Update on BMY CVRs – Post liso-cel announcement

I should have held off a few hours before publishing yesterday’s update.  After publishing that update, Bristol announced that liso-cel (JCAR017) met its primary and secondary endpoints in the Transcend NHL 001 study.    Further, Bristol announced that it planned to file an NDA for liso-cel/JCAR017 before year-end.

This is all very positive news for the BMY-RT CVRs for three reasons:

–  the data looks strong and in-line with that produced by Yescarta (Gilead/Kite Pharma) and arguably superior to what was initially published by Kymriah (Novartis) in relapsed/refractory Large B cell lymphoma prior to its priority review and FDA approval.

–  Based on an NDA submission before year end, that should provide liso-cel plenty of time to be approved by the FDA before the required 12/31/20 deadline required for the CVRs to payout.  Particularly if the FDA grants priority review (which we don’t have clarity on yet, but is something that could certainly happen).

–  This is more nuanced but given that Bristol seems to be largely disclosing the information that’s material to how the CVRs should be valued, that should provide Bristol the flexibility to be repurchasing the CVRs should it desire to do so.  Which again (buying these CVRs back), would seem an eminently smart thing to do given how inexpensively they are currently trading and how much more they will cost Bristol if they end up paying out at $9 per.

The one piece of data announced that has gained some chatter is there were four deaths related to the treatment.  It should be recognized that 269 patients were administered liso-cel and this patient group has a very poor prognosis without treatment (typically 6 months to live). Those four deaths come to 1.5% of those treated.  It should also be recognized that there were two deaths related to Yescarta treatment amongst the 101 treated (2%) with Yescarta in the study that led to a priority review and FDA approval for Yescarta.  Upshot, I don’t believe those unfortunate outcomes will hold up liso-cel’s FDA approval.

In sum, between the bb2121 announcement on Friday, December 6 and the JCAR017 announcement yesterday, the BMY CVRs should trade significantly higher on Monday.  I leave the materially increased target prices I published yesterday stand:  the CVR’s should be trading at $4.50 now and $5.25 by March-end (assuming an Ozanimod FDA approval).  I’ll be listening to tonight’s Bristol webcast from ASH to determine if anything else material is disclosed that could/should change those target prices.