By Aakash B
(Reuters) - Bristol-Myers Squibb (NYSE:BMY) Co on Monday offered to divest Celgene (NASDAQ:CELG) Corp's psoriasis treatment Otezla to allay concerns raised by U.S. antitrust regulators, and pushed back the closing of their $74 billion (58 billion pounds) deal.
The move sent Bristol's shares down nearly 7%, while Celgene's shares fell nearly 5%.
The psoriasis drug, which brought in revenue of around $1.61 billion last year, is currently worth around $9.3 billion, according to a net present value calculation by Credit Suisse (SIX:CSGN) analyst Vamil Divan, but he said Bristol-Myers could have some difficulty getting the full value.
"The key for Otezla now will be what Bristol can obtain for the asset. We believe sellers are often at a disadvantage when potential buyers know they need to divest a given asset, but there are many companies with drugs in the dermatology space that may look to bid on the asset," Divan said in a research note, adding that AbbVie Inc (NYSE:ABBV), Johnson & Johnson (NYSE:JNJ), and Eli Lilly (NYSE:LLY) could be interested.
Bristol announced its plans to buy Celgene in a cash-and-stock deal in early January to bring together the companies that specialize in oncology and cardiovascular drugs in the largest pharmaceutical industry merger ever. It had planned to close the deal in the third quarter.
However, it now expects the merger to close by the end of 2019 or the beginning of 2020.
The divestiture is subject to further review by the U.S. Federal Trade Commission (FTC) and requires Bristol to enter into a consent decree with the agency, Bristol said.
In March, the FTC had sought additional information from the companies as it focused on their psoriasis treatments as part of its review of the planned merger.
Bristol is still developing a treatment for the condition and in September reported positive results from a mid-stage trial of its plaque psoriasis drug, part of a class known as tyrosine kinase 2 (TYK-2) inhibitors.
Bristol's TYK-2 inhibitor, which is being tested for psoriasis, could be "key" for Bristol, Divan said.
The company also said it remains actively engaged in discussions with the FTC on continued review of the proposed deal.
The companies have submitted a formal application seeking European Commission clearance for the merger, Bristol said.
Separately on Monday, Bristol said its blockbuster cancer treatment Opdivo failed to meet the main goal of statistically significant improvement in overall survival in patients in a late-stage study.