BMS to sell $1.6B psoriasis drug to satisfy FTC concerns about Celgene acquisition

The drugmaker said Monday it would sell off the drug Otezla to address concerns about competition that the Federal Trade Commission had expressed in connection to the pending $74 billion deal. According to an analyst, BMS saw Otezla as competitive against its investigational TYK2 inhibitor.

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Bristol-Myers Squibb plans to divest a drug used to treat autoimmune disease in order to address regulator concerns about the effects of its planned acquisition of Celgene on competition.

The New York-based drugmaker said Monday that it would divest Summit, New Jersey-based Celgene’s Otezla (apremilast), a drug used to treat psoriasis and psoriatic arthritis, in order to address concerns expressed by the Federal Trade Commission around the $74 billion acquisition deal, which the companies announced in January.

Shares of Celgene opened down 3 percent on the Nasdaq Monday morning following the news. BMS’ shares were down 4 percent on the New York Stock Exchange. BMS had also said Monday that a Phase III study of its flagship drug, Opdivo (nivolumab), had failed in patients with liver cancer.

In an email, BTIG biotech analyst Tom Shrader wrote that BMS had told his firm that a psoriasis drug in its pipeline, a TYK2 inhibitor, would be potentially competitive with Otezla. “The TYK2 targeting therapeutic is not approved, but is considered a promising program often mentioned by BMS,” Shrader wrote. “In cases like this, the FTC prefers the marketed drug be divested.”

The company announced Phase II data on the drug, BMS-986165, in September. It is currently in Phase III development.

BMS disclosed in a March 26 filing with the Securities and Exchange Commission that the FTC had requested information on psoriasis drugs – both marketed and in development – in order to ensure that the merger would not harm competition. The request extended the standard waiting period for the deal until 30 days after the companies complied, though they anticipated that the merger would still be on track for completion by the third quarter of this year. BMS said Monday that it expects the deal to close by the end of this year or in early 2020.

BMS noted on Monday that the divestiture of Otezla remained subject to review by the FTC and would require a consent decree with the agency. Otezla had sales of $1.6 billion in fiscal year 2018, according to Celgene’s fourth quarter earnings statement in January.

Last week, Celgene handed full global rights to the PD-1 inhibitor tislelizumab back to its development partner, Beijing, China-based BeiGene, as part of the pending merger with BMS, which already markets the aforementioned Opdivo, itself a PD-1 inhibitor approved for numerous cancer indications. Earlier this month, an executive from BeiGene said at the American Society of Clinical Oncology meeting in Chicago that the company was well-prepared for the expected handover of the drug, which is in Phase III development in several cancers. An analyst wrote that on the hand, BeiGene may partner tislelizumab outside of China, but not many large companies have need of a PD-1 inhibitor due to crowding in the market, but the drug is nevertheless derisked due to the advanced stage of its development.

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