Bristol-Myers Ponies Up for Elotuzumab

Includes: BMY, PDLI
by: Eben Tessari

Bristol-Myers Squibb (NYSE:BMY) and PDL BioPharma (NASDAQ:PDLI) announced an agreement for the global development and commercialization of PDL BioPharma’s anti-CS1 antibody, elotuzumab (HuLuc63), currently in Phase I development for multiple myeloma.

Does someone have some cash burning a hole in their knickers? BMS has been on fire in the last six months divesting non-core assets, buying small innovative oncology companies (Kosan), bidding for larger partners (ImClone) and now licensing promising mAb’s. The terms here are pretty rich:

$30MM upfront
80/20 development cost sharing
$480MM in development milestones
$200MM in sales milestones (in MM and other indications)
50/50 profit split in US with WW royalty

BMS also has an option to add another CS1 compound (PDL241) to the mix upon inspecting pre-clinical results. That option would drop another $15MM upfront into PDL’s pocket and another $230MM in milestones with the same profit sharing as above).

PDL brought in some hefty upfront and potential cash in the deal but I think they key here, and what makes it such a great deal for PDL, is the risk aversion. PDL only contributes 20% of development costs while raking in 50% of the US profits. Again, pretty sweet deal for PDL.

Want to out-license an oncology product?  Call BMS.

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