Bristol-Myers Squibb and Eli Lilly have ended a dispute over rights to a follow-on antibody to Erbitux , their best-selling oncology drug. The two pharmas will co-develop and co-commercialize the drug, necitumumab (IMC 11F8), in the U.S., Canada and Japan, while Lilly will have rights to the antibody in the rest of world.

Necitumumab became a bone of contention between the two companies when Lilly beat Bristol to the punch in purchasing ImClone for roughly $6.5 billion in 2008. Bristol already was partnered with ImClone on Erbitux and believed that the collaboration gave it rights to the follow-on compound which preceded Lilly's acquisition of the biotech.

"We're thrilled," a top Bristol executive anonymously told The Pink Sheet DAILY at the time of the Lilly/ImClone deal, which also required Lilly to pay Bristol a $1 billion break-up fee. "We don't give up any of our rights [to Erbitux or follow-on 11F8] (Also see "Lilly Snatches ImClone Away From Bristol" - Pink Sheet, 6 October, 2008.).

The companies each announced the resolution on their separate earnings calls, which both took place Jan. 28. They provided only scant details about their agreement, but in a follow up e-mail, Bristol clarified that under the restructured deal, it will pay 55 percent of costs for studies to be used only in the U.S. and 27.5 percent for global studies. Under the original deal for Erbitux, Bristol covered 60 percent of clinical development costs.

In the U.S. and Canada, Bristol would book sales of 11F8 if it reaches market and would keep 55 percent of the profits. The marketing costs in those two countries would be split evenly between the two firms. Likewise, in Japan, Bristol and Lilly will share commercialization costs and profits equally.

A fully humanized version of Erbitux, 11F8 entered a Phase III trial in non-small cell lung cancer late last year. Previously, the antibody produced "encouraging early results" in Phase II studies in lung and colorectal cancer, according to Bristol. It wouldn't estimate when Phase III results will read out.

Sales of Erbitux, an epithelial growth factor receptor blocker approved to treat irinotecan-refractory colorectal cancer and head-and-neck cancer, declined 9 percent to $683 million last year, Bristol reported. The decrease is partially because since July, FDA labeling requires Erbitux to be prescribed only to people who test negative for a genetic mutation known as K-RAS. (see: Also see "Bristol-Myers's Grand Ambitions in Oncology" - In Vivo, 1 November, 2009.

Bristol didn't say how important necitumumab could be to its oncology franchise, but one market analyst has projected that it could produce peak annual sales of about $300 million by 2015--hardly a blockbuster.

Onglyza quarterly sales total only $4 million

Bristol announced net product sales of $5.033 billion in fourth-quarter 2009, up 11 percent from one year earlier. Chairman and CEO James Cornelius attributed the strong performance partly to the company's increased focus on biopharma (Also see "Bristol Flying Solo As A Pure Biopharma After Mead Johnson Spin Out" - Pink Sheet, 16 November, 2009.).

Several Bristol products posted double-digit percentage sales increases during the fourth quarter, including the anti-depressant Abilify (aripiprazole), which grew 17 percent to $707 million for the quarter and 20 percent to $2.592 billion for the year.

Cornelius noted that Bristol in April 2009 extended its collaboration with the Japanese drug firm Otsuka, enabling it to sell Abilify for an additional 29 months to April 2015, when the drug goes off patent. "We expect that extension will be accretive by at least $0.30 per share in both 2013 and 2014 - probably when we need it the most," the CEO said (see: 'Bristol-Myers Squibb and Otsuka Stabilize their Bases,' IN VIVO, April 2009).

The Abilify deal will hardly be enough to make up for the loss of Bristol's top seller, Plavix (clopidogrel), which loses patent protection in 2012, and another best-seller, Avapro (irbesartan). But it's one of a series of steps Bristol is taking to make up the anticipated revenue shortfall. Net sales of Plavix totaled $1.618 billion for the fourth quarter and $6.146 billion for the year, both 10 percent increases over 2008.

Bristol is also hoping that sales of new products will kick in and make up at least part of the deficit. The strong performance of many of Bristol's well-established products could not, however, fully disguise the poor performance of its newest launch, the type 2 diabetes drug Onglyza (saxagliptin).Approved in the U.S. last July and in the EU in October, the DPP-4 inhibitor posted total sales of only $4 million during the fourth quarter, roughly $2 million apiece in the U.S. and EU. For the year, Onglyza sales totaled $24 million. By contrast, Merck projected 2009 sales of between $2.4 billion and $2.7 billion for its more established DPP-4 inhibitor, Januvia (sitagliptin), which has been on the market since 2006 ([A#0072003002]).

Bristol execs asked investors for patience regarding Onglyza, saying the company has only just begun marketing efforts for the drug. Along with partner AstraZeneca, the pharma plans to launch Onglyza in several key EU markets in the near term, acting CFO Charlie Bancroft said. He also attributed the sequential drop-off in Onglyza's fourth-quarter sales to inventory stocking that occurred during the third quarter.

"We are making steady progress in our launch; positive signs include improved access and reimbursement, increase in brand-awareness by physicians and positive trends in physicians' intent to prescribe Onglyza," he said.

Asked about the struggling launch, Bristol President Lamberto Andreotti asserted "Nobody should spend too much time on sales of Onglyza in 2009 ... the number of physicians that are trying Onglyza continues to increase, and those physicians who have prescribed Onglyza generally continue to prescribe it and one of the key areas of focus that we have is to increase the number of physicians who try because when they try, they continue." Over 40 percent of health plans that have adopted Onglyza have placed it on tier 2 of their formularies, he added.

The key to the drug's future, Andreotti said, is the high unmet need in type 2 diabetes, as 40 percent of patients have not achieved disease-control on their current therapy. He also touted the drug's efficacy and safety profiles and said Onglyza might play an important role as add-on therapy to metformin and other diabetes drugs. Execs said that the company has submitted a filing for fixed-dose Onglyza and metformin extended release.

String of pearls strategy to continue

During the call, Bancroft also noted that Bristol has almost $10 billion cash on hand and intends to continue its "string of pearls" merger and acquisition strategy - a major part of its plan for overcoming its patent cliff.

"We are focused on two types of deals, deals that can build our late-stage pipeline in 2011 and 2012 and deals that can be accretive in 2012-2013, after the loss of exclusivity on Plavix," he added. Bristol currently is assessing several opportunities, he said, and will continue to focus on "small and mid-sized acquisitions that either fit or complement our current portfolio of products."

-Joseph Haas (j.haas@elsevier.com)

BMS, Lilly Reach Agreement To Co-Develop Erbitux Follow-On

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