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

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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

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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

Lessons for biotech and phar­ma from a doc­tor who chased his own cure

After being struck by a rare disease as a healthy third year medical student, David Fajgenbaum began an arduous journey chasing his own cure. Amidst the hustle of this year’s JP Morgan conference, the digital trials platform Medable partnered with Endpoints Studio to share Dr. Fajgenbaum’s story with the drug development industry.

What follows is an edited transcript of the conversation between Medable CEO Dr. Michelle Longmire and Dr. Fajgenbaum, and it is full of lessons for biotech executives charged with bringing the next generation of medicines to patients.

Kathy High (file photo)

Gene ther­a­py pi­o­neer Kathy High has left Spark af­ter com­plet­ing $4.3B union with Roche

Kathy High dedicated the past seven years of her life shepherding experimental gene therapies she’s developed at Children’s Hospital of Philadelphia toward the market as president and head of R&D at Spark Therapeutics. Now that the biotech startup is fully absorbed into Roche — with an FDA approval, a $4.3 billion buyout and a promising hemophilia program to boast — she’s ready to move on.

Roche confirmed her departure with Endpoints News and noted “she will take some well-deserved time off and then will begin a new chapter in a sabbatical at a university.”

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Tim Mayleben (file photo)

Es­pe­ri­on's goldilocks cho­les­terol fight­er wins FDA ap­proval — will its 'tra­di­tion­al' pric­ing ap­proach spur adop­tion?

It’s more effective than decades-old statins but not as good as the injectable PCSK9 — the goldilocks treatment for cholesterol-lowering, bempedoic acid, has secured FDA approval.

Its maker, Esperion Therapeutics, is betting that their pricing strategy — a planned list price of between $10 to $11 a day — will help it skirt the pushback the PCSK9 cholesterol fighters, Repatha and Praluent, got from payers for their high sticker prices.

The sky-high expectations for the pair of PCSK9 drugs that were first approved in 2015 quickly simmered — and despite a 60% price cut, coupled with data showing the therapies also significantly cut cardiovascular risk, sales have not really perked up.

Esperion is convinced that by virtue of being a cheaper oral therapy, bempedoic acid will hit that sweet spot in terms of adoption.

“We’re kind of like the old comfortable shoe,” Esperion’s chief commercial officer Mark Glickman remarked in an interview with Endpoints News ahead of the decision date. “It’s an oral product, once-daily and nontitratable — these are things that just resonate so true with patients and physicians and I think we’ve kind of forgotten about that.”

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James Collins, Broad Institute via Youtube

UP­DAT­ED: A space odyssey for new an­tibi­otics: MIT's ma­chine learn­ing ap­proach

Drug development is complex, expensive and comes with lousy odds of success — but in most cases, if you make it across the finish line brandishing a product with an edge (and play your cards right) it can be a lucrative endeavor.

As it stands, the antibiotic market is cursed — it harbors the stink of multiple bankruptcies, a dearth of innovation, and is consequently barely whetting the voracious appetites of big pharma or venture capitalists. Enter artificial intelligence — the biopharma industry’s cure-all for the pesky process of making a therapeutic, including data mining, drug discovery, optimal drug delivery, and addressable patient population.

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Gilead los­es two more patent chal­lenges on HIV pill, set­ting up court­room fight in Delaware

Gilead sustained two more losses in their efforts to rid themselves of an activist-backed patent lawsuit from the US government over a best-selling HIV pill.

Urged on by activists seeking to divert a portion of Gilead’s revenue to clinics and prevention programs, the Department of Health and Human Services made a claim to some of the patents for the best-selling HIV prevention drug, Truvada, also known as PrEP. Gilead responded by arguing in court that HHS’s patents were invalid.

Today, the US Patent and Trademark Office ruled that Gilead was likely to lose the last two of those challenges as well. The USPTO ruled against Gilead on the first two patents earlier this month.

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Tal Zaks (Moderna via YouTube)

For two decades, a new vac­cine tech­nol­o­gy has been slow­ly ap­proach­ing prime time. Now, can it stop a pan­dem­ic?

Two months before the outbreak, Moderna CMO Tal Zaks traveled from Cambridge, MA to Washington DC to meet with Anthony Fauci and the leaders of the National Institutes of Health.

For two years, Moderna had worked closely with NIH researchers to build a new kind of vaccine for MERS, one of the deadliest new viruses to emerge in the 21st century. The program was one test for a new technology designed to be faster, cheaper and more precise than the ways vaccines had been made for over a century. They had gathered evidence the technology could work in principle, and Fauci, the longtime head of the National Institute of Allergy and Infectious Diseases and a longtime advocate for better epidemic preparedness, wanted to see if it, along with a couple of other approaches, could work in a worst-case scenario: A pandemic.

“[We were] trying to find a test case for how to demonstrate if our technology could rapidly prepare,” Zaks told Endpoints News.

