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Thwarting Opposition, Bristol Gets Shareholder OK for $74B Celgene Buyout

Xconomy New York — 

The early opposition has turned out to be just noise. Shareholders of Bristol-Myers Squibb today approved the pharma giant’s planned buyout of Celgene, paving the way for a deal that will create one of the largest biopharma organizations in the world, and send ripples throughout the sector.

Bristol (NYSE: BMY) said Friday that more than 75 percent of its shareholders voted to approve the deal at a meeting on Friday. Some 98 percent (NASDAQ: CELG) of Celgene’s stockholders supported the deal, the company said in a separate announcement. The deal should close in the third quarter of 2019.

Bristol first struck a deal to buy Celgene for $74 billion, or $102.43 per share, in January. Celgene shareholders get $50 in cash and one Bristol share for each Celgene share they own, as well as a tradeable contingent value right (CVR) for each of their shares that are tied to regulatory approvals of three Celgene drugs that are close to market.

The buyout will combine two leaders in oncology that are at a crossroads, having suffered tough setbacks over the past few years.

Bristol, for instance, has been one of the top players in immunotherapy, which has begun to change the way a number of cancers are treated. Its immunotherapies, including one of its top-selling drugs, nivolumab (Opdivo), generate some $7.5 billion in yearly sales combined and are approved to treat a variety of solid tumors of the skin, lung, kidney, and other organs. But Bristol has seen nivolumab fail a few key trials, enabling immunotherapy rivals Merck (NYSE: MRK) and Roche to grab market-leading positions in certain types of cancer.

Celgene, meanwhile, is best known for its hematology franchise, and specifically for taking a derivative of the once-banned drug thalidomide, lenalidomide (Revlimid), and turning it into a mainstay treatment for the blood cancer multiple myeloma. Lenalidomide generated $8.2 billion in sales last year alone. But the company, long known for its creative web of partnerships under former top dealmaker George Golumbeski and ex-research chief Tom Daniel, has stumbled in its efforts to prepare for life after lenalidomide.

One key drug, an experimental Crohn’s disease treatment called mongersen that Celgene bought for $710 million, failed a Phase 3 trial in October 2017. And ozanimod, a multiple sclerosis drug that was the crown jewel of a $7.2 billion buyout of Receptos, was rejected by the FDA because Celgene left key information out of its approval application. Though ozanimod could still be approved, its launch has been significantly delayed. Sales of its autoimmune drug, apremilast (Otezla), have also disappointed.

When the deal was signed, lenalidomide could’ve faced generic competition as soon as 2020. Shares were cut in half between September 2017 and December 2018, just before Bristol’s buyout offer.

In selling the deal to shareholders, Bristol has put high expectations on the next wave of Celgene drugs. It has said that Celgene’s ozanimod, the blood disease drug luspatercept, and two CAR-T cell therapies for blood cancers, bb2121 and liso-cel—along with two of Bristol’s own experimental drugs—can generate some $15 billion in yearly revenue. Some top shareholders balked at the assessment, most notably Wellington Management and Starboard Value, which both campaigned heavily against the deal and felt that Bristol would be better off going in a different direction.

Nonetheless, the deal gained momentum in recent weeks. Celgene filed for approval of luspatercept and re-submitted an application for ozanimod. The company delayed, once again, potential generic competition for lenalidomide. And two proxy firms backed the buyout, leading Starboard to drop its opposition.

Now it will be on Bristol to make good on its projections. That will involve succeeding with, and helping expand the reach, of CAR-T cell therapy, a cutting-edge form of cancer immunotherapy that has struggled so far commercially. It will also involve proving that Celgene is truly on the verge of selling drugs that will make a big difference for Bristol’s bottom line, not to mention patients with diseases like beta thalassemia, multiple sclerosis, and more.

More broadly, biotech circles will also be watching how the combined company handles partnerships and alliances with smaller biotechs. In addition, several biotechs with existing partnerships with Celgene and Bristol are now on notice. New priorities for the new combined company can end alliances and stall drug development collaborations.

Here’s more on the buyout, Celgene’s history, and some of the key drugs Bristol has championed as key drivers for the deal.