BMS claims still on track to close Celgene deal by early 2020 – Bristol-Myers Squibb (BMS) has confirmed that it remains on track to close its proposed $74bn acquisition of the US biotech giant Celgene by the end 2019 or in early 2020, even though this is now dependent on securing a separate deal to dispose of the oral anti-inflammatory drug Otezla. In June, BMS and Celgene announced that the US antitrust regulator would require it to dispose of Otezla – which might have a value of $8-10bn – presumably on concerns about ownership of the developmental TYK2 inhibitor, BMS-986165.
BMS today stated that there has been significant interst from potential buyers for Otezla in its second quater results call, which may assuage concerns as there are thought to be relatively few companies that have the strategic desire and financial wherewithal to mount an acquisition and, more importantly, would not run into their own anti-trust concerns. Speculation has focussed on Amgen, Johnson & Johnson, Lilly or Regeneron being the most likely acquirors. Confirming a deal to dispose of Otezla has become important for several of the specialist investment trusts, as these have aquired shareholdings in Celgene as means to abritrage the deal. BB Biotech (BBB) and International Biotechnology Trust (IBT) notably, have holdings in Celgene equivalent to 4.6% and 4.2% of their respective NAVs.
In January, the two companies agreed a merger in which Celgene shareholders would receive one BMS share and $50 in cash as well as a contingent value right (CVR) which may provide a payment based on the achievement of three future regulatory milestones. Initially there was an attractive margin for investing in Celgene, but this becomes less attractive as deal has been delayed. Furthermore, BMS has experienced a number of clinical setbacks to its flagship cancer drug Opdivo, including most recently a negative outcome of the Checkmate-227 study in non-small cell lung cancer.