A new $6.4 billion lawsuit against Bristol Myers Squibb Co (BMY.N) in Manhattan Federal Court accuses the firm of delaying lymphoma cancer drugs to avoid paying Celgene Corp's shareholders, avoiding a "milestone" payment.
Bristol Myers Squibb, which purchased the drug manufacturer Celgene Corporation in 2019, was slapped with the lawsuit claiming the company breached a value-rights agreement by willfully delaying a specific cancer drug for approval by the FDA.
UMB Bank NA, the trustee for Celgene's former shareholders, initiated the lawsuit. UMB claims Bristol Myers withheld and/or submitted vital data late for the new cancer drug Breyanzi's approval. The lawsuit documents also claim Bristol Myers did not prepare its manufacturing plants for their expected, required inspections by the FDA.
Court documents show the purchaser was contractually obligated to gain the approval by using "diligent efforts" with the US Food and Drug Administration (FDA) for the new non-Hodgkin cancer drug.
The complaint alleges the agreement called for strong efforts to get the FDA approval for its Celgene-developed lymphoma drug and two other drugs by December 31, 2020.
Bristol Myers successfully gained FDA approval for the two other Celgene drugs by December, including a multiple sclerosis drug called Zeposia and the drug Abecma, used for the treatment of multiple myeloma.
UMB claims Bristol Myers did not meet the "milestone" payment deadline by the end of the year, meaning they did not have to pay another cash payment of $9 per share to shareholders of Celgene.
The lawsuit alleges these payment savings are a significant "windfall" for Bristol Myers.
In 2019, Bristol Myers purchased Celgene for $80.3 billion, a deal that included cash and stocks.
Regarding the lawsuit, UMB said, "Other cellular therapies based on similar technology have received FDA approval without the issues and ineptitude that plagued Bristol Myers, and in substantially less time."
In a statement, Bristol Myers said they would not be commenting on the pending litigation.
The lawsuit calls Bristol Myers’ delay of the cancer drug "blatant misconduct." Bristol Myers released a statement saying they would not comment on pending litigation.
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