Albany Molecular Research Inc. signed a letter of intent with Bristol-Myers Squibb Co. to replace and consolidate Albany’s Molecular’s original agreement with DuPont Pharmaceuticals Co., in addition to signing a new agreement giving BMS access to AMRI’s natural products library.
Milestones from the deal potentially could reach $7 million per compound.
The letter of intent, expected to be finalized by the quarter’s end, includes a new, three-year, multimillion-dollar agreement whereby Bristol-Myers Squibb will fund 30 fewer scientists than was called for in the original agreement with DuPont, but that continues the chemistry-based drug discovery and development services for Bristol-Myers’ pharmaceutical research and development programs.
“We are excited to continue the relationship with Bristol-Myers Squibb,” said AMRI Chief Financial Officer David Waldek.
The original agreement was made in 1998 with DuPont, of Wilmington, Del., which was acquired by Bristol-Myers, of New York, in October. The agreement was expanded in November 1999, and reportedly was valued at $8 million for 2000 and up to $10 million each year thereafter for AMRI, of Albany, N.Y. (See BioWorld Today, Nov. 15, 1999.)
In November, AMRI reported that Bristol-Myers had decided to begin termination of the relationship, but the companies instead formed an entirely new agreement. “Both Albany Molecular and Bristol-Myers wanted to continue the relationship that had been started with DuPont,” Waldek said, noting that AMRI already had a “small relationship” with Bristol-Myers prior to its acquisition of DuPont.
In return for funding fewer scientists at AMRI, Bristol-Myers agreed to make an up-front paymentof $1 million to the company, Waldek said.
The agreement also calls for Bristol-Myers to transfer intellectual property to AMRI, giving it ownership of one of Bristol-Myers’ late-stage preclinical drug candidates, along with a patent estate in attention deficit hyperactivity disorder and central nervous system indications. AMRI will be able to license that to a third party or to develop the compound on its own.
“We will look to license outward to another company,” Waldek said, noting that it will be “a company that has the ability to bring the drug candidate to market,” although a specific one has not been identified.
In return, AMRI is immediately granting warrants that would allow Bristol-Myers Squibb to purchase $500,000 in AMRI stock, and may issue warrants for another $2.5 million, depending on factors including whether AMRI licenses out the BMS compound within 18 months or develops it on its own.
“This contract fits into our corporate strategy,” Waldek said, noting that AMRI had total revenues in 2001 of just under $100 million, and the new deal adds contract revenue growth as called for in its strategy.
“In 2001, we signed six deals in total that have provisions where we have potential for milestone or royalty payments,” Waldek said. “We are providing drug discovery services, and the hope on [the part of] both parties is that a drug candidate will eventually make it to market.”
Separately, the companies entered a three-year research and licensing agreement whereby AMRI provides Bristol-Myers with access to some of the extracts and compounds from its natural products collection, on which Bristol-Myers will conduct biological testing in its assays. Going forward, Bristol-Myers also could select extracts for which AMRI may provide additional chemistry support, at Bristol-Myers’ option.
In addition to a fee-for-service agreement and an up-front technology access fee, milestone payments to AMRI could range from $500,000 to $7 million per compound, plus royalties. Specific financial terms were not disclosed.
AMRI will provide up to 80,000 extracts from its Diversity Library, which includes microorganisms from terrestrial and marine environments, and 1,000 compounds from its ChemoFocus library. For each pure compound Bristol-Myers selects, AMRI may provide additional medicinal chemistry applications, as well as its combinatorial biocatalysis technology, microbiology or computational chemistry.
AMRI’s stock (NASDAQ:AMRI) gained $2.70 Tuesday, or 11.5 percent, to close at $26.20.