Bristol Myers Deal-Linked Derivative Surges on Inspection Hopes

The deal sweetener Bristol Myers Squibb Co. offered as a part of its Celgene Corp. purchase spiked as traders positioned ahead of a key year-end deadline and shared optimism related to a needed regulatory inspection.

The $9 all-or-nothing payment jumped as much as 55% to the highest level in about three weeks as investors weighed whether U.S. regulators could inspect a facility key to the derivative’s payout in time for a year-end deadline.

Bristol Myers Deal-Linked Derivative Surges on Inspection Hopes

While traders await word from the company on the state of the inspection, they shared commentary from another drug manufacturer at an Evercore ISI event Wednesday that said a site inspection had just been completed. Fans of the so-called contingent value right, or CVR, viewed the update as a positive sign that the Food and Drug Administration is still inspecting facilities amid the pandemic.

The derivative, which has been volatile since plummeting a month ago, depends on FDA approval of the company’s cancer drug lisocabtagene maraleucel by the end of the year as well as approval of a second drug, idecabtagene vicleucel in multiple myeloma, by March 31.

Read more: Bristol CVR Surges as FDA Head’s Tweet Sparks Investor Optimism

Investors have been doing their best to read the tea leaves for what would prove to be a very profitable trade if Bristol Myers can clear the two remaining hurdles. The derivative spiked last week as traders circulated a tweet from FDA Commissioner Stephen Hahn, which signaled the agency is ramping up inspections of drug manufacturing sites.

©2020 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.