Please ensure Javascript is enabled for purposes of website accessibility

Former Celgene Shareholders' Contingent Value Rights Slip Further Away

By Cory Renauer – May 6, 2020 at 4:24PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Food and Drug Administration moved its action date on liso-cell back by three months.

On Wednesday, Bristol Myers Squibb (BMY -0.77%) told investors the FDA would require an extra three months to complete its review of liso-cel, a cell-based cancer therapy candidate that the big pharma took control of in its 2019 acquisition of Celgene. Instead of paying upfront for Celgene's late clinical-stage pipeline, Bristol Myers Squibb issued contingent value right (CVR) shares worth $9 in the event liso-cell and two other drugs earn FDA approval by preset deadlines. 

The first component of that CVR, ozanimod, met its deadline in March when the FDA approved it to treat multiple sclerosis. Liso-cel needs to earn approval by the end of 2020, and the third candidate, ide-cel needs to earn FDA approval by March 31, 2021, or the CVR will expire without any payout.

Person looking through a telescope.

Image source: Getty Images.

Delayed not done

A three-month delay to liso-cell's application doesn't give the CVR shareholders any room for further error. To account for additional information Bristol Myers Squibb submitted after the review began, the FDA pushed its action date back to Nov. 16, 2020. The agency could issue its decision before then, but because two similar therapies have already been approved, liso-cell's application is relatively low on the FDA's list of priorities at the moment.

The odds of hitting a late clinical-stage trifecta are slim under the best circumstances, but the COVID-19 pandemic and this new delay have investors extra jittery. The value of the CVR shares (NYSE: BMY.RT) climbed to a peak of $4.51 last month, but closed trading on Wednesday at $3.75. 

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Bristol Myers Squibb. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Bristol Myers Squibb Company Stock Quote
Bristol Myers Squibb Company
BMY
$69.70 (-0.77%) $0.54

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
338%
 
S&P 500 Returns
108%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/07/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.