As op­po­si­tion mounts against Cel­gene deal, Bris­tol-My­ers tells share­hold­ers the planned buy­out is the best bet in a scarce mar­ket

Fac­ing bru­tal op­po­si­tion against its planned $74 bil­lion ac­qui­si­tion of Cel­gene, Bris­tol-My­ers Squibb is now scram­bling to con­vince share­hold­ers that its takeover of the biotech — tar­nished by a poor per­for­mance un­der CEO Mark Alles — is in­deed a good idea.

In an open let­ter to share­hold­ers on Wednes­day, Bris­tol-My­ers $BMY made it clear that a Cel­gene $CELG buy­out was im­per­a­tive to rein­vig­o­rate its growth.

“Giv­en the scarci­ty of at­trac­tive biotech op­por­tu­ni­ties, high pre­mi­ums paid in bolt-on ac­qui­si­tions, a longer time­line and the like­li­hood of com­pet­i­tive auc­tions that re­duce the prob­a­bil­i­ty of pre­vail­ing, Bris­tol-My­ers Squibb de­ter­mined that ac­quir­ing Cel­gene’s Big-5 late-stage pipeline, plus its 22 Phase 1 and 2 clin­i­cal pro­grams, would rep­re­sent a bun­dled ‘string-of-pearls’ that in to­tal­i­ty of­fers a greater val­ue cre­ation op­por­tu­ni­ty than oth­er strate­gic al­ter­na­tives,” the com­pa­ny un­der­scored in bold.

It comes as no sur­prise that Bris­tol-My­ers is shop­ping. Its flag­ship im­muno-on­col­o­gy treat­ment Op­di­vo hasn’t quite lived up to sky-high ex­pec­ta­tions, ver­sus Mer­ck’s $MRK Keytru­da. But for the cav­al­ry of naysay­ers — Welling­ton Man­age­ment (Bris­tol-My­ers’ largest share­hold­er); Star­board (ac­tivist in­vestor who nabbed a 1 mil­lion-share stake in the lead up to the pro­posed trans­ac­tion) and Dodge & Cox (Bris­tol-My­ers’ 5th largest in­vestor that is re­port­ed­ly not keen ei­ther) — Cel­gene is hard­ly the an­swer. The large biotech is fac­ing a patent cliff with its cash cow Revlim­id, and the fu­ture of its top R&D prospects is un­cer­tain.

Bris­tol-My­ers, how­ev­er, is woo­ing its in­vestors on the ba­sis that the Cel­gene deal is the best bet out there in bio­phar­ma land, and has come with an “at­trac­tive price,” giv­en the breadth of Cel­gene’s port­fo­lio: “BRIS­TOL-MY­ERS SQUIBB + CEL­GENE = A POW­ER­FUL VAL­UE CRE­ATION OP­POR­TU­NI­TY FOR OUR SHARE­HOLD­ERS.” 

For the first time Bris­tol pub­licly pro­vid­ed the sums-of-the parts val­u­a­tion for the deal, not­ed Cred­it Su­isse’s Vi­mal Di­van. The com­pa­ny al­lo­cat­ed about $55 bil­lion for Cel­gene’s mar­ket­ed prod­ucts and more than $20 bil­lion for syn­er­gies, sug­gest­ing it is ac­quir­ing the “en­tire Cel­gene pipeline for a val­ue of ~$15 bil­lion,” Di­van wrote in a note.

Ac­tivist in­vestor Star­board has sug­gest­ed that Bris­tol-My­ers could be­come a tempt­ing takeover tar­get in its own right if they drop the Cel­gene deal. For Bris­tol-My­ers share­hold­ers the ques­tion is whether they should set­tle for Cel­gene, or hope for some­thing bet­ter to come along.

For Bar­clay’s Ge­off Meacham the Cel­gene deal is a ra­tio­nal move by Bris­tol-My­ers.

