Yet Another Value Podcast - A threesome on drugs: talking $BMYRT with Matt and Dan

Episode Date: September 14, 2020

Matt Turk and Dan Schneeberger do an extremely deep dive into BMYRT. BMYRT is a contingent value right (CVR) established when Bristol-Myers Squibb (BMY) bought Celgene. While CVR's are extremely risky and there is a real chance of this proving worthless, Matt and Dan walk through what a CVR is, why a CVR might be overlooked, and why they think the odds of approval for the drugs underlying BMY's CVR are much higher than the market suggests.Again, CVRs are risky, and nothing in this podcast is investing advice.Twitter handles: Matt: Given2Tweet (https://twitter.com/given2tweet)Dan: Sheep of Wall Street (https://twitter.com/Biohazard3737)

All right. Hello and welcome to the yet another value podcast. I'm your host, Andrew Walker. And today I'm excited to try something new and do my first threesome. I've got two people on the pod. I've got Matt Rosen and Dan Schneeberger. Is that right? Schneeberger? Yeah, right. Great. Well, guys, how are you doing? Andrew, my real last name is not Rosen. Is it really? I, you know, lock Twitter account. I just assumed it was your real last name. Yeah, I'm not shy about the real last name. My last name is Turk. Oh, Matt Turk.

That's right. That's right. Perfect. Well, Matt Turk and Danci Newburgh, great. Thanks for coming on. Let me start the pod the way I do every podcast, and that's by pitching the two of you. You know, it's a little tough to pitch two guys at the same time. But what I can say is Matt and I've kind of converse over just Twitter for a couple years,

and it's been a real pleasure. I think sometimes profitable, sometimes not so profitable. But Matt's a really sharp guy, really sharp investor, and it's been a lot of fun. Dan, I actually kind of only discovered you a couple weeks ago when, you know, I was looking at this Bristol-Myers continued value right we're going to talk about. But the amount of work and your understanding of the CVR have been incredible. So it's just great to be, it's been great to follow you guys. It's great to have you guys both on.

That out the way, maybe you guys can dive into your background a little bit. Maybe, Dan, do you want to start and dive a little into your background and how you came to be here? You're going to make me follow Dan? Go first if you want. Sure. So, you know, I've been an investor for most of my life. It started when I was 14.

It was back in 98 where, you know, I sort of got sucked it into the dot-com bubble, you know, probably much as many new traders nowadays. And, you know, it's been a while right over 22 years. In the meantime, I mean, I've completed a medical degree in Switzerland and MBA in the US, did some consulting at McKinsey, did an internship, I mean, sorry, residency in internal medicine. And, you know, most recently I was working at a long short biotech fund here in Texas before starting my own shop early last year.

And I mostly do health care slash biotech binary events and some special opportunities. perfect that's what I'm focused on and you know I have a little bit of an obsession with this cell gene CVR and you know Matt has as well so it's great to be on the podcast and have the opportunity to discuss the situation all right so Matt we've got a an MBA former McKinsey consultant doctor helping to analyze this contingent value right what are your credentials for analyzing the CVR the only thing I have on and Dan is that I started investing when I was 13 and then apparently after 13 though Dan has me beat across the board so yeah I've been investing since my bar mitzvah and uh just I love the stock market I've always been passionate

to stock market um after I graduated from Tulane actually I know Andrew you're from New Orleans right fellow Tulane alum yeah oh I forgot you actually went to Tulane yeah so after I graduated from Tulane in 2001 which was right after right in the heart of the recession. Actually, not to be a downer, my first day of work was 9-11 at Spear Leeds in Kellogg, which was by that time owned by Goldman Sachs, and it was a few blocks away from the World Trade Center. Wow. Everybody I know was fine. I was fine. I ended up getting three or four weeks off from work after all I wanted to do was start my trading career. I worked at Spear Leeds for a year, and then I joined a hedge fund that I worked for three years called Brahmin Capital.

and left that to co-found my own hedge fund in 2006. That was great for a little bit and then not so great for a little bit and shut that down right before the financial crisis actually in 2008, but before it, I can't blame the financial crisis for why we shut it down. And since 2008, I've just been managing my own money from my couch in San Diego. I've been doing it for about 12 years now and I focus mostly on a special situation. I have no biotech background, but I have been involved in biotech in the past, and Twitter knows, I think, that I used to be really passionate about Surrepta back in the day.

So I kind of was trial by fire for me learning about biotech through Surrepta. After that, I feel like everything's a piece of cake. Twitter knows about you and Surrepta. But, look, so we've got a doctor, MBA, former consultant, and a pajamas trader. So this should be a great conversation. So, Matt, you didn't want to go on a new shirt. I put on a new shirt for you for today. We appreciate it. So, Matt, you didn't want to go a second there. So maybe you can go first here. Just maybe you can discuss. So the thing we want to talk about today is the Bristol-Myer CVR.

It was issued when they acquired Seljean. And I'm just going to go ahead and disclaim that, you know, CVRs are extremely risky. They can absolutely, there's absolutely a chance that this thing goes to zero. You know, we all hope this doesn't. But this is a podcast. It's not an investing advice. So I'm just going to go disclaim that. that out the way. Matt, why don't you explain what a CVR is and how kind of the Bristol-Myers CVR came into existence? Sure. So I love CVRs. Most CVRs are not tradable. This is a tradable publicly traded CVR. So first I'll explain what CVRs are and why they exist and then I'll explain this one in particular. But CVRs exist when a company, two companies are in negotiations for a merger and they can't agree on a certain price for a specific asset.

And maybe the buyer thinks it's worth 10, and the seller thinks it's worth 20, and they're out of bind. And usually these assets are biotech-related. They could be for approvals. They could be for sales milestones. They could be for successful phase three trials. They could be for really anything where the buyer and seller in the middle of a merger negotiation can't come to agreement. And you get this CVR upon closing.

and let's say the CVR pays $3 for FDA approval of drug XYZ. When the merger closes, you get the CVR deposit into your account. It doesn't trade most of the time. And sometime in the next X years, there's usually a deadline that you have. If that drug is approved, you get the $3. If the drug isn't approved, you get nothing. I'm attracted to these because there's very few accounts that can hold this. It's hard to market. Sometimes it takes years before you get a conclusion. This Bristol Myers CVR is rather different. It's publicly traded. So when the merger closed with Seljean and Bristol Myers last year, shareholders of Selgin got cash, stock in Bristol Myers, and they got one of these CVRs. The CVR is worth $9 only if three milestones are hit and they're all hit by a specific date.

Okay. The first milestone was something called Ozanamad, which is a drug that was already approved in March. So that's done. We don't even have to talk about it. It's done. It's in the bag. It's irrelevant. The other two milestones are two drugs that this is Daniel can talk all about the biotech side of this, but there are two drugs in the CAR-T umbrella that one's called Liso Cell and one's called Ida-Cell. and LISO cell has to be approved by December 31st of this year. And Liso, excuse me, an Ida cell has to be approved by March 31st of next year. If they both get approved by those deadlines, you get $9. Currently, the CVR is trading at $2.1. So you can see the stock market saying there's less than a 25% chance that this happens.

No, that's a perfect background. So, no, that's perfect. Maybe, Dan, can you dive into, so Lysosel and IdaSL are the two kind of main hurdle serves, hurdles. Obviously, you guys are both bullish on the CVR. You know, why do you think these two drugs are going to get approved? Sure. So, you know, happy to talk about that.

