While Bristol-Myers executives successfully beat back Starboard and Wellington’s efforts to derail the deal, the questions raised by that opposition remain.
By buying Celgene, Bristol-Myers gains a top-selling blood cancer drug in Revlimid (lenalidomide) and a slate of five drugs the companies believe they can launch within the next two years.
Yet Revlimid comes with an expiration date, with limited generic competition set to arrive in early 2022. Celgene’s pipeline, meanwhile, is an uncertain bet. Two of those five drugs have hit notable delays, while Wall Street sales forecasts paint a less rosy picture than what Bristol-Myers and Celgene have pitched.
“I do acknowledge that some shareholders have expressed concerns with the acquisition of Celgene,” said Bristol-Myers CEO Giovanni Caforio Friday at the company’s shareholder meeting, which was held in a law firm’s offices in Manhattan.
“From our perspective — the management team and the board — we believe the acquisition of Celgene creates a leading company. It is the right transaction for Bristol-Myers Squibb.”
Whether or not Celgene meets that billing, the deal might have been the only transaction for Bristol-Myers. Both Starboad, and to a lesser extent Wellington, had appeared hopeful that Bristol-Myers itself could be acquired.
But Caforio dismissed that possibility in early March, telling investors at a conference run by Cowen & Co. that he had had no discussions about a possible acquisition by other companies since 2017.
Regulatory filings, meanwhile, revealed that Celgene approached only one other drugmaker about a deal and decided against further outreach after that company’s CEO signaled no offer would be forthcoming.
Ultimately, more than three-quarters of Bristol-Myers shareholders voted Friday to support the deal, a preliminary tally subject to final certification.
Nearly all of the votes cast by Celgene shareholders were in favor of the combination.
Per deal terms, Bristol-Myers will pay $50 in cash plus one Bristol-Myers share for every Celgene share, plus a contingent value right (CVR) worth $9 based on the performance of three pipeline projects. Compared against Celgene’s share price on Jan. 2, the day before the deal was announced, Bristol-Myers’ offer represented a 67% premium.
Including the assumed net debt of Celgene and the prevent value of the CVR, the total deal consideration stretches to nearly $94 billion.
Together, Bristol-Myers and Celgene predict revenues totaling $44 billion in 2020, a figure that would rank the combined company among the top seven drugmakers currently.
In the near-term, sales will be largely fueled by Bristol-Myers’ Opdivo (nivolumab) and Celgene’s Revlimid. But the companies also estimate their near-term pipeline could deliver more than $15 billion in peak annual sales.
Given the commercial heft of both Opdivo and Revlimid, however, replacing slowing sales of either over time will be a key challenge going forward.
In rebuffing Starboard, Bristol-Myers pointed to its success in transitioning from a reliance on drugs like Plavix (clopidrogel) and Abilify (aripriprazole) to its current top earners Opdivo and Eliquis (apixaban).
Bristol-Myers management will now have to repeat that achievement on a much larger scale, as together Opdivo and Revlimid would represent more than 40% of the combined company’s revenues.
For the pharma industry, Bristol-Myers buyout will end Celgene’s three decade run as one of the leading independent biotech companies, a fate the New Jersey biotech now shares with biotech pioneers like Genentech, MedImmune and Genzyme.
