When Delay Becomes Corporate Strategy -By Fransiscus Nanga Roka

$6.7 billion, this is neither a contract battle, nor one that was recently resurrected by the US Court of Appeals for the Second Circuit. It is an image breaking referent on whether Big Pharma can play chicken with time, regulation and investor confidence then label the carnage compliance.

Plaintiff: Bristol Myers Squibb, the successor to Defendant Celgene, former shareholders of Celgene and UMB Bank, Trustee for such Investors. Bristol Myers, A Contingent Value Rights Set from Celgene’s about $80.3 billion acquisition in 2019 When holding those CVRs up to the light, they promised $9 a share—or almost $6.4 billion to $6.7 billion all together, if three glaring drugs earned timely approvals from the FDA: liso-cel now marketed under Breyanzi, Ozanimod and Ide-cel.

It was Breyanzi’s approval date that triggered it: the contract deadline was December 31, 2020 but the FDA authorized it five weeks late February 5, 2021. Such a miss caused the CVRs to expire, costing Bristol Myers billions in payouts.

The case had been dismissed in September 2024 by *US District Judge Jesse Furman over a trustee appointment issue, but has now been revived in Manhattan, where the federal appeals court reignited it.. An appeals court said the lower court erred on that point, stressing Bristol Myers had not seriously argued confusion over UMB Bank’s role as a representative.

Because if the allegation is not bad luck. The investors allege that Bristol Myers delayed the approval process in order to allow the clock run out. The revived case does not, however, prove guilt on that allegation. Formulate a merger sweetener that grabs headlines, let the deadline go by weeks, save billions and then attempt to bury the fight in procedural obfuscation: It is one lawsuit — perhaps explosive but limited damage. It hits the credibility of merger promises themselves.

The lesson goes through the gap between these two factors: formal legality on the one part and commercial good faith with its needs on the other. Corporate America abounds with contracts that are technically correct and morally ambiguous. The question is whether Bristol Myers just got delayed luck or can investors show that the company orchestrated this process to empty out the bargain yet keep its legal shell intact? That is the sort of behaviour which courts, but not without some corporate wide-eyed wonderment or fear from systemic threats to reputation, ought to take a good look at.

Three strategic recommendations are urgent:

First, the courts should enforce good faith obligations in CVR agreements as an essential precaution with substance, not art. CVRs become instruments of illusion timing manipulation can go undetected if companies know they won’t be held accountable for it.

Second, much better disclosure should be required for milestone risk transactions including details on the reasons for approval bottlenecks, manufacturing risks and internal incentives. Investors should not require appellate rescue to discover what they were actually sold.

Third, boards and shareholders ought to demand post-merger oversight any time multibillion dollar contingent payouts hinge on the timing of regulators. The conflict is evident if management controls both the process and the financial upside of delay.

So far this is not evidence of fraud. But it already shows evidence of something ugly: when billions ride on a missed deadline, delay morphs from accident to business model.

Fransiscus Nanga Roka

Faculty of Law University 17 August 1945 Surabaya and Managing Partner Law Firm Victorious Indonesia