AEGiS-WSJ: Bristol-Myers's Earnings Decline 3.4% - Cornelius Leaves Door Open to Sale; Pfizer Collaboration

Important note: Information in this article was accurate in 2007. The state of the art may have changed since the publication date.

Bristol-Myers's Earnings Decline 3.4% - Cornelius Leaves Door Open to Sale; Pfizer Collaboration

Wall Street Journal - April 27, 2007
Sarah Rubenstein, sarah.rubenstein@wsj.com

James Cornelius began his tenure as permanent chief executive at Bristol-Myers Squibb Co. by signing a drug-development deal with Pfizer Inc., announcing first-quarter earnings and telling investors that he is trying to run the company as an independent business.

But he left the door open to selling the New York drug maker, saying in an interview that a current review of the company's strategic alternatives "doesn't mean selling the business necessarily."

Expectations of a takeover have lifted the company's shares in recent months. Shares of Bristol-Myers, which closed Wednesday at a 52-week high, slipped 47 cents yesterday, or 1.6%, to $29.23 in 4 p.m. New York Stock Exchange composite trading.

In a note to investors, Barbara Ryan, an analyst at Deutsche Bank, called Mr. Cornelius's now-permanent role "a purely cosmetic move to minimize the distractions/questions created by his interim status."

Bristol-Myers insists it is pushing ahead. In an interview, Mr. Cornelius said the company is more than halfway through its strategic review, which includes exploring an acquisition or more partnerships with big drug makers. "AstraZeneca's made a very bold move," Mr. Cornelius said, referring to that company's announcement it would acquire MedImmune Inc.

As for a sale of Bristol-Myers, Mr. Cornelius said that the review has "no sacred cows." He said he doesn't anticipate a radical change to Bristol-Myers's overall strategy of focusing on diseases treated by specialist physicians, such as cancer and HIV, while maintaining a smaller sales force for primary-care medications.

In the deal announced yesterday, Pfizer will pay Bristol-Myers as much as $1 billion to collaborate on apixaban, Bristol-Myers's anticlotting drug that is in late-stage trials. The deal is similar to one Bristol-Myers announced with AstraZeneca PLC in January for two drugs in Bristol's pipeline for Type 2 diabetes. Bristol-Myers says such deals help reduce risks associated with drug development while allowing the company to take advantage of its partners' primary-care sales resources.

Bristol-Myers announced first-quarter profit of $690 million, down 3.4% from $714 million a year earlier. Sales fell 4.3% to $4.48 billion. The company raised its per-share earnings guidance for the full year to a range of $1.24 to $1.34, up from $1.12 to $1.22.

However, there is continuing fallout from the company's botched negotiations last year to protect the blood thinner Plavix from generic competition. The company said it received a subpoena this month from the antitrust bureau of the New York State attorney general's office seeking documents related to the proposed deal, adding to investigations already under way.

Bristol-Myers also continued to feel the brunt of a temporary launch of a generic version of Plavix that came in the wake of those negotiations, though the brunt was softer than analysts expected. Plavix sales fell 5% to $938 million in the quarter, about $300 to $350 million lower than they would have been without the generic launched by competitor Apotex Inc., the company estimated.
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