Bristol Myers CVR down the drain as CAR-T drug's FDA manufacturing inspection spots problem

Bristol Myers Squibb new sign outside
Bristol Myers Squibb's contingent value rights from its Celgene buyout are now worthless as the FDA didn't deliver a decision on CAR-T therapy liso-cel by year-end after noticing manufacturing problem during a pre-approval inspection. (Bristol Myers Squibb)

Thanks to shortfalls at a manufacturing plant, Bristol Myers Squibb won't be shelling out a closely watched follow-up payment linked to its Celgene buyout. And disappointed investors—who'd been hotly anticipating that payout—might well channel their anger toward the company.

The FDA didn’t deliver an approval for the CAR-T drug liso-cel by Dec. 31, which was a target for the contingent value rights Bristol Myers issued with the Celgene merger.

In fact, the FDA didn’t issue a decision at all—and now, those CVRs are worthless, the company said Friday.

Nearly 715 million CVRs were outstanding, according to Bloomberg. Based on their intended price of $9 per share, that means about $6.4 billion has officially gone down the drain.

Angry investors are pointing fingers. Lawsuits are likely. Regardless of what happens next, Bristol Myers faces a reckoning on its role in the failure.

Previously, BMS cited a belated FDA inspection of a Lonza viral vector plant, slated to help produce liso-cel, as the reason why the FDA delayed its decision. But this time, the pandemic doesn’t appear to be responsible for the CVR debacle.

The FDA did inspect the facility from Dec. 3 to Dec. 10, according to a Bristol Myers update. That might have fed an approval by year-end, provided the plant passed muster. Problem is, FDA inspectors found shortfalls.

“Lonza and BMS expeditiously responded to observations received at the close of the inspection within eight days,” Bristol Myers said. The company also received—and “rapidly responded to”—information requests, leaving none outstanding, it added. It’s not immediately clear whether the FDA’s satisfied with the company’s response.

RELATED: Investors send Bristol Myers' CVR soaring on rekindled hopes for timely CAR-T site inspection

Right now, the FDA still hasn’t come up with a new action date for the CAR-T drug’s application in relapsed or refractory large B-cell lymphoma. Bristol Myers said it continues to work closely with the agency to support its ongoing review.

An FDA green light for liso-cel by the end of 2020 was one of three predetermined conditions the CVR payment was pegged to. Celgene’s Zeposia came through with its multiple sclerosis approval last March, satisfying one of those criteria. The third piece, bluebird bio-partnered CAR-T therapy ide-cel, sits on a March 27 PDUFA date this year.

Liso-cel has had a checkered regulatory history. Bristol Myers filed the anti-CD19 cell therapy for FDA approval in late 2019 after linking the drug to a 53% complete tumor clearance rate. The FDA requested more information in May 2020 and postponed its original action date of mid-August by three months to finish the review.

RELATED: Sanofi pays $315M to settle claims it delayed Lemtrada to avoid investor payouts

When mid-November arrived, the FDA postponed its decision again. At the time, a belated plant inspection because of COVID-19 restrictions was cited.

If the FDA were able to carry out its inspection by year-end, BMS might just meet the deadline, CVR holders figured. And they saw a glimmer of hope when word came out that the agency had finished an inspection of the manufacturing facility for Macrogenics’ now-approved HER2 drug Margenza ahead of its mid-December PDUFA date.

But in the end, that struggle didn’t translate into a happily-ever-after ending for the investors.

The manufacturing misstep, together with the FDA's original refusal to file, could open Bristol Myers up for potential lawsuits. CVR holders could accuse the company for failing to support liso-cel’s application properly.

Sanofi faced similar allegations a few years ago. In late 2019, the French pharma shelled out $315 million to settle claims from former Genzyme shareholders that it deliberately dragged its feet on multiple sclerosis drug Lemtrada to avoid potential CVR payments tied to its timely FDA approval and meeting certain sales milestones.