BMS skates again on $6.4B Celgene shareholder lawsuit but is still not free from another filing
A federal judge has dismissed a $6.4 billion lawsuit brought by Celgene shareholders against Bristol Myers Squibb for the second time in 19 months, ruling that the filing was brought by an "improperly appointed trustee." (Jeremy Moeller/Getty Images)
For the second time in 19 months, a federal judge in New York has dismissed a lawsuit claiming that Bristol Myers Squibb slow-walked its request for FDA approval of blood cancer drug Breyanzi to avoid paying $6.4 billion to Celgene shareholders in contingent value rights (CVRs).
In U.S. District Court in Manhattan, Judge Jesse Furman rejected the claims of UMB Bank because the plaintiff wasn’t properly appointed as the “successor trustee” of the CVR and thus did not have standing to bring the lawsuit.
The decision doesn’t free BMS from further action, however, as Furman ruled that a new lawsuit could be refiled by a “properly appointed trustee.”
A CVR is a right granted to shareholders of a company facing a restructuring or buyout. The rights ensure that the shareholders get benefits if a specific event occurs, usually within a specified time frame.
In this case, Celgene shareholders were hoping to cash in on the pending FDA approvals of three of its drugs as the company was in the process of being bought out by BMS for $74 billion in 2019.
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 $6.4 billion to Celgene investors.
The original FDA decision date for Breyanzi’s approval was in August 2020, but the endorsement didn’t come until February 2021. The CVR deadline date was Dec. 31, 2020. One reason for the delay was that BMS’ submission for approval was incomplete. Also at play were pandemic-related FDA inspection delays and an inspection failure at a third-party manufacturer.
Kansas City-based UMB argued that BMS’ exclusion of “critical and mandatory information in its initial filing” for Breyanzi was intentional. It also accused BMS of failing to “take steps necessary to prepare” a pair of manufacturing facilities for FDA inspections.
In March 2023, Furman ruled that Celgene shareholders failed to show BMS' missteps during the submission process for Breyanzi were designed to delay its approval.
BMS did not respond to a request for comment.
