Funding, Deals & Partnerships: BIOLOGICS & MEDICAL DEVICES; BioMed e-Series; Medicine and Life Sciences Scientific Journal – http://PharmaceuticalIntelligence.com
FDA chief Scott Gottlieb steps down, leaving pet projects behind
FDA Commissioner Scott Gottlieb was appointed by President Trump in 2017. (FDA)
Not quite two years into his stewardship of the FDA, Scott Gottlieb, M.D., is stepping down. His sudden departure will likely send shock waves through biopharma, because the commissioner was popular for his market-based policies to lower drug costs and work to speed new brands to approval.
Gottlieb won Senate confirmation as FDA commissioner back in May 2017, an uncertain time for the drug industry. During the selection process, his name had been favored by a majority of biopharma executives polled by an analyst. At the time, one anonymous executive said he’s the “least likely to rail for the obliteration of the current efficacy, safety, risk-benefit model that is a foundation for advancement of new treatments in the United States”—unlike at least one other candidate for the job.
That preference proved out after Gottlieb took over the agency, as his policies favored speed and competition. And when the news broke Tuesday afternoon, the industry trade group PhRMA praised his “exemplary leadership.”
“During his tenure, he focused on innovation in drug development and review, increased competition, and advanced the regulatory framework for approving novel technologies, including gene therapies,” the organization said in a statement. “His efforts have made a meaningful impact for patients in need of innovative medicines.”
Gottlieb tweeted Tuesday that he’s “immensely grateful” for the opportunity to lead the FDA. In a letter to colleagues, he wrote that “there’s nothing that could pull me away from this role other than the challenge of being apart from my family for these past two years and missing my wife and two young children.”
President Donald Trump tweeted that he’s done an “absolutely terrific job” and will be missed.
In his resignation letter, tweeted by STAT reporter Matthew Herper, Gottlieb reviewed his efforts at the agency over the past two years. It’s a long list, but here are a few examples:
The FDA worked to avoid drug shortages after a hurricane struck Puerto Rico,
led a global investigation into drug impurities,
advanced reviews of cell and gene therapies, and
bolstered approvals of complex generic drugs.
Also under his command, the FDA took quick and decisive action on drug costs. The commissioner worked to boost generic approvals and crack down on regulatory “gaming” that stifles competition. He additionally blamed branded drug companies for an “anemic” U.S. biosimilars market and recently blasted insulin pricing.
His sudden departure will likely leave many agency efforts to lower costs up in the air. After the news broke, many pharma watchers posted on Twitter that Gottlieb’s resignation is a loss for the industry.
During his tenure as FDA commissioner, Gottlieb’s name had been floated for HHS chief when former HHS secretary Tom Price resigned due to a travel scandal, but Gottlieb said he was best suited for the FDA commissioner job. Now, former Eli Lilly executive Alex Azar serves as HHS secretary, and on Tuesday afternoon, Azar praised Gottlieb for his work at the agency.
New FDA commissioner Gottlieb unveils price-fighting strategies
New FDA commissioner Scott Gottlieb laid out some approaches the agency will take to fight high prices.
During the campaign and since the U.S. presidential election, President Donald Trump has pledged to bring down drug costs and, in some cases, railed against the industry for its pricing. Now, his new FDA commissioner is laying out some approaches the agency will take to fight high prices.
Importantly, the FDA can’t regulate drug prices, but it can implement measures aimed at deterring the types of price hikes that have made so many headlines over more than a year.
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At a U.S. House of Representatives budget hearing on Thursday, new FDA commissioner Scott Gottlieb said his agency will publish and regularly update a list of medications that are off patent and have no competition, work to improve generic review times and seek to “curtail gaming” of regulations by the industry that allows companies to extend patent monopolies.
On the first point, Gottlieb said a regularly updated list of off-patent meds could “entice competitors into the market” and ultimately lower costs. One such old, off-patent med with no generic competition is infamous to industry watchers: Daraprim.
Back in 2015, after picking up the medication from Marathon Pharma, Martin Shkreli’s Turing Pharma raised Daraprim’s price exponentially, triggering intense backlash.
In his opening remarks at the budget hearing, Gottlieb said he’s working on a “drug competition action plan” that he will unveil soon. However, the new commissioner did offer a few strategies to lower costs.
