- A bank representing former Celgene shareholders has sued Bristol Myers Squibb, claiming the pharmaceutical company failed to work diligently to win U.S. approval of a cancer cell therapy it acquired in its 2019 takeover of Celgene.
- The therapy, then known as liso-cel, was one of three drugs covered in an agreement between Bristol Myers and Celgene, which required Bristol Myers to pay an additional $6.4 billion to Celgene shareholders should all three receive Food and Drug Administration approval by certain dates.
- But the Dec. 31, 2020 deadline for liso-cel to win an OK passed without a decision from the FDA, which had found problems at two manufacturing sites Bristol Myers planned to use to make the therapy. The agreement, called a contingent value right, was therefore terminated, allowing Bristol Myers to avoid payment.
The lawsuit, filed in U.S. district court by UMB Bank, was expected after Bristol Myers failed to win approval of liso-cel by the deadline spelled out in the CVR.
UMB claimed Bristol Myers didn't make "diligent efforts" to secure the drug's clearance. The bank alleged Bristol Myers failed to put necessary information in its initial application to the FDA and didn't adequately prepare for regulatory inspections at the two manufacturing sites.
UMB argued liso-cel would have been approved before the CVR deadline passed if Bristol Myers took appropriate steps on both fronts, rather than 36 days later on Feb. 5, 2021. Liso-cel is now cleared for the treatment of late-stage lymphoma under the brand name Breyanzi.
"Had Bristol Myers used diligent efforts to achieve the liso-cel milestone — efforts which would have avoided a major amendment that caused at least a three-month delay and two Forms 483 that caused several more months of delay — Bristol-Myers would have met the deadline," the lawsuit stated, referring to the FDA inspection reports of the two production plants.
Additionally, UMB also claimed Bristol Myers breached the CVR contract by refusing to allow the bank to review information related to the drugmaker's preparations for approval.
In a statement, Bristol Myers said it would not comment on pending litigation.
Worth billions of dollars in aggregate, the CVR stipulated Bristol Myers would add an additional $9 per Celgene share on top of the roughly $102 per share in cash and stock the pharma agreed to pay as part of the acquisition.
UMB, which took over as CVR trustee from Equiniti Trust Company on Dec. 18, 2020, argued in its suit that the agreement created a "perverse economic incentive" for Bristol Myers. A delay to approval of any of the three drugs would mean Bristol Myers could avoid paying the estimated $6.4 billion.
To safeguard the CVR, Bristol Myers was required under the agreement to make "diligent efforts" to meet each of the three deadlines, an obligation UMB argues the drugmaker did not meet.
UMB cited Bristol Myers' size and experience in submitting experimental drugs in arguing the pharma should have known the information needed for its application as well as the areas FDA officials would scrutinize in their manufacturing inspections.
The bank also noted review of Breyanzi took far longer than the FDA's review of similar cell therapies like Gilead's Yescarta and Tecartus and Novartis' Kymriah.
Even before the delays in the FDA's evaluation of Breyanzi, the therapy hit several setbacks as it changed corporate owners. Originally developed by Juno Therapeutics, which once predicted a 2018 approval, the treatment was acquired by Celgene when it bought Juno in 2018. Celgene pushed back its timeline for approval as well, before being taken over by Bristol Myers.
In its suit, UMB is seeking damages, interest and legal fees, which it asks to be determined through a trial.
The bank's attempt to win financial relief has some precedent. In October 2019, Sanofi agreed to pay $315 million to settle a lawsuit alleging it slowed development of a multiple sclerosis drug covered by a CVR issued in the French drugmaker's 2011 takeover of Genzyme.