But I think, you know, there are two or three things that they wanted to add to what Matt said about CVRs. Yeah, go for it. I like them for similar reasons. And I think, you know, there are, I think the way I invest is I always try to, you know, look for underpriced or mispriced assets. And I think, you know, there are a lot of reasons to believe why this CVR, you know, when the Selgin merger closed, was underpriced compared, you know, to the probable payoff. And I think one of those reasons is, you know, that the track record of CVRs really isn't that great. If you look at all CVRs ever issued, you know, I think about 20% of all milestones or payouts have been met.

But I think, you know, you have to differentiate what those, you know, CVRs exactly were. And most of the CVRs that didn't pay out were linked to, you know, overly optimistic sales milestones. You know, and we know that, for instance, for any kind of drug law, cell-side estimates usually are too high in about 80% of cases. That's why a lot of people short those drug launches. And that's one of the reasons why CVRs have such a bad track record. Here in this case, you don't really have to worry about sales. There's a regulatory milestones.

And in the past few years, we've seen FDA that was very permissive and was very much on top of especially oncology, rare disease, rare disease and sort of breakthrough medicines, you know, and got him approved in record number and record time. So, you know, and that was the reason why I got involved with the CVR. It was also, it was pretty complex to analyze because going into this, you had three milestones that you had to meet. So, you know, there was a lot to analyze. I thought very few people would be willing to do that work and own the CVR and underwrite that kind of risk of a security that, you know, that potentially can go to zero. So I think, you know, there were a lot of reasons to believe

why this was an underpriced security. And, you know, I started looking at all those drugs individually. And, you know, what was very easy to analyze for all those drugs is, at least for me, is safety and efficacy. You know, there was no question for me that all those drugs are safe and efficacious in their indications and, you know, should ultimately get improved by the FDA. So at this point, at this point, we've seen the phase three data for these drugs and everything. Is that right? Yeah, I mean, we've seen pivotal data for all those.

Can I add one thing, Dan? Of course. I just want to add the reason why the CVR exists. So it's easy to look back why cell gene and Bristol-Mymy. had this. So when the time this merger was announced, the three assets, Ozanamad, Ida Sal and Lysa cell, Ozanamad was currently, hasn't been refiled yet, and previously got to refuse the file letter under Seljean. So there was hair on it, okay? Nobody knew exactly why the refused to file letter happened. Cellgene was pretty open about it. And it seemed like

the refiling was going to be fine. But that's why that drug was put into this basket. LISO cell and IdaCell hadn't had their pivotal data readouts yet. They came in December of 2019, and this CVR was created in January 2019. So the reason why Bristol-Myers put those in the bucket is because they hadn't read out their pivotal studies. When Dan and I started looking at the security, I don't actually when Dan started looking at it, but I didn't look at it until after December, it started trading in November. I didn't look at it until after both of those top lines read out, and it was pretty much consensus that the safety and efficacy were approvable for those two drugs.

So the skeptic would say, why did Bristol Myers even have the CVR if they were so sure these three drugs were going to get approved? Well, they weren't back in January of 2019 because all three of them either didn't have their pivotal data or had hair on them. And today, well, there's been some hair this year, but when you look at it, when we looked at it in December and January, it was a much different picture. So anyway. That's perfect.

You guys keep going. You guys have this. Y'all are doing great. But, you know, what do you think about Lysosol and Iadol at this point? Sure. So I think we should probably start talking the Liza cell first because it's probably right now, you know, the next catalyst for, you know, poor to CVR, you know, the next really big and uncertain catalyst, I would say, the people are worried.

about. So Lyso's cell is a cartyph therapy. It's a cell therapy where you take cells from, you know, the patient, you genetically modify them with a virus in the lab, and then, you know, you expand them and you put them back into the patient, and those cells start attacking the tumor that the patient is suffering from. And Lyso's cell is, you know, was developed in, was developed in diffuse, large cell, larger B-cell infomer. And we already have two cartis that are approved for that indication. And I think, you know, some people believe that that lysosol is not differentiated, but it appears, you know, to have best in class safety and efficacy.

You know, especially the safety is actually, you know, remarkably better. And it is so good that in a certain case it can even be probably, administered to outpatients, which will save a lot of cost of the system. And, you know, I mean, we had a lot of discussions about that, you know, talk to regulatory experts, and it is believed that the FDA does not view this as fur to market and, you know, has really, you know, really thinks that this is an important application. There are some complexities here around manufacturing, you know, already approved parties are much easier to manufacture here, you know, Bristol Myers or, you know, Juno, they actually

separate the two different types of T cells, the CD4 and the CDA positive T cells, expand them separately and, you know, administer them to the patient separately. So it is a more complex product. And it seems like, you know, the whole CMC or the manufacturing aspect of it was more complex and, you know, that plus certain, you know, maybe deficiencies in the initial application have led to a so-called three-month extension where originally the drug was supposed to be approved back in August, but the FDA has extended that time frame by three months and has now said November 16th, the Dufa, which is the date by which, by statute, you know, they have to make the decision where they approve the drug.

not. And historically speaking, you know, this is something that's positive because the FDA doesn't, you know, easily give those three-month extensions. They only do that when they believe that there's an issue that can't be addressed in those three months and will ultimately, you know, result in a successful approval. So, you know, I think that that is a positive signal. And we've also heard, you know, from a city last week from Bristol-Myers, Executive VP and chief medical officer aside here that thus far our discussions with the FDA we are very encouraged by the way they have looked at it and so that it's all going in a good direction which you know I interpret as you know that the regular review of that drug the safety efficacy and CMC review are

going well and you know I always thought that CMC review is the biggest biggest risk here so I'm very encouraged by those comments. But what the other issue is, and I think why, you know, why the CVR sold off so much is that there are logistical risks around the FDA inspection right now. That, you know, normally, in a normal world without COVID, the inspections for such products take place very early on in the review cycle, you know, usually about three to four months after the finding. And here, we know that they haven't happened yet as of last week. And that is due to co-grids, you know, related travel restrictions. And, you know, I think that's what people worry about right now. I don't know, Matt, do you want to continue?

Expanding on there? Go ahead, Matt. You know, what I would add, I think that was a really good summary of the situation is that the major amendment only happens about 10% of the time and it never really happens as early as it happened here. So usually it happens within a month of the PDUFA deadline and the FDA needs more time to get it over the finish line for the first review cycle. It actually says in the statute exactly what Dan said that they only give major amendments if they think it's going to lead to approval in this review cycle. What was odd here was it happened in early May with an August 21st pedoufa date. And I can't find a time that's ever happened before. So there's all sorts of theories behind this that maybe

the FDA was buying themselves more time because of COVID to be able to do inspections because you couldn't do inspections in May and April in June and July. Another thing that Dan did mention was that the previous Cartes, the two that have been approved, both were approved five to six weeks early from the Purdue date and never had a major amendment. So that would have put Lyce's cell being approved in the middle beginning of July, which I think Dan is actually referenced to me privately, means that when that major amendment happened early May, it was actually very far along in the review process, if you think about it, because they're probably were on an accelerated review, just like the other Cartees, and they were expecting approval

early July. So in early May, major amendment isn't as bizarre under that context. As far as the inspections go, I think what the market, and this really, we have to focus most of our time on the inspections, because that really is the big issue right now. I think what the market's missing is that we have data points over the last two months of how the FDA is conducting inspections, whether they're conducting inspections, and nothing is abnormal with the way that this Bristol-Myers review process is going. So for instance, we know that a company called Phenic had a pedoufa date in the middle of August, and they got their drug rejected. It's not breakthrough designation. And so a breakthrough designation is a designation that drugs get that are very important

