(Reuters) — A federal judge on Wednesday dismissed a lawsuit accusing Bristol Myers Squibb Co. for defrauding investors who stood to receive $6.4 billion if they had won federal approval within specified deadlines for drugs developed by the former Celgene Corp.
In conjunction with the $80.3 billion acquisition of Celgene in 2019, Bristol Myers had agreed to pay Celgene shareholders holding “contingent value rights” an additional $9 per share in cash if it timely won U.S. Food and Drug Administration approvals of The Breyanzi cancer drug and two other drugs.
Rights holders accused Bristol Myers of failing to submit critical information to the FDA and finished facilities for inspection in an attempt to delay the approvals and avoid the $6.4 billion payout, while publicly vowing to use “diligent”; efforts to meet December 2020 and March 2021 deadlines.
However, U.S. District Judge Jesse Furman in Manhattan found no evidence of intent to defraud.
He said there was no evidence Bristol Myers executives sought to benefit financially from delays, and that even alleged corporate “mismanagement” did not amount to fraud.
Lawyers for the investors did not immediately respond to requests for comment. Bristol Myers and its lawyers did not immediately respond to similar requests.
Judge Furman said the investors can file certain claims in an amended complaint.
Bristol Myers is still facing a separate lawsuit raising similar claims in Manhattan federal court by a trustee representing former Celgene shareholders, and a third lawsuit raising similar claims in New York state court in Manhattan.
The New York-based company won FDA approval for Breyanzi on February 5, 2021 to treat non-Hodgkin’s lymphoma.
The case is In re Bristol–Myers Squibb Co. CVR Securities LitigationUS District Court, Southern District of New York, no. 21-08255.