The FDA will work to “improve processes that enable generic versions of complex drugs to be approved for marketing,” and simplify the overall generic review process, Gottlieb said. He wants the agency to achieve those goals while “completely eliminating” a backlog of generic medications waiting for a review, he told members of Congress.
Further, the FDA will seek to stop misuse of Risk Evaluation Mitigation Strategies that have hurt generic drug developers’ ability to get samples of branded medications needed to develop copycats.
The proposals will likely be welcomed by those who’ve asked for drug pricing reform but have seen little action from Congress despite more than a year of calls from its members to rein in drug prices.
In a Thursday statement, the pharmacy benefit manager industry group PCMA hailed the proposals.
“As the Trump administration seeks to combat high drug costs, we applaud FDA Commissioner Gottlieb’s decision to publish a ‘watch list’ of off-patent drugs,” PCMA CEO Mark Merritt said in a statement. “This move, which PCMA and others have long advocated, will help deter manufacturers from buying the rights to drugs like Daraprim for the explicit purpose of raising their price.”
UPDATED 3/19/2019
National Cancer Chief, Ned Sharpless, Named F.D.A.’s Acting Commissioner
Dr. Norman E. Sharpless was named acting commissioner of the Food and Drug Administration on Tuesday. For the last 18 months, he had been director of the National Cancer Institute.CreditTom Williams/CQ Roll Call, via Getty Images
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Dr. Norman E. Sharpless was named acting commissioner of the Food and Drug Administration on Tuesday. For the last 18 months, he had been director of the National Cancer Institute.CreditCreditTom Williams/CQ Roll Call, via Getty Images
WASHINGTON — Dr. Norman E. (Ned) Sharpless, director of the National Cancer Institute, will serve as acting commissioner of the Food and Drug Administration, Alex M. Azar III, secretary of health and human services, announced on Tuesday.
Dr. Sharpless temporarily will fill the post being vacated by Dr. Scott Gottlieb, who stunned public health experts, lawmakers and consumer groups last week when he abruptly announced that he was resigningfor personal reasons.
Dr. Sharpless has been director of the cancer center, part of the National Institutes of Health, since October 2017. He is also chief of the aging biology and cancer section in the National Institute on Aging’s Laboratory of Genetics and Genomics. His research focuses on the relationship between aging and cancer, and development of new treatments for melanoma, lung cancer and breast cancer.
“Dr. Sharpless’s deep scientific background and expertise will make him a strong leader for F.D.A.,” said Mr. Azar, in a statement. “There will be no let up in the agency’s focus, from ongoing efforts on drug approvals and combating the opioid crisis to modernizing food safety and addressing the rapid rise in youth use of e-cigarettes.”
Dr. Douglas Lowy, known for seminal research on the link between human papillomavirus and multiple cancer types including cervical, and ultimately leading to development of a vaccine, will be named head of the NCI to replace Dr. Sharpless. Dr. Lowy currently is Deputy Director of the NCI.
Other posts on the Food and Drug Administration and FDA Approvals during Dr. Gotlieb’s Tenure on this Open Access Journal Include:
From Thalidomide to Revlimid: Celgene to Bristol Myers to possibly Pfizer; A Curation of Deals, Discovery and the State of Pharma
Curator: Stephen J. Williams, Ph.D.
Updated 6/24/2019
Updated 4/12/2019
Updated 2/28/2019
Lenalidomide (brand name Revlimid) is an approved chemotherapeutic used to treat multiple myeloma, mantle cell lymphoma, and certain myedysplastic syndromes. It is chemically related to thalidomide analog with potential antineoplastic activity. Lenalidomide inhibits TNF-alpha production, stimulates T cells, reduces serum levels of the cytokines vascular endothelial growth factor (VEGF) and basic fibroblast growth factor (bFGF), and inhibits angiogenesis. This agent also promotes G1 cell cycle arrest and apoptosis of malignant cells. It is usually given with dexamethasone for multiple myeloma. Revlimid was developed and sold by Celgene Corp. However, recent news of deals with Bristol Myers Squib
Revlimid (lenalidomide) is an immunomodulatory drug indicated for the treatment of patients with multiple myeloma, transfusion-dependent anemia due myelodysplastic syndromes (MDS), and mantle cell lymphoma.
