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Bristol-Myers to buy Celgene in $74B deal; US FDA shutdown may last weeks

Top news

* New York's Bristol-Myers Squibb Co., maker of blockbuster cancer drug Opdivo, is acquiring Celgene Corp. in a cash and stock deal with an equity value of about $74 billion. Celgene shareholders will receive one Bristol-Myers share and $50 in cash for each share of the company they hold.

The companies expect to complete the deal in the third quarter of 2019. Once completed, shareholders of Bristol-Myers and Celgene are expected to own about 69% and 31% of the combined company, respectively.

Separately, Bristol-Myers released its 2019 EPS estimates, excluding the impact of the Celgene acquisition. The company is offering a GAAP EPS guidance range of $3.75 to $3.85 and a non-GAAP EPS guidance range of $4.10 to $4.20.

* U.S. FDA Commissioner Scott Gottlieb warned drugmakers yesterday that his agency was able to provide only limited services during the ongoing government shutdown — a closure the Republican head of the Senate signaled could last for weeks. The FDA furloughed more than 7,000 of its employees, or about 41% of its staff, on Dec. 22, 2018, when Congress failed to fund 25% of the U.S. federal government — a shutdown that is now into its second week.

President Donald Trump yesterday said he would keep the shuttered agencies closed for "as long as it takes" to get the funding he wants for his proposed border wall between the U.S. and Mexico.

On the policy front

* President Trump, in a meeting of his Cabinet at the White House, said he expects a "tremendous decrease" in drug prices, Reuters reported. Trump's comment came days after drugmakers — including Allergan PLC, Bristol-Myers, Biogen Inc. and Eli Lilly and Co. — boosted hundreds of medicines' prices by an average of 6.3%.

M&A and capital markets

* Karo Pharma AB said EQT Partners AB raised its offer for the company to 38.00 Swedish kronor per share in cash from 36.90 kronor announced earlier. Stockholm-based Karo Pharma, which sells over the counter drugs and nutritional products, was valued at 5.97 billion kronor under the previous offer.

* Cambrex Corp. completed the $252 million acquisition of Avista Pharma Solutions, a contract development, manufacturing and testing company. Cambrex said the acquisition adds early-stage development capabilities for both active pharmaceutical ingredients and the finished dosage forms of drugs, as well as analytical testing services.

* Luminex Corp. has completed the acquisition of Merck KGaA's cell analysis equipment provider MilliporeSigma in a $75 million cash, stock and asset deal. The acquisition expands the Austin, Texas-based company's footprint in life science research and broadens its existing offering of flow-based detection systems.

Drug and product pipeline

* Bristol-Myers said the U.S. Food and Drug Administration approved a combination of its cancer drug Sprycel and chemotherapy to treat children one year of age and older with newly diagnosed Philadelphia chromosome-positive acute lymphoblastic leukemia — a rare subtype of the disease.

The approval, which was granted after priority review by the FDA, is based on data from a phase 2 study in 78 patients that showed that event-free survival, the length of time after the start of Sprycel treatment to lack of remission or certain complications including death, was 64.1% after three years.

* Merck & Co. Inc. blockbuster immuno-oncology drug Keytruda received five simultaneous approvals from Japan's Pharmaceuticals and Medical Devices Agency, including three expanded indications for advanced non-small cell lung cancer, one in skin cancer and a new indication in advanced microsatellite instability-high tumors.

* Ironwood Pharmaceuticals Inc. and Allergan settled a patent dispute with Mylan NV over the generic maker's version of Linzess, a drug that treats irritable bowel syndrome with constipation. The deal stipulates that Mylan may launch its generic versions of Linzess in 2030 at different times of the year depending on the size of the dose.

Ironwood and Allergan permitted the Canonsburg, Pa. company to market its 145-microgram and 290-microgram doses in February 2030 and its 72-microgram Linzess generic in August of that year. It is the third such settlement that partners Ironwood and Allergan have reached to protect Linzess, also known as linaclotide.

Operational activity

* Merck & Co. Inc. exercised an option to license NGM Biopharmaceuticals Inc.'s investigational insulin sensitizer NGM313 for $20 million. NGM313 is being studied for treating nonalcoholic steatohepatitis, a fatty liver disease, and type 2 diabetes.

* Teva Pharmaceutical Industries Ltd. and Amgen Inc. agreed to settle an ongoing patent dispute over Teva's generic version of the drug cinacalcet hydrochloride, ending the litigation process between the two companies. Under the settlement, Teva agreed to pay Amgen an undisclosed amount and halt the distribution of its generic product until its license date in mid-year of 2021 or earlier under certain circumstances.

Cinacalcet, which is being marketed by Amgen as Mimpara, is used to treat secondary hyperparathyroidism — a condition in which the parathyroid glands produce too much parathyroid hormone, causing high levels of calcium in the blood — in adult patients with chronic kidney disease on dialysis. The drug is also indicated to treat hypercalcemia in adult patients with parathyroid carcinoma, as well as severe hypercalcemia in adult patients with primary hyperparathyroidism who are unable to undergo parathyroidectomy, a surgical procedure to remove the parathyroid glands.

* Indian generic-drug maker Aurobindo Pharma Ltd.'s U.S. unit Aurobindo Pharma USA Inc. is voluntarily recalling 80 lots of valsartan blood pressure drugs due to the detection of cancer-causing impurities. The drugs being recalled include amlodipine valsartan tablets USP, valsartan HCTZ tablets USP and valsartan tablets USP.

Drugs containing valsartan, which was originally developed by Novartis AG and marketed under the Diovan brand, are used to treat high blood pressure and heart failure. According to the U.S. FDA safety report, the drugs were contaminated with trace amounts of a cancer-causing impurity identified as N-nitrosodiethylamine.

* MyoKardia Inc. will regain the global rights to certain heart disease medicines in its pipeline after the company and Sanofi decided not to extend a research collaboration that ended Dec. 31, 2018. The two companies formed a research partnership in 2014 to develop three MyoKardia programs for the treatment of hypertrophic cardiomyopathy and dilated cardiomyopathy, which are diseases of the heart muscles. Sanofi has paid about $230 million to Myokardia under the collaboration.

Other features

* Bloomberg News writes about how pharmaceutical companies may be holding off on price increases on their drugs to avoid scrutiny.

* CNBC has a feature about how healthcare stocks could continue their gains into the new year, and another about how drugmakers are racing to cash in on the global market for nonalcoholic steatohepatitis therapies.

* The (U.K.) Financial Times writes about the clamor for drugmakers to respond more to climate change not only by reducing emissions but also by developing therapies for conditions that are expected to become more prevalent as global warming gets worse.

The day ahead

Early morning futures indicators pointed to a lower opening for the U.S. market.

In Asia, the Hang Seng fell 0.26% to 25,064.36, while the Nikkei 225 was closed today.

In Europe, around midday, the FTSE 100 fell 0.61% to 6,693.36, and the Euronext 100 was down 1.03% to 900.95.

Click here to read about today's financial markets, setting out the factors driving stocks, bonds and currencies around the world ahead of the New York open.

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