“Be­yond the lack of al­ter­na­tives that could pro­vide a sim­i­lar lev­el of up­side to the pro­posed deal (we note that the op­pos­ing share­hold­ers have not come for­ward with any sort of con­crete Plan B, with no over-the-top bid­ders in sight), we think the fi­nan­cial terms of the deal are very fa­vor­able and we’d char­ac­ter­ize the Cel­gene pipeline as quite strong and fair­ly de-risked al­ready. For ex­am­ple, the re­cent ac­cep­tance of the fe­dra­tinib and award of pri­or­i­ty re­view shows that Cel­gene is ex­e­cut­ing from a reg­u­la­to­ry per­spec­tive,” Meacham wrote in a note on Wednes­day.

“Ul­ti­mate­ly, bar­ring a re­al­is­tic al­ter­na­tive ca­pa­ble of pro­vid­ing sim­i­lar ma­te­r­i­al up­side, we ex­pect the ma­jor­i­ty of share­hold­ers to vote in fa­vor of the deal April 12th, giv­en we con­tin­ue to see strong strate­gic and fi­nan­cial ra­tio­nale to sup­port the trans­ac­tion.”

John Hood [file photo]

UP­DATE: Cel­gene and the sci­en­tist who cham­pi­oned fe­dra­tinib's rise from Sanofi's R&D grave­yard win FDA OK

Six years after Sanofi gave it up for dead, the FDA has approved the myelofibrosis drug fedratinib, now owned by Celgene.

The drug will be sold as Inrebic, and will soon land in the portfolio at Bristol-Myers Squibb, which is finalizing a deal to acquire Celgene.

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Ab­b­Vie gets its FDA OK for JAK in­hibitor upadac­i­tinib, but don’t look for this one to hit ex­ecs’ lofty ex­pec­ta­tions

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The top 10 fran­chise drugs in bio­phar­ma his­to­ry will earn a to­tal of $1.4T (tril­lion) by 2024 — what does that tell us?

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UP­DAT­ED: Sci­en­tist-CEO ac­cused of im­prop­er­ly us­ing con­fi­den­tial in­fo from uni­corn Alec­tor

The executive team at Alector $ALEC has a bone to pick with scientific co-founder Asa Abeliovich. Their latest quarterly rundown has this brief note buried inside:

On June 18, 2019, we initiated a confidential arbitration proceeding against Dr. Asa Abeliovich, our former consulting co-founder, related to alleged breaches of his consulting agreement and the improper use of our confidential information that he learned during the course of rendering services to us as our consulting Chief Scientific Officer/Chief Innovation Officer. We are in the early stage of this arbitration proceeding and are unable to assess or provide any assurances regarding its possible outcome.

There’s no explicit word in the filing on what kind of confidential info was involved, but the proceeding got started 2 days ahead of Abeliovich’s IPO.

Abeliovich, formerly a tenured associate professor at Columbia, is a top scientist in the field of neurodegeneration, which is where Alector is targeted. More recently, he’s also helped start up Prevail Therapeutics as the CEO, which raised $125 million in an IPO. And there he’s planning on working on new gene therapies that target genetically defined subpopulations of Parkinson’s disease. Followup programs target Gaucher disease, frontotemporal dementia and synucleinopathies.

But this time Abeliovich is the CEO rather than a founding scientist. And some of their pipeline overlaps with Alector’s.

Abeliovich and Prevail, though, aren’t taking this one lying down.

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Chi­na has be­come a CEO-lev­el pri­or­i­ty for multi­na­tion­al phar­ma­ceu­ti­cal com­pa­nies: the trend and the im­pli­ca­tions

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Early March was a no good, awful, terrible time for Allergan CEO Brent Saunders. His big lead drug had imploded in a Phase III disaster and activists were after his hide — or at least his chairman’s title — as the stock price continued a steady droop that had eviscerated share value for investors.

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CEO Pascal Soriot via Getty Images

As­traZeneca's jug­ger­naut PARP play­er Lyn­parza scoops up an­oth­er dom­i­nant win in PhI­II as the FDA adds a 'break­through' for Calquence

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Wednesday morning the pharma giant and their partners at Merck parted the curtains on a successful readout for their Phase III PAOLA-1 study, demonstrating statistically significant improvement in progression-free survival for women with ovarian cancer in a first-line maintenance setting who added their PARP Lynparza to Avastin. This is their second late-stage success in ovarian cancer, which will help stave off rivals like GSK.

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ICER blasts FDA, PTC and Sarep­ta for high prices on DMD drugs Em­flaza, Ex­ondys 51

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