Development History and FDA Approval Process for Revlimid
Right before the 2019 JP Morgan Healthcare Conference and a month before Bristol Myers quarterly earings reports, Bristol Myers Squib (BMY) announes a $74 Billion offer for Celgene Corp. From the Bristol Myers website press realease:
Highly Complementary Portfolios with Leading Franchises in Oncology, Immunology and Inflammation and Cardiovascular Disease
Significantly Expands Phase III Assets with Six Expected Near-Term Product Launches, Representing Greater Than $15 Billion in Revenue Potential
Registrational Trial Opportunities and Early-Stage Pipeline Position Combined Company for Sustained Leadership Underpinned by Cutting-Edge Technologies and Discovery Platforms
Strong Combined Cash Flows, Enhanced Margins and EPS Accretion of Greater Than 40% in First Full Year
Approximately $2.5 Billion of Expected Run-Rate Cost Synergies to Be Achieved by 2022
THURSDAY, JANUARY 3, 2019 6:58 AM EST
NEW YORK & SUMMIT, N.J.,–(BUSINESS WIRE)–Bristol-Myers Squibb Company (NYSE:BMY) and Celgene Corporation (NASDAQ:CELG) today announced that they have entered into a definitive merger agreement under which Bristol-Myers Squibb will acquire Celgene in a cash and stock transaction with an equity value of approximately $74 billion. Under the terms of the agreement, Celgene shareholders will receive 1.0 Bristol-Myers Squibb share and $50.00 in cash for each share of Celgene. Celgene shareholders will also receive one tradeable Contingent Value Right (CVR) for each share of Celgene, which will entitle the holder to receive a payment for the achievement of future regulatory milestones. The Boards of Directors of both companies have approved the combination.
The transaction will create a leading focused specialty biopharma company well positioned to address the needs of patients with cancer, inflammatory and immunologic disease and cardiovascular disease through high-value innovative medicines and leading scientific capabilities. With complementary areas of focus, the combined company will operate with global reach and scale, maintaining the speed and agility that is core to each company’s strategic approach.
Based on the closing price of Bristol-Myers Squibb stock of $52.43 on January 2, 2019, the cash and stock consideration to be received by Celgene shareholders at closing is valued at $102.43 per Celgene share and one CVR (as described below). When completed, Bristol-Myers Squibb shareholders are expected to own approximately 69 percent of the company, and Celgene shareholders are expected to own approximately 31 percent.
“Together with Celgene, we are creating an innovative biopharma leader, with leading franchises and a deep and broad pipeline that will drive sustainable growth and deliver new options for patients across a range of serious diseases,” said Giovanni Caforio, M.D., Chairman and Chief Executive Officer of Bristol-Myers Squibb. “As a combined entity, we will enhance our leadership positions across our portfolio, including in cancer and immunology and inflammation. We will also benefit from an expanded early- and late-stage pipeline that includes six expected near-term product launches. Together, our pipeline holds significant promise for patients, allowing us to accelerate new options through a broader range of cutting-edge technologies and discovery platforms.”
Dr. Caforio continued, “We are impressed by what Celgene has accomplished for patients, and we look forward to welcoming Celgene employees to Bristol-Myers Squibb. Our new company will continue the strong patient focus that is core to both companies’ missions, creating a shared organization with a goal of discovering, developing and delivering innovative medicines for patients with serious diseases. We are confident we will drive value for shareholders and create opportunities for employees.”
“For more than 30 years, Celgene’s commitment to leading innovation has allowed us to deliver life-changing treatments to patients in areas of high unmet need. Combining with Bristol-Myers Squibb, we are delivering immediate and substantial value to Celgene shareholders and providing them meaningful participation in the long-term growth opportunities created by the combined company,” said Mark Alles, Chairman and Chief Executive Officer of Celgene. “Our employees should be incredibly proud of what we have accomplished together and excited for the opportunities ahead of us as we join with Bristol-Myers Squibb, where we can further advance our mission for patients. We look forward to working with the Bristol-Myers Squibb team as we bring our two companies together.”
