Millennium's P&L-Based Strategy and the Ortho/J&J Deal

Executive Summary

Thanks to a disappointing set of sales numbers and a relatively small upfront fee from its new partner on the recently launched anti-cancer drug, Velcade, investors are once again wondering whether Millennium really has figured out how to be a commercial operation, not a discovery company. But in fact the deal it signed with Johnson & Johnson's Ortho Biotech unit-for ex-US marketing of Velcade is one of several recent signals that the company has focused itself firmly on the new valuation metrics: real earnings growth. The deal structure flies in the face of the most common measures of deal value, and could be as revolutionary in its implications as Millennium's discovery deals had been.