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Faced with regulator’s merger concerns, BMS want to offload Otezla

Sell-off will mean merger delay

bms

Bristol-Myers Squibb has announced plans to sell off its blockbuster psoriasis drug Otezla in order to gain regulatory approval for its $74bn acquisition of Celgene.

It has been known since March that the US Federal Trade Commission (FTC) had raised concerns that the merged company might have an overly-dominant position in the psoriasis market, but a major divestment hadn’t been expected.

The regulator has pointed to BMS’ pipeline candidate in the therapy area, a tyrosine kinase 2 (TYK2) inhibitor, which it has indicated that in combination with Celgene's Otezla could give the company too big a share in the market.

BMS says it has proposed the sell-off of Otezla to the FTC, and is now awaiting the regulator’s verdict on its solution. Even if it gains the thumbs up, the company expects the merger to be delayed: it now predicts the deal to go through towards the end of 2019 or early 2020.

The FTC’s objections are another tricky obstacle for BMS in what has been a far-from-easy deal to pull off.

It had already faced objections from some shareholder activist groups, who had believed the deal was not in their interests, but the company nevertheless got the backing of shareholders in a vote in April.

Otezla sales for the first quarter this year were $389 million, putting it on track for sales in excess of $1.6bn this year.

The loss of Otezla from its portfolio will be significant, though other drugs, such as flagship myeloma blockbuster Revlimid and pipeline assets such as bb2121 are more vital to the firm’s future.

BMS has put an optimistic spin on the sell-off, which should fetch billions from a big pharma buyer, and says the divestment will help it pay off the debts related to the Celgene acquisition faster.

The company said in a statement: “Bristol-Myers Squibb reaffirms the significant value creation opportunity of the acquisition of Celgene. 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.”

Article by
Andrew McConaghie

24th June 2019

From: Regulatory

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