Compelling Strategic Benefits
Leading franchises with complementary product portfolios provide enhanced scale and balance. The combination creates:
Leading oncology franchises in both solid tumors and hematologic malignancies led by Opdivo and Yervoy as well as Revlimid and Pomalyst;
A top five immunology and inflammation franchise led by Orencia and Otezla; and
The #1 cardiovascular franchise led by Eliquis.
The combined company will have nine products with more than $1 billion in annual sales and significant potential for growth in the core disease areas of oncology, immunology and inflammation and cardiovascular disease.
Near-term launch opportunities representing greater than $15 billion in revenue potential. The combined company will have six expected near-term product launches:
Two in immunology and inflammation, TYK2 and ozanimod; and
Four in hematology, luspatercept, liso-cel (JCAR017), bb2121 and fedratinib.
These launches leverage the combined commercial capabilities of the two companies and will broaden and enhance Bristol-Myers Squibb’s market position with innovative and differentiated products. This is in addition to a significant number of lifecycle management registrational readouts expected in Immuno-Oncology (IO).
Early-stage pipeline builds sustainable platform for growth. The combined company will have a deep and diverse early-stage pipeline across solid tumors and hematologic malignancies, immunology and inflammation, cardiovascular disease and fibrotic disease leveraging combined strengths in innovation. The early-stage pipeline includes 50 high potential assets, many with important data readouts in the near-term. With a significantly enhanced early-stage pipeline, Bristol-Myers Squibb will be well positioned for long-term growth and significant value creation.
Powerful combined discovery capabilities with world-class expertise in a broad range of modalities. Together, the Company will have expanded innovation capabilities in small molecule design, biologics/synthetic biologics, protein homeostasis, antibody engineering and cell therapy. Furthermore, strong external partnerships provide access to additional modalities.
Compelling Financial Benefits
Strong returns and significant immediate EPS accretion. The transaction’s internal rate of return is expected to be well in excess of Celgene’s and Bristol-Myers Squibb’s cost of capital. The combination is expected to be more than 40 percent accretive to Bristol-Myers Squibb’s EPS on a standalone basis in the first full year following close of the transaction.
Strong balance sheet and cash flow generation to enable significant investment in innovation. With more than $45 billion of expected free cash flow generation over the first three full years post-closing, the Company is committed to maintaining strong investment grade credit ratings while continuing its dividend policy for the benefit of Bristol-Myers Squibb and Celgene shareholders. Bristol-Myers Squibb will also have significant financial flexibility to realize the full potential of the enhanced late- and early-stage pipeline.
Meaningful cost synergies. Bristol-Myers Squibb expects to realize run-rate cost synergies of approximately $2.5 billion by 2022. Bristol-Myers Squibb is confident it will achieve efficiencies across the organization while maintaining a strong, core commitment to innovation and delivering the value of the portfolio.
Terms and Financing
Based on the closing price of Bristol-Myers Squibb stock on January 2, 2019, the cash and stock consideration to be received by Celgene shareholders is valued at $102.43 per share. The cash and stock consideration represents an approximately 51 percent premium to Celgene shareholders based on the 30-day volume weighted average closing stock price of Celgene prior to signing and an approximately 54 percent premium to Celgene shareholders based on the closing stock price of Celgene on January 2, 2019. Each share also will receive one tradeable CVR, which will entitle its holder to receive a one-time potential payment of $9.00 in cash upon FDA approval of all three of ozanimod (by December 31, 2020), liso-cel (JCAR017) (by December 31, 2020) and bb2121 (by March 31, 2021), in each case for a specified indication.
The transaction is not subject to a financing condition. The cash portion will be funded through a combination of cash on hand and debt financing. Bristol-Myers Squibb has obtained fully committed debt financing from Morgan Stanley Senior Funding, Inc. and MUFG Bank, Ltd. Following the close of the transaction, Bristol-Myers Squibb expects that substantially all of the debt of the combined company will be pari passu.
Accelerated Share Repurchase Program
Bristol-Myers Squibb expects to execute an accelerated share repurchase program of up to approximately $5 billion, subject to the closing of the transaction, market conditions and Board approval.
Corporate Governance
Following the close of the transaction, Dr. Caforio will continue to serve as Chairman of the Board and Chief Executive Officer of the company. Two members from Celgene’s Board will be added to the Board of Directors of Bristol-Myers Squibb. The combined company will continue to have a strong presence throughout New Jersey.
