CELEX: 32019M9294
Language: en
Date: 2019-07-29 00:00:00
Title: Commission Decision of 29/07/2019 declaring a concentration to be compatible with the common market (Case No COMP/M.9294 - BMS / CELGENE) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                              Brussels, 29.7.2019
                                                              C(2019) 5799 final
                                                                                PUBLIC VERSION
                                                                In the published version of this decision,
                                                                some information has been omitted
                                                                pursuant to Article 17(2) of Council
                                                                Regulation (EC) No 139/2004 concerning
                                                                non-disclosure of business secrets and other
                                                                confidential information. The omissions are
                                                                shown thus […]. Where possible the
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                                                              To the notifying party
Subject:             M.9294 – BMS/Celgene
                     Commission decision pursuant to Article 6(1)(b) of Council Regulation
                    No 139/20041 and Article 57 of the Agreement on the European Economic
                    Area2
Dear Sir or Madam,
(1)       On 24 June 2019, the European Commission received a notification of a proposed
          concentration pursuant to Article 4 of the Merger Regulation by which Bristol-
          Myers Squibb Company (“BMS”, United States) will acquire sole control of
          Celgene Corporation (“Celgene”, United States). In this Decision, BMS is referred
          to as the “Notifying Party”. Together, BMS and Celgene are referred to as the
          “Parties”.
1.        THE PARTIES AND THE OPERATION
(2)       BMS is a global pharmaceutical company headquartered in the United States. BMS
          is engaged in the development and commercialisation of innovative medicines in
1     OJ L 24, 29.1.2004, p. 1 (the “Merger Regulation”). With effect from 1.12.2009, the Treaty on the
      Functioning of the European Union (“TFEU”) has introduced certain changes, such as the replacement of
      “Community” by “Union” and “common market” by “internal market”. The terminology of the TFEU
      will be used throughout this decision.
2     OJ L 1, 3.1.1994, p. 3 (the “EEA Agreement”).
Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE
Europese Commissie, DG COMP MERGER REGISTRY, 1049 Brussel, BELGIË
Tel: +32 229-91111. Fax: +32 229-64301. E-mail: COMP-MERGER-REGISTRY@ec.europa.eu.
 ---pagebreak---          four main therapeutic areas: oncology, autoimmune diseases, cardiovascular
         diseases, and fibrotic diseases.
(3)      Celgene is a global pharmaceutical company headquartered in the United States.
         Celgene is engaged primarily in the development and commercialisation of
         innovative therapies in oncology and autoimmune diseases.
(4)      On 2 January 2019, the Parties signed a Merger Agreement pursuant to which BMS
         will acquire Celgene in a cash and stock transaction with an equity value of
         approximately USD 74 000 million (approximately EUR 62 700 million) (the
         “Transaction”). Upon closing of the Transaction, BMS will acquire sole control over
         Celgene.
(5)      The Transaction would therefore give rise to a concentration within the meaning of
         Article 3(1)(b) of the Merger Regulation.
2.      EU DIMENSION
(6)      The undertakings concerned have a combined aggregate worldwide turnover of more
         than EUR 5 000 million3 in 2018 (BMS: EUR 19 104 million; Celgene: EUR 12 939
         million). Each of them has an EU-wide turnover in excess of EUR 250 million in
         2018 (BMS: […]; Celgene: […]), but they do not achieve more than two-thirds of
         their aggregate EU-wide turnover within one and the same Member State.
(7)      The Transaction therefore has an EU dimension within the meaning of Article 1(2)
         of the Merger Regulation.
3.      FRAMEWORK FOR THE COMMISSION’S COMPETITIVE ASSESSMENT
3.1.    General considerations on market definition
3.1.1. Relevant product market
(8)      When defining relevant markets in past decisions dealing with finished dose
         pharmaceutical products,4 the Commission based its assessment on the following
         general approach.5
3    Turnover calculated in accordance with Article 5 of the Merger Regulation and the Commission
     Consolidated Jurisdictional Notice (OJ C 95, 16.4.2008, p. 1).
4    Finished dose pharmaceuticals (“FDPs”) refer to the finished dosage form of pharmaceutical products,
     which, in other words, are ready to be used by customers. FDPs contain (i) an active pharmaceutical
     ingredient (or “API”, which correspond to the component present within the product that provides the
     pharmacological action in the body, e.g. acetyl salicylic acid in an aspirin tablet), or a combination of
     APIs and (ii) other excipients.
