Bristol-Myers Squibb Company BMY announced its intention to transfer its rights to the oncology drug, Erbitux, in North America, including the U.S., Canada, and Puerto Rico to Eli Lilly and Company LLY. The rights include full commercialization and manufacturing operational responsibilities among others. The transaction is expected to be completed in the fourth quarter of 2015.
As per the terms of the agreement, Bristol-Myers will receive tiered royalties based on net sales of Erbitux in North America after the completion of the transition through Sep 2018. Financial details related to this transfer of rights have not been revealed.
Erbitux is indicated for the treatment of certain advanced colorectal (including KRAS/wild-type, epidermal growth factor receptor-expressing, metastatic colorectal cancer) and head and neck (including locally or regionally advanced squamous cell carcinoma of the head and neck) cancer in combination with other treatment regimens or as a single agent. As per Bristol-Myers, the product generated revenues of $723 million in 2014.
We note that earlier this year, Bristol-Myers had agreed to transfer full responsibility for the promotion of Erbitux to Merck KGaA MKGAF in Japan as of May 1, 2015.
We believe that these deals are in line with Bristol-Myers’ strategy of focusing on immuno-oncology, across both solid tumors and hematologic malignancies. Bristol-Myers has been looking to combat the generic threat hanging over its key drugs through partnering deals and acquisitions and introducing new products to augment its product portfolio. Bristol-Myers is highly active on the deal signing/ acquisition front.
Bristol-Myers is a Zacks Rank #3 (Hold) stock. Valeant Pharmaceuticals International, Inc. VRX is a better-ranked stock in the health care space carrying a Zacks Rank #1 (Strong Buy).
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