and usually unmet needs. And both lysosol and Ida-cell, have breakthrough designation, which is the most important label you could have for a drug in the FDA. So this drug, the Fedik had, has no breakthrough designation, and got rejected, but it has been disclosed not publicly through private phone calls with the company that they got their inspection about 30 days prior to that PDUFA date, which is very close. That's very close to when you would normally do it. You would do it months probably in the dance of that. So 30 days, this Padova Day for LISO cell is not until the third week in November, which is like 75 days from now. That's the first thing. The second thing we know is there were three other drugs approved

in August. And it's my understanding that all three of these drugs had inspections before they were approved. You can confirm it with their investor relations. They won't give you details of when the inspections were. Do you remember what the drugs were, Dan? One was PTCT and what was the other one? I can't remember off top of my head. Yeah, I think Roche had two approvals, and I think there was one other drug. So as far as, and then finally, the final thing that's very important about inspections is on July 20th, the FDA put out a press release, saying they were going to continue, sorry, not continue, restart inspections in the country. And they were going to do it

in a three-tiered fashion. Okay, the first tier is mission critical drugs, will be inspected everywhere. They do not define what mission critical it is, but they says they will look at whether drugs have breakthrough designation or, so not and, or whether they're for an unmet need. Now, that's the second part where it gets confusing with LISO cell because there's two drugs already on the market.

But Dan and I would argue very strongly that this is a differentiated product that is better than both drugs on the market and actually will save lives. So Dan can get into this, But the safety of carties is very, very important. Of the two cartis on the market, the one that's the most efficacious, has 2% of the patients die from the side effects.

It's called CRS. 2% of the 500 patients, 9, died in a post-approval study of that CART. Whereas with lysosol, in its pivotal trial, with 300 patients, not a single patient died from CRS. We're talking about 2% chance of dying as a safety side effect for a very, very sick patient. So this is not some minor headache or something that we're talking about with the side of thoughts. Now I just totally lost my train of thought. Why did I go down to that? Oh, right. Sorry, the three different buckets. So the first bucket is mission critical drugs all get inspected. The second bucket is non-mission critical drugs can be inspected.

depending on a multitude of factors, what COVID is like in the state, what COVID is like in the county, and I guess some importance of how the drug is, but they're not clear. And then the third bucket is all clear, everything gets inspected, no COVID risk, whatever. So that was July 20th. On August 28th, they put out a 12, but you could find all this online by Googling. On August 28th, they put out a draft guidance. which is being implemented immediately. So it's actual guidance that's real today

about how they're going to deal with pedufas and manufacturing in the age of COVID. And there's a very important page here relating to LISO cell where it says if an inspection is needed. And we now know an inspection is needed here. Bristol Myers came out last week and said the FDA has told them an inspection is needed. And that is not a red flag.

Every one of our contacts told us over the last few months that cause of the complexity of CAR-T, they would have to inspect these plants. Doesn't mean there's something wrong with the plants. In fact, these plants have never been inspected before. So there's no reason to believe there's any kind of red flag at the plants is why they need an inspection. But anyway, Bristol says they need an inspection.

And in the guidance, it says if you need an inspection and you can't do it due to COVID, there's two buckets the FDA is going to follow most times. The first bucket is if the FDA has a reason to believe, that the facilities have a problem. I'll repeat. If they have a reason to believe the facilities have a problem, they are likely, and they can't inspect, they are likely to issue a complete response letter, which is jargon for rejecting the drug when the Padoofa day comes. The second bucket says, if there's simply inadequate information and they need to inspect, they're more

likely then to delay the Padoofa and tell the company that he need to inspect, but not reject it. Okay, this is very important for LISO cell because we have until December 31st for this drug to be approved. And the Padoofa date is November 17th. So in the event that the FDA can't inspect in the next eight weeks, I'll let Daniel explain why they might not be able to expect in the next eight weeks, but it's very interesting where this is going and what happened here. In the event they can't inspect, we have six more weeks of cushion before the CVR would be rendered worthless. Dan, do you want to tell them the reason why there's issues here? Just before you get there, let me just pause, because you guys are very in the weeds,

and it's actually fantastic. Like, I've looked at this, but you guys are so much for the me. But let me just summarize for listeners who might not be as in the weeds as you guys. What happens is there's a CVR. Specifically, we're talking about Liso Cell. Lysosel got a major amendment in May that pushed its spadoofo date back from, what was it, it was going to be in August and pushed it to November, right? And right now we're talking about the risk. They need, basically they got a major amendment pushed it back by three

months because they need an inspection of the facility. Right now we're talking about the risk that the facility isn't inspected. If the facility is inspected and everything's okay, this drug's almost certainly, I would say, getting approved. The risk here is that for some reason they can inspect it or there's an off chance they inspect it and find something wrong and the drug isn't approved by December 31st, because if it's not approved by December 31st, the CVR is a zero. Am I just kind of summarizing all of that correctly? Yeah, most of it was correct. I think the only correction I make is that the free month extension was not because they could make the inspection.

You know, Bristol-Myers has never disclosed why exactly it happened. We believe it has something to do with the CMC part of the review and, you know, the FDN needing more time for that. Okay, perfect, perfect. So, Dan, Matt kind of was leading you into why you, a little bit more on the safety in the inspection. Why don't you dive into that? Sure. So, as we said, you know, in a non-COVID world, this inspection would have happened a long time ago. It probably would have happened in March or April.

You know, my assumption is that actually was scheduled for March or April, but they have to postpone you to, you know, COVID. You know, things were pretty bleak back then. You know, so the FDA strategy so far was to schedule those inspections, you know, sort of as late as possible in the review, you know, with the hope that COVID would, you know, from a trend point of view, get directionally better, right? And it would be safer for those inspectors to travel out there. So, you know, as Matt mentioned, we, for instance, know from Fennec that their, you know, their inspection does happen 30 days prior to the people. The drug was rejected, but that had nothing to do with, you know, the FDA's ability or inability to inspect those facilities. And, you know, so far, we also know that the FDA has not really missed a lot of Purdue days. In fact, they have met them.

They have not met the Purdue for, you know, a very small biota company called Lipasein, which is developing oral testosterone replacement. It's a testosterone tablet, basically, but that was not due to, you know, the inability to inspect. In fact, you know, I suspect that it has something to do with regulatory exclusivity there where the FDA doesn't know whether by their statute they are allowed to approve this drug because another, you know, oral T pill was approved 18 months ago. And now the question is, you know, is this pill different enough from the other pill, you know, for them to be able to approve it. And I believe that liposine had to present in front of the exclusivity panel

and this whole discussion hasn't been resolved yet, and that's the reason for the delay. And, you know, we are aware of one company that actually got a CRL because the FDA could not inspect the facility that was a small biotech called Nibreba that is working on an antibiotic, but there, you know, there were two issues. One, they already had a CRL a couple of years ago, for their facility and it was their resubmission and two, the facility was

located in Europe, you know, and at the time with the travel restrictions, it was not even clear when or how the FDA could respect that plant. So they got a CRL for that. And I would add, I'd add, both of those drugs don't have breakthrough designation.

