A federal appeals court has overturned (PDF) the 2024 dismissal of a lawsuit filed by Celgene shareholders that accuses Bristol Myers Squibb of slow-walking the approval of blood cancer drug Breyanzi to avoid paying out a more than $6 billion contingent value rights (CVR) agreement.
By a 3-0 vote, the U.S. Circuit Court of Appeals in Manhattan has ruled that District Judge Jesse Furman “erred in concluding” that Celgene’s trustee, UMB Bank, “lacked subject matter jurisdiction” to bring the lawsuit because of alleged defects in how Kansas City-based UMB was appointed to replace a prior trustee.
“Even if UMB’s initial appointment as Trustee did not comport with the requirements of the CVR Agreement, UMB may maintain this suit because all parties to the Agreement, including Bristol-Myers, accepted UMB’s appointment as Trustee,” Judge Beth Robinson wrote in a decision this week, adding that BMS was not “confused about the status” of UMB as the representative of the shareholders.
Twice in a span of 19 months, Furman dismissed the case. But in his ruling in October of 2024, he allowed that a separate breach of contract lawsuit could be refiled by a “properly appointed trustee.” In December of last year, Furman allowed part of that lawsuit to go forward.
It is uncertain how this week’s appeals court decision will affect the breach of contract lawsuit.
BMS did not respond immediately to a request for comment on either case.
The lawsuits surround the 2019 acquisition of Celgene by BMS for $74 billion. The buyout included a CVR agreement in which BMS would pay Celgene investors $9 per share if three Celgene drugs received FDA approval by the end of 2020.
Two of the drugs—Zeposia and Abecma—were approved by the FDA before their CVR deadlines passed. But Breyanzi’s nod came after its deadline, freeing BMS from paying what amounted at the time to $6.4 billion to Celgene investors.
The FDA's original target decision date for Breyanzi’s approval was August 2020, but the U.S. endorsement didn’t come until February 5 of 2021. One reason for the delay was that BMS’ submission for approval was incomplete. Also at play were pandemic-related FDA inspection hurdles and an inspection failure at the facility of third-party manufacturer, Lonza.
UMB has argued that BMS excluded “critical and mandatory information in its initial filing” for Breyanzi and that the mistakes were intentional to delay the approval. The shareholders also accused BMS of failing to “take steps necessary to prepare” two manufacturing facilities for FDA inspections.