Approvals and Timing to Close
The transaction is subject to approval by Bristol-Myers Squibb and Celgene shareholders and the satisfaction of customary closing conditions and regulatory approvals. Bristol-Myers Squibb and Celgene expect to complete the transaction in the third quarter of 2019.
Advisors
Morgan Stanley & Co. LLC is serving as lead financial advisor to Bristol-Myers Squibb, and Evercore and Dyal Co. LLC are serving as financial advisors to Bristol-Myers Squibb. Kirkland & Ellis LLP is serving as Bristol-Myers Squibb’s legal counsel. J.P. Morgan Securities LLC is serving as lead financial advisor and Citi is acting as financial advisor to Celgene. Wachtell, Lipton, Rosen & Katz is serving as legal counsel to Celgene.
Bristol-Myers Squibb 2019 EPS Guidance
In a separate press release issued today, Bristol-Myers Squibb announced its 2019 EPS guidance for full-year 2019, which is available on the “Investor Relations” section of the Bristol-Myers Squibb website at https://www.bms.com/investors.html.
Conference Call
Bristol-Myers Squibb and Celgene will host a conference call today, at 8:00 a.m. ET to discuss the transaction. The conference call can be accessed by dialing (800) 347-6311 (U.S. / Canada) or (786) 460-7199 (International) and giving the passcode 4935567. A replay of the call will be available from January 3, 2019 until January 17, 2019 by dialing (888) 203-1112 (U.S. / Canada) or (719) 457-0820 (International) and giving the passcode 4935567.
2. Then through news on Bloomberg and some other financial sites on a possible interest of a merged Celgene-Bristol Myers from Pfizer as well as other pharma groups
Billionaire John Paulson sees a 10 percent to 20 percent chance that Bristol-Myers Squibb Co. receives a takeover bid and he’s positioning his Celgene Corp. trade based on that risk, he said in an interview on Mike Samuels’ “According to Sources” podcast.
Bristol-Myers “is vulnerable and it has an attractive pipeline to several potential acquirers,” Paulson said in the podcast released Monday. “It’s a reasonable probability,” he said. “You have to be prepared someone may show up. It’s an attractive spread, but you can’t take that big a position.”
John Paulson
Photographer: Jin Lee/Bloomberg
Paulson has the Celgene/Bristol-Myers trade as a 3 percent portfolio position, though his firm is short a pharma index rather than Bristol-Myers for about half of the position. If an activist did show up, it would likely blow out the spread from its current $13.85 to probably $20 and, if an actual bid arrived, he said the spread could move out to $40.
“I just don’t feel comfortable being short Bristol in this environment,” Paulson said. “You can sort of get the same economics by shorting an index, maybe even do better because, since Bristol came down, if the pharma sector goes up, Bristol may go up more than the pharma sector, which would increase the profitability on the Celgene. ”
Celgene fell as much as 2.2 percent on Tuesday, its biggest intraday drop since Dec. 27. Bristol-Myers also sank as much as 2.2 percent, the most since Jan. 9.
The question of whether Bristol-Myers receives a hostile takeover offerhas been the top issue for investors since the Celgene deal was announced. The drugmaker was pressured in February 2017 to add three new directors after holding talks with activist hedge fund Jana Partners LLC. The same month, the Wall Street Journal reported that Carl Icahn had taken a stake and saw Bristol-Myers as a takeover target.
Pfizer Inc., AbbVie Inc. or Amgen Inc. “make varying amounts of sense as suitors, though we see many barriers to someone making an offer,” Credit Suisse analyst Vamil Divan wrote in a note earlier this month. AbbVie and Amgen “have the balance sheet strength and could look to beef up their oncology presence.”
CNBC’s David Faber said Jan. 3 — the day the Celgene deal was announced — that there had been “absolutely” no talks between Bristol-Myers and potential acquirers.
Jefferies analyst Michael Yee wrote in note Tuesday that he doesn’t expect an unsolicited offer for Bristol-Myers to “thwart” its Celgene purchase. He sees the deal spread as “quite attractive” again at the current range of 18 percent to 20 percent after it had earlier narrowed to 11 percent to 12 percent.
Paulson managed about $8.7 billion at the the beginning of November.