Zaks and Fauci, of course, wouldn’t have to wait to develop a new test. By year’s end, an outbreak in China would short circuit the need for one and throw them into 24/7 work on a real-world emergency. They also weren’t the only ones with new technology who saw a chance to help in a crisis.

An ocean away, Lidia Oostvogels was still on vacation and relaxing at her mother’s house in Belgium when her Facebook started changing. It was days after Christmas and on most people’s feeds, the news that China had reported a novel virus to the World Health Organization blurred into the stream of holiday sweaters and fir trees. But on Oostvogels’s feed, full of vaccine researchers and virus experts, speculation boiled: There was a virus in China, something contained to the country, but “exotic,” “weird,” and maybe having to do with animals. Maybe a coronavirus.

Lidia Oostvogels

“I was immediately thinking like, ‘Hey, this is something that if needed, we can play a role,'” Oostvogels told Endpoints.

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Christos Kyratsous (via LinkedIn)

He built a MERS treat­ment in 6 months and then the best Ebo­la drug. Now Chris­tos Kyrat­sous turns his sights on Covid-19

TARRYTOWN, NY — In 2015, as the Ebola epidemic raged through swaths of West Africa, Kristen Pascal’s roommates sat her down on their couch and staged an intervention.

“Are you sure this is what you want to be doing with your life?” she recalls them asking her.

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Pascal, a research associate for Regeneron, had been coming home at 2 am and leaving at 6 am. At one point, she didn’t see her roommate for a week. For months, that was life in Christos Kyratsous’ lab as the pair led a company-wide race to develop the first drug that could effectively treat Ebola before the outbreak ended. For Pascal, that was worth it.

“I’m ok, I don’t have Ebola,” Pascal told them. “I see that death toll rising and I can’t not do something about it.”

Last August, Regeneron learned they had succeeded: In a large trial across West Africa, their drug, REGN-EB3, was vastly more effective than the standard treatments. It was surprise news for the company, coming just 10 months into a trial they thought would take several years and a major victory in the global fight against a deadly virus that killed over 2,000 in 2019 and can carry a mortality rate of up to 90%.

For Kyratsous and Pascal, though, it brought only fleeting reprieve. Just four months after the NIH informed them REGN-EB3 worked, Kyratsous was back in his office reading the New York Times for updates on a new outbreak on another continent, and wondering alongside Pascal and senior management whether it was time to pull the trigger again.

In late January, as the death toll swelled and the first confirmed cases outside China broke double digits, they made a decision. Soon they were back on the phone with the multiple government agencies and their coronavirus partners at the University of Maryland’s Level 3 bio lab. The question was simple: Can Kyratsous and his team use a process honed over two previous outbreaks, and create a treatment before the newest epidemic ends? Or worse, if, as world health experts fear, it doesn’t vanish but becomes a recurrent virus like the flu?

“Christos likes things immediately,” Matt Frieman, Regeneron’s coronavirus collaborator at the University of Maryland, told Endpoints. “That’s what makes us good collaborators: We push each other to develop things faster and faster.”

Kristen Pascal (Regeneron)

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The first time Regeneron tried to respond to a global outbreak, it was something of a systems test, Kyratsous explains from his office at Regeneron’s Tarrytown headquarters. Kyratsous, newly promoted, has crammed it with photos of his family, sketches of viral vectors and a shark he drew for his 3-year-old son. He speaks rapidly – an idiosyncrasy his press person says has only been aggravated this afternoon by the contents of his “Regeneron Infectious Diseases”-minted espresso glass – and he gesticulates with similar fluidity, tumbling through antibodies, MERS, the novel coronavirus, Ebola-infected monkeys.

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Bank­rupt an­tibi­otics mak­er Ar­a­digm turns to old part­ner/in­vestor for fi­nal $3M fire sale

Grifols once paid Aradigm $26 million for a stake in its inhaled antibiotics. But with Aradigm now in bankruptcy, the Spanish drugmaker is dishing out a final $3.2 million to buy it all.

The fire sale — which comes one year after Aradigm filed for Chapter 11 following a regulatory trifecta for disaster — will see Grifols obtain assets and IP to Apulmiq (formerly Pulmaquin and Linhaliq in Europe), Lipoquin and free ciprofloxacin. In addition to waiving its claims in the bankruptcy case, Grifols also agreed to milestone payments up to $3 million more upon any regulatory approvals.

DB­V's peanut pre­ven­tion patch ap­proach­es key stage of ap­proval process

Almost a year and a half after DBV Technologies pulled its peanut allergy immunotherapy patch from FDA review, the biotech will get their day in court. The FDA has scheduled an advisory committee hearing for May 15.

In the two-horse race to develop the first immunotherapy for peanut allergy, DBV had the early lead, filing an NDA for their patch in 2018. But on December 20 of that year, the company withdrew their application after, they said, meeting with regulators and determining they had not submitted “sufficient detail regarding data on manufacturing procedures and quality controls.” Aimmune filed their BLA 3 days later and won approval as the first immunotherapy for peanuts this month.