Celgene, say goodbye to Otezla: BMS agrees to sell psoriasis drug to clear $74B merger

With the Federal Trade Commission (FTC) sweating the details of Bristol-Myers Squibb and Celgene’s proposed $74 billion merger, all eyes were on the companies’ combined psoriasis portfolio, which regulators feared would corner the market. The feds found a solution: You can have your merger, but you don’t get to keep Celgene's blockbuster Otezla. Bristol-Myers will sell the psoriasis pill as part of a consent decree with the FTC intended to speed up its Celgene merger, the company said. Otezla, which cleared more than $1.6 billion in global sales in 2018, was not considered one of the core assets in the merger, according to Credit Suisse analyst Vamil Divan. The divesture will likely delay the merger's approval until late 2019 or early 2020, overshooting plans for a Q3 approval this year, Bristol-Myers said. "Bristol-Myers Squibb is committed to working with regulatory authorities around the world on the proposed combination with Celgene,” Bristol-Myers said in a statement. “The company is focused on realizing the promise of the transaction, and is continuing to work to complete the transaction on a timely basis.” In snap reactions to the news Monday, analysts expressed a common thought: surprise. Jefferies analysts said targeting Otezla, which competes with five to seven major competitors in psoriasis and isn’t considered a “dominant power,” revealed the FTC’s tight strategy on pharma M&A. “We believe this is a (potential) read-through that the FTC is being tougher on regulating competition,” the analysts said. Divan said there could be multiple buyers for Otezla, but Bristol-Myers’ leverage in a potential sale would be limited with the mandatory nature of the castoff.