Valuing Celgene's Contingent Value Rights

May 16, 2019 3:32 AM ETCelgene Corporation (CELG)BMY15 Comments
William Meyers profile picture
William Meyers


  • The Bristol-Myers deal with Celgene includes a $9 CVR component.
  • Three drugs must get FDA approvals by deadlines for the CVR to pay out.
  • We won't know if there is a payout until 2021, but a failure could come sooner.

Celgene (NASDAQ:CELG) has seen its stock price improve dramatically since it was announced it would be acquired by Bristol-Myers Squibb (BMY). The deal was approved by stockholders of both companies and looks likely to go through this year, unless there are regulatory objections. Currently, Celgene's stock price is near the cash value of the deal $50 per share, plus the price of one BMY share. But there is another potential asset in the deal: CVRs (contingent value rights). Right now these appear to be valued at zero. Here I will discuss why CVRs should carry a higher value when issued, and could be worth $9 each.

CVR terms

In the Celgene acquisition there is an unresolved mystery. The mystery is where will the CVRs (contingent value rights) be priced on issuance and how events will drive trade afterwards.

There is even ambiguity in the way CVRs were announced:

Each share also will receive one tradeable CVR, which will entitle its holder to receive a one-time potential payment of $9.00 in cash upon FDA approval of all three of ozanimod (by December 31, 2020), liso-cel (JCAR017) (by December 31, 2020) and bb2121 (by March 31, 2021), in each case for a specified indication. [Bristol-Myers Squibb to Acquire Celgene, January 3, 2019]

The natural reading is that if any one of these three potential therapies fails to get FDA approval, the CVRs are worthless. But ozanimod has three indications in Phase 3 trials. Does it need to hit all three, or a particular one, or just any one of the three? I am assuming it needs only the most advanced approval, for multiple myeloma.


Ozanimod is in Phase 3 trials for three indications: relapsed multiple sclerosis; ulcerative colitis; and Crohn's disease. It has a December 31, 2020, FDA approval deadline to make the CVR good.

This article was written by

William Meyers profile picture
I provided stock and bond research and analysis to a small cap specialist investor, Lloyd Miller, from 2002 until his death in January 2018. For my own account I invest mainly in technology and biotechnology stocks. My technology and investment web site is, where readers can view the notes I take to make decisions and to write articles for Seeking Alpha.

Disclosure: I am/we are long CELG. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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