are in development. Moreover, with its legal woes in the rearview mirror, "Bristol could look attractive to other pharmaceutical companies, like AstraZeneca, GlaxoSmithKline or Pfizer, leading to a bidding war."

Prevailing wisdom prior to the Plavix ruling held that BMS and Sanofi had a strong case in the patent trial. And there is a "slight chance" Apotex could win on appeal. The good news, however, "strengthens the opportunity for management at Bristol to reassess an independent future," said a Mehta Partners analyst quoted by Reuters.

Patent protection on Plavix runs until November 2011. The drug had annual US sales of nearly $4 billion before the Apotex generic was launched and global sales of $6 billion.

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