5    See, for example, cases M.8974 – Procter & Gamble / Merck Consumer Health Business, decision of
     27.8.2018; M.7919 – Sanofi/Boehringer Ingelheim Consumer healthcare Business, decision of 4.8.2016;
     M.6969 – Valeant Pharmaceuticals International/Bausch & Lomb Holdings, decision of 5.8.2013;
     M.5778 – Novartis/Alcon, decision of 9.8.2010; M.7276 – GlaxoSmithKline/ Novartis Vaccines Business
                                                         2
 ---pagebreak--- (9)      The Commission noted that medicines may be subdivided into therapeutic classes by
         reference to the Anatomical Therapeutic Classification (“ATC”), devised by the
         European Pharmaceutical Marketing Research Association (“EphMRA”) and
         maintained by EphMRA and IQVIA, formerly known as Intercontinental Medical
         Statistics (“IMS”).
(10)     The ATC system is a hierarchical and coded four-level system, which classifies
         medicinal products by class according to their indication, therapeutic use,
         composition, and mode of action (“MoA”). In the first and broadest level (ATC 1),
         medicinal products are divided into the 16 anatomical main groups. The second level
         (ATC 2) is either a pharmacological or therapeutic group. The third level (ATC 3)
         further groups medicinal products by their specific therapeutic indications. Finally,
         the ATC 4 level is generally the most detailed one (not available for all ATC 3) and
         refers for instance to the MoA or any other subdivision of the relevant products.
(11)     The Commission has often referred to the third level (ATC 3) as the starting point
         for defining the relevant product market. However, in a number of cases, the
         Commission found that the ATC 3 level classification did not yield the appropriate
         market definition within the meaning of the Commission Notice on the Definition of
         the Relevant Market.6 In particular, the Commission has considered in previous
         decisions plausible product markets at the ATC 4 level, at a level of a molecule or a
         group of molecules that are considered interchangeable so as to exercise competitive
         pressure on one another.7
(12)     The Commission has also envisaged the possibility of defining the market by
         reference to the disease (and its degree of severity). For instance, in oncology, the
         Commission took into consideration the type of cancer, its location and whether the
         cancer is in an initial or an advanced stage.8 Similarly, in autoimmune diseases, the
         Commission has typically identified relevant product markets by reference to
         indications.9
(13)     In its past decisional practice, the Commission has also considered relevant market
         segmentations based on (i) the types of treatment (e.g. chemotherapy, targeted
         therapies and immunotherapies in oncology;10 conventional and biologic treatments
     (Excl. Influenza) / Novartis Consumer Health Business, decision of 28.1.2015; M.5865 – Teva /
     Ratiopharm, decision of 3.8.2010; and M.8889 – Teva / PGT OTC, decision of 29.1.2010.
6    OJ C 372, 9.12.1997, p. 5.
7    See case M.9274 – GSK/Pfizer Consumer Healthcare Business, decision of 10.7.2019, recital 15 and case
     M.7275 - Novartis/GSK Oncology, decision of 28.1.2015, recitals 207 and 216.
8    See case M.5476 - Pfizer/Wyeth, decision of 17.7.2009, recitals 21-26 (renal cell carcinoma).
9    See case M.8955 - Takeda/Shire, decision of 20.11.2018, recital 49 (ulcerative colitis and Crohn’s
     disease).
10   See case M.7275 - Novartis/GSK Oncology, decision of 28.11.2015, recital 31. The Commission found
     that, given the different ways in which they treat cancer, chemotherapies, targeted therapies, and
     immunotherapies may not be substitutable and they are most often used as complementary treatments.
     For instance, chemotherapies and targeted therapies attack cancerous cells directly, whereas
     immunotherapies work to enable the patient’s own immune system to attack the cancer. Targeted
     therapies are designed to interact with a specific target associated with cancer, whereas chemotherapies
     are typically identified because they kill rapidly dividing cells. Targeted therapies and immunotherapies
     are also typically more expensive than chemotherapies. Given their novelty, targeted therapies and
     immunotherapies are generally still under patent, while many chemotherapy drugs are off patent.
