Biotech’s much-debated lottery ticket got a little more complicated
Bristol Myers Squibb’s $74 billion acquisition of Celgene came with a sweetener: Every share of Celgene entitled investors to a voucher that turns into $9 if certain conditions are met and turns into dust if even one of them is not. The latest news seems evenly weighted toward profit and peril.
The key cogs are a pair of Celgene-owned CAR-T therapies, which need to win approval on certain timelines for the voucher to pay off. Yesterday brought good news for bb2121, one of the CAR-T treatments: The FDA accepted its approval application and set a decision date of March 27, which comes in right under the wire. But the news for the other treatment, which must be approved by the end of the year, was more confusing. Bristol Myers said the FDA was yet to inspect its CAR-T manufacturing facilities and hadn’t scheduled a date to do so, which could be a sign the agency is going to blow the deadline.
Those $9 vouchers are publicly traded, and the latest twists dragged their value down to around $2 each. That sets up one of the starkest risk-reward profiles in all of biotech: Investors could more than quadruple their money or walk away with absolutely nothing, and there’s no outcome in between.
The key cogs are a pair of Celgene-owned CAR-T therapies, which need to win approval on certain timelines for the voucher to pay off. Yesterday brought good news for bb2121, one of the CAR-T treatments: The FDA accepted its approval application and set a decision date of March 27, which comes in right under the wire. But the news for the other treatment, which must be approved by the end of the year, was more confusing. Bristol Myers said the FDA was yet to inspect its CAR-T manufacturing facilities and hadn’t scheduled a date to do so, which could be a sign the agency is going to blow the deadline.
Those $9 vouchers are publicly traded, and the latest twists dragged their value down to around $2 each. That sets up one of the starkest risk-reward profiles in all of biotech: Investors could more than quadruple their money or walk away with absolutely nothing, and there’s no outcome in between.
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