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According to Canaccord Genuity, Celgene's latest application to the US Food and Drug Administration for its multiple sclerosis drug is a good sign for the Celgene and Bristol-Myers Squibb merger project.
The company submitted Monday an application for FDA approval for its drug, the ozanimod for the treatment of multiple sclerosis. The company encountered a major hurdle last year when the FDA rejected its treatment request.
The story back.
Celgene
(symbol: CELG), the stock is up about 39% since the beginning of this year. In January,
Bristol-Myers Squibb
(BMY) said it bought the biotech drug maker for $ 90 billion, including net debt. Bristol shares have declined by 7.4% since the beginning of the year.
The operation met opposition from Bristol shareholders such as Starboard Value and Wellington Management. (According to Starboard, Bristol would pay too much for Celgene's drug development pipeline.) The shareholders' meeting on the proposed deal will take place on April 12th.
What's up. Celgene's ozanimod application demonstrates its commitment to "adhere to a one-time schedule of key pipeline approvals," said Canaccord Genuity analyst John Newman to his clients in a note. This, he wrote, is "a little extra progress" for the potential merger.
Bristol investors "might see a little less risk in the acquisition," he wrote. Celgene investors, meanwhile, "could get a slightly lower risk by getting the potential value right." CVRs are common components of mergers and acquisitions, which provide shareholders with additional benefits if certain objectives are met. The Celgene shareholders' CVR will pay off if federal regulators approve certain drugs in the Celgene pipeline, with a potential gain of $ 9 per share.
Celgene's action rose 1.1% to $ 88.86 on Tuesday afternoon. Bristol's shares rose 1.2% to $ 48.07.
Moving forward. Newman reiterated a note of retention on Celgene. His target price of $ 102 reflects Bristol's offer, he noted.
"The approval in multiple sclerosis and the additional development in inflammatory bowel disease will be essential for achieving the total revenues of Ozanimod," he noted.
Newman does not expect Bristol's shareholders to reject the agreement, "even with the recent rise of dissenting voices".
As Barron's Andrew Bary wrote in February that Celgene shares could be a good bet for the deal.
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