Nina Kjellson was just two years out of college, working as a research associate at Oracle Partners, a hedge fund in New York, when a cabbie gave her a stock tip. There was a company in New Jersey, he told her, trying to resurrect thalidomide, a drug that was infamous for causing severe birth defects, as a treatment for cancer.
Kjellson was born in Finland, where the memory of thalidomide, which was given to mothers to treat morning sickness but led to babies born without arms or legs, was particularly raw because the drug hit Northern Europe hard. But she was on the hunt for new cancer drugs, and her interest was piqued. She ended up investing a small amount of her own money in Celgene. That was 1999.
Since then, Celgene shares have risen more than 100-fold; the company became one of the largest biotechnology firms in the world. Earlier this month, rival Bristol-Myers Squibb announced plans to purchase Celgene for $74 billion in cash and stock.
Reflecting on a company she watched for two decades, Kjellson, now a venture capitalist at Canaan Partners in San Francisco, marveled at the “grit and chutzpah” that it took to push thalidomide back onto the market. “The company started taking off,” she remembered, “but not without an incredible reversal.” Celgene faced resistance from some thalidomide victims, and the Food and Drug Administration was lobbied not to revive the drug. In the end, she said, it built a golden egg and became a favorite partner of smaller biotech companies like the ones she funds. And it populated the rest of the pharmaceutical industry with its alumni. “If I had a nickel for every company that says we want to do Celgene-like deals,” she said, “I’d have better returns than from my venture career.”
But there’s another side to Celgene. When the company launched thalidomide as a treatment for leprosy in 1998, it cost $6 a pill. As it became clear that it was also an effective cancer drug, Celgene slowly raised the price, quadrupling it by the time it received approval for an improved molecule, Revlimid. Then, it slowly increased the price of Revlimid by a total of 145 percent, according to Sector & Sovereign LLC, a pharmaceutical consultancy.
Revlimid now costs $693 a pill. In 2017, Revlimid and another thalidomide-derived cancer drug represented 76 percent of Celgene’s $12.9 billion in annual sales. Kjellson gives the company credit for guts in science, for taking a terrible drug and resurrecting it. But it also had chutzpah when it came to what it charged.
A pioneer in ‘modern pricing’
How did the price of thalidomide, and then Revlimid, increase so much? Celgene explained it in a 2004 front-page story in the Wall Street Journal. “When we launched it, it was going to be an AIDS-wasting drug,” Celgene’s chief executive at the time, John Jackson, said. “We couldn’t charge more or there would have been demonstrations outside the company.” But once Celgene realized that the drug was a cancer treatment, the company decided to slowly bring thalidomide’s price more in line with other cancer medicines, such as Velcade, a rival medicine now sold by the Japanese drug giant Takeda. In 2003, it cost more than twice as much as thalidomide. “By bringing [the price] up every year, it was heading toward where it should be as a cancer drug,” Jackson told the Journal.
Thalidomide was not actually approved as a myeloma treatment until 2006. That same year, Revlimid, which causes less sleepiness and nerve pain than thalidomide, was approved, and Barer, the chemist behind Celgene’s thalidomide strategy, took over as chief executive. He made good on thalidomide’s promise, churning out one blockbuster after another. In 2017 Revlimid generated $8.2 billion. Another cancer drug derived from thalidomide, Pomalyst, generated $1.6 billion. Otezla, a very different drug also based on thalidomide’s chemistry, treats psoriasis and psoriatic arthritis. Its 2017 sales: $1.3 billion.
With persistent price increases, quarter after quarter, Celgene pioneered something else: what Wall Street calls “modern pricing.” Cancer drug prices have risen inexorably.
Activist investor Starboard Value is officially rallying the troops against Bristol-Myers Squibb’s $74 billion Celgene deal, and thanks to a big investor’s thumbs-down, it’ll have more support than some expected. But the question is whether it’ll be enough to scuttle the merger.
Starboard CEO Jeffrey Smith penned a letter (PDF) to Bristol-Myers’ shareholders on Thursday labeling the transaction “poorly conceived and ill-advised.” It intends to vote its shares—which number 1.63 million, though the hedge fund is seeking more—against the deal, and it wants to see other shareholders do the same. It’ll be filing proxy materials “in the coming days” to solicit “no” votes from BMS investors, Smith said.
