Bris­tol-My­ers inks a $74B deal to buy out Cel­gene, ex­pects $15B a year from late-stage pipeline

In a stun­ning turn of events, Bris­tol-My­ers Squibb $BMY has struck a deal to buy Cel­gene $CELG for $74 bil­lion in cash and stock. And sev­er­al an­a­lysts were quick to agree that this was a good deal for Cel­gene’s bruised in­vestors.

Cel­gene share­hold­ers will get 1 share of Bris­tol-My­ers stock and $50 for every share of the biotech they own. The ac­qui­si­tion is val­ued at $102.43 per Cel­gene share — plus a CVR.

Yes­ter­day, Cel­gene’s shares closed at $66.64, down by more than half from their high in the fall of 2017. The plunge made this deal pos­si­ble, and may sig­nal a new era of big-time M&A in bio­phar­ma.

The re­ac­tion on the mar­ket was swift. Bris­tol-My­ers’ shares dropped 15% while Cel­gene saw its stock rock­et up 31%.

The deal gives Bris­tol-My­ers a big new pipeline which boasts of sev­er­al would-be block­busters. It al­so marks the end game for an ex­ec­u­tive team led by Cel­gene CEO Mark Alles, which has come un­der in­tense crit­i­cism for a se­ries of mishaps that blight­ed its rep and share price.

Slide: Bris­tol-My­ers Squibb, Cel­gene

Click on the im­age to see the full-sized ver­sion


The com­bined com­pa­ny will have 9 prod­ucts on the mar­ket “and sig­nif­i­cant po­ten­tial for growth in the core dis­ease ar­eas of on­col­o­gy, im­munol­o­gy and in­flam­ma­tion and car­dio­vas­cu­lar dis­ease.”

Mark Alles, Cel­gene CEO

Bris­tol-My­ers is count­ing on about $15 bil­lion in near-term an­nu­al rev­enue from Cel­gene’s late-stage pipeline, turn­ing to the drugs that Cel­gene has been buy­ing up or part­ner­ing with com­pa­nies like blue­bird bio. That in­cludes:

  • Two in im­munol­o­gy and in­flam­ma­tion, TYK2 and ozan­i­mod; and
  • Four in hema­tol­ogy, lus­pa­ter­cept, liso-cel (JCAR017), bb2121 and fe­dra­tinib.

The CVR, worth up to $9 each, is based on FDA ap­proval of all three of these drugs: “ozan­i­mod (by De­cem­ber 31, 2020), liso-cel (JCAR017) (by De­cem­ber 31, 2020) and bb2121 (by March 31, 2021).”

The ac­qui­si­tion marks the com­bi­na­tion of two of the world’s top-10 R&D op­er­a­tions. Cel­gene — which spent $6 bil­lion on R&D in 2017 — built the com­pa­ny on Revlim­id sales, and in­vest­ed bil­lions of that rev­enue in build­ing its pipeline with a long string of deals.

Bris­tol-My­ers will come out of the buy­out with 69% of the eq­ui­ty and all of the pow­er. Bris­tol CEO and Chair­man Gio­van­ni Caforio will be in charge of the show post-merg­er. 

Chart: Ed­win Elmhirst, EP­Van­tage

Click on the im­age to see the full-sized ver­sion


You can ex­pect plen­ty of cuts and lay­offs with this move. Bris­tol-My­ers is lay­ing out its ex­pec­ta­tions for find­ing $2.5 bil­lion in an­nu­al cost re­duc­tions by 2022 as it merges the two op­er­a­tions. More than half of that will come out of com­mer­cial op­er­a­tions, with a plan to “op­ti­mize” R&D, with a spe­cial fo­cus on re­vamp­ing ear­ly-stage work. The pact al­so re­moves one of the in­dus­try’s most ac­tive deal­mak­ers. Biotechs will miss Cel­gene, which had a well known rep for of­fer­ing a sup­port­ive role for its part­ners. They al­so paid top dol­lar for the best prospects.