The company that missed the Padufa date is a little $50 million market cap that's been CRL twice before. And again, nothing to do with inspections. Yep. These two drugs, lysosol and idosel could not be more kind of life-saving, last-of-line treatments for patients. I don't, we haven't really touched on that yet. But this is the end of the road for both of these indications.

There's no other treatments, really. Is that true, Dan? I mean, after this, if these drugs fail for the most part. Right. So, you know, I think normally what would happen now, based on everything that we've observed from other companies, is that DFTA will probably say. schedule inspection four to six weeks prior to the Perdufer date, travel there, inspect the facilities, and eventually approved.

But from what we've learned last week at City, you know, it's even more complicated than that, as that, you know, our country is in those extraordinary times now with COVID, where, you know, we have this operation warp speed or this heroic effort, you know, to get a COVID vaccine to market as quickly as possible. And, you know, Bristol-Myers has disclosed that some of the people, this is not from the review team, not from the oncology team, but some people that were actually, you know, supposed to work on that inspection, that they might get pulled into COVID-vaccine-related facility inspections. So, you know, what I suspect is going on is that they have something scheduled, you know, a few weeks from now where the FDA inspectors are supposed to travel to the, those two sites that need to be inspected. But right now, the, you know, the FDS also told them that there's some some risk around that, you know, that some of those people might be needed for

vaccine inspections, which, you know, the FDA due to political pressure might prioritize over lysosel inspections. Yep. No, that's perfect. And then why don't you, Matt, you were kind of tossing over Sam. Why don't you talk about why lysoscel is so critical, why you think the FDA, you know, it's breakthrough, obviously, why you think the FDA is going to prioritize inspecting this? Well, there's only, besides the vaccine, if you look at the calendar for the next few months for the FDA, and specifically for oncology and the division that oversees this, it's very light. And there's not a lot of drugs.

Liso cell, in fact, is probably the most important one between next. and the end of November when it has its pedufa date. So we're not talking about dozens of breakthrough designation drugs that need to be inspected. In fact, Dan was looking at this this weekend. I think priority review is a six-month review versus a 10-month review, and all breakthrough designation products get prior review. We've never found one that hasn't. So Dan just looked at just how many priority reviews are up in the next three months.

And I think, Dan, you only found four or five drugs that are up for approval, I think, between now and the end of November. And I didn't think any of them were as important as LISO cell. One of the most important parts about LISO cell being differentiated is usually when one or two competing products go to market and something that's still in the clinical phase has breakthrough designation, the FDA can pull breakthrough designation. You don't have to keep, they don't make you keep it. So if the FDA thought that this was not a differential,

important product, not only would they pull the breakthrough designation, but they wouldn't have given a priority review in the first place come last February. The clinical data is pretty clear about this, that it's as efficacious as the carty on the market, but it's also the safest cartier in the market. So I feel very strongly that the FDA knows this. Bristol Myers has said the FDA knows this. The really only question is, Do they get pulled each way for the vaccines, and can they not make it to the plants? My working theory is similar with Dan's is that they have been told, Bristol Myers has been told that they have inspections coming, whether it's in the end of September or early October.

Bristol Myers does not want to go into a game where they have to update the market every week about whether there's inspections. Did the inspections happen? Did they find something bad during the inspections? it's a terrible road to go down every day having phone calls with, you know, investors. So what they did was it decided to come out last week and say, this is the situation. We need inspections. We're not going to tell you if they're scheduled. We're never going to tell you anything ever again, actually, unless we want to.

But the only thing you should expect going forward, this is actually what they said, is it's approved, it's rejected, or they'll miss the pedupa date. If any of those three things happen, expect disclosure. If those three things don't happen, we're not telling you. you. And the market really freaked out, but it was a pretty smart thing for them to do because and then the reason why I think an inspection is scheduled is, I thought it was very odd that Bristol Myers disclosed the vaccine side of the risk. Because if the FDA comes to Bristol Myers and says, hey guys, we don't know if we're going to be able to inspect or not because of COVID,

it seems odd they would then say also, by the way, once we have a scheduled inspection, we might have to pull our guys for vaccines. It's much more likely, they said, we're planning on coming at the end of September, middle of October. We have absolutely no idea what's going to happen with these vaccine trials and with what plants we might need to inspect. Yep. Just want to let you know there's a risk that we do pull,

and then we have to change the date. You know, that's what I think. Dan, do you know if the plant inspectors, like, if I'm, because Cartier is obviously a very specialized manufacturer. If I'm the inspector for the Carthie plant, like am I the same person who would be inspecting a COVID vaccine plant or is that generally a completely different group? Like, you know, is it siloed groups and the only reason they'd be taking these guys off as kind of last thing, hey, we need to inspect 20 different COVID vaccine plants at the same time.

Does that make sense? Yeah, so you were breaking out there a little bit. I think I got the gist of your question. So, you know, I think. we are not a hundred percent certain how the FDA is organized internally and how they you know which groups would be inspecting which plans my understanding you know just based on biology would be that you know you have some people that are you know specialized more you know on production let's say on you know of drug products with cell-based systems and you know

we have some vaccines that require that you know and I assume that's probably where the overlap would be with the people that would inspect the CART facilities. And importantly to know, you know, I think the frontrunners right now are Pfizer and Biotech and Moderna, and those are all RNA vaccines, which are basically, you know, the RNA synthesized. It's not a cell-based manufacturing system. That having said, we don't know how exactly, you know, the plans of DA look like. And it's reasonable to believe, you know, that those plants would be inspectors. when they're ready, you know, from a, from a manufacturing compliance and CMC perspective

as to versus when the clinical trials actually read out. So I think, you know, there's a lot of uncertainty there. And I think, you know, the FDA statements and Bristol statements reflect that uncertainty, frankly. That having said, you know, Bristol is also very clear that the FDA is aware of potential scheduling conflicts and they try to work in peril. And, you know, I think what really spooked the market was the fact that those risks were so emphasized by Bristol-Myers. But I think, and I think, you know, we as investors are not used to hearing those kind of statements from companies. And, you know, that normally companies care about their stock price, you know, biotech companies because they need access to capital. You know, so if this was, you know, another smaller mid-cap biotech, you know, they wouldn't have highlighted those risks.

They would have said, they would have told us, you know, we're very confident in approval by Purdue. That would have been the statement. Here, you know, we have to CVR that is basically a $7 billion liability. And if it doesn't pay out, you know, shareholder lawsuits are 100% likely. Like, literally the risk of that is 100%. So I think they have to prepare all their statements with that in mind and, you know, just highlight all the risks more than anything else. And, you know, as investors, I think we're not used to that.

This is a security where we all know there's a lot of risk. It can go to zero or, you know, litigation value. It was probably, I don't know, 10 or 20 cents above zero. So, you know, I think that that's why investors reacted the way they did. And they sent down, you know, the CVR from $2.80 to $1.80 last week. And, you know, again, I think that's the reason. It really actually went from $3.60 to $1.80 because it started going down when in the early August, Mr. Myers disclosed on a private call with a cell sider that they hadn't been inspected.

the light so still hadn't been inspected yet. And then I really never recovered from that private call. And that's what got them in the bond. So this security has been littered with selective disclosures by Bristol Myers and Bluebird having private cell side chats and giving updates along the way from May to today. And I think the last week's call was public. It was a dial-in number and a webcast.

But they're not all webcast. And I think Bristol Myers finally mixed in the butt and that's why they issued that disclosure. I'd like to add one real quick thing that's not before I forget. A very, very bullish part of what came out last week was the FDA saying they need to inspect. A lot of people might have interpreted that as negative thinking, oh, it might be a problem. That's why they do inspect. But something happened in August that is a real tell.

