Seeking edge in oncology, Bristol-Myers bets big on blood cancer, cell therapies
Already a leader in therapies for solid tumors, Bristol-Myers Squibb's $74 billion bid for Celgene and its blood cancer business could help the big pharma in its rivalry with oncology powerhouse Merck & Co.
Sales of Merck's cancer immunotherapy Keytruda (pembrolizumab) for the first time recently surpassed Bristol-Myers' Opdivo (nivolumab), boosted by first-line lung cancer indications Opdivo has yet to secure.
A more diverse pipeline may hand Bristol-Myers a stronger position in oncology overall, especially because neither company has put much attention toward cell therapies, an area many consider as the next frontier in cancer drug development.
The acquisition would be one of the industry's largest ever, and bring together four blockbuster cancer treatments in Bristol-Myers' Opdivo and Yervoy (ipilimumab) and Celgene's Revlimid (lenalidomide) and Pomalyst (pomalidomide).
The combined company would also sport one of the deepest oncology pipelines across pharma — with 31 experimental medicines in Phase 1 and Phase 2 testing and another eight in Phase 3. The medicines target an array of diseases, such as multiple myeloma, chronic lymphocytic leukemia and lung cancer.
"When you think about our presence in oncology, we have a number of really exciting platforms," said Bristol-Myers CEO Giovanni Caforio during a Jan. 3 conference call, "and by adding cell therapy now, we have significantly broadened our opportunity to participate in the growth and evolution of the oncology market."
Over the last few years, Celgene leadership has earmarked five candidates in its pipeline that are forecast to offset looming generic competition to Revlimid, which accounts for roughly 60% of the biotech's revenue. Among the five drugs are two CAR-T therapies: bb2121 for multiple myeloma and JCAR017, also known as liso cel, for blood cancers.
Bristol-Myers is paying close attention to those cell therapies as well. Terms of the acquisition hold that Celgene investors are eligible for a $9 per share contingent value right should bb2121, liso cel and an experimental Celgene drug for multiple sclerosis called ozanimod win approval by specified dates. The deadline for bb2121 is March 31, 2021; for liso cel it is Dec. 31, 2020.
Dane Leone, an analyst at Raymond James, argued in a Jan. 3 investor note there's less concern about liso cel and bb2121 hitting their deadlines compared to ozanimod. The bb2121 approval is particularly less risky due to encouraging early data and the upcoming readout of the pivotal KarMMa trial.
Celgene has predicted peak annual sales of $3 billion for liso cel and more than $2 billion for bb2121. Some analysts, however, are more cautious. Raymond James has noted its outlook for key new Celgene products is $2.9 billion lower than the company's estimates, largely because of its $1.2 billion peak sales prediction for liso cel.
The investment bank forecasts total Celgene revenue for 2023 of around $23 billion, higher than the sell-side consensus of around $21.3 billion.
Bristol-Myers, meanwhile, predicts the deal will be immediately accretive to revenue following closing and generate $45 billion in free cash flow over the first three years of the deal.
Cancer tie-up fuels confidence
Wall Street analysts were also largely positive about the deal.
Jefferies' Michael Yee wrote in a Jan. 3 investor note the companies have "complimentary synergy" in oncology and immuno-oncology, given Bristol-Myers' experience in solid tumors and Celgene's blockbuster blood cancer business. He noted too that Merck and Pfizer would have made sense as buyers due to them having no major overlapping competitive products with Celgene.
Bristol-Myers doesn't have Celgene in hand just yet. Leerink's Geoffrey Porges argued that because the deal's value hinges on the big pharma's stock price, Bristol-Myers shareholders may question the acquisition should that price dip too low. Bristol-Myers shares were down nearly 15% to $44.40 apiece in mid-morning trading Thursday.
Aside from that risk, Porges found there's not much standing in the way of the deal closing, expected sometime in the third quarter if all goes according to plan.
"The deal generates tremendous immediate-term value that we believe would have taken years for Celgene to achieve," he wrote in a Jan. 3 note. "It also distances Celgene investors from the management of Celgene, which has made multiple errors over the precious 2 years, and moves the assets, in our view, into the more capable hands at Bristol."
- BioPharma Dive Bristol-Myers to buy Celgene in industry-shaking $74B deal
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