The deal gives Bris­tol-My­ers a di­ver­si­fied pipeline that will great­ly ex­pand a scope that had nar­rowed con­sid­er­ably around Op­di­vo, its megablock­buster PD-1 check­point which has slipped be­hind the leader at Mer­ck. Bris­tol-My­ers is fi­nanc­ing the deal with cash on hand plus mon­ey from Mor­gan Stan­ley Se­nior Fund­ing and MUFG Bank.

One ear­ly ca­su­al­ty of the buy­out: BeiGene. The Chi­na biotech saw its stock $BGNE drop 20% af­ter the news broke, as Bris­tol-My­ers is un­like­ly to want an al­liance on a ri­val PD-1 pro­gram.

Leerink’s Ge­of­frey Porges ad­vised Cel­gene’s share­hold­ers to take the mon­ey and run — ahead of the fi­nal clos­ing.

This trans­ac­tion di­lutes in­vestors’ ex­po­sure to Cel­gene’s patent cliff, re­lieves Cel­gene in­vestors of the tri­als of the com­pa­ny’s man­age­ment de­ci­sion-mak­ing and of­fers im­me­di­ate up­side that would oth­er­wise take many months, or even years, to be re­al­ized. While Cel­gene’s share­hold­ers are un­like­ly to re­ject the of­fer, Bris­tol’s could, hence our rec­om­men­da­tion to sell in­to the liq­uid­i­ty as­so­ci­at­ed with this an­nounce­ment.

Jef­feries’ Michael Yee was quick to agree that this was a good deal for Cel­gene in­vestors.

We see this as a pos­i­tive for CELG as de­spite be­ing very cheap, it seems the mar­ket was not go­ing to get clar­i­ty on how the next 3 years would “change” the prob­lem and hence get the stock up sus­tain­ably (set­tle­ment with Red­dy’s and 3 big drugs com­ing were al­ready in ex­pec­ta­tions) and in­vestors had lost con­fi­dence in the strat­e­gy with stock trad­ing at all-time low P/E at 6x…

And you can add Baird’s Bri­an Sko­r­ney to that cho­rus of ap­proval — for Cel­gene’s side of the deal.

The deal’s suc­cess, in our view, hinges on the out­come of Revlim­id patent lit­i­ga­tion but for CELG share­hold­ers to­day, its a big win.


Im­age: Bris­tol-My­ers CSO Thomas Lynch at an End­points News event in June 2018 End­points News

Secretary of health and human services Alex Azar speaking in the Rose Garden at the White House (Photo: AFP)

Trump’s HHS claims ab­solute au­thor­i­ty over the FDA, clear­ing path to a vac­cine EUA

The top career staff at the FDA has vowed not to let politics overrule science when looking at vaccine data this fall. But Alex Azar, who happens to be their boss’s boss, apparently won’t even give them a chance to stand in the way.

In a new memorandum issued Tuesday last week, the HHS chief stripped the FDA and other health agencies under his purview of their rule making ability, asserting all such power “is reserved to the Secretary.” Sheila Kaplan of the New York Times first obtained and reported the details of the September 15 bulletin.

#ES­MO20: Push­ing in­to front­line, Mer­ck and Bris­tol My­ers duke it out with new slate of GI can­cer da­ta

Having worked in parallel for years to move their respective PD-1 inhibitors up to the first-line treatment of gastrointestinal cancers, Merck and Bristol Myers Squibb finally have the data at ESMO for a showdown.

Comparing KEYNOTE-590 and CheckMate-649, of course, comes with the usual caveats. But a side-by-side look at the overall survival numbers also offer some perspective on a new frontier for the reigning checkpoint rivals, both of whom are claiming to have achieved a first.

UP­DAT­ED: Two wild weeks for Grail end in $8B Il­lu­mi­na buy­out

Grail’s whirlwind two weeks have ended in the wealthy arms of its former founder and benefactors.

