An FDA inspection raises questions about Bristol Myers Squibb's liso-cel facility and the CVR, but analysts urge caution
For months, speculation over Bristol Myers Squibb and its $9 Celgene CVR has focused on whether the FDA would be able to inspect the Big Pharma’s cell therapy plant in Texas in time to approve their ‘liso-cel’ cancer therapy. But on Friday, the agency posted a document to its website announcing that it had looked at the company’s other liso-cel plant in Washington and found problems there, including over sterilization procedures.
The inspection touched off another minor bout of hand-wringing among CVR investors, who need the FDA to approve liso-cel by Dec. 31 to earn a payout. After months picking apart rumors and conducting amateur detective work — including one person who hired a “spotter” to sit outside the Washington plant and discreetly take photos of two people with a beige car and rolling black suitcases who may or not have been FDA inspectors — investor hopes sank dramatically last month, when the agency formally delayed a decision until they could complete a Texas inspection.
The CVR traded around $1 for weeks after the news broke. Ironically, optimism — and shares — increased last Thursday, after a rumor circulated that the plant may have been inspected. Evercore ISI’s Umer Raffat relayed that the agency had inspected a Macrogenics facility in Seattle, sending the CVR’s value up 55%.
The agency posted the inspection document the following day. Shares ticked downward.
Still, analysts are cautioning against reading too deeply into the inspection document. It’s common for the FDA to raise issues, Mizuho’s Salim Syed wrote, and it’s difficult to discern where exactly the observations in the document fall in terms of severity. Ira Loss of Washington Analysis told STAT, “A four-page report with six observations (or problematic findings), to me, is like a B+. There’s nothing that would stop them from approving it.”
Syed also noted that the report was issued Oct. 16, meaning that Bristol Myers Squibb would have already responded to the issues it raised. The fact that they didn’t disclose the document in November, he said, suggests that it’s not important to the FDA’s decision.
That leaves the major concern where it’s long been: Whether the agency will inspect their Texas facility in time. The CVR is now trading at $2.16.