And August, Biomeran was applying, well, was near the end of its pedufa for a, it's gene therapy drug, which is under the same umbrella as these cartis. It's not oncology, but it's the same group that does the inspections. And they rejected the drug at the end of July. Importantly, IOMRIN never had their facility inspected when they got it rejected. And they would have definitely needed an inspection. It's a novel drug in a facility that never had anything approved before. Why didn't the FDA inspect? Well, it seems pretty obvious. hindsight, COVID's ramp is ramping everywhere, and it was in Orange County, L.A. area. And the FDA didn't want to send its inspectors into a COVID hot zone when they were rejecting the drug.

So fast forward to Bristol Myers and LISO cell, and we're definitely done with the review process at this point. You know, the Padoofa date was in August, and it got pushed in November. And I'm very confident that they're done with everything but the inspections. And they've told Bristol Myers, we need to inspect your facilities. They wouldn't go into inspecting. they've already found a problem with either the CMC from the documentation or with the safety efficacy of the drug. So that's a huge tell that it's, you know, it's queued up to be improved pending these inspections. Dan, maybe talk a little bit about the risk of the inspections and how risky they are

and what you think about that from that perspective. Yeah. Sure. So, you know, um, the way the inspection works is that you have a number of people most of the time four or five they go to the plant they spend anywhere between three and five days there and they go through all the documentation they look at the way the drug is being manufactured you know they they tour the facility they even you know look for rodents in the cafeteria you know it's a pretty

extensive list of things that they go through or, you know, need to check off on. You say rodents in the cafeteria. That happens. Like, I don't know if you ever looked at acorn, but they were finding, if I remember correctly, Fresnius broke the lawsuit because the FDA was finding like literally cockroaches in the, in their mixes and everything. Yeah. Yeah. I'm familiar with then. How it works in practice is, you know, at the end of the day, You know, at the end of every day, the lead inspector gives, you know, senior management on site a summary of the findings. And when they're, you know, done with the physical inspection before they leave, they give you a summary of everything they found.

You know, they give you this preliminary 483 form. And, you know, it mostly has, you know, their findings on it. And it's important that, you know, I would expect both Bristol-Myers, you know, at their Buffalo Washington facility, as well as their vector manufacturer in Texas to receive a 483, I think it's quite likely. You know, I looked at the two already approved Cartes and all the vector manufacturers that were inspected. You had a total of five inspections, which has resulted in five, 483. So, you know, the 483 might come. We might hear about it. It's nothing to, you know, be freaked out about.

Because, you know, what happened as a result is 483 is that as a company, you have up to 15 days to respond to that in writing. And, you know, the response is basically you don't have to resolve those issues. You just need to present, you know, a root cause analysis. You know, why did those things happen? and convey how you know and sort of convey how you're planning to address it right and and that's what's required and then you know once the inspector gets your report or your written statement you know he will do one of two things he will either you know recommend approval or say that you know the state of the facility at this time you know isn't isn't isn't good enough and he's he

recommends withholding the approval. Those are the two things that can happen. And, you know, in case of of the five inspections that we had for Carty products, and that's what happened in every single case, you know, 483 company or, you know, manufacturer responded. Response was deemed satisfactory and, you know, the inspector recommended approval. Do I remember correctly a 483? I mean, an insight could be as simple as, hey, we saw a lab tech. technician who didn't wash his hands, right? And then the company will just say, we will post a sign that says employees must wash their hands, or it could be as complicated as you said as, hey, there are rats running around through the entire facility. Am I remembering that correctly?

That's correct, yes. And to be clear, there are 483s that can be pretty bad. It can't easily be addressed. Yes. Actually, the inspectors will say, you know, I recommend withholding the approval at this point, you know, and the company receives a CRL and needs to resubmit. That can happen. I've seen that happen, you know. So what I think one risk here is that because most of these inspections in non-COVID world happen earlier on in the review cycle, it gives them a much longer time to respond to any problems that arise. So let's say they inspect now in the middle or the end of October. We don't have any reason to believe they're going to wait that long, but maybe they do. And maybe they find

some problems. And maybe they're not super minor. And FDA decides come November 17th, I think is the Perdufa date. We're not going to give you any more time. This is the pedophidate. We're rejecting the drug. You have to refile. So that's a real risk. I don't believe that will happen. I don't believe the FDA is working against Bristol Myers.

They have the same goal to get this drug to patients just like Bristol Myers does. So I think, at fact, Dan, why don't you tell them about what you found out about the inspection on that company in July and August and how it was approved? The drug was approved like three weeks later after getting a bunch of, negative inspection points? Sure. So, you know, I think you're referring to the, you know, Bayer's approval of Lampett. And I think, you know, more than anything, this just shows, you know, that the FDA usually

will go above and beyond, you know, to meet the Perdufa date and get drugs approved. So that was a drug for a disease called Chagas, you know, it's a infectious disease, transmitted by kissing bugs and the facility was inspected, you know, I think 2018 or something like that, and they got a CRL back then. Now they, you know, we submitted the application for the drug and inspection was scheduled for March, but it was postponed at the time, you know, because COVID was ramping in Europe and the U.S. was rescheduled for July 7th, which was exactly 30 days prior to the per dufa date. They missed that. So they actually inspected it. Let me see, they

inspected it July 20th to 27th. They wrapped up the inspection just 10 days prior to the perdufer date. This resulted in a five item 483. It was still recommended for approval by an inspector eight days after the inspection. Nine days after the inspection, the review was formally finished and 10 days after the inspection rules the per dufa date the FDA approved the drug so now i think this just shows that the FDA really goes above and beyond to prove those drugs bring them to market and it can be very very flexible and very quick um so you know that that was one case that gives me quite a bit of confidence that the FDA will make it happen here so with with that we should probably you know sort of wrap up lies and sell this is but this has been

going on for quite a bit i think what's most likely going to happen, in my opinion, you know, there's always risk. It's possible that the FDA can't inspect. It's possible that the FDA will find issues, you know, in a 483 that Brissom Myers can't address, and it's possible that, you know, we've got a CRL here, or that, you know, that the response from the FDA will drag beyond December 31st. But I think the most likely outcome, and I give this a 75% probability, is that the FDA will inspect prior to the PDUFA date, in fact, the next few weeks, and then that they will ultimately approve the drug prior to or on PDUFA. I think that's still my base case. And I think

there's, you know, the 25% where this doesn't happen, I think you still have a 50% chance that, you know, the FDA will miss the PDUFA date, but they will try to, you know, but they will ultimately give a positive decision by end year, which is really the deadline for the CVR. So you have about six weeks of wiggle room there. Of course, you know, we have Christmas, but I think you still have a lot of wiggle room there where the FDA could send an inspection team

and sort of try to make that approval happen prior to year end, which, by the way, also matters for the FDA because they always have their statistics, you know, and the annual statistics where they always, you know, proud about, you know, we always talk about how many drugs they got approved, what sort of the approval rate was, and, you know, they met all the padoufa dates, et cetera. It's also very important for them to show that COVID is not impacting bringing life-saving drugs to patients. They've talked about this a lot of the last six months. And missing the

pedufa date because they can't inspect in COVID is a very bad look for the FDA. They have not done it yet once. So it seems very unlikely to me that that's going to happen. Before we get into Ida-Sel, I think we should spend probably five minutes on the incentives behind the CVR. It's the most asked question usually is the point. So I have a lot of questions on incentives at the end. Why don't why don't we do that there? Because I do think some of the stuff with IDSL comes into play with the incentives. But let me just, so Dan said 75% this is approved by Padufa, 50% it's approved in the in the 25% it doesn't happen. 50% it's improved before the year end. We'll round up and say he said it's almost 90% that this is approved by year end.

