Bristol-Myers Squibb Shares $375 Million Deal with Merck for Diabetes Drug.

Byline: Lewis Krauskopf

Apr. 29--Bristol-Myers Squibb Co. said Wednesday it agreed to share rights to its promising diabetes drug with Merck & Co. for as much as $375 million, reflecting what CEO Peter Dolan described as a strategic shift.

The deal, which came as Bristol announced a 22 percent rise in first-quarter profits, means the two New Jersey companies will now jointly develop the clinical and marketing plans for Muraglitazar, now in the final phase of study, and share future costs. Both companies would promote the drug.

In recent years, Bristol has raked in money from mass-market products such as the cholesterol treatment Pravachol and diabetes pill Glucophage. But as patents expire on those drugs, Bristol plans to replace them with treatments in more specialized areas, such as neurology, HIV, and hepatitis, shifting where the company places its sales and marketing resources.

"This collaboration is consistent with our new strategy of focusing on specialists and high-prescribing, primary-care physicians, and when appropriate, partnering to unlock the full potential of our productive pipeline, particularly products that require maximum presence with a primacy care audience to be fully competitive," Dolan told analysts on a conference call.

Smaller companies commonly strike deals with large drug companies to help fund and market their promising medicines, but such arrangements are rare between companies considered peers in size, such as Bristol and Merck.

Bristol, which employs more than 8,000 people in New Jersey, will receive $100 million up front from Merck, and $275 million more should the product reach certain sales goals. The drug could be approved next year.