Key Takeaways:
A U.S. appeals court revived a $6.7 billion lawsuit accusing Bristol Myers Squibb of cheating former Celgene shareholders by delaying three drug approvals.
The 2nd U.S. Circuit Court of Appeals in Manhattan ruled 3-0 on Thursday that UMB Bank was entitled to represent the Celgene shareholders as trustee despite an error in how it was appointed. "Bristol Myers was not confused about the status of the investors who purported to appoint UMB," Circuit Judge Beth Robinson wrote.
The case stems from Bristol Myers' $80.3 billion purchase of Celgene in 2019. Shareholders holding contingent value rights were entitled to an extra $9 per share if the drugmaker won timely U.S. Food and Drug Administration approvals for Liso-cel (Breyanzi), Ozanimod, and Ide-cel. Bristol Myers won approval for Breyanzi to treat non-Hodgkin lymphoma on Feb. 5, 2021, five weeks after the relevant deadline.
The ruling revives a case U.S. District Judge Jesse Furman in Manhattan dismissed in September 2024. UMB ultimately accused the Princeton, New Jersey-based drugmaker of failing to use "diligent efforts" to win approvals and wrongly delisting the CVRs from the New York Stock Exchange before holders could enforce their rights.
The appeals court said UMB had standing to sue because Bristol Myers, the prior trustee, and a majority of the CVRs' "beneficial owners" approved UMB's appointment, though the investors were not "registered" owners as defined in the CVR agreement. In his December ruling, Furman allowed Kansas City, Missouri-based UMB to pursue some claims against Bristol Myers, including breach of contract and failure to act in good faith.
It was not immediately clear how Thursday's decision affected UMB's similar lawsuit raising several new claims against Bristol Myers, which Furman let proceed last December. Bristol Myers and its lawyers did not immediately respond to requests for comment, and UMB and its lawyers also did not immediately respond to similar requests.
The legal pressure on Bristol Myers extends beyond the Celgene dispute. Cytokinetics separately sued the drugmaker and its 2020 buyout MyoKardia on Thursday to avoid a potential patent infringement case tied to its heart disease therapy Myqorzo (aficamten), according to a company filing.
The revival exposes Bristol Myers to a potential $6.7 billion payout if shareholders prevail, a sum that would pressure the drugmaker's balance sheet and could set a precedent for merger-related shareholder litigation. Bristol Myers shares traded at $64.98 on Thursday, up 2 percent. Investors will watch whether the case proceeds to trial and how the parallel lawsuit develops.
This article is for informational purposes only and does not constitute investment advice.
