A federal appeals court has overturned the 2024 dismissal of a lawsuit accusing Bristol Myers Squibb of deliberately delaying approval of blood cancer drug Breyanzi.
The U.S. Circuit Court of Appeals in Manhattan ruled 3-0 that District Judge Jesse Furman had erred in dismissing the case brought by Celgene shareholders.
At the heart of the dispute is a contingent value rights agreement tied to BMS’s $74 billion acquisition of Celgene in 2019.
Under that deal, BMS agreed to pay Celgene investors $9 per share if three Celgene drugs received FDA approval by the end of 2020.
Two of those drugs, Zeposia and Abecma, met their deadlines and received FDA approval in time, triggering their respective payouts.
Breyanzi, however, missed its deadline, with the FDA’s approval arriving on February 5, 2021, well after the August 2020 target decision date.
The delay meant BMS was not required to pay what amounted to approximately $6.4 billion to former Celgene investors under the CVR agreement.
Celgene trustee UMB Bank argued that BMS excluded “critical and mandatory information in its initial filing” for Breyanzi and that the mistakes were intentional to delay approval.
Shareholders also accused BMS of failing to “take steps necessary to prepare” two manufacturing facilities for FDA inspections, further contributing to the delay.
Contributing factors cited in the case include pandemic-related FDA inspection hurdles and an inspection failure at the facility of third-party manufacturer Lonza.
Judge Beth Robinson, writing for the three-judge panel this week, found that even if UMB’s initial appointment as trustee was procedurally flawed, it could still maintain the suit.
“Even if UMB’s initial appointment as Trustee did not comport with the requirements of the CVR Agreement, UMB may maintain this suit because all parties to the Agreement, including Bristol-Myers, accepted UMB’s appointment as Trustee,” Robinson wrote.
Robinson also noted that BMS was not “confused about the status” of UMB as the representative of the Celgene shareholders throughout the proceedings.
Judge Furman had dismissed the case twice within a span of 19 months, though his October 2024 ruling did permit a separate breach of contract lawsuit to be refiled by a properly appointed trustee.
In December of last year, Furman allowed part of that breach of contract lawsuit to proceed, and it remains unclear how this week’s appeals court ruling will affect those proceedings.
Bristol Myers Squibb did not respond immediately to a request for comment on either case.