The last day of 2020 came and went without a decision by the Food and Drug Administration on approval of a closely watched cancer cell therapy owned by Bristol Myers Squibb.
While the FDA's review of the therapy, known as liso-cel and developed for the treatment of late-stage lymphoma, continues, Dec. 31 was a crucial deadline for investors holding a tradable security issued by Bristol Myers as part of its $74 billion acquisition of Celgene two years ago.
The security — a deal sweetener for Celgene investors — promised payouts from Bristol Myers if liso-cel and two other drugs formerly owned by the biotech won U.S. approval by certain dates. Were all three to secure FDA backing on time, Bristol Myers pledged to pay those shareholders roughly $6 billion more.
But with no decision on liso-cel by Dec. 31, the agreement terminated and trading of the so-called contingent value right on the New York Stock Exchange was halted.
For holders of the CVR, the missed deadline punctures an unusual all-or-nothing bet that provoked close tracking of the FDA's review process, down to stalking of agency inspectors visiting a plant involved in the drug's manufacture. And for liso-cel, it's another bump in what's proven to be a long road through development first by Juno Therapeutics, then by Celgene and finally Bristol Myers.
Liso-cel is a CAR-T cell therapy, a personalized type of cancer treatment that consists of a patient's own immune cells, extracted and then genetically engineered to target tumors. In liso-cel's case, the target is a protein often found on malignant B cells in lymphoma.
Juno, a Washington-based biotech bought by Celgene in 2018, developed liso-cel through early clinical testing, and at one point was considered a frontrunner in CAR-T cell therapy. But by the time of the Celgene acquisition, Juno had been beaten to market in lymphoma by rival Kite Pharma and, soon after, Novartis.
A year after the Juno deal, Bristol Myers swallowed Celgene and promised to quickly submit liso-cel for FDA approval. Yet, uncertain of the drug's prospects, the pharma negotiated with Celgene to link approval of liso-cel to a three-in-one CVR agreement that promised $9 per each Celgene share. The other two drugs included were Zeposia, a now approved multiple sclerosis treatment, and ide-cel, a CAR-T therapy for multiple myeloma.
But the hoped-for swift FDA review of liso-cel was quickly derailed, first by a request from the regulator for more information and then by the COVID-19 pandemic, which made required inspections of manufacturing facilities more difficult to schedule.
Agency inspectors made it out to a Juno plant in Bothell, Washington in mid-October, filing a report that noted several deviations from good manufacturing practices but was seemingly clean enough to allow approval. However, an inspection of a facility owned by the Swiss contract firm Lonza, which makes a key part of liso-cel for Bristol Myers, didn't occur until early December — well after the FDA's rescheduled Nov. 16 decision date.
Bristol Myers wasn't the only drugmaker whose would-be products were disrupted by pandemic-related difficulties. Novartis, Revance Therapeutics, Liquidia and Alkermes all recently cited challenges tied to scheduling FDA inspections of manufacturing sites in disclosing drug approval delays or rejections.
The missed deadline for liso-cel could result in new headaches for Bristol Myers, however. With billions of dollars in payouts now canceled, CVR holders are likely to sue the pharmaceutical company, according to Salim Syed, an analyst at Mizuho Securities USA who has followed liso-cel's progress.
"COVID-19 definitely had a hand in this," Syed said. But, he added, the delays to liso-cel's review could spur questions of whether the FDA had "moved its goalposts" or whether there was any negligence on Bristol Myers' part.
Investors would have some precedent if they choose to sue. In October 2019, Sanofi agreed to pay $315 million to settle claims that it slowed development of a multiple sclerosis drug linked to a CVR the French drugmaker issued in a 2011 takeover of Genzyme.
"It's a distraction for any company. If you're Bristol, do you want to go through litigation for the next two years?" said Syed, noting he thought a settlement in this case is possible.
Whether CVR holders press their case could depend on how soon liso-cel is approved. If the FDA clears the treatment in the coming days or weeks — close to the Dec. 31 deadline — CVR holders could argue any small delays by Bristol Myers made the difference.
As for the CVR itself, trading on the NYSE is halted and Bristol Myers does not plan to sponsor a stock ticker for over-the-counter, or "pink sheets," trading, according to Syed. A broker or bank may list the security at some point, but that's not yet certain.
Shares of the CVR were worth 69 cents apiece before trading was stopped by the NYSE early Monday morning.
The third drug in the CVR, ide-cel, is also expected to be approved, with a decision date of March 27 set by the FDA. The deadline under the CVR would have been March 31.