Case Law | Mergers & Acquisitions | Business

Introduction: When Regulatory Timelines Become Legal Time Bombs

In one of the most consequential pharmaceutical-merger disputes in recent memory, a U.S. federal judge has ruled that Bristol Myers Squibb (BMS) must face a $6.7 billion lawsuit brought by the trustee for former Celgene shareholders. The suit alleges that Bristol Myers intentionally delayed regulatory approval of a critical cancer therapy, Breyanzi a long enough to avoid paying billions owed under a 2019 merger agreement.

The decision, issued December 1, 2025, by U.S. District Judge Jesse Furman, rejected BMS’s attempt to dismiss the case and cleared the way for a high-stakes legal battle that could reshape how contingent-value rights (CVRs) are structured and enforced across the pharmaceutical industry. The ruling not only exposes Bristol Myers to severe financial liability but also signals to corporate executives that strategic timing around drug approvals carries significant legal risk.

The Legal Foundation: What the Case Is About

The Celgene Merger and the Contingent-Value Rights

When Bristol Myers acquired Celgene in 2019, shareholders received CVRs each valued at $9 contingent upon three Celgene-developed drugs receiving FDA approval by specific deadlines. These included:

• Breyanzi (Liso-cel), a CAR-T cell therapy for lymphoma
• Ozanimod, for multiple sclerosis
• Ide-cel, another cell-based cancer therapy

CVRs are common in biotech acquisitions, especially when drug pipelines contain promising but not yet approved products. They allow buyers to avoid overpaying upfront while promising sellers additional compensation if regulatory milestones are met.

But CVRs are legally binding contracts. Missing a milestone by even a single day can void them and in this case, it erased $6.7 billion in shareholder value.

The Allegations: Delay by Design?

Five Weeks Too Late

Breyanzi received FDA approval on February 5, 2021, missing the contractual deadline by just over five weeks. This single delay automatically rendered the CVRs worthless.

A “Slow-Roll” Strategy

According to the lawsuit, filed by UMB Bank, the trustee representing CVR holders, Bristol Myers:

• “Slow-rolled” its FDA submission and regulatory process
• Failed to use contractually required diligent efforts
• Engaged in a strategy to avoid the payout, knowing even slight delays would eliminate liability
• Delisted the CVRs, making it harder for holders to enforce their rights

The CVR agreement required BMS to use the same level of effort it applied to its other top-priority drugs. The plaintiffs argue the company did not do so.

A Rare Revival of CVR Litigation

Multiple earlier lawsuits were dismissed in 2024, but this time the court ruled that the trustee has proper legal standing and that the allegations, if proven, could constitute breach of contract and breach of the implied covenant of good faith and fair dealing.

The Court’s Reasoning: Why the Judge Said the Case Must Proceed

Judge Furman’s decision did not determine liability but it did find enough factual disputes to justify a full trial.

Key reasons the court allowed the case to move forward:

1. Evidence Could Show Bristol Myers Failed to Use Diligent Efforts

The CVR contract required Bristol Myers to pursue regulatory approval with consistent intensity. Whether BMS acted diligently is a fact-specific inquiry, unsuitable for dismissal early in the process.

2. Approval After the Deadline Raises “Plausible Inferences”

Approval came only five weeks late a timeline the court noted could reasonably suggest that on-time approval was achievable with diligent effort.

3. The CVR Delisting May Indicate Bad Faith

The judge ruled that delisting CVRs may support an inference of intent to undermine enforcement, strengthening the good-faith claim.

4. The Trustee Now Has Clear Standing

The court clarified that UMB Bank, acting as trustee, has authority to sue on behalf of all CVR holders — solving the issue that doomed earlier lawsuits.

With these findings, the case proceeds to discovery, where Bristol Myers’ internal communications, regulatory-submission timelines, and manufacturing-readiness documents will come under intense scrutiny.

Potential Consequences: More Than Just Money

1. Financial Fallout

A $6.7 billion judgment or even a substantial settlement would represent one of the largest post-merger payouts in pharmaceutical history. Even for a company of BMS’s size, such a ruling could materially affect:

• Cash reserves
• R&D investment
• Shareholder dividends
• Executive compensation structures

2. Implications for the FDA Approval Process

The case could force courts to examine whether financial motives played a role in regulatory timing — an area historically left to scientific and operational judgment.

3. The Future of CVRs

If plaintiffs win, future mergers may require:

• Tighter contractual language
• More measurable diligence obligations
• Independent monitoring
• Escrowed payout funds

CVRs may become rarer, or at least risk-adjusted to account for legal exposure.

4. Executive Accountability

Should evidence reveal intentional delay, executives could face:

• Shareholder-derivative claims
• SEC scrutiny
• Reputational damage

Corporate boards may also be pressured to reform oversight of contingent obligations.

Industry-Wide Impact: A Warning Shot for Pharma Deals

This case is already resonating across the pharmaceutical and biotech sectors. With acquisitions increasingly relying on future drug performance, companies must recognize that CVR-based deals can become legal minefields if obligations aren’t met with full transparency and effort.

The ruling also sends a message about fiduciary duties:
Companies cannot assume that missing regulatory deadlines especially by narrow margins will shield them from contractual consequences.

In short, the lawsuit forces the industry to confront a fundamental question:
What does “best efforts” truly mean when billions are on the line?

Conclusion: The Stakes Are as High as the Price Tag

The court’s ruling marks a turning point in a long-running dispute that could redefine pharmaceutical merger agreements, corporate accountability, and investor protections. Bristol Myers now enters a high-risk phase of litigation — one where discovery may reveal whether the missed deadline was an unfortunate regulatory delay or a strategic maneuver with multibillion-dollar consequences.

As the case proceeds, its outcome could set a powerful precedent for how companies must balance scientific development, regulatory engagement, and contractual obligations. For investors, it signals that courts are increasingly willing to scrutinize sophisticated financial structures. For the industry, it is a reminder that timelines in drug development are not just scientific milestones they are legal commitments.

If the plaintiffs prevail, this lawsuit may become a landmark in corporate-merger litigation. If Bristol Myers prevails, it could reinforce the difficulty of proving diligence-related breach in the complex, unpredictable world of drug approvals.

Either way, what happens next will be watched closely not just by lawyers and shareholders, but across the entire pharmaceutical landscape.