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June 20 (Bloomberg) -- Bristol-Myers Squibb Co. won a court ruling upholding the patent on its best-selling drug Plavix, renewing speculation the company may be a takeover target.
Potential suitors may include Sanofi-Aventis SA, Bristol- Myers's marketing partner on Plavix, as well as two drugmakers with agreements to develop experimental drugs, Pfizer Inc. and AstraZeneca Plc, said A.G. Edwards analyst Joseph Tooley.
A U.S. judge ruled yesterday the patent on Plavix, the world's third-best-selling drug, with $6.1 billion in 2006 revenue, was valid and enforceable. The court barred sales of cheaper copies for four more years. The ruling reassured prospective buyers that Plavix faces no immediate competitive threat, making Bristol-Myers more attractive, analysts said.
``With the Plavix decision settled, it lowers the uncertainty around your future revenue stream from Plavix, making the takeover more of a possibility than it was before the ruling,'' Tooley said in a telephone interview from his St. Louis office.
Assuming an 80 percent probability that Bristol-Myers will be bought over the next year, Roopesh Patel, an analyst with UBS Investment Research in New York, raised his target price to $35 from $33.
``We continue to view Bristol-Myers's takeout prospects as high and believe it could fetch a bid as high as $37,'' Patel said yesterday in a note to clients.
Shares Rise
The shares of New York-based Bristol-Myers fell 35 cents to $31.23 in New York Stock Exchange composite trading after a 4.2 percent increase yesterday. That was the biggest jump since a 4.7 percent gain on Jan. 29, after a French newsletter reported that the company was in talks to combine with Sanofi.
Bristol-Myers spokesman Tony Plohoros declined to comment on buyout speculation, as did Pfizer spokesman Raymond Kerins, Sanofi's U.S. spokesman Marc Greene, and AstraZeneca's U.S. spokeswoman Laura King.
U.S. District Judge Sidney Stein in New York blocked generic competition from the Canadian drugmaker Apotex Inc. The closely held company flooded the market with its Plavix copies in August, before Stein ordered a halt in the shipments. Stein said he will rule on how much Apotex must pay Bristol-Myers for infringing on the Plavix patent at a later, unspecified date. Apotex said it will appeal.
Plavix sales last year ranked behind those of Pfizer's cholesterol pill Lipitor, with $13 billion in revenue, and GlaxoSmithKline Plc's asthma drug Advair, with $6.13 billion.
Pfizer agreed in April to pay Bristol-Myers as much as $1 billion to jointly develop the blood thinner apixaban. The experimental drug is in the last stage of tests generally needed for U.S. regulatory approval.
Plavix Successor
``If Pfizer doesn't see adequate progress in its pipeline over the next year, we view a deal as more likely in order to blunt the impact of the Lipitor patent expiration in 2011,'' George Grofik, an analyst with Citigroup Global Markets in New York, said in a note to clients.
AstraZeneca agreed in January to pay Bristol-Myers as much as $1.35 billion to develop two diabetes drugs.
The most advanced of the medicines, saxagliptan, uses the body's own mechanisms to control blood sugar in a way similar to Merck & Co.'s Januvia, which won U.S. approval in October and analysts say may bring in $2.5 billion a year. AstraZeneca plans to seek U.S. clearance for saxagliptan next year.
The second product, dapagliflozin, may be the first in a new family of diabetes drugs that work by blocking the kidney's absorption of glucose and could be taken in combination with injected insulin or other oral medicines.
Larger U.S. Presence
For Sanofi, an acquisition of Bristol-Myers would provide a larger presence in the U.S. and expand product lines in diabetes, cancer and mental health, where both companies specialize, said Citigroup's Grofik.
Sanofi's recent setback over a U.S. regulatory panel recommendation that its obesity pill Acomplia not be cleared for sale ``may provide further impetus for an acquisition,'' he said.
GlaxoSmithKline Plc's uncertainty over future growth for its diabetes drug Avandia, linked to elevated risk of heart attacks in a prominent medical journal last month, may increase that company's motivation to do a deal with Bristol-Myers, Grofik said.
Today, the family of a Texas man who suffered a fatal heart attack while taking Avandia filed the first product-liability complaint over the drug. Lawyers for the family of Larry Stanford contend in their complaint in federal court in Marshall, Texas, that Glaxo officials knew preliminary studies raised questions about Avandia's ``cardiovascular safety profile.''
Glaxo executives failed to warn consumers and doctors about Avandia's health risks and wrongfully touted the drug as safe, according to the complaint.
Response to Lawsuit
``GSK stands firmly behind the safety of Avandia when it is used appropriately,'' Glaxo's U.S. spokeswoman Mary Anne Rhyne said in an e-mailed statement.
Bristol-Myers's stable of approved and experimental cancer drugs might attract Novartis AG, maker of the cancer drug Gleevec, Grofik said. Novartis's U.S. spokeswoman Sherry Pudloski declined to comment.
Two other developments for Bristol-Myers this month also may help boost interest among buyers, analysts said.
Bristol-Myers won accelerated U.S. review yesterday for its experimental breast-cancer drug ixabepilone, a new type of medicine for patients whose tumors have spread to other organs. The U.S. Food and Drug Administration may make a decision in October, the company said.
Last week, Bristol-Myers finished two years of probation over an accounting scandal, allowing the company to operate without federal supervision for the first time since a settlement with a U.S. attorney in New Jersey.
With the end of probation, ``the volume of chatter surrounding a potential bid for Bristol-Myers will likely rise,'' said Les Funtleyder, an analyst with Miller Tabak & Co. in New York, in a note to clients last week.
To contact the reporter on this story: Lisa Rapaport in New York at stephen@drinnonlaw.com
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