                                                            3
 ---pagebreak---          in autoimmune diseases),11 (ii) the line of treatment,12 (iii) the MoA,13 and (iv) the
         mode of delivery (“MoD”, e.g. oral, intravenous, intramuscular, and subcutaneous
         injections).14
(14)     As regards pipeline products, the Commission has in previous decisions considered
         market definitions based on the indication, the mode of action, and, where relevant,
         the line of treatment, but ultimately left open the exact delineation of the market.15
         The Commission added that when research and development (“R&D”) activities are
         assessed in terms of importance for future markets, the product market definition can
         be left open, reflecting the intrinsic uncertainty in analysing products that do not
         exist yet.16
(15)     The Commission will analyse in Section 4 below the relevance of these distinctions
         for the relevant product market definition in the present case.
3.1.2. Relevant geographic market
(16)     The Commission has consistently considered that the markets for FDP products are
         national in scope, in particular in view of the national regulatory and reimbursement
         schemes and the fact that competition between pharmaceutical firms still
         predominantly takes place at a national level.17 For pipeline products, the
         Commission has considered the geographic scope of the market to be at least EEA-
         wide.18
(17)     The Commission will analyse in Section 4 below the relevance of these precedents
         for the relevant geographic market definition in the present case.
3.2.     General approach to competitive assessment of horizontal effects of the
         Transaction
(18)     Article 2 of the Merger Regulation requires the Commission to examine whether
         notified concentrations are compatible with the internal market, by assessing
         whether they would significantly impede effective competition in the internal market
         or in a substantial part of it, in particular, as a result of the creation or strengthening
         of a dominant position or the removal of a significant competitive constraint.
(19)     In addition, Article 57(1) of the EEA Agreement requires the Commission to
         examine whether notified concentrations are compatible with the functioning of the
11   See case M.8955 - Takeda/Shire, decision of 20.11.2018, recitals 17-25.
12   See case M.7275 - Novartis/GSK Oncology, decision of 28.1.2015, recitals 33 and 143. Line of treatment
     refers to the setting for which a specific drug is indicated. For example, a drug indicated for second-line of
     treatment should be used only after another therapy (the first-line of treatment) has proven ineffective or if
     this other therapy cannot be prescribed altogether to a specific patient.
13   See case M.8955 - Takeda/Shire, decision of 20.11.2018, recitals 31-49.
14   See case M.8401 - J&J/Actelion, decision of 9.06.2017, recital 60.
15   See cases M.3354 - Sanofi-Synthelabo/Aventis, decision of 26.4.2004, recital 57; and M.7275 -
     Novartis/GSK Oncology, decision of 28.1.2015, recitals 85-94.
16   Case M.7275 - Novartis/GSK Oncology, decision of 28.1.2015, recital 26.
17   See cases M.8955 - Takeda/Shire, decision of 20.11.2018, recital 56 and M.8401 - J&J/Actelion, decision
     of 9.06.2017, recital 66.
18   See most recently, case M.8955 - Takeda/Shire, decision of 20.11.2018, recital 56.
                                                              4
 ---pagebreak---          EEA Agreement, by assessing whether they would create or strengthen a dominant
         position as a result of which effective competition would be significantly impeded
         within the EEA territory or a substantial part of it.
(20)     In this framework, “competition” is understood to mean product and price
         competition (actual or potential), as well as innovation competition, where the
         Commission assesses in particular potential horizontal non-coordinated effects.19
         The Commission considers that a concentration may not only affect competition in
         existing markets, but also competition in innovation and new product markets.20 This
         may be the case when a concentration concerns entities currently developing new
         products or technologies which either may one day replace existing ones or which
         are being developed for a new intended use and will therefore not replace existing
         products but create a completely new demand.21
(21)     In the pharmaceutical industry, the process of innovation is structured in such a way
         that it is typically possible at an early stage of clinical trials to identify competing
         research programmes (or “pipeline” programmes).22 Competing pipeline
         programmes can be defined as R&D efforts aimed at developing substitutable
         products and having similar timing. The timing of a research programme should be
         assessed by reference to the stage of the on-going preclinical or clinical trials.23
(22)     In line with the past decisional practice in the pharmaceutical sector 24 and the
         Commission’s decisions in Dow/Dupont and Bayer/Monsanto,25 the Commission has
         taken into account a four-layer competitive assessment framework, which
         corresponds to the overlaps between the parties’ activities in terms of:
         (a)    Actual (product and price) competition, assessing the overlaps between the
                parties' existing (marketed) products;26
19   See case M.8084 - Bayer/Monsanto, decision of 21.3.2018, recital 48. The remainder of this Section
     focuses on horizontal, non-coordinated effects, as the Transaction does not give rise to non-horizontal
     overlaps or coordinated effects. Regarding the framework of assessment of horizontal non-coordinated
     effects, see the Commission Guidelines on the assessment of horizontal mergers under the Merger
     Regulation (the “Horizontal Merger Guidelines”) OJ C 31, 5.2.2004, p. 5, paragraphs 24-38.