Where would you put your odds? I'm at 90%, a little bit different than he is, though. I'm at 80% by Padufa, which, by the way, I'm haircutting for no really great reason. I was at 90% by Padufa before last week, which is just statistically what breakthrough designation drugs get, what major amendment drugs get. This is, they get to prove 90% of the time. I'm not even looking at this specific circumstance, which I think is an approvable drug on its own merits, just. statistically. So I'm at 80% by the Padufa, and I'm at a 10% chance that it happens between the Padufa and the end of year. The remaining 10%, 5% chance they get rejected, and a 5% chance

it goes after December 31st. So I'm a 90% chance of it happening. Let's turn over to Idesel. Dan, do you just want to walk through Idesel real quickly and what's going on there? Sure. So IdaSL is also Cartier treatment. It's for multiple myeloma. It's It's a last line treatment for those patients. It would be first to market, you know, in this specific indication. So I think, you know, there's a lot of people that are concerned, you know, concerns that the Liza cells for it to market here. You know, those concerns don't really apply. The clinical data, you know, safety and efficacy-wise is certainly good enough for an approval.

I didn't see anything that would give me concern. But I think, you know, what happened with IDSEL that was a little bit surprising is that I believe it was submitted in late March for approval. And then in May received refusal to file letter where, you know, the FDA refused to review the inspection and, you know, told Bristol Myers to resubmit. and, you know, we can, and we will probably, you know, try to sugarcoat that, but really, you know, it is concerning that, you know, a company of the size of Bristol Myers, you know, ended up in a situation that's, you know, quite rare and quite embarrassing for any kind of, you know, respectable drug manufacturer where the FDA just simply refuse their application. We could talk about that.

I mean, basically the idea behind an RTF, it runs the gamut of the worst thing that could ever happen to what they claim is this. So basically, when a company files a new drug application, the FDA has 60 days to accept it. And they don't usually care too much about the quality of the information. It's the quantity. So the FDA says you have to have this kind of documentation for the CMC. You have to run a phase three trial. whatever the volume is they demand,

they expected to be there for them to review the application. What Bristol-Myers claims happened was they left out a large chunk of documentation relating to the CMC module of this application. And the FDA said, we can't review this application because you forgot to give us the documents. Bristol-Myers claims that they were supposed to give them the documents during the review process, not before the filing. So to take a step back, early May, well, let's do the timeline. End of March, I.S.L. gets submitted to the FDA. End of March.

Early May, Liso cell gets a major amendment that Bristol Myers discloses was also for documentation related to CMC and, quote, unquote, preclinical stuff. They never got into more detail than that, but it was a documentation related to CMC. The FDA said you gave us so much information we're deeming it. major amendment so we can have three more months to analyze it, okay? That was the beginning of May. Then just two weeks later, they get to refuse the file for IDICEL saying you left out so much documentation relating to the CMC module for IDICEL. You have to refile. There's a school of thought that both of these things are the exact same problem, that Bristol Myers did not have the feedback on the LISO cell major amendment when they submitted the application at the end of

March, and thus they made the same mistake twice, and the FDA this time gave Bristol Myers refused the file because that was the quickest way to turn this application around and get it approved as soon as possible for patients. They could have done it two ways. They could have accepted the application and then Dean did a major amendment and it wouldn't have extended it three months anyway. In fact, this probably saved a little bit of time by doing it this way. So investors are very concerned that one had a major amendment. which is actually a positive, if you look at the literature, and one had a refuse to file. This CVR was going so smoothly.

It was trading of $4.50 at the beginning of May, end of April. Ozanamad was just approved, and both of these drugs were considered complete shuance. Now, fast forward to the end of May, the CVR went to $2.20 after IdaSL got its refused to file from 450. People thought, what's going on here? both these drugs had these big hiccups, and nobody understands why. Fast forward to today, I-to-Sel has been resubmitted. The FDA has not accepted it yet.

They're going to accept it in the next two weeks. Fingers crossed. The FDA, from our understanding, has never given a back-to-back RTF in the history of the FDA. There's really no risk in my mind of them not accepting this application in two weeks. One risk, some people point to, is they have to give it priority review. If it doesn't get priority review, then the application won't be reviewed in time for the March 31st deadline. Again, we've looked at 100 breakthrough designation oncology drugs. A hundred out of 100 got priority review. And this is first to market for a very unmet need. I put it at literally a 0%

chance. It won't get priority review. But that's the next catalyst for Ida sell. In the next two to three weeks, the FDA is going to formally notify that they accept it. I don't expect the stock to go up a lot on that, maybe it goes up 10 to 20 cents, but it's just a milestone that needs to happen. Dan? Yeah, I mean, I agree with you. I think, you know, pretty confident that we'll get accepted. I'm pretty confident that, you know, in normal times, I would say I'm 98% sure that they will get priority of you.

I think you have to acknowledge, you know, that there's some critical risk now with COVID out there and, you know, that the vision potentially being backed up that could get you know standard review um but i i think that risk is very minimal it's it's more theoretical in my mind because even if you look you know at the vaccine work that's being done it's not really being being done by the oncology reviewers you know and we're concerned about with lisa cell it's not the oncology reviewers being pulled it's just the people that inspect the plans being pulled so i think you know the oncology division is with working pretty pretty normally I also think it says it's terrible precedents for them to have a breakthrough designation drug

that actually is first to market to not give it prior to review is basically all but acknowledging that they are not bringing drugs to patients as fast as possible. The opposite of what they're trying to convey, that they're still operating just as normal. I would like to point the other major risk in the security, it's part of this story. is because Ida-Sel got or refused to file, that means that their pedufa date is going to be sometime at the end of March. This is a risk that's going to exist until it gets approved, and it's what follows. If Ida-Sel gets a major amendment, just like Liso-Sel got, it pushes the Padof out past March and the CVR is a goner. Now, Lysosol got a major amendment.

So you might think, well, there was a decent chance this happens. I mean, if one of these Cartees got it, maybe Bristol-Myers screwed up on this one. So my answer to that is the following. When Bristol-Myers got the refused-to-file letter, what happens is they get a long letter, and every part of the dossier that they submitted gets critiqued, and they say specifically what is missing in this package, usually drugs don't get refused to files, but they do miss, they are missing things. look what Apple would LISO cell, was missing things, and they had to submit more stuff after.

It's my belief that because they got this kind of early look into what the FDA wanted from this refused to file, it took them over 10 weeks to refile this application. I think they submitted everything under the sun, every piece of documentation they have, and there's really nothing left of a materiality that the FDA could ask for to then necessitate a three-month extension. Now, the skeptics and the cynics, which will come up to with incentives coming forward, will say Bristol-Myers purposely left out stuff. They purposely left stuff out so that the FDA could have a major amendment and they could save $7 billion and not have to pay out the CVR. And we'll get to that if you want under the incentives.

