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Bristol-Myers Squibb (BMS) made a presentation this morning at the Credit Suisse Healthcare Conference that showed the company plans on saving an additional $2.5 billion in “productivity initiatives.” According to its new CFO, the company plans to squeeze the savings out of “headcount and related costs” — which  likely means more downsizing and layoffs.  Rumors have it that these job cuts will take place by December 1, 2008 just prior to when employee bonuses are traditionally decided.

To make matters worse, the Pharmalot blog reported today  that "the drugmaker earlier this week sent a voicemail to employees saying a 2 percent cost of living increase will be given this year to those who are meeting or exceeding performance standards."  The announcement has lead to speculation among BMS employees whether or not the same ceiling will be applied to the bonuses and stock rewards handed to Bristol-Myers CEO Jim Cornelius and members of his executive team.

Heavy losses incurred  by its former CFO who "bet the store" on mortgage-backed securities coupled with the recent, highly publicized failure of Jim Cornelius to purchase ImClone (to gain complete control over the multi-billion dollar Erbitux franchise) suggests that the future of the company may be in serious jeopardy.

Until next time…

Good Luck and Good Job Hunting!!!!!!!

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After months of melodrama and acrimonious exchanges between Jim Cornelius and Carl Icahn, Eli Lilly, not Bristol-Myers Squibb, will acquire ImClone and gain access to the multibillion Erbitux franchise. In the end, Carl Icahn, ImClone’s Chairman, got the $70 per share that he wanted for ImClone stock.

BMS’s reluctance to purchase ImClone at the $70 per share price is puzzling. The Pharmalot blog reported that Jim Cornelius, BMS’s CEO, released the following statement after the ImClone/Lilly deal was finalized “We are pleased to have initiated a process that has resulted in the substantial increase of ImClone’s value for all of its stockholders. Perhaps Bristol-Myers has made a comfortable bid for ImClone which would be, in our view, very attractive to the company. If however, it did not succeed then it can liquidate its stake at a premium.” This makes about as much sense as Sarah Palin’s explanation of the factors responsible for global warming—the amount of money that BMS would garner if it liquidates its 16% stake in ImClone would pale in comparison to revenues that would annually accrue from Erbitux sales. Apparently I am not alone in my thinking. According to a financial analyst “the stake’s value independent of full ownership of IMCL is NOT strategic, and gets BMY nothing,”

In my opinion, Jim Cornelius’s failure to acquire ImClone (at any cost) has jeopardized BMS’s future. He had the opportunity to right the wrongheaded licensing deal that his predecessor Peter Dolan entered into with ImClone. The inability of BMS to retain at least partial ownership of its flagship biotechnology product doesn’t bode well for a company that is trying to reinvent itself as a “next generation biopharma company”—if there is a next generation at BMS.

 Until next time…

Good Luck and Good Job Hunting!!!!!!!

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Bristol-Myers Squibb announced earlier today that its Board of Directors approved a deal to purchase ImClone for $4.5 billion. BMS already owns about 17% of ImClone’s shares and is ImClone’s US marketing partner for Erbitux, a monoclonal antibody treatment for colorectal and head and neck cancers. BMS bought Kosan Biosciences earlier this year for $195 million.

The ImClone offer comes after an announcement late last week from CEO Jim Cornelius who said that there will likely be more job cuts at BMS to keep pace with the company “productivity transformation initiative.”  Earlier this year, BMS sold ConvaTec, its wound care and medical device subsidiary for $6.5 billion which will likely provide BMS with the monies necessary to complete the ImClone purchase.

The acquisition makes sense for BMS because of its campaign to re-invent itself as a “next generation biopharma company.” Currently, BMS’s biotechnology roster consists of only two drugs: Erbitux (which was developed by ImClone and licensed by BMS) and Orencia a treatment for rheumatoid arthritis. That said, BMS has several monoclonal antibodies and other biotechnology drugs in its pipeline. I think that the purchase of ImClone makes BMS more attractive as a takeover target for Sanofi-Aventis or another major pharmaceutical company itching to get into the biotechnology frenzy.

BMS’s purchase of ImClone closes the book on a steamy and oft times nefarious drug development saga that I assume both companies would like to forget. As you may recall, in 2001, Peter Dolan, then CEO of BMS, cut a questionable licensing deal (and made a $2.0 billion investment in ImClone) for marketing rights to Erbitux. At that time, Sam Waksal, one of ImClone’s founders, was CEO of the company.  Shortly after the deal, BMS researchers discovered that the clinical trials data that were used to convince BMS that Erbitux was a treatment for colorectal cancer were flawed.  Because of this, BMS was forced to invest hundreds of millions of dollar and spend several more years before it would ultimately win regulatory approval for Erbitux.  Meanwhile, before the deal was finalized, Waksal, seeing a huge financial upside, engaged in insider trading of ImClone’s stock. Later, he disclosed that he needed the money to cover the enormous debt that he incurred because of his high profile NYC lifestyle. Ultimately, Waksal and his close friend Martha Stewart plead guilty to insider trading of ImClone stock and spent several years in prison.

Ironically, the acquisition of ImClone by BMS is something of a vindication for former CEO Peter Dolan. At the time that Dolan cut the deal with ImClone, many Wall Street analysts and industry insider thought that Dolan paid an excessive amount for Erbitux which was clinically unproven. Ultimately, Dolan was ousted as CEO after it was learned that he cut an illegal deal with Apotex, a Canadian generics manufacturer, to delay release of generic versions of its anti-clotting drug Plavix (co-marketed with Sanofi-Aventis) after expiry of Plavix patents in 2010.

The BMS-ImClone deal is one of several big M &A deals that have recently taken place as a result of financially-troubling times. Don’t expect consolidation in the pharma and biotechnology industries to subside any time soon!

Until next time….

Good Luck and Good Job Hunting!!!!!!!

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