20   Horizontal Merger Guidelines, paragraph 8.
21   Horizontal Merger Guidelines, paragraph 38.
22   In the pharmaceutical industry, pipeline drugs go through several development stages, starting with
     preclinical trials in laboratories and on animals, and later moving on to clinical trials in humans (so called
     “Phase I”, “Phase II” and “Phase III” clinical trials which are detailed in fn. 27 below). Clinical trials in
     humans are strictly regulated in order to ensure the protection of trial subjects and the credibility of the
     results. In most jurisdictions, before a clinical trial can start, the sponsor must typically apply for and
     receive clinical trial authorisation from the competent authorities. The clinical trial is also typically
     registered on public databases. All clinical trial protocols conducted in Europe are identified at European
     level with a unique number and registered in the European Clinical Trials Database (EudraCT database).
     ClinicalTrials.gov is a web-based resource that provides easy access to information on publicly and
     privately supported clinical studies conducted worldwide. Unlike clinical trials, preclinical trials are not
     registered and their existence is not always publicly disclosed.
23   See case M.7275 - Novartis/GSK Oncology, decision of 28.1.2015, recital 90.
24   See case M.7275 - Novartis/GSK Oncology, decision of 28.1.2015, recitals 89-90.
25   See cases M.7932 - Dow/Dupont, decision of 27.3.2017, recitals 272-302 and M.8084 - Bayer/Monsanto,
     decision of 21.3.2018, recitals 48-54.
26   The Transaction does not give rise to horizontally affected markets involving existing (marketed)
     products in any EEA countries.
                                                             5
 ---pagebreak---           (b)    Potential (product and price) competition, assessing the overlaps (i) between
                 the parties’ existing (marketed) and pipeline products at advanced stages of
                 development and (ii) between the parties’ pipeline products at advanced stages
                 of development. For pharmaceutical products, the Commission in principle
                 considers programmes in Phase II and III clinical trials as being at an advanced
                 stage of development;27
          (c)    Innovation competition in relation to the parties’ ongoing pipeline products,
                 assessing the risk of significant loss of innovation competition resulting from
                 the discontinuation, delay or redirection of the overlapping pipelines
                 (including early stage pipelines); and
          (d)    Innovation competition in relation to the capability to innovate in certain
                 innovation spaces, assessing the risk of a significant loss of innovation
                 competition resulting from a structural reduction of the overall level of
                 innovation.28
(23)      The Commission will analyse the overlaps between the activities of the Parties
          against this framework in Section 4 below.
27   The phases of clinical development for pipeline products can be described as follows. Phase I starts with
     the initial administration of a new drug into humans, with trials carried out on a small number of people
     (e.g. in oncology, the sample size is usually in the low tens). The focus of Phase I trials is to confirm that
     the drug is safe to use in humans and to identify the appropriate dosage and exposure-response
     relationship. They typically involve one or a combination of the following aspects: estimation of initial
     safety and tolerability, characterisation of a drug's absorption, distribution, metabolism, and excretion,
     and early measurement of drug activity. Phase II usually starts with the initiation of studies to explore
     therapeutic efficacy in patients. Studies in Phase II are typically conducted on a small group of patients
     (generally around 20 to 50 up to some hundreds per cohort or treatment arm) that are selected based on
     stricter criteria for indications. Phase III trials aim to demonstrate or confirm therapeutic benefit in a
     larger group of patients (Phase III trials will typically have hundreds of patients and may have over a
     thousand, for example for autoimmune diseases). Studies in Phase III are designed to confirm the
     preliminary evidence accumulated in Phase II that a drug is safe and effective for use in the intended
     indication and recipient population. Usually, Phase III trials will involve a comparison of the
     investigational agent with a placebo or the standard of care therapy. These studies are also intended to
     provide an adequate basis for marketing approval. Phase IV begins after drug approval to monitor
     possible adverse reactions and/or new side effects over time. See Case M.8401 - J&J/Actelion, decision
     of 9.06.2017, footnote 6.