We're going to hit the incentives. Just anything else on IDSL, I mean, I want to be conscious of time as well, but anything else we should be hitting on I to sell here? All I'll say is every expert you speak to you can go call 100 oncologists. Everyone will tell you it's an approval product. We used to get odds from 98% to 99.9%. They have some competitive issues with some drugs in the pipeline from Johnson and Johnson. It might have some difficulty from a commercial standpoint once Johnson and Johnson's drug gets approved, six months, three months, nine months later.

But as far as approbability from a clinical perspective, nobody will tell you this drug's controversial in any way. Dan, anything from you? Yeah, so, you know, I think the main problem with IdaSEL is that the timelines are, you know, sort of, sort of very, very tight, right? So to do for date, should it get, you know, accepted and get priority review, will be before March 41st, but, you know, probably what is it, one or two days ahead of that. So if there are any, you know, delays, inspection related, or if there are any, you know, or if there's a three-month extension, the CVR is probably toast. You know, I think one has to acknowledge that, that having said, I very much agree with Matt, you know, that the clinical data and safety and efficacy-wise is very much approvable. CMC is easier than, you know, for Liza cell because they don't have to come to get an extra step where they would separate, you know, CD4 and CD8 cells, which is much more similar manufacturing-wise, you know, to the already approved CAR-T, so that the first-generation carties, I will say.

And, you know, they had this, they went through this RTF process, so they know exactly what the FDN wants to see, CMC-wise, in terms of documentation. That's positive as well. And then, you know, I think the last thing that I wanted to mention is inspection-wise. I don't know where the vector is being manufactured, but at least, you know, the product itself is being manufactured in building S-12 in, in, in a, what we could say, facility.

Yeah, it is in New Jersey, but what's a town? I'm in New Jersey. Correct. Summit, New Jersey. So, you know, I think that's a three-hour drive from the FDA's headquarters. So I think, unlike, you know, the Lys itself facility that's located in Washington State, I think, you know, the inspection there should be much easier to schedule logistically. And, you know, I also don't expect, you know, the FDA to be back-to-back, busy with, you know,

COVID vaccine plant inspections. until March. So I think the risk there is smaller. I think I'm 80% plus on it getting approved by the deadline. There's some risk around the free month extension. There's some risk. You know, we don't know what's going to happen. I want to be fully transparent. We don't know what's going to happen, you know, with COVID in the winter. Yep. It is a hypothetical risk, you know, that we could end up in a situation that's similar to where we were, you know, in March of last year. And if that's the case, and maybe even, I don't know, a summit New Jersey inspection couldn't be risky. But, you know, I'm pretty confident that this drug will get approved.

Well, the good news about lysos, excuse me, I don't believe they had to name these things so close to each other. The good news about idicel is it is mission critical. There is no way anybody would argue that that's not a mission critical drug. It's first to market for a very unmet need of dying patients. So even if COVID's rampant, according to the FDA guidance in July, that gets inspected. Period. I mean, that's what the, that's what the guidance says. Yeah. I feel very good about that being the second one with the shorter time frame. No, that's perfect. So let's switch to management incentives, right? Because when I see this, and I see a major amendment, a refuse to file all this, you know, and the timeline is really creeping

up on you, I look at this and I say to myself, hey, you know, I've seen this happen with CVRs before, right? If the drugs approved March 31st, the company owes $9 billion, $7 billion, $10 billion, whatever. If it's approved April 1st, they don't know anything. Like the incentive is there for the company to just try to push back that filing just a little bit because then they get to keep several extra billion dollars, right? And they still have drug approval. So why do you guys feel comfortable that what's going on here is, you know, Bristol just kind of messed up once or twice? So it sounds like the same thing they messed up in both drugs filings versus.

Bristol is actively trying to game the system to get approvals just beyond when the CVR will play out and I'll let either of you start. I have a lot to say about this. I know Dan I think Dan's got a really good angle from his time at HBS and he could talk from that perspective from talking to other executives about incentives.

But there's two things I'd like to discuss here. So the first one is every action Bristol has taken has been the exact opposite of trying to not pay it. his drug. So pay the CDR, excuse me. So first they filed IDESL at the end of March. The guidance was for the first half of 2020. I believe Dan also believes they probably rushed the filing at the end of March so that they would have a full year to get this approved by March 31, 2021, so that they would have the cushion for a major amendment if it came. They did it within days

of the deadline. That's the first thing. The second thing is when Idesel got the refusal, the file in May. They could have said that day, we're shocked. The files are terrible. We need to have a type A meeting with the FDA. We're not sure when we're refile this thing. We want to make sure it's a bit. We're very careful next time. No, they didn't do that. They said, this is easy. We are going to get this refiled by the end of July. Why is that important? If this got filed the first week of August, the CDR is probably dead. But they said they're going to get it done by the end of July. Guess what? They filed it by the end of July. So, you know, a cynic could say they're doing this all for lawsuits, but they had a

pretty easy out. I mean, they got to refuse the file, which is one of the worst things you can get, and they could have said they really want to make sure they have all their eyes dotted, all their cheese crossed, and they want to be with the FDA, and they wanted to take their time. That's the first half. But the second half reason, or the second bucket of reasons why they can't, not even won't, but can't sabotage this, is if you take some time to look at all the people that are working on this project, it's in the dozens. And most of them, virtually all of them, are ex-celgene. And when you, when they consummated the merger, every Seljean employee down to, you know, the janitor that owned Seljean stock or had

cell gene options got CVRs. I believe for employees, they're all non-tradable because they're all part of their stock packages or whatever. And the entire Juno team is all, Juno, by the way, is a cell gene unit that is now Bristol-Myer unit. We refer to Juno. We're talking about where LISO cell is made. They all have CVRs. I actually wrote down the names

of the five most senior Bristol-Myers employees that are going to be overseeing LISO cell and the regulatory process. And the five most senior employees are the CEO of Bristol-Myers, of course. He's, of course, from Bristol-Myers, not from Seljean. The second employee is the CFO of Bristol-Myers.

He came from Seljean and has CVRs. The third most important employee is the CMO, chief medical officer. He's brand new from 2019, did not come from Selgin. The next employee is the executive vice president of hematology. His name is Nadim Hemed. He came from Selgin. He oversees all Carty. And then every single employee below them is virtually all Selgin.

So in order to sabotage this in any way, you have to believe, that either the CEO of Bristol Myers or somebody below them, somehow orchestrated with multiple employees, not just one, but multiple employees all the way down to whoever's submitting the regulatory file, some way to sabotage it, just enough to sabotage it so that they either, well, either get rejected, if you think you're that cynical, or just to somehow push out the deadline so they're going to prove in April or May. If they did this, I believe, believe this would be a felony, definitely from a financial perspective, because you're committing financial fraud, trying to save $7 billion. But can you imagine the headline risk of trying to

push out a breakthrough designation cancer drug for the most sickest patients because you were trying to save a rounding error for a $150 billion company? You might go to jail, and the headline risk would be so astronomical you would definitely lose your job. And we're talking about, dozens of people that have to be involved, and all would take was one of them to be a whistleblower about it. Oh, and mind you, they also all own CVRs, and they all are incentivized to see this get done on time. So I just think it's ridiculous that people think there's a chance of a misalignment. Dan, why don't you tell you a little story about the CEOs you talk to? Go ahead, Dan.

