By Jonathan Stempel
(Reuters) -Bristol Myers Squibb reached a $239 million settlement of claims that former Celgene shareholders were defrauded about prospects for the psoriasis drug Otezla, and multiple sclerosis treatment now known as Zeposia.
A preliminary settlement of the 7-1/2-year-old class action was filed on Tuesday night in the federal court in Newark, New Jersey, and requires a judge’s approval.
The former shareholders could receive about $159.3 million after legal fees and costs are deducted, court papers show.
Bristol Myers bought Celgene for $80.3 billion in cash and stock in November 2019.
In a statement on Wednesday, Bristol Myers said it was pleased to settle, so it can continue focusing on developing medicines to help patients fight disease.
Celgene was accused of overstating the revenue potential for Otezla and ozanimod, the generic name for Zeposia, as it prepared for the eventual loss of patent protection for its blockbuster multiple myeloma drug Revlimid.
The company and two executives allegedly ignored internal warnings that Otezla would generate less revenue than investors were promised, and that the U.S. Food and Drug Administration would not approve ozanimod without required study data.
Celgene’s alleged misrepresentations inflated its share price, causing billions of dollars of shareholder losses after the truth came out, the lawsuit said.
All defendants denied wrongdoing, and settled to avoid the uncertainty and cost of further litigation.
Amgen bought Otezla from Celgene for $13.4 billion in cash in 2019.
The class is led by Swedish pension fund AMF Tjanstepension AB, and includes former Celgene shareholders from April 27, 2017 to April 27, 2018.
Matthew Mustokoff, a lawyer for the shareholders, said they were gratified by the settlement.
Celgene was based in Summit, New Jersey, and Bristol Myers is based in Princeton, New Jersey.
The shareholders’ lawyers plan to seek up to 30% of the settlement fund, or about $71.7 million, for legal fees.
The case is In re Celgene Corp Securities Litigation, U.S. District Court, District of New Jersey, No. 18-04772.
(Reporting by Jonathan Stempel in New York; Editing by Bill Berkrot)
