Celgene-BMS merger looks good to go as shareholder backs down

Bristol-Myers Squibb’s mega-merger with Celgene looks set to go ahead after activist hedge fund Starboard Value backed out of a campaign against the $74 billion deal.

The move came after a series of other developments that shore up the future of Celgene’s biggest selling blockbuster drug, Revlimid, which could generate sales in excess of $10 billion this year.

Late last week Starboard Value backed down from its campaign after two leading advisory firms backed the deal, advising shareholders to vote in its favour in a vote due later this month.

Institutional Shareholder Services (ISS) and Glass Lewis said on Friday that Bristol-Myers Squibb shareholders should vote in favour of the deal on April 12.

The hedge fund will continue to vote against the merger, which it has criticised because of concerns about the profitability of Celgene’s drugs after the merger goes ahead.

Starboard’s main concern is about Revlimid, which is due to go off patent in key markets in coming years, and whether the merged company will be able to get enough new drugs approved to make up for the shortfall in sales.

However, Starboard said it would stop its campaign against the deal in light of the ruling from the two advisers.

Starboard said in a statement: “Despite the substantial swell of support against the transaction, it is extremely difficult for shareholders to prevail without a supportive recommendation from ISS and Glass Lewis to vote against the transaction.”

BMS has mounted its own campaign to urge shareholders to back the deal, announced in early January, which will create a company specialising in oncology and cardiovascular drugs in one of the largest pharma industry mergers ever.

Separate developments seem to be working in favour of Revlimid: Celgene has settled a patent dispute with subsidiaries of the generics firm Alvogen preventing them from selling any generics until March 2022, and even then with limits on volume. Alvogen will only be able to sell the generic without volume limitations from January 31, 2026.

And in a separate development, Europe’s Committee for Medicinal Products for Human Use (CHMP) backed Revlimid as part of a triple therapy for multiple myeloma, setting up a potential new use in the EU in the next few months.

Revlimid gained a positive opinion in combination with bortezomib and dexamethasone (RVd), for adult patients with previously untreated multiple myeloma (MM) who are not eligible for transplant.

The choice of treatment in a first-line therapy setting is critical as patients progressively become less responsive to therapy and experience shorter periods of remission at later lines of treatment. If approved, RVd can provide newly diagnosed patients an option that significantly prolongs the time to a first relapse and delivers unprecedented overall survival (OS) of over 7 years.

Celgene’s Imnovid (pomalidomide) was also recommended by the CHMP in combination with bortezomib and dexamethasone (PVd) for adult patients with MM who have received at least one prior treatment regimen including Revlimid.

Positive opinions from the CHMP are passed onto the European Commission, which nearly always grants a licence in line with the committee’s recommendations within a few months.