In a much-needed positive for BMS, Celgene gains FDA review for blockbuster hopeful

celgene
Celgene delivered some positive optics for its would-be parent Bristol-Myers Squibb. (Celgene)

The $74 billion deal that will see Bristol-Myers Squibb subsume Celgene into its ranks is all but done, but it’s been a rocky path. Today, Celgene delivered some positive optics for its would-be parent.

The Big Biotech and partner Acceleron say that blood disease drug luspatercept, a blockbuster hopeful, has been given a series of FDA passes: First up is a priority review for the erythroid maturation agent’s potential indication in beta-thalassemia (with an action date of Dec. 4), followed by a PDUFA date of April 4 for its myelodysplastic syndromes (MDS) indication.

Analysts at Jefferies see $2 billion in peak annual sales for the drug if its gains approval for both indications in the U.S. and Europe, noting the lion’s share of revenue should come from its MDS license, given the gene therapy competition for the beta-thalassemia population and the fact that MDS affects more people.

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Jefferies said in a recent note to clients: “Luspatercept is one of four very important late-stage products (others are BLUE bb2121, JUNO JCAR017 and ozanimod) that add up to potential $5-$6B+ prob-adjusted 2026 revenues and could make up half of the $11B-$12B longer-term Revlimid erosion period that the Street is worried about.”

This will be good news for BMS, which will want to start seeing cash coming in from its buy as soon as possible, and comes after a protracted and sometimes bitter battle for the Big Biotech.

The deal for BMS to buy Celgene was all but assured back on March 29, when proxy advisers Institutional Shareholder Services and Glass Lewis backed the transaction. The firms said in a statement that “the deal's strategic rationale is sound,” and the “transaction also significantly enhances BMS' pipeline, raising the number of late-stage drugs from one to six.” Later that day, Starboard gave up the fight to sway shareholders against the deal.

But it had been quite a battle until then. Starboard mailed a letter to BMS shareholders in early March listing five reasons the company shouldn’t buy Celgene. They included a “massive patent cliff” facing Celgene, primarily from multiple myeloma drug Revlimid, as well as the possibility that BMS would be more valuable without the deal because it could sell itself at a high price. Other institutional shareholders, including Wellington Management, opposed the deal.

In the end, it went down to a shareholder vote, which BMS comfortably won. The review for luspatercept helps show why BMS thinks the deal is the right one, and follows on from its re-filing (after an embarrassing misstep the first time around) for its multiple sclerosis hopeful ozanimod, putting it on track to gain FDA approval next year and potentially billions more in sales.

That resubmission, however, came one year after Celgene was rocked by a refusal-to-file notice from the FDA.

The U.S. regulator hit Celgene with the notice after shortcomings in the preclinical and clinical pharmacology parts of its package. Celgene looked to some ongoing clinical pharmacology programs for data to address the FDA’s demands, but hopes of a rapid resolution to the logjam faded quickly.

The original filing for FDA approval of ozanimod was a low point for Celgene in a bad period for the company. The regulatory misstep hurt Celgene’s reputation, further pressured its share price and enabled Novartis to steal a lead in the race to bring a SP1 drug to market, denting the prospect of ozanimod living up to its billing as a big blockbuster. And in the aftermath, Celgene’s Nadim Ahmed laid the blame for the snafu at Receptos’ door (the biotech it from which it bought the drug).

This debacle was one of the reasons investors questioned BMS’ $74 billion deal for Celgene. But it’s managed to turn things around, and with two of the four key late-stage drugs set for approvals over the next 12 months helping to shore up future losses for Revlimid, BMS bosses may just be breathing a little easier.

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