The acquisition of new base by BMS was opposed by shareholders, and the building of a tumor treatment head enterprise was blocked. A vote will be held on April 12

With a transaction value of US $74 billion, involving two industry giants, BMS (Bristol Myers Squibb)'s acquisition of the new base pharmaceutical industry on January 3 triggered an industry uproar once it was disclosed BMS hopes to integrate the existing pipeline of the new base pharmaceutical industry to build itself into a head enterprise of solid tumors and blood tumors, but it seems that shareholders have not fully paid for this idea The slogan on the front page of the global official website of BMS shows that about two months after the announcement of the acquisition, BMS submitted an application to the US Securities and Exchange Commission on February 22, and its two major shareholders, Wellington and starboard value, publicly opposed the transaction Not only that, as early as January 14, U.S congressmen Peter Welch and Francis Rooney questioned the BMS acquisition plan under review by the Federal Trade Commission and the Department of justice They believed that the acquisition might kill the benign competition in this field, especially in the field of cancer Wellington management, which owns about 8% of BMS, and starboard value, another shareholder of BMS, announced on February 27 that it was opposed to the $74 billion acquisition Wellington listed three main reasons for putting too much risk on BMS shareholders in the deal Starboard, which owns a 1% stake, said the deal was "poorly conceived and unwise" and would seek other stakeholders from BMS to stop the deal Dodge & Cox, another 2% owner, also opposed the deal BMS counterattacked and responded to shareholder criticism In an open letter to shareholders on February 28, BMS listed the benefits of the transaction and mentioned four specific points, including: 1 BMS has achieved sustained growth for 10 consecutive years, and the combination with new base will create a leading biopharmaceutical enterprise; 2 After the merger, BMS is expected to launch six new drugs with market in the near future, including five R & D pipelines from new base pharmaceutical industry, with total revenue of more than 15 billion US dollars; 3 New base pharmaceutical industry will enrich the early research pipeline of BMS, with a more diversified platform, BMS will be able to develop new products with a higher innovation level, so as to promote the strong growth in the next 10 years; 4 Within three years after the completion of the transaction, the company is expected to generate about $45 billion in free cash flow, which will help the company reduce its debt rapidly It is expected that the merger will achieve about $2.5 billion in merger cost synergies by 2022 BMS said in an open letter attached to shareholders that after the merger, the company will have 10 drugs in clinical phase III, six of which will be listed in the near future In the early and medium-term pipeline, there are 21 immunooncology and solid tumor products, 10 blood tumor products, 10 immunology and inflammation products, and 9 cardiovascular and fibrosis products BMS will hold a special meeting of shareholders at 10 a.m EST on April 12, 2019 to vote on the acquisition In addition to the three major shareholders opposed above, the opinions of Norinchukin zenkyoren asset management company (10.14%), Vanguard Group (7.02%) and BlackRock (7.02%) will be very important Among them, vanguard also owns 7.5% of celgene, and BlackRock owns 7.43% of celgene They are unlikely to vote against this transaction BMS is an old multinational pharmaceutical company with a history of one hundred years In the early years, BMS and Sanofi reached an agreement to acquire the North American rights of the anticoagulant clopidogrel Since the drug was approved by the FDA in 1998, it has rapidly grown into a blockbuster drug that directly forces the "generation of God drug Lipitor" The two companies achieved $1 billion in sales in the third year after the drug went on the market, and their performance has soared since then, with annual sales reaching 10 billion The drug is still regarded as an unrepeatable legend in the industry In 2009, BMS became independent from Mead Johnson and began its transformation to the "next generation of Biopharmaceutical Enterprises" Through the acquisition of IFM therapeutics, cormorant and other companies, it has built the kingdom of Biopharmaceutics, with product lines covering cardiovascular disease, cancer, immunology and other fields In 2011, yervoy (IPI lumimab), a CTLA4 monoclonal antibody, was listed on the market and gradually became the "new favorite" of the company In July 2014, opdivo (nivolumab) came out, becoming the first PD-1 inhibitor approved in the world, and opening the market chapter of "anticancer drug" PD-1 Opdivo is pushing against keysruda in terms of indications, leading the company in the immunotherapy battle In 2015, the first-line treatment of non-small cell lung cancer with opdivo + yervoy, an immune combination launched by BMS, made a great breakthrough, further laying a leading position in immunotherapy In 2017, BMS gained a decisive advantage in the patent dispute with MSD It not only obtained two key patents, but also received a down payment of $625 million, and 2.5-6.5% keytruda sales share However, BMS suffered a lot from a series of failures in clinical trials Opdivo's failure in the first-line single drug therapy for non-small cell lung cancer (NSCLC) caused the company's share price to fall 16% on the same day and the market value to evaporate 20 billion US dollars; then the third-phase trial of second-line single drug therapy for small cell lung cancer failed to reach the end point; I / O combined with small cell lung cancer maintenance therapy was forced to give up the accelerated review, and the market value of BMS fell 46 billion US dollars BMS's advantage in patent war doesn't seem to bring good luck to clinical trials On the contrary, its old rival, Mosha, is more and more stable On January 10, 2017, MSD obtained the FDA's "keytruda + pemetrexed + carboplatin" first-line treatment of NSCLC (regardless of the expression level of PD-L1) for supplementary application approval, and awarded the priority review qualification, so as to gain an advantage in the field of first-line treatment of