Bristol-Myers Faces Lawsuit Claims Over Side-Stepping $6.4 Billion CVR Payment

In 2019, Bristol-Myers Squibb (BMS) acquired Celgene for a mammoth 80.3 billion dollars in a cash and stock deal. As per the terms of the agreement, Celgene shareholders received one BMS share and $50 in cash for each share of Celgene.

In addition, they were eligible for one tradeable Contingent Value Right (CVR), which amounted to a cash payment of $9.00 per share if three of Celgene’s drugs received FDA approvals before stipulated deadlines. That included Celgene’s multiple sclerosis drug Zeposia, and its CAR-T therapy candidates, ide-cel (Abecma), and liso-cel (Breyanzi).

Although the first barricade was cleared when Zeposia got approved in March 2020, Breyanzi’s approval did not materialize within its deadline of December 31st, 2020. Even Abecma managed to get the agency’s nod before its deadline of March 21st, 2021.

On January 1st, 2021, the very next day of Breyanzi’s CVR deadline, BMS announced that the CVRs are no longer eligible for payment. The company reasoned that the COVID-19 pandemic had delayed FDA inspection of a manufacturing facility in Texas. Breyanzi eventually received FDA approval in February 2021.

The Lawsuit

Dejected shareholders of Celgene who had lost approximately $6.4 billion in the process have now sued the Big Pharma for losses. On behalf of Celgene’s shareholders, UMB Bank, N.A., has filed a lawsuit accusing BMS of not putting “Diligent Efforts” to secure FDA approval and improperly delaying the process.

In its suit, UMB claimed that “other cellular therapies based on similar technology have received FDA approval without the issues and ineptitude that plagued Bristol-Myers, and in substantially less time”. It cited examples of previously approved CAR-T therapies, Gilead’s Yescarta and Novartis’ Kymriah which took less than half the time to get approved.

“Bristol-Myers’s failure to exercise Diligent Efforts has, to date, allowed it to take control of three FDA-approved blockbuster therapies at an enormous discount and at the CVR holders’ expense,” UMB said. BMS has refused to comment on pending litigation at this time.

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Author

Rajaneesh K. Gopinath