28   In the present case, the Commission considers that the Transaction is unlikely to raise competition
     concerns in this respect given the very large number of R&D organisations competing at global level
     (e.g. pharmaceutical and biotechnology companies, university research programmes) in the overlapping
     therapeutic spaces, which are characterised by intensive R&D. For instance, in oncology, over 700
     companies are active in late stage R&D, including at least 14 large biopharmaceutical companies (see
     IQVIA - Global Oncology trends 2018 report, p. 42). In autoimmune diseases, a report of the
     Pharmaceutical Research and Manufacturers of America (“PhRMA”) indicated that in 2016, there were
     311 medicines and vaccines in development by more than 150 companies for patients with autoimmune
     diseases      (see     http://phrma-docs.phrma.org/sites/default/files/pdf/medicines-in-development-report-
     autoimmune-diseases.pdf and http://phrma.org/sites/default/files/pdf/medicines-in-development-drug-
     list-autoimmune-diseases.pdf).
                                                             6
 ---pagebreak--- 4.       COMPETITIVE ASSESSMENT
(24)     BMS and Celgene are both active in the development and commercialisation of
         pharmaceutical products. The Parties’ activities give rise to limited horizontal
         overlaps in the EEA in relation to marketed and/or pipeline treatments in
         autoimmune diseases (Section 4.1), fibrotic diseases (Section 4.2), and oncology
         (Section 4.3).
4.1.     Autoimmune diseases
4.1.1. Introduction
(25)     Autoimmune diseases result from a dysfunction of the immune system in which the
         body attacks its own organs, tissues, and cells. Autoimmune diseases can target
         almost any part of the body. Autoimmune diseases vary according to the part of the
         body being targeted by the immune system, and include psoriasis (“PsO”), psoriatic
         arthritis (“PsA”), inflammatory bowel diseases (“IBD”) including ulcerative colitis
         (“UC”) and Crohn’s disease (“CD”), and systemic lupus erythematotus (“Lupus” or
         “SLE”). Autoimmune diseases can range in severity, from mild to severe cases, with
         the gravity of the disease often increasing over time. They affect approximately 5-
         10% of the global population.29
(26)     In the autoimmune therapeutic space, the Parties activities overlap with respect to
         the following indications: PsO (Section 4.1.2), PsA (Section 4.1.3), IBD (Section
         4.1.4) and Lupus (Section 4.1.5).
4.1.2. Treatments for Psoriasis
(27)     Psoriasis (“PsO”) is a chronic inflammatory disease, which causes an exaggerated
         reaction of the natural repair and defence mechanisms of the body. This exaggerated
         reaction causes red, scaly patches of skin to appear.
(28)     Patients can suffer from PsO of different gravity, ranging from mild to severe. PsO
         severity is typically classified with reference30 to the body surface area (“BSA”)31
         percentage that is affected by the disease; the Psoriasis area and severity index
         (“PASI”);32 and the dermatology life quality index (“DLQI”).33
29   See notably the report summarising the presentations and discussions of a workshop on autoimmune
     diseases          held        at        the      European         Parliament        on        25.9.2017:
     http://www.europarl.europa.eu/cmsdata/133620/ENVI%202017-
     09%20WS%20Autoimmune%20diseases%20%20PE%20614.174%20(Publication).pdf.
30   See EMA, Committee for Medicinal Products for Human Use, Guidelines on Clinical Investigation of
     Medicinal Products for the Treatment of Psoriasis, 2004, p. 6, available at
     https://www.ema.europa.eu/en/documents/scientific-guideline/guideline-clinical-investigation-medicinal-
     products-indicated-treatment-psoriasis en.pdf.
31   BSA is a percentage indicating the area affected by the disease compared to the whole body surface.
32   PASI combines the assessment of the severity of lesions and the area affected into a single score in the
     range 0 (no disease) to 72 (maximal disease).
33   DLQI is based on a ten-question questionnaire used to measure the impact of the skin disease on the
     quality of life of an affected person. The DLQI score ranges from 0 to 30.
