New details are emerging in the lawsuit against Bristol Myers Squibb over a scuppered contingent value rights (CVR) payout tethered to its $74 billion Celgene takeover.
Former Celgene shareholders filed suit against BMS back in June, accusing the drugmaker of “blatant misconduct” in allegedly delaying development of CAR-T lymphoma therapy Breyanzi. At the time of the original filing, BMS declined to comment.
Now, a slate of confidential witnesses have come forward to detail just how Bristol Myers dropped the ball. In a new filing, lawyers for the plaintiffs laid out the drugmaker’s myriad opportunities to rectify the situation before it was too late.
BMS would have owed former Celgene shareholders $6.4 billion if it scored FDA approval for three new drugs—Zeposia, Breyanzi and Abecma—each by a particular deadline. When Breyanzi, also known as liso-cel, failed to make it past the FDA finish line by Dec. 31, 2020, the CVR became worthless.
In the latest complaint, “multiple” former employees who worked at the facilities making the drug confirmed that BMS “knew the facilities were inadequately prepared prior to the FDA inspection and failed to take necessary action to address numerous well-known, but relatively easily solvable, issues that impacted the timing of the FDA’s approval of liso-cel,” the lawsuit states, according to excerpts provided by Mizuho Securities.
Former staffers at the Lonza and Juno Therapeutics manufacturing facilities revealed “pervasive and obvious issues with the facilities warehouse that had existed for months, if not years, prior to the scheduled inspection, which Bristol knew or would have known about …” the complaint continues.
Kansas City-based UMB Bank NA, which levied last year's suit against BMS as a trustee for Celgene’s former shareholders, took issue with BMS’ decision to exclude “critical and mandatory information in its initial filing” for Breyanzi. It also accused Bristol of failing to “take steps necessary to prepare” a pair of manufacturing facilities for FDA inspections.
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A Lonza viral vector plant in Houston, which the FDA inspected in Dec. 2020, failed its inspection on “numerous, egregious” deviations from FDA regulations, triggering a Form 483 from the agency.
No one, much less a seasoned pharma like BMS, “would ever have omitted such key information had they truly intended to use ‘diligent efforts’ to obtain FDA approval of liso-cel” by the necessary deadline to trigger the CVR payout, the latest complaint says.
Part of the original complaint against BMS, which was echoed in the witnesses’ statements, hinged on a “major amendment” the company made to its initial FDA application, which automatically extended the FDA’s target action date on the drug.
Major Amendments are “so rare” that the new complaint’s confidential witness #1, an executive director at Celgene from 2017 to late 2019 and at BMS from late 2019 to early 2021, had never experienced one and was “deeply disappointed” by the announcement, according to the complaint.
“I perceived [the Major Amendment] as a major blunder,” the confidential witness said, as quoted in the complaint.
Meanwhile, shortly after BMS bought Celgene, it publicly described liso-cel’s manufacturing facilities as "‘launch ready,’” the complaint goes on to say. In reality, according to confidential witness #2, a former manager of audit and inspections at the Lonza plant, BMS and Lonza “concluded that there was a lot of work left to be done after their mock pre-approval inspection in the fall of 2019."
Despite those concerns, BMS failed to take the necessary steps to prepare for its inspection, the plaintiffs argue. Even with an FDA inspection notice and ample opportunity to address deficiencies, “both facilities were left woefully unprepared,” the complaint says.
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Confidential witness #3, who was a Lonza facility senior manager from 2020 to 2021, pointed out issues with the companies’ warehousing. Bristol was “absolutely” aware of issues with management of materials, the complaint says. The witness said the inventory system “did not always indicate if a material had been used by the manufacturing facility, discarded or destroyed.”
Lonza’s warehouse problems could be traced back to January 2019 and still weren’t being addressed by the time witness #4 left Lonza in October 2020, the complaint says.
The third observation in the FDA’s Form 483 concerned failure to follow written procedures, particularly those regarding visual inspection and environmental monitoring. BMS didn’t do enough to make sure Lonza employees understood and followed written procedures, the complaint goes on to allege.
Confidential witness #8, who was a viral vector manufacturing technician at the Lonza facility who specifically worked on liso-cel, said members of Lonza’s environmental monitoring team told him they didn’t think they’d been sufficiently trained to do their jobs. They also expressed concerns that the team wasn’t sufficiently staffed.
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After delays, BMS eventually won FDA approval for Breyanzi in February 2021. The drug carries big sales expectations, and BMS execs hope it can help fill the revenue hole left by Revlimid generics, which are set to launch in March.
Last year, Mizuho analyst Salim Syed predicted BMS could eventually settle the CVR lawsuit.
A BMS representative didn't immediately respond to a request for comment about the latest lawsuit.