Bristol-Myers Squibb CVR BMY RT
December 17, 2019 - 1:52pm EST by
2019 2020
Price: 2.63 EPS 0 0
Shares Out. (in M): 758 P/E 0 0
Market Cap (in $M): 1,993 P/FCF 0 0
Net Debt (in $M): 0 EBIT 0 0
TEV (in $M): 1,993 TEV/EBIT 0 0

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  • CVR



We believe that the CVR created as part of the merger between BMY and CELG offers an attractive risk reward.  The CVRs offer a $9 payoff if all three drugs are approved by the specified timelines. Clinical risk has been largely de-risked here, and thus it is highly likely that all 3 drugs will be approved.  We estimate that approval probabilities are 80%, 85% and 70% respectively for ozanimod, JCAR017 and ide-cel, suggesting the CVR should be trading closer to $4.28 vs. its current $2.63. And though there is some timing risk (especially with the ide-cel approval) we believe the most likely scenario is that the CVR will be paid out in full - presenting a 200%+ return from the current price in the next 12-15 months.


This CVR was created as part of the merger of BMY and CELG.  It will pay out $9 per share if all three conditions are met.


Each share also will receive one tradeable CVR, which will entitle its holder to receive a one-time potential payment of $9.00 in cash upon FDA approval of all three of ozanimod (by December 31, 2020), liso-cel (JCAR017) (by December 31, 2020) and bb2121 (by March 31, 2021), in each case for a specified indication.




Ozanimod has been studied in Multiple Sclerosis and Crohn’s Disease.  Ozanimod acts as a sphingosine-1-phosphate (S1P) receptor agonist, sequestering lymphocytes to peripheral lymphoid organs and away from their sites of chronic inflammation. Celgene gained rights to the compound through its acquisition of Receptos.


Ozanimod is on track to be approved by December 31st, 2020 and thus meeting the CVR criteria.  In CELG’s 3Q19 earnings release they notes that that a PDUFA date has been set with March 25th, 2020.  This is not a first in class compound, which increases our confidence in approval.  Two S1P1 modulators (Gilenya and Mayzent) are already on the market.  


With an established mechanism of action, ozanimod has shown efficacy largely consistent with other agents in the class with a 38-48% reduction in annualized relapse rate.