Bristol-Myers lets go of psoriasis drug to save Celgene merger; stock falls

The planned merger between pharmaceutical firms Bristol-Myers Squibb Company (NYSE: BMY) and Celgene (CELG) – touted as a landmark deal in the rapidly-changing industry – hit a stumbling block this week after the Federal Trade Commission expressed antitrust concerns. Bristol-Myers’s stock dropped 6% early Monday after it revealed the decision to sell Otezla, a highly successful psoriasis drug from Celgene, to clear the regulatory hurdles in completing the merger by year-end, as originally scheduled.

The deal has been under the scrutiny of the FTC for some time, which held several rounds of talks with Bristol-Myers Squibb. Now, the company expects to close the transaction by year-end or early 2020, once it gets the green signal from the FTC after their consent decree is accepted by the latter. The proceeds from the divestiture will be used for the post-closing deleveraging plans. Earlier, the transaction was approved by shareholders of both the companies.

The deal has been under the scrutiny of the FTC for some time, which held several rounds of talks with Bristol-Myers Squibb

An official statement from Bristol-Myers said the company expects significant earnings and sales growth through 2025, aided by $2.5 billion of cost synergies, the strong pipeline and portfolio of marketed products. Earlier this year, the FTC had raised concerns about the companies’ pipeline and marketed therapies for the treatment of psoriasis and psoriasis arthritis.

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“The Company is continuing to develop its promising immunology pipeline asset, tyrosine kinase-2 (TYK2) inhibitor, in several autoimmune diseases, including psoriasis. Bristol-Myers Squibb looks forward to advancing its leadership in core areas of focus, including immunology, and delivering highly innovative medicines that bring meaningful benefits to patients as a combined company,” added the statement.

Earlier in the day, Bristol-Myers in a separate statement said an advanced-stage clinical study on Opdivo, indicated for the treatment of liver cancer, failed to meet the primary endpoints, triggering a stock selloff in the premarket session.

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On Monday, Bristol-Myers stock pared most of the gains it made so far this year and traded just above $45 in the early hours. It has lost 13% since the beginning of 2019 and 18% in the past twelve months. Meanwhile, Celgene shares lost about 5% in the initial hours of the session.

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