Illumina has shelled out $8 billion to reacquire the closely-watched liquid biopsy startup they spun out just 5 years ago and sold off much of its shares just 3 years ago. The deal comes nearly two weeks after the well-heeled startup filed for a potentially massive IPO — one that was disrupted just a week later when Bloomberg reported that Illumina was in talks to buy their former spinout for up to $8 billion.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 90,400+ biopharma pros reading Endpoints daily — and it's free.

Roche vaults to the front of the NL­RP3 clin­i­cal race, pay­ing $448M up­front to bag In­fla­zome

Roche is going all in on NLRP3.

The pharma giant is putting down $448 million (€380 million) upfront to snatch Novartis-backed Inflazome, which makes it a clinical player in the space overnight.

Dublin and Cambridge, UK-based Inflazome is the second NLRP3-focused biotech Roche has acquired in less than two years, and although no numbers were disclosed in the Jecure buyout, this is almost certainly a much larger deal.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 90,400+ biopharma pros reading Endpoints daily — and it's free.

President Donald Trump (via AP Images)

Signs of an 'Oc­to­ber Vac­cine Sur­prise' alarm ca­reer sci­en­tists

President Donald Trump, who seems intent on announcing a COVID-19 vaccine before Election Day, could legally authorize a vaccine over the objections of experts, officials at the FDA and even vaccine manufacturers, who have pledged not to release any vaccine unless it’s proved safe and effective.

In podcasts, public forums, social media and medical journals, a growing number of prominent health leaders say they fear that Trump — who has repeatedly signaled his desire for the swift approval of a vaccine and his displeasure with perceived delays at the FDA — will take matters into his own hands, running roughshod over the usual regulatory process.

#ES­MO20: Bris­tol My­ers marks Op­di­vo's sec­ond ad­ju­vant win — eye­ing a stan­dard of care gap

Moving into earlier and earlier treatment lines, Bristol Myers Squibb is reporting that adjuvant treatment with Opdivo has doubled the time that esophageal or gastroesophageal junction cancer patients stay free of disease.

With the CheckMate-577 data at ESMO, CMO Samit Hirawat said, the company believes it can change the treatment paradigm.

While a quarter to 30% of patients typically achieve a complete response following chemoradiation therapy and surgery, the rest do not, said Ronan Kelly of Baylor University Medical Center. The recurrence rate is also high within the first year, Hirawat added.

Sebastian Nijman (file photo)

Roche looks to ge­net­ic mod­i­fiers for new drug tar­gets, team­ing up with Dutch biotech in $375M deal

Roche is gambling on a new way of discovering drug targets and, ultimately, promising to infuse more than $375 million into a small biotech if all goes well.

A spinout of the Netherlands Cancer Institute and Oxford University, Scenic Biotech set out to pioneer a field that’s gaining some traction among top VCs in the US: to harness the natural protecting powers of genetic modifiers — specific genes that suppress a disease phenotype.

Anthony Fauci (AP Images)

A press of­fi­cer at An­tho­ny Fau­ci’s NI­AID was un­masked as a hard-right Covid troll. He just re­tired to­day

William B Crews had been a public affairs specialist at the NIH’s National Institute of Allergy and Infectious Diseases.

That ended today when he informed the agency of his decision to retire, after he was identified as the managing editor at RedState, a prominent Trump loyalist website.

Crews’ RedState duties are performed under the alias streiff. While enjoying the benefits of pseudonymity, he disparaged and worked against NIAID with an incendiary level of rhetoric in the midst of a pandemic.

Donald Trump, AP

Covid-19 roundup: Trump sug­gests Pfiz­er vac­cine could be first ap­proved; VBI Vac­cines inks de­vel­op­ment deal with Cana­da

President Donald Trump commented Monday morning that Pfizer’s Covid-19 vaccine candidate could be the first to win approval by regulators.

During an interview on a Fox News’ morning show, the president said Pfizer was doing “very well” when asked which candidate could be approved, according to a Reuters report. He added that J&J could follow up afterward, saying “they’ll probably be a little later.”