FirstWord Lists: An early postmortem of Bristol-Myers Squibb's 'String of Pearls' M&A strategy

With an eye on upcoming patent expirations for big-selling drugs like the blockbuster blood thinner Plavix, Bristol-Myers Squibb put in place an aggressive M&A campaign seven years ago designed to both expand and diversify the company's pipeline, while concentrating its efforts on areas of strength.

The endeavor, dubbed the "String of Pearls" programme, was launched by then-CEO James Cornelius (who later transitioned into the chairman's role) and embraced by Jeremy Levin, who joined from Novartis' global research organisation in the fall of 2007.

As the SVP of strategy, alliances and transactions, Levin took the ball and ran with it, executing almost 20 deals – including both partnerships and acquisitions – in the areas of cancer, cardiovascular disease, immunology, neuroscience and virology, before moving on to take the reins at Israeli drugmaker Teva at the beginning of 2012.

While not yet three years removed from Levin's departure, it would still be premature to make any conclusive judgments about the success of the strategy, but – not unexpectedly, given the unpredictable nature of the biotech industry – an updated look at the results of many of the deals suggests it has produced at least one big winner and quite a few losers.

The largest – and most successful – of Bristol-Myers Squibb's pearls is its $2.4-billion takeout of antibody maker Medarex in August 2009, which brought with it Yervoy (ipilumimab), an anti-CTLA-4 mAb that was in Phase III testing for melanoma and was the first of what has blossomed into one of the more productive immuno-oncology franchises in the industry.

In fact, Bristol-Myers Squibb has already recouped its investment in Medarex based on sales of Yervoy alone, which posted $360 million, $706 million and $960 million in full-year sales during its three years on the market (2011 to 2013), as well as $592 million in the first two quarters of 2014, adding up to a cumulative $2.6 billion.

Thus, Medarex might be considered a big win for Bristol-Myers Squibb based on the success of Yervoy, but that doesn't take into account for other products obtained in the deal, most notably anti-PD-1 mAb nivolumab, which was just approved in Japan and is predicted by analysts to be a major blockbuster.

On the other hand, many deals turned out to be nowhere near as successful as the Medarex transaction. Among those are the multiple arrangements with Exelixis, which have thus far resulted in several programmes (XL 184 and XL 281) being returned to the biotech and another (XL 139) that has progressed from preclinical to Phase Ib testing in the six years. A separate agreement to develop TGR5 agonists and ROR antagonists that was signed in late 2010 is still ongoing.

Others that seemingly flopped include acquisitions of cancer companies Adnexus (for $430 million) and Kosan (for $235 million), which have not lived up to expectations; as well as partnerships with KAI Pharmaceuticals (now part of Amgen) to develop delcasertib (formerly KAI-9803) for acute myocardial infarction, which was dropped in 2011 due to a lack of efficacy; a deal with Allergan to develop AGN-209323 for neuropathic pain, which was dropped in 2013; and an agreement with Alder Biopharmaceuticals for exclusive rights to clazakizumab, which the pharma returned last week.

Bristol-Myers Squibb also bought partner ZymoGenetics, with which it was developing PEG-interferon lambda under a 2009 deal, for $885 million in 2010. However, the company subsequently discontinued the programme and sold off the marketed surgical bleeding drug Recothrom to The Medicines Co. in late 2012.

String of Pearls was not all about bulking up and expanding the company's footprint, however, as Bristol-Myers Squibb dispensed with certain franchises that it felt the company was not strong enough to compete. Among these was the divestiture of its medical imaging business to private equity firm Avista for $525 million in late 2007 and the sale of its ConvaTec wound, ostomy and skin care unit to private equity firms Nordic Capital and Avista for $4.1 billion in 2008. Bristol-Myers Squibb also disposed of its branded generics business in certain emerging markets, and spun off its nutritions business.

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