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Bristol Myers Deal Sweetener Tumbles on FDA Delay Jitters

Bristol Myers Deal Sweetener Tumbles on FDA Delay Jitters

(Bloomberg) -- The all-or-nothing payout that Bristol Myers Squibb Co. used to sweeten its purchase of Celgene Corp. is on track for its worst day ever as investors weighed the impact of the coronavirus pandemic.

The so-called contingent value right, or CVR, depends on timely U.S. approval of three Celgene drugs, with a decision for multiple sclerosis drug ozanimod expected by March 25. While Wall Street has talked up expectations for the company to clear the bar on all three, potential hiccups at the U.S. Food and Drug Administration due to the ongoing pandemic ignited fears.

“There is a fair deal of panic among investors,” Mizuho analyst Salim Syed wrote in a note to clients. He said the most frequent questions have centered on “potential coronavirus-driven FDA delays.”

Bristol Myers Deal Sweetener Tumbles on FDA Delay Jitters

The potential $9 payout fell as much as 16% to touch an intraday low of $2.35, the lowest level since early December.

There have been questions across drug development as to how remote work situations will affect companies’ ability to interact with regulators during the development process. Last week, the FDA said it is postponing “all non-essential meetings” through April. Routine facility inspections may also be delayed as regulators halt travel.

Syed reiterated his stance that ozanimod would get approval by the March 25 timeline, though he stressed that the CVR milestone threshold isn’t until the end of the year.

To contact the reporter on this story: Bailey Lipschultz in New York at blipschultz@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Lisa Wolfson

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