non-small cell lung cancer There is no doubt that opdivo and yevoy carry too much hope for BMS Although the company has a leading edge in the field of immunotherapy at present, murshadong is closely following, and may be overtaken by a little carelessness The anxious BMS needs to be replenished with fresh blood, so that the company can quickly gain an advantage outside the PD-1 market The acquisition of Xinji aims to build the number one cancer treatment player From this point of view, Xinji pharmaceutical industry is a suitable target Not to mention the car-t products obtained by Xinji through the acquisition of Juno, only the multiple myeloma drug Revlimid can bring the company nearly 10 billion US dollars in sales In addition to the strategic cooperation signed by Xinji and Baiji Shenzhou, BMS will hold two PD-1 and one car-t in one hand, and become a giant in the field of solid tumor and hematoma treatment Combined with the layout of the two companies in immunology, inflammation and cardiovascular sectors, the combined company will have nine heavyweight products with annual revenue of more than $1 billion The new base pharmaceutical product pipeline transaction has been considered by the managers, which has been followed for more than ten years By focusing on high-value investment opportunities and external procurement innovation, and complementing the internal portfolio and product pipeline, BMS has achieved sustained and strong growth for 10 consecutive years At the same time, the deal will greatly increase BMS's clinical assets and help the company develop more advantageous and innovative drugs BMS forecasts that after the pipeline merger, BMS will have six products to be released in the near future, with a potential revenue of more than $15 billion With its own products and new base pharmaceutical industry, BMS will have a leading position in oncology after 2025 With the diversification of product pipeline, the company will gain opportunities in more disease treatment to promote the growth of BMS in the second half of 10 years Poor consideration? Shareholders say that the risk is too great, but why does such a seemingly attractive business meet the public opposition of shareholders? Wellington's first charge is that the deal puts shareholders at too much risk Revlimid is currently the sales volume of new base pharmaceutical No 1, which contributed US $9.685 billion in sales in 2018 But it is also about to face the pain of all innovative drugs - patent expiration Revlimid's important patents in Europe will last until 2022, while the drug patents in the United States will be extended to 2026 Revlimid is the biggest revenue driver of new base If Revlimid starts to face generic competition in 2022, BMS must accept the fact that Revlimid's revenue has dropped by 90% In addition, BMS offered $74 billion, with 69% of the shares purchased, or about $152.77 per share, compared with a 52 week high valuation of $95.3 for new base pharmaceuticals In addition, the agreement also mentions that shareholders of Xinji can obtain 1 BMS share and $50 cash for each celg share they hold, and they can also obtain the continuous value rights (CVR) of $9 cash in the future Such a decision would be "ill considered" for BMS shareholders But that's not all What we bought together with the pipeline, as well as the liabilities of the new base pharmaceutical industry BMS said in an investor report that the company's long-term debt is currently only $7.3 billion; however, if an acquisition is to be made, the company's balance sheet will increase by $32 billion At the same time, they need to take on $20 billion of debt from the new base pharmaceutical industry As a result, the cost of BMS debt insurance fell to its highest level since May 2010, and the corporate credit default swap rate rose to 66% Wellington said in the announcement that they don't think it's as easy for BMS to get returns from earnings as they think, and the return value that managers provide to shareholders is not so attractive However, they have not yet specified in the announcement what the specific return is Whether Xinji executives will get a large amount of compensation for BMS is still unknown Xinji executives are undoubtedly the first to get rich Fierce Pharma has calculated that if Mark alles, chief executive of newbase, leaves after the BMS merger, he will receive about $27.9 million Citing a proxy statement to the SEC, fierce said alles would receive about $17 million in equity, $10 million in cash, and miscellaneous allowances and benefits after leaving office It is reported that this is about three times his current salary and benefits In addition to alles, other senior executives of Xinji will also benefit financially from the merger According to reports, if three executives leave after the BMS transaction, they will receive 2.5 times of salary and bonus: David Elkins, chief financial officer, may receive $15.1 million; Peter Kellogg, Chief Strategic Officer, may take $11.9 million; Rupert Vessey, director of research and development, is expected to receive $12.2 million in return Congressman objected: or led to the rise of drug prices Compared with the other two objectors, Wellington's announcement was polite Starboard value, another shareholder, said in the announcement that he would seek the opinions of other stakeholders to prevent the transaction Congressmen Peter Welch and Francis Rooney directly questioned that the acquisition may kill the benign competition in this field, especially in the field of cancer, which will eventually lead to the rise of drug prices, not conducive to consumers Welch and Rooney believe that the new products acquired after the acquisition can supplement or enhance the competitive advantage of BMS's own cancer treatment products, which will also lead to a decline in the competitiveness of other similar drugs, and BMS will have more chips in the price negotiation with insurance companies In a letter to regulators, the two wrote: "the larger the company after merger, the more likely it is to form a monopoly, and the more likely it is to use strategies such as kickbacks to prevent health care institutions from obtaining more affordable or equally effective alternative products." This is not the first time that stakeholders have opposed a major merger In 2018, during Takeda's acquisition of shire, a group of Takeda