Bristol-Myers Squibb (BMY) Delay of Drug Approval Securities Class Action

Bristol-Myers Squibb Co. filed an S-4 Registration Statement for its November 2019 acquisition of Celgene Corporation. The complaint for this class action alleges that this S-4 contained untrue statements and omitted important information, because it did not disclose that Bristol-Myers was deliberately slow-walking approval of a drug. The slowdown would mean that certain milestones in the acquisition terms would not be met, which would thus save the company the expense of certain Contingent Value Rights (CVRs) offered as part of the acquisition deal.

Two classes have been defined for this action:

• The Common Stock Class is all persons who acquired Bristol-Myers common stock in exchange for Celgene securities as part of the acquisition.
• The CVR Class is all persons who acquired Bristol-Myers CVRs pursuant or traceable to the Registration Statement.

The proposed arrangement for this acquisition involved a trade of each share of Celgene stock for $50, one share of Bristol-Myers Squibb (BMY) stock, and one Contingent Value Right (CVR).

The CVR would have value only if Bristol-Myers met certain goals by certain times in getting approval from the Food and Drug Administration (FDA) for what the complaint describes as “a blockbuster cancer therapy—JCAR017 a/k/a lisocabtagene maraleucel” or Liso-cel.

The S-4 laid out these terms, but the complaint alleges that it made false statements and omitted important information. According to the complaint, the S-4 “failed to disclose that Bristol-Myers was already implementing operational irregularities and drafting aberrant regulatory filings that diverged from industry practice, contravened ongoing FDA guidance, and [] would slow-roll the FDA approval process for [] Liso-cel and thereby avoid a $6.4 billion payment promised to CVR holders.”

In other words, the complaint claims that Bristol-Myers was ensuring that it would not meet the CVR time requirements, so that the CVRs would become worthless.

For example, the complaint alleges that the Biologic License Application portion of its application to the FDA “was designed to omit critical data, the omission of which, once the FDA predictably demanded it in the form of an amendment, would trigger an automatic three-month delay to achieving the Liso-cel Milestone.”

It also claims, “At the same time, Bristol Myers was allowing its purportedly launch-ready production facilities to lapse basic FDA and industry standards. Again, upon inspection, the FDA predictably found the facilities riddled with ‘significant’ issues risking adulteration, contamination, and harm to patients.”

The complaint says, pointedly, “This was not Bristol-Myers’ first rodeo.”

The complaint alleges violated §§ 11, 12(a)(2), and 15 of the Securities Act of 1933 on the part of Bristol-Myers and a group of individuals who are former officers and directors of Bristol-Myers and Celgene.

Article Type: Lawsuit
Topic: Securities
Tags: Mergers or Acquisitions, Registration Statement, Securities