Bristol Myers Squibb has agreed to pay $239 million to settle claims from former Celgene shareholders who said they were misled about the future of two drugs: Otezla, used for psoriasis, and Zeposia, a treatment for multiple sclerosis. This settlement, announced Tuesday night in a federal court in Newark, New Jersey, still needs approval from a judge.
The legal battle has been going on for over seven years. After legal fees and costs, shareholders could receive around $159 million. The lawsuit accused Celgene of exaggerating revenue expectations for these drugs while preparing for the loss of patent protection on their top-selling cancer drug, Revlimid. The company and two of its executives reportedly ignored internal warnings that Otezla’s sales would be weaker than claimed and that the FDA would not approve ozanimod (Zeposia’s generic name) without more study data.
According to the lawsuit, these misrepresentations led to an inflated stock price. When the truth emerged, shareholders’ investments lost billions. Although all the defendants denied any wrongdoing, they decided to settle to avoid further legal costs and uncertainty.
Bristol Myers Squibb acquired Celgene in November 2019 in a deal valued at $80.3 billion. That same year, Amgen purchased Otezla from Celgene for $13.4 billion.
The class action is led by the Swedish pension fund AMF Tjanstepension AB and includes those who owned Celgene shares between April 27, 2017, and April 27, 2018. Legal representatives for the shareholders expressed satisfaction with the settlement and plan to request up to 30% of the fund, around $71.7 million, for legal fees.
Both Celgene and Bristol Myers Squibb are New Jersey-based companies, with Celgene located in Summit and Bristol Myers Squibb in Princeton. The case is registered as In re Celgene Corp Securities Litigation in the U.S. District Court for the District of New Jersey.