Yeah, I mean, I agree, you know, pretty much everything that was said. And, you know, if you're I always, you know, I think we, as investors, we always think, you know, that dollars or cash are, you know, the most important thing for biotech or big pharma CEOs, you know, maybe as a biotech investor, you think pipeline is the most important thing. But it is not. I was very fortunate. I had the chance to talk to several, you know, executives of large U.S., publicly traded. pharma and biotech companies last year and you know the answer that I uniformly got when I asked about what their biggest worry is was headline risk you know they worry that there's some kind of scandal is worried that there's some kind of drug pricing headline price coaching headline this is the kind of stuff that those CEOs worry about you know on a daily basis and I think you know for them if you look at how they're incentivized it makes perfect sense right once you sit in that seat, you get your $20 million plus compensation annually, you know,

there's no big upside for you, you know, if you save $5 million somewhere, but there's real downside, you know, if you lose that job because it's, you know, it might not be that easy, you know, to find another job that will pay you pretty well, right? So I think that's, that's very clear, you know, I was also, I did some, some digging on, you know, people that worked with Bristelmaier's CEO before to sort of learn how he thinks. And, you know, what I university heard back is that he's very risk-averse. So, you know, and in fact, that's probably the reason why the CVR exists in the first place is, you know, he was worried about overpaying, you know, in case the pipeline not working out.

I don't think he, you know, would have kind of person now that would, you know, on purpose, try to sabotage that, you know, burned out the house to collect fire insurance, you know, It just seems very, very remote to me. And, you know, it's also that those applications are now at the FDA, you know, in the hands of the FDA. So it will be very difficult for him to, or anybody else's need to really delay it unless, you know, you think you would on purpose, you know, do something in the, in the, in the bathroom facility, you know, like plant those rodents in the cafeteria or something like that. you know, or try to somehow, you know, make the idysel package in purpose, on purpose, incomplete, or, you know, try to, like, work in some kind of problems there into the CMC section, which I just don't see how you would be able to do that in, you know,

such an organization, much to what Matt already, what are you said? The head idicel, see, I couldn't, I can't find the Lyso cell. head reviewer. But the IdaSL reviewer is available, a Google search for IdaSL, LinkedIn, LinkedIn, Bristol Myers, and you'll find her. And she's very experienced. She's in charge of the entire regulatory process. And guess what? She came from Seljean. So she's been spending two years working on this. She probably owns CVRs. And I'm pretty sure she's not going to take a phone call from the Bristol Myers CEO saying, can you please mess this up just a little bit so we could save some money and also kill some people for a few months?

Um, I just don't see it happening. I, I, I, I, you know, I don't have my Q hat on. The only other thing I'd add is there's a line in the, uh, Bristol's proxy that says, I believe it's, I'm kind of glanced at it. Our CEO, the incentives for the whole executive manager team, uh, are designed around the pipeline. And they, those include milestones related to the CVRs, which I've actually never seen a pharma proxy or CEO or executive team get compensated based on a CVR's payout before. So I think, my push back to that is it's a rounding error for him he makes like 20 million dollars a year it says it's 10% it's in a bucket of 10% of his long-term compensation doesn't say how much of the

bucket is that so i think that's extremely minor from a perspective of him being compensated i'm trying to be a bull here i'm trying to help you out over here i want to be honest about what i think is is is the reason why they won't screw this up and it is it because giovanni is going to make money off of this well guys uh this has been great we're running really long so I think we're going to wrap it up here. I do want to give you guys a point. Matt, anything you think we miss or anything you wish we had dived in further? Or do you think we were pretty?

The reason why this opportunity exists, Dan touched on a little bit, but there's over 750 million shares outstanding of this. Right now at $2, that's a billion and a half dollar float. At $9, it's $7 billion. This is a very peculiar security that most people can't own. Most funds don't want to own. And if they do own it, they own it in very small. small size. It is a very small group of people that can absorb this, which is why I think

you have the opportunity. In fact, it's the kind of thing to where when it's doing well, when it was $4.50 and everything was going well, I think a much larger group of funds is interested in it. Oh, this is kind of a safer security that's going to go from $450 to 9. Now at $2, the house is on fire. It seems very easy to see how this can go to zero. And the opposite is happening. You're having people sell before it goes to zero. And every person I know, I know, personally that owns this was already way too big in it and has not added when it went from two ladies and two dollars because they're already overweight and they have no room to add so i just think it's that's the opportunity this opportunity exists for that reason no one no reason else if this

was just a hundred million dollar security or 50 million dollar security i think you'd be trading a three or four dollar maybe three or three fifty right now is my guess not two dollars dan anything else from you before we wrap this up um yeah um yeah i think we know what i wanted to add is it's it's rare that you have those securities you know where you know you can go to zero and I think that's what scares people frankly I was wondering you know if it had like a $4 bond component to it so you know if the CBI was $6 right now and you know the downside would be trades down $2 to $4 and you know you have a $7 upside I was wondering you know where people would look differently at it and sort of evaluate differently I'm pretty sure they would

The thing is, you know, it's the zero that is scary. It's also, you know, quite illiquid, as Matt said, there are 700 million shares outstanding. Most days it trades, you know, two or three million shares. So only a very, very small fraction, you know, of the shares change his hands. I think the bets have been mostly made. I think going forward to CVR, you know, and any kind of news can be incredibly volatile. I think you have to know that if you're, you know, considering to invest in it. Especially, you know, I think if it had to be.

to a situation where, you know, we're heading towards Perdoufa Day, or it is Padoufa Day, and we haven't heard back yet, you know, and there are hundreds of millions of shares that, you know, could change hands one way or another, I think, you know, it could be potentially extremely volatile security. You know, I think you're, if you're a portfolio manager and, you know, as that November 16th date or March 31st day starts creeping up and you say, oh, this might be a zero, it just takes one guy hitting the, don't, get me out of this and it can be very volatile. Andrew, let me have this one thing for 30 seconds.

Next event, investors, besides the I to sell thing, which I think is not at a real risk, basically we're looking for a lack of news because since Bristol-Myers has told us, they're only going to, most likely only go to notify us when it's approved, rejected, or delayed. I believe that if the FDA hasn't inspected within 30 days, within 25 days of the November 2017-Pedufa, we will get a press release or an 8K from Bristol Myers saying the FDA has notified them, they are going to miss the pedufa date. If we don't get that press release, I think by definition that means they have inspected because there's no way they can approve it by November 17th.

Yes, they might be able to do it two weeks prior or three weeks prior. But as we get closer to that perdufa date, no news in my mind is good news. And on Thursday, I don't know when you're going to be airing this, But on Thursday, the CEO of Bristol Myers is doing a fireside chat that's public. He is not the one that was on Tuesday's fireside chat. That was the chief medical officer. So I'm sure he's going to be asked about this again. And you might be in for a wild ride with what the CVR does based on what his comments are.

So it's nonstop, you know, where the next data point can come from. Yeah, not for the thing. Hey, guys, I knew you guys, you know, I followed this. I knew you guys knew more about this. But this has been just the amount of, you know, there are so many things that due diligence here has been outstanding. Hopefully we have you guys back on in December or something. Lysa cells approved and we're just worried about the idicel thing.

But this has been great. I'm going to put your Twitter handles in the link so everyone can, all the listeners can be sure to look at that and follow you guys there. Hope to have you guys back again. This has been great. Thanks so much for coming on. I should say, I have a locked account and don't usually accept new follows. So don't feel like I'm disrespecting you if I don't accept follow.

You're going to be sure. Dozens of that is. Dozens of listeners are going to be angry with you, Matt. But Matt and Dan, thank you so much. Talk to you soon. Thank you for doing. Take care.