Celgene, a biopharmaceutical company, developed and marketed Otezla, an oral medication. Otezla was later divested from Celgene, a move that allowed for a larger corporate merger to proceed.
About the Drug Otezla
Otezla, with the active ingredient apremilast, is an oral, small-molecule inhibitor of phosphodiesterase 4 (PDE4). PDE4 is an intracellular enzyme found in inflammatory cells that degrades cyclic adenosine monophosphate (cAMP) into its inactive form. By inhibiting PDE4, Otezla increases intracellular cAMP levels, which is thought to reduce inflammatory proteins and increase anti-inflammatory mediators, thereby modulating the inflammatory response.
This medication is approved to treat several inflammatory conditions. It is used for adults with moderate-to-severe plaque psoriasis, a chronic skin condition characterized by raised, silvery plaques. Otezla also treats adult patients with active psoriatic arthritis, a form of arthritis that affects some people with psoriasis, leading to joint swelling and pain. Additionally, it is indicated for adults experiencing oral ulcers associated with Behçet’s disease, a rare disorder causing inflammation of blood vessels.
The Otezla Transaction
The sale of Otezla was a direct consequence of a larger corporate merger between Celgene and Bristol-Myers Squibb (BMS). In August 2019, Celgene agreed to divest the global rights to Otezla to Amgen for $13.4 billion in cash. This divestiture was part of the regulatory approval process for the acquisition of Celgene by Bristol-Myers Squibb, a deal valued at approximately $74 billion.
The sale of Otezla to Amgen facilitated the completion of the Bristol-Myers Squibb-Celgene merger, which officially closed in November 2019. Amgen acquired Otezla’s intellectual property rights, protected through at least 2028, and the drug fit Amgen’s existing inflammation portfolio. This divestiture marked one of the largest ever required in a merger enforcement action.
Regulatory Reasons for the Sale
The primary reason for the Otezla sale stemmed from antitrust concerns raised by the Federal Trade Commission (FTC) regarding the proposed merger between Bristol-Myers Squibb and Celgene. The FTC alleged that if BMS acquired Celgene and retained Otezla, it would substantially lessen competition in the U.S. market for oral treatments for moderate-to-severe psoriasis.
Bristol-Myers Squibb had its own oral drug, a tyrosine kinase 2 (TYK2) inhibitor, in late-stage development for psoriasis and psoriatic arthritis. The FTC’s concern was that the combined entity would possess both Otezla, an established oral treatment, and a promising pipeline candidate in the same therapeutic area, potentially creating an anti-competitive environment. To address these antitrust issues and allow the $74 billion merger to proceed, the FTC mandated the divestiture of Otezla as a condition of approval.