- Celgene has successfully submitted to the Food and Drug Administration the first of five experimental drugs that were a key draw for Bristol-Myers Squibb in its decision to move forward with a potentially $74 billion deal to buy the storied biotech.
- On Tuesday, Celgene announced the FDA has accepted its New Drug Application for fedratinib, a drug for myelofibrosis. The regulator granted Priority Review to Celgene's submission, setting up a decision on approval by Sept. 3, just six months from now.
- Celgene expects to submit ozanimod in multiple sclerosis this month and recently said a Biologics License Application for luspatercept would be filed with the FDA in April. Such milestones are important, as all three drugs are part of a slate of six medicines that Celgene and Bristol-Myers Squibb expect to earn more than $15 billion in peak annual sales.
Shareholders in Bristol-Myers and Celgene will vote on the proposed $74 billion takeover in a special meeting scheduled for April 12.
In the roughly four weeks until then, executives from both companies will be pressed to defend a deal that now looks to be on shakier ground after a key institutional holder of Bristol-Myers' stock voiced its opposition.
Wellington Management, which holds a nearly 8% stake in the pharma, based its case against the deal on three main points, concluding in particular that a Celgene buyout would be too risky and success more difficult than depicted by Bristol-Myers' leadership.
A large part of Bristol-Myers' case for pulling the trigger on what would be one of the largest ever pharma takeovers centered on the prospects of Celgene's drug pipeline.
Bristol-Myers is highly dependent on revenues it earns from two drugs: Eliquis (apixaban) and Opdivo (nivolumab). Behind those two blockbusters, the pharma's pipeline looks thin.
Adding Celgene's line-up of experimental assets would give Bristol-Myers five treatments that could potentially reach markets within the next three years. (A sixth drug in the companies' list of near-term launches comes from Bristol-Myers.)
Yet that's no sure thing. Several of Celgene's drugs have been delayed, most notably ozanimod, which was rejected by the FDA in February 2018. And some, including the activist investor Starboard Value, have questioned the companies' revenue projections.
"Bristol-Myers management is asking its shareholders to believe that Celgene can essentially rebuild its entire current revenue base from its current product pipeline," Starboard Value's managing member Jeffrey Smith wrote in a Feb. 28 letter to shareholders of Bristol-Myers.
"That puts an immense amount of pressure on the pipeline to perform at an extraordinarily high level, one that we believe may be exceedingly difficult to meet, especially when the task is to replace one of the top selling global drugs," Smith added, referring to Celgene's Revlimid (lenalidomide).
Wall Street forecasts vary widely for key Celgene pipeline drugs
|2028 sales estimate (low-end, billions)||2028 sales estimate (high-end, billions)|
SOURCE: Starboard Value letter to shareholders of Bristol-Myers
Regulatory submissions for large-cap drugmakers are usually a matter of checking the appropriate box. Securing Priority Review for fedratinib is a good first step, but Celgene's planned filings for ozanimod and luspatercept will receive closer attention.
Filing ozanimod on time is particularly critical. The multiple sclerosis treatment is part of a contingent value rights agreement in Bristol-Myers' offer that would pay Celgene investors $9 per share if ozanimod, JCAR017 and bb2121 win approval by certain dates in 2020 and 2021.
A recent regulatory filing shows Celgene management put the probability of achieving all three milestones between 65% and 70%, while Bristol-Myers' executives were more skeptical with a 45% estimate.
If ozanimod were to fall off schedule, shareholders meeting in April would have new reason to oppose the deal.