Bristol-Myers Squibb's bid to buy Celgene for $74 billion would create one of the largest oncology-focused drugmakers in the industry, bringing two top-selling cancer drugs together under one roof. 

Opdivo, Bristol-Myers' star immunotherapy, has been at the forefront of the rapid shift in cancer research toward drugs that recruit the immune system to attack tumors. Celgene, meanwhile, boasts a multiple myeloma business led by Revlimid, perennially among the world's most lucrative drugs. 

Revlimid's commercial success, however, will soon be curtailed by limited entry of a generic competitor in 2022. By buying Celgene, Bristol-Myers would inherit the biotech's task of finding a replacement for more than $8 billion in annual revenue.

The pharma is well aware of the challenge it would face, but is betting a slate of five experimental Celgene drugs (along with a sixth from its own labs) will be up to the task. Bristol-Myers and Celgene estimate the six drugs combined could eventually generate more than $15 billion in revenue. 

Such a lofty prediction may be optimistic, however. Two of the five drugs coming from Celgene — ozanimod and JCAR017 — have hit notable delays, while uncertain commercial prospects for the field of cell therapy could make hitting financial targets difficult for bb2121 and JCAR017, both CAR-T treatments. 

All five drugs come from outside Celgene, picked up via acquisitions of Receptos, Impact BioMedicines and Juno Therapeutics, or brought on board via collaborations with Acceleron and Bluebird Bio. While that speaks to Celgene's well-known partnering strategy, it also says less about Celgene's own R&D engine. 

"Both companies painted themselves into a corner," said Brad Loncar, an investor and founder of a biotech exchange traded fund, in an interview. "Bristol had to do something and those pipeline assets, I think they're making them look a lot more promising than they really are, because we have seen them do that before." 

In selling the deal to investors, Bristol-Myers touted the prospects of the five drugs from Celgene as one of four key factors in the company's calculus to move forward.

"There are concrete short-term growth opportunities that this deal will deliver to Bristol-Myers Squibb," said Bristol-Myers CEO Giovanni Caforio on a Jan. 3 conference call, indicating he expects product launches for all six within the next one to two years.

Bristol-Myers and Celgene also agreed to tie U.S. approval of three of the six drugs — ozanimod, JCAR017 and bb2121 — to a type of financial option known as contingent value rights. 

Essentially, if all three drugs are approved by certain dates, Bristol-Myers will pay an additional $9 in cash per Celgene share, further raising the value of the deal to Celgene shareholders. 

Analysts see a reasonably high likelihood of a U.S. OK for all six drugs, but some are less bullish on the sales each could earn.

Raymond James analyst Dane Leone, for example, takes a more measured view than Celgene leadership. Overall, forecasts from the investment bank put peak annual sales nearly $3 billion under the estimate of $12 billion to $14 billion Celgene gave last month for the five drugs. 

Notably, Leone puts his estimate for peak sales of JCAR017 at $1.2 billion, less than half what Celgene predicts.

JCAR017, a CAR-T therapy Celgene bought from Juno, is aimed first at diffuse large B-cell lymphoma, a market Gilead Sciences and Novartis already compete in with their respective CAR-T treatments, Yescarta and Kymriah. Celgene, and now Bristol-Myers, believe JCAR017 could offer a superior safety profile, but the slow uptake of both Yescarta and Kymriah suggest caution to lofty sales estimates.

The same holds true of bb2121, even as it appears positioned to be first in line among CAR-T therapies targeting BCMA for the treatment of multiple myeloma.

And while the set-out timelines for each drug's approval do appear reachable, both ozanimod and JCAR017 have seen slowdowns before.

Delays for ozanimod, which is designed to treat multiple sclerosis among other diseases, were one factor in a substantial erosion of Celgene's share price over the past 14 months. That slide erased almost $70 billion from Celgene's market capitalization, somewhat ironically making it more affordable for Bristol-Myers to ink a deal.

Bristol-Myers and Celgene now expect to file ozanimod for approval in the first quarter of 2019, an early test for the companies to clear.  

For JCAR017, Juno had said before Celgene bought it out that an approval in lymphoma could come as soon as the end of 2018. That timeline was significantly pushed back following the acquisition, and Celgene now expects an OK in mid-2020. 

If all goes according to plan, Bristol-Myers may get a fresh slate of oncology drugs for relatively cheap. But if setbacks trip up several of the six drugs, the pharma would likely face pointed questions about whether $74 billion was too much to pay.

"The deal does what many investors have been looking for [Bristol-Myers] to do, in expanding the near-term pipeline beyond just new Opdivo indications," wrote Credit Suisse analyst Vamil Divan in a Jan. 3 note to investors. "On the other hand, buying Celgene raises new questions, comes with its own risks, and is not a complete solution to the issues that we believe Bristol has been facing."