Starboard picked up its stake early this year after the deal was announced, BMS confirmed last week, but until now, the activist fund hasn’t been forthcoming about its intentions. But the timing of its reveal is likely no coincidence; just Wednesday, Wellington Management—which owns about 8% of Bristol-Myers’ shares and ranked as its largest institutional shareholder as of earlier this week—came out publicly against the “risky” buyout.
But while “we believe it is possible at least one other long-term top-five [shareholder] may disagree with the transaction, too,” RBC Capital Markets’ Michael Yee wrote in his own investor note, he—as many of his fellow analysts do—still expects to see the deal go through. “We think the vast majority of the acquirer holder base that would not like the deal already voted by selling their shares earlier, leaving investors who are mostly supportive of the deal,” he wrote.
Meanwhile, Starboard has been clear about one other thing: It wants board seats. It’s nominated five new directors, including CEO Smith, and investors will vote on that group at an as-yet-unscheduled meeting. Thing is, that meeting will take place after BMS investors vote on the Celgene deal in April, so Starboard will have to rally sufficient support against the deal if it wants to see them installed.
The “probability of a third-party buyer for Bristol-Myers Squibb” before the April vote is “very low,” BMO Capital Markets analysts wrote recently, adding that “we do not believe a potential activist can change that.” Barclays analysts agreed Wednesday, pointing to a “lack of realistic, potential alternatives that could collectively provide a similar level of upside.”
Three quarters of Bristol-Myers Squibb shareholders vote to approve the deal with Celgene, paving the way for the largest pharmaceutical takeover in history.
Bristol-Myers Squibb (BMY – Get Report) on Friday announced that it had secured enough shareholder votes to approve its roughly $74 billion takeover of Celgene (CELG – Get Report) , putting the company closer to finalizing the largest pharmaceutical merger in history.
More than 75% of Bristol-Myers shareholders voted to approve the deal, according to a preliminary tally announced by Bristol-Myers on Friday.
Bristol-Myers’ position took a positive turn in late March after an influential shareholder advisory group recommended investors vote in favor of the cancer drug specialist’s takeover, and a key activist dropped its opposition to the deal.
Institutional Shareholder Services recommended the deal, which had been challenged by key Bristol-Myers shareholders Starboard Value and Wellington Management, ahead of Friday’s vote.
Updated 6/24/2019
Bristol Myers agrees to sell off Celgene blockbuster psoriasis and arthritis drug Otezla to satisfy FTC in hopes to speed up merger
Bristol-Myers Squibb hasn’t exactly had a pristine path to its proposed acquisition of Celgene. Sure, the legacy pharma giant racked up more than 75% of shareholder votes to approve the $74 billion acquisition following a quickly-quashed rebellion from some activist naysayers. But the company hit another hurdle in its Celgene acquisition quest that sent Bristol Myers stock tumbling nearly 7.5%, a $6 billion erasure in market value.
The reason(s)? For one, Bristol-Myers Squibb reported an unfortunate clinical trial result from a late-stage study of its cancer immunotherapy superstar Opdivo in liver cancer. For another—BMS made a somewhat surprising announcement that it would spin off Celgene’s blockbuster psoriasis and arthritis drug Otezla, slated to rake in nearly $2 billion in sales this year alone, in order to address Federal Trade Commission (FTC) antitrust concerns over the M&A.
That means the Bristol-Myers Celgene deal may not close until early 2020, rather than the originally expected timeline by the end of this year.
“Bristol-Myers Squibb reaffirms the significant value creation opportunity of the acquisition of Celgene,” the firm said in a statement. “Together with $2.5 billion of cost synergies, a compelling pipeline and a strong portfolio of marketed products, the company continues to expect growth in sales and earnings through 2025.”
Investors can be a fickle bunch. For now, though, they don’t seem particularly pleased at the decision to lop off one of Celgene’s tried and true cash cows.
Additional posts on Pharma Mergers and Deals on this Open Access Journal include:
Live Conference Coverage @Medcity Converge 2018 Philadelphia: Oncology Value Based Care and Patient Management
Reporter: Stephen J. Williams, Ph.D.
3:15 – 4:00 PM Breakout: What’s A Good Model for Value-Based Care in Oncology?
