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

Biotech and Big Phar­ma: A blue­print for a suc­cess­ful part­ner­ship

Strategic partnerships have long been an important contributor to how drugs are discovered and developed. For decades, big pharma companies have been forming alliances with biotech innovators to increase R&D productivity, expand geographical reach and better manage late-stage commercialization costs.

Noël Brown, Managing Director and Head of Biotechnology Investment Banking, and Greg Wiederrecht, Ph.D., Managing Director in the Global Healthcare Investment Banking Group at RBC Capital Markets, are no strangers to the importance of these tie-ups. Noël has over 20 years of investment banking experience in the industry. Before moving to the banking world in 2015, Greg was the Vice President and Head of External Scientific Affairs (ESA) at Merck, where he was responsible for the scientific assessment of strategic partnership opportunities worldwide.

No­var­tis' sec­ond at­tempt to repli­cate a stun­ning can­cer re­sult falls flat

Novartis’ hopes of turning one of the most surprising trial data points of the last decade into a lung cancer drug has taken another setback.

The Swiss pharma announced Monday that its IL-1 inhibitor canakinumab did not significantly extend the lives or slow the disease progression of patients with previously untreated locally advanced or metastatic non-small cell lung cancer when compared to standard of-care alone.

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AstraZeneca CEO Pascal Soriot (Raphael Lafargue/Abaca/Sipa USA)

A com­bo of As­traZeneca's Imfinzi and chemo wins where oth­ers have failed in piv­otal bil­iary tract test

Looking to run with the big dogs in the PD-(L)1 class, AstraZeneca’s Imfinzi has a tall hill to climb to compete in an increasingly bustling market. An aggressive combo strategy for the drug has paid off so far, and now AstraZeneca is adding another notch to its belt.

A combo of Imfinzi (durvalumab) and chemotherapy significantly extended the lives of first-line patients with advanced biliary tract cancer over chemo alone, according to topline results from the Phase III TOPAZ-1 study revealed Monday.

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Sean Ianchulev, Eyenovia CEO and CMO

Re­cent court de­ci­sion push­es FDA to re­ject and re­clas­si­fy drug-de­vice com­bo, crush­ing shares

Back in April, the FDA lost a crucial court case in which its broad discretion of regulating medical products that might satisfy the legal definitions of either “drug” and/or “medical device” was sharply curtailed.

In addition to the appeals court ruling that Genus Medical Technologies’ contrast agent barium sulfate (aka Vanilla SilQ) should not be considered a drug, as the FDA had initially ruled, but as a medical device, the agency also was forced to spell out which drugs would transition to devices as a result of the ruling.

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Peter Greenleaf, Aurinia CEO

Af­ter pass­ing on Ac­celeron, Bris­tol My­ers eyes bolt-on ac­qui­si­tion of au­toim­mune spe­cial­ist — re­port

Bristol Myers Squibb is looking to beef up its autoimmune portfolio by scooping up Aurinia Pharmaceuticals, Bloomberg reported.

The recent overtures to Aurinia, relayed by anonymous insiders, came just as Bristol Myers turned down buyout talks with partners at Acceleron — which Merck ultimately struck a deal to acquire for $11.5 billion. Bristol Myers has reportedly decided to cash out on its minority stake, likely bagging $1.3 billion in the process, while keeping the royalty deals on two of Acceleron’s blood disorder drugs.

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Robert Califf (Pablo Martinez Monsivais, AP Images, File)

As buzz on Califf FDA nom heats up, in­dus­try and agency in­sid­ers of­fer a strong nod for the ‘per­fect’ choice

For once in this long, dramatic road to finding a new FDA commissioner, there’s been some continuity. Both CNN and Politico reported this weekend that Rob Califf met with President Biden to discuss the permanent commish role, following earlier news broken by the Washington Post that all signs point to Califf.

Although there may be a few Democrats who continue to grandstand about the dangers of COI (Califf has worked for Verily, sits on the board of Centessa Pharmaceuticals, and has other ties to industry research), with the pandemic ongoing and the need for some kind of continuity at FDA mounting, Califf is likely to meet the same fate as when he first won Senate confirmation in 2016, by a vote of 89-4 — Bernie Sanders and 6 others didn’t vote.

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Sim­mer­ing feud be­tween blue­bird and a ri­val con­tin­ues with al­le­ga­tions of patent fraud

Bluebird bio was hit with a patent infringement lawsuit last week from a Chicago-based biotech it has had an ongoing beef with calling for $2 billion to help cure the “irreparable harm” caused by alleged willful infringement.

Bluebird bio is facing a lawsuit from Errant Gene Therapeutics for violating patent law in two instances, the company says.

The suit alleges that bluebird infringed the rights of EGT’s recombinant vectors used in the gene therapy treatment of rare diseases such as sickle cell disease and beta thalassemia for its drugs Zynteglo and LentiGlobin. EGT has an exclusive license from the Memorial Sloan Kettering Cancer Center to patents titled “vector encoding human global gene and use thereof in treatment of Hemoglobinopathies.”

Sanofi, Re­gen­eron gear up for new Dupix­ent fil­ing af­ter clear­ing sec­ond PhI­II for eosinophilic esophagi­tis

This fall’s harvest is proving fruitful for Dupixent.

Days after touting a clean Phase III sweep in prurigo nodularis, Sanofi and Regeneron report that their blockbuster anti-inflammatory drug has passed another Phase III test with flying colors, paving the way for regulatory filings in 2022.

It’s the second trial where Dupixent has proven effective against eosinophilic esophagitis, meeting the co-primary endpoints by spurring significant improvements in both clinical and histologic disease measures.

So — that pig-to-hu­man trans­plant; Po­ten­tial di­a­betes cure reach­es pa­tient; Ac­cused MIT sci­en­tist lash­es back; and more

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