Bristol-Myers Squibb to divest Otezla to gain US regulatory approval of Celgene purchase

Bristol-Myers Squibb said Monday that it plans to divest Otezla (apremilast) in order to satisfy concerns expressed by the US Federal Trade Commission regarding its proposed $74-billion acquisition of Celgene. Bristol-Myers Squibb noted that the sale of the PDE4 inhibitor requires further review by the FTC, while the drugmaker must also enter a consent decree with the regulator.

Celgene reported in April that Otezla generated sales of $389 million in the first quarter, up 10% year-over-year, mainly driven by increased demand of the psoriasis therapy in the US, with revenue from the product reaching $1.6 billion last year. Bristol-Myers Squibb indicated that proceeds of the Otezla divestiture will allow it to accelerate its post-closing deleveraging plans.

Bristol-Myers Squibb added "the company is continuing to develop its promising immunology pipeline asset, tyrosine kinase 2 (TYK2) inhibitor, in several autoimmune diseases, including psoriasis." Last year, the drugmaker reported that the experimental TYK2 inhibitor BMS-986165 led to significant skin clearance in a Phase II study in patients with moderate-to-severe plaque psoriasis. Specifically, data showed that between 67% and 75% of patients dosed with BMS-986165 3 mg twice daily or more achieved PASI 75 at week 12, compared to 7% for placebo.

Bristol-Myers Squibb is currently conducting the registrational POETYK PSO Phase III programme for BMS-986165 in patients with moderate-to-severe plaque psoriasis. Meanwhile, mid-stage studies of the drug are also being conducted for patients with systemic lupus erythematosus or Crohn's disease (for related analysis, see ViewPoints: FTC forces Bristol-Myers Squibb to bet extra big on TYK2 and Future Treatment Trends in Psoriasis (Physician Survey)).

Despite the sale of Otezla, Bristol-Myers Squibb reaffirmed "the significant value creation opportunity of the acquisition of Celgene," adding "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." According to Bristol-Myers Squibb, the companies have concluded their pre-notification process with the European Commission and it expects to close the acquisition of Celgene at the end of this year or the beginning of 2020, delayed from a previous goal of the third quarter of 2019.

The news, along with Bristol-Myers Squibb's announcement that Opdivo (nivolumab) failed to significantly prolong overall survival compared to Bayer's Nexavar (sorafenib) as a first-line treatment in patients with unresectable hepatocellular carcinoma, sent shares in the former down as much as 7% on Monday. "Divesting Otezla [is] a surprise to us and removes one of the newco's growth drivers," remarked Credit Suisse analyst Vamil Divan.

The delay to Bristol-Myers Squibb's purchase of Celgene comes as Roche also battles to overcome antitrust concerns related to its proposed acquisition of Spark Therapeutics. Earlier this month, the FTC requested additional information and documentary material from Roche and Spark in connection with the deal, marking the latest in a number of extensions to the transaction. "We continue to be mindful and are carefully watching to get a better handle on if we are in a more aggressive FTC era for biotech," commented Jefferies analyst Michael Yee.

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