                                                           7
 ---pagebreak--- (29)     In Europe, it is generally considered that a patient can be considered as suffering
         from mild PsO when he/she has a BSA of 10% or less; a PASI score of 10 or less;
         and a DLQI of 10 or higher. A patient is considered as suffering from moderate-to-
         severe PsO when he/she has a BSA exceeding 10%; a PASI score higher than 10;
         and a DLQI lower than 10.34
(30)     Treatment for moderate-to-severe PsO is typically undertaken in steps through
         consecutive lines of treatment, matching the severity of the disease and the patient’s
         symptoms.35 This means that a patient has to first be prescribed with drugs from the
         earlier line of treatment category and if these do not work, the patient can be moved
         to a drug from a subsequent line of treatment category.
           4.1.2.1. Market definition
         (A)        Relevant product market
         (A.i)      Commission’s Precedents
(31)     The Commission has not assessed in detail the relevant product market definition for
         PsO treatments in the past.36
         (A.ii)     The Parties’ view and Commission’s assessment
Segmentation by reference to the severity of the disease
(32)     The Parties submitted that treatments for moderate-to-severe PsO and treatments for
         mild PsO belong to separate relevant product markets. In any event, the Parties
         argued that this question could be left open because the Transaction would not raise
         competition concerns even under the narrower of the two market segmentations, i.e.
         treatments for moderate-to-severe PsO.37
(33)     The market investigation suggested that there is a separate relevant product market
         for treatments for moderate-to-severe PsO. All the competitors and the key opinion
         leaders (“KOLs”)38 who responded to the market investigation indicated that
         Celgene’s Otezla and its competing products target the treatment of moderate-to-
34   See notably EMA, Committee for Medicinal Products for Human Use, Guidelines on Clinical
     Investigation of Medicinal Products for the Treatment of Psoriasis, 2004, p. 6. See also Definition of
     treatment goals for moderate to severe psoriasis: a European consensus, Arch Dermatol Res. 2011 Jan;
     303(1) 1-10.
35   The main guidelines in the EEA for the treatment of PsO are the European S3 Guidelines on the systemic
     treatment of PsO (the “S3 Guidelines”) from the European Dermatology Forum in cooperation with the
     European Academy of Dermatology and Venereology and the International Psoriasis Council.
 36  In its decisional practice, the Commission considered topical anti-PsO products (skin creams available
     over the counter (“OTC”) or by prescription). See Case M.5530 - GlaxoSmithKline/Stiefel Laboratories,
     decision of 17.7.2009, recital 20. In that decision, the Commission has not considered any products
     comparable to the products and pipeline projects of the Parties for the treatment of PsO.
37   Form CO, paragraphs 245-246.
38   The KOLs contacted during the Commission's market investigation are leading experts in their field of
     expertise, and recognised figures in the European medical community.
                                                           8
 ---pagebreak---          severe PsO39 and can usually be prescribe for this indication alone. KOLs also
         recalled that the available guidelines in the EEA specifically concern treatments for
         moderate-to-severe PsO.40
Segmentation by line of treatment
(34)     The Parties submitted that in Europe, lines of treatment for PsO are not as well
         defined as in other diseases (e.g. in oncology). The Parties added that references to
         different lines of treatment are rare in clinical guidelines for PsO.41 The Parties
         suggested that the issue could ultimately be left open because the Transaction would
         not raise competition concerns even if one looks at moderate-to-severe PsO
         treatments divided by lines of treatment.42
(35)     The majority of competitors who responded to the market investigation
         acknowledged a three-fold categorisation of moderate-to-severe PsO treatments by
         line of treatment.43 According to these respondents, (i) first-line treatments for
         moderate-to-severe PsO include anti-inflammatory drugs, topical treatments, and
         phototherapies; (ii) second-line treatments include conventional systemic therapies
         (e.g. methoxetrate or cyclosporine); and (iii) third-line treatments consist of
         biologics and small-molecule drugs.44 The vast majority of KOLs also agreed45 that
         the treatment algorithm for PsO is also organised in lines of treatment, which
         include, after the use of topical treatments, (i) conventional systemic therapies and
         (ii) biologics and small-molecule drugs. Certain competitors and KOLs noted that
         the boundaries between the different lines of treatment are blurred,46 however, none
         of the respondents questioned the fact that biologics and small-molecule drugs are
         offered as the last line of treatment.
(36)     In any event, the exact relevant product market definition can be left open since the
         Transaction does not give rise to serious doubts as to its compatibility with the
         internal market and the functioning of the EEA Agreement even if a separate market
         were defined for the last line (third-line) treatments for moderate-to-severe PsO.