How do you implement a value-based care model in oncology? Medicare has created a bundled payment model in oncology and there are lessons to be learned from that and other programs. Listen to two presentations from experts in the field.
Mari: Building strategic partnerships with partners focused on population based health and evidence based outcomes. they provide data analytics and consultative services. Incorporate risk based systems. also looking at ancillary segments because they see cost savings. True Performance is their flagship performance program and 11% lower ED (saving $18 million) rates and 16% lower readmissions ($200 million cost savings). Also launched the Highmark Cancer care Program with Johns Hopkins. They monitor the adherence pathways and if clinician shows good adherence they give reimbursements.
Charles: Integra is a cloud based care platform focused on oncology and urology and allow clinicians to practice value based care. Providers must now focus on total cost including ER visits, end of life and therapies (which is half of total cost in US). The actionable ways to reduce costs is by reducing ER visits. What is working? Data on reimbursements models is very accurate so practices can dig into data and find effieciencies. However most practices do not have the analytics to do this.
care navigation
care path based treatment choices
enhanced patient access and experience
What is not working
data not structured so someone has to do manual curation of records
flawed logic based on plurality of visits but physician doesn’t know who else they saw
target pricing not taking into account high prices of new therapies
lack of timely reporting either by patient or physician
insufficient reimbursements
technology limitations
4:10- 4:55 Breakout: What Patients Want and Need On Their Journey
Cancer patients are living with an existential threat every day. A panel of patients and experts in oncology care management will discuss what’s needed to make the journey for oncology patients a bit more bearable.
sponsored by CEO Council for Growth
Moderator:Amanda Woodworth, M.D., Director of Breast Health, Drexel University College of Medicine Speakers: Kezia Fitzgerald, Chief Innovation Officer & Co-Founder, CareAline® Products, LLC Sara Hayes, Senior Director of Community Development, Health Union @SaraHayes_HU Katrece Nolen, Cancer Survivor and Founder, Find Cancer Help @KatreceNolen John Simpkins, Administrative DirectorService Line Director of the Cancer Center, Children’s Hospital of Philadelphia @ChildrensPhila
Kezia: was a cancer patient as well as her child getting treated at two different places and tough part was coordinating everything including treatments and schedules, working schedules
Katrece: had problem scheduling with oncologists because misdiagnosis and her imaging records were on CD and surgeon could not use the CD
John: the above are a common frustration among patients at a time when they don’t need the confusion. He feels cancer centers need to coordinate these services better
Sara: trying to assist people with this type of coordination is very tough even with all the resources
Kazia: she needed to do all the research on her own because big dichotomy being an adult and a pediatric patient where pediatrics get more information and patient centered care. She felt she felt burdening the physicians if she asked the same questions. How can we get more interaction with primary care physicians and feel comfortable with their interaction?
John: there is this dichotomy especially on wait times for adults is usually longer. We can also improve patient experience with counseling patients
Katrece: Just working with a patient navigator is not enough. The patient needs to take charge of their disease.
Sara: Patient communities can help as sometimes patients learn from other patients.
Amanda: in breast cancer , navigators are common but must take care they are not only people patients see after a while
John: at CHOP they also have a financial navigator. On the adult side there are on call financial navigators. Recent change of the high deductible plans are a major problem. Although new families are starting to become comfortable with the financial navigator
Katrece: guiding your children through your experience is important. It was also important for her to advocate for herself as she had three different sites of cancer care to coordinate and multiple teams to coordinate with each other
Amanda: A common theme seems to be hard trying to find the resources you need. Why is that?
Kazia: Sometimes it is hard to talk about your disease because it can be emotionally draining comforting other people who you told about the disease and they are being empathetic. Sometimes they want to keep their ‘journey’ to themselves
John: A relative kept her disease secret because she didn’t want to burden others…. a common cancer patient concern
Sara: Moderation of a social group is necessary to keep it a safe space and prevent trollers (like in Facebook support groups).
Kazia: most group members will get together and force those trollers out of the group
Katrece: alot of anxiety after treatment ends, patient feels like being dropped on the floor like they don’t get support after treatment. If there were survivorship navigators might be helpful
Amanda: for breast cancer they do a Survivor Care Package but just a paper packet, patients do appreciate it but a human coordinator would be a great idea
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