Federal judge denies Bristol Myers' attempt to avoid Celgene shareholder lawsuit
Some Celgene shareholders aren’t happy with how Bristol Myers Squibb’s takeover went down.
On Friday, a New York federal judge ruled that they have a case against the pharma giant, denying a request to dismiss allegations that it purposely slow-rolled Breyanzi’s approval to avoid paying out $6.4 billion in contingent value rights (CVR).
When Bristol Myers put down $74 billion to scoop up Celgene back in 2019, liso-cel — the CAR-T lymphoma treatment now marketed as Breyanzi — was supposedly one of the centerpieces of the deal. After going back and forth on negotiations for about six months, BMS put $6.4 billion into a CVR agreement that required an FDA approval for Zeposia, Breyanzi and Abecma, each by an established date.
Breyanzi had a deadline of Dec. 31, 2020. If any of the three drugs failed to win approval by the set dates, BMS would owe nothing in CVR payouts. They were just 36 days late on the Breyanzi deadline, and the CVR became worthless.
Last June, UMB Bank filed suit against BMS, accusing the company of purposely delaying Breyanzi’s development to avoid the payouts. Since then, several unidentified witnesses have come forward to detail “a series of deliberate or reckless acts” they say BMS took to stall an approval.
“This unprecedented string of deficiencies in the liso-cel approval process pushed FDA approval 36 days beyond the milestone date, just long enough to spare Bristol a $6.4 billion payout to CVR holders, while allowing it to reap the economic benefits of bringing the lucrative drug to market after a modest delay,” a complaint states.
Breyanzi is prescribed to patients suffering an aggressive and difficult-to-treat form of blood cancer called diffuse large B cell lymphoma. While it was previously approved to treat patients who had already received two prior rounds of therapy, the FDA came through with a label expansion on Friday in the second-line setting.
“Breyanzi represents a remarkable advance over a nearly 30-year standard of care, providing significantly improved efficacy with a well-established safety profile,” lead investigator Manali Kamdar said in a statement.
BMS had vowed to do whatever it could to get the three approvals in on time. And Celgene repeatedly stated — even after announcing the merger — that Breyanzi was on track for a BLA submission in the second half of 2019, with an approval expected in mid-2020. The company submitted the first component of a BLA in September 2019, and the FDA found no issues with that portion, according to the complaint.
However, BMS took three months to submit the next portion, and the FDA found “significant additional omissions” in BMS’ portion.
The complaint accuses Bristol Myers of leaving out “volumes of basic information,” including omissions that were “glaringly obvious, particularly for a drug company of Bristol’s sophistication and experience, and would have needed to be approved by Bristol senior executives.”
Regulators also found “a litany of basic and easily avoidable deficiencies at both of the facilities where liso-cel was being manufactured,” according to the complaint.
Addressing the manufacturing deficiencies required supplemental regulatory submissions from BMS, but those submissions were also deficient and required further supplementation, the plaintiffs allege. At one point, the FDA concluded that new information provided by BMS was so substantial that it required a major amendment.
BMS ended up securing an approval last February, based on pivotal data showing 54% of patients treated with liso-cel achieve complete remission. Regulators tacked on a black-box warning for cytokine release syndrome and neurologic toxicities.
The drug raked in $87 million last year, according to BMS’ Q4 results.
BMS sought to dismiss the lawsuit, arguing that plaintiffs failed to “comply with certain pre-suit notice procedures requiring notice of an alleged breach and a ninety-day period to cure the breach before filing suit.”
Judge Jesse Furman denied the motion on Friday. BMS was not available for comment as of press time.