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9:09 PM
Jan 04, 2019
 |  BioCentury  |  Product Development

Bristol-Myers’ next phoenix act?

How Celgene could be BMS’s next chance to reinvigorate growth, deliver on EPS

Bristol-Myers Squibb Co. will now be in the driver’s seat to monetize the assets gained from the myriad deals Celgene Corp. has forged. The pharma will need to mimic its history of using well-timed acquisitions to rise from the ashes and meet growth expectations.

This time, however, BMS won’t have the luxury of multiple first-in-class assets to fuel the turnaround, though it could have a batch of best-in-class candidates. Celgene’s pipeline is a mixed bag of programs that would compete in crowded spaces.

On Jan. 3, BMS proposed to acquire Celgene for $74 billion in a cash and stock deal, making it the largest pure-biotech takeout (see Figure: “Kind of a Big Deal”).

Figure: Kind of a big deal

Bristol-Myers Squibb Co. (NYSE:BMY)’s proposed $74 billion acquisition of Celgene Corp. (NASDAQ:CELG) is the largest one-time payout for a pure biotech takeout by a pharma, eclipsing the 2009 acquisition of the remaining shares of Genentech Inc. (DNA) by Roche (SIX:ROG; OTCQB:RHHBY). Last year’s proposed $62 billion bid by Takeda Pharmaceutical Co. Ltd. (Tokyo:4502) for Shire plc (LSE:SHP; NASDAQ:SHPG) rounds out the top three. Johnson & Johnson (NYSE:JNJ); Actelion Ltd. (ATLN); Actavis plc (ACT); Forest Laboratories Inc. (FRX); Sanofi (Euronext:SAN; NYSE:SNY); Genzyme Corp. (GENZ); AbbVie Inc. (NYSE:ABBV); Pharmacyclics Inc. (PCYC). Source: BCIQ: BioCentury Online Intelligence

BMS gains a clinical pipeline of 28 programs across cancer, hematology and autoimmune/inflammatory indications. Celgene also brings a marketed portfolio of cancer drugs to treat hematologic and solid tumors, supplementing BMS’s immuno-oncology franchise.

“This is truly a unique combination of two very complementary companies,” said BMS Chairman and CEO Giovanni Caforio on the investor call announcing the deal.

Celgene’s pipeline is the result of its prolific dealmaking. Five of its six Phase III programs were gained via acquisitions and licensing deals, including one first-in-class and three potential best-in-class compounds. At least 12 of its 22 Phase II and Phase I programs were also brought in.

BMS is looking to five of the late-stage assets, plus one of its own, to deliver near-term revenue growth. The expectation is that these six programs will be launched in the next two years, with $15 billion in revenue potential, though BMS declined to disclose if this was peak revenue potential.

BMS has historically done well bringing in programs via billion-dollar deals and turning them into blockbusters, particularly where they were first-in-class.

The pharma will need to repeat that success to meet or beat five-year growth projections of 11%.

Its immuno-oncology franchise has been hampered by clinical setbacks, losing ground to Merck & Co. Inc. in the PD-1 wars. BMS’s lone candidate among the six near-term growth drivers would be unlikely to pick up the slack.

“This is truly a unique combination of two very complementary companies.”

Giovanni Caforio, BMS

Still, even with the Celgene deal, BMS has a hefty task ahead since four of the drivers face competitive markets.

And whereas in the past, acquisitions have been in BMS’s well-trodden therapeutic areas, allowing the pharma to capitalize on its internal expertise, the Celgene assets break new ground.

However, in addition to assets, Celgene brings commercial and R&D management expertise that could help BMS deliver on the potential, in particular for new areas where BMS has little experience.

Caforio -- who will be CEO of the joint entity -- may also need to add talent in critical areas new to both companies, such as multiple sclerosis.

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