39   Replies to questions 10, 12, 13, 15-18 – Questionnaire to competitors – Autoimmune diseases; Non-
     confidential minutes of a conference call with a KOL, 21.5.2019; Non-confidential minutes of a
     conference call with a KOL, 16.5.2019; Non-confidential minutes of a conference call with a KOL,
     2.5.2019, Non-confidential minutes of a conference call with a KOL, 30.4.2019; Non-confidential
     minutes of a conference call with a KOL, 29.4.2019; Non-confidential minutes of a conference call with
     competitor, 24.5.2019.
40   Non-confidential minutes of a conference call with a KOL, 16.5.2019; Non-confidential minutes of a
     conference call with a KOL, 2.5.2019; Non-confidential minutes of a conference call with a KOL,
     30.4.2019.
41   See A Nast et al, European S3-Guideline on the systemic treatment of psoriasis vulgaris–Update
     Apremilast and Secukinumab–EDF in cooperation with EADV and IPC, J Eur Acad Dermatol Venereol.
     2017 Dec; 31(12):1951-1963.
42   Form CO, paragraph 256.
43   See Replies to question 5 – Questionnaire to competitors – Autoimmune diseases.
44   ‘Small molecule’ drugs are typically synthetised via chemical processes, and constitute the majority of
     drugs in use. Conversely, ‘large molecule’ drugs are typically produced through biologic processes like
     cell culture (these include many vaccines and monoclonal antibodies).
45   See Non-confidential minutes of a conference call with a KOL, 30.4.2019, Non-confidential minutes of a
     conference call with a KOL, 29.4.2019, Non-confidential minutes of a conference call with a KOL,
     24.4.2019.
46   See Replies to question 5 – Questionnaire to competitors – Autoimmune diseases and Non-confidential
     minutes of a conference call with a KOL, 29.4.2019.
                                                         9
 ---pagebreak--- Segmentation by mode of action
(37)     The Parties suggested that different treatments for moderate-to-severe PsO compete
         with each other, regardless of their MoA. The most important factors for a physician
         choosing a treatment against an autoimmune disease are efficacy and safety. The
         physician will consider a wide range of MoA taking into account the specific needs
         of the patient.47 The Parties suggested that the issue could ultimately be left open
         because the Transaction would not raise competition concerns even if one looks at
         moderate-to-severe PsO treatments sub-segmented by MoA.
(38)     The majority of competitors and KOLs who responded to the market investigation
         also suggested that treatments for moderate-to-severe PsO compete with each other,
         regardless of their MoA.48 As one KOL put it, “what matters for doctors when
         choosing a PsO treatment is the drug’s efficacy as well as its safety. The drug’s
         mode of action is less important.”49 When asked to compare biologicals and small-
         molecule drugs, the majority of competitors confirmed that “all available third line
         treatments compete with one another […] regardless of mode of action”.50 When
         asked to identify the closest competitor to a product or a pipeline project, the vast
         majority of competitors indicated products and pipeline projects with different
         MoA.51
(39)     In particular, in light of the Parties’ overlapping products, the Commission
         investigated whether there is a separate relevant product market for moderate-to-
         severe PsO treatments with a specific MoA, namely tyrosine kinase 2 (“TYK2”)
         inhibition. TYK2 is an enzyme involved in the signalling of pro-inflammatory
         cytokines such as interleukins 12 and 23 and interferon I responses. A TYK2
         inhibitor specifically blocks TYK2 and therefore the creation of these pro-
         inflammatory cytokines, which drive PsO and other autoimmune diseases. TYK2
         inhibitors seek to block specifically the TYK2 enzyme and not other kinases, which
         makes for a safer drug. TYK2 inhibitors are still under development today and none
         of them has been launched at this stage.
(40)     The market investigation suggested that TYK2 inhibitors should not constitute a
         separate relevant product market. The majority of competitors and KOLs confirmed
         that TYK2 inhibitors will compete with other treatments for moderate-to-severe
         PsO, regardless of the MoA.52 For example, most competitors expect that TYK2
         inhibitors (if/when launched) would have comparable efficacy and safety to
         biologics such as interleukin 12/23 (“IL-12/23”) inhibitors.53 Yet, a small minority
47   Form CO, paragraph 281.
48 See Replies to questions 11 and 13 – Questionnaire to competitors – Autoimmune diseases.
49   See Non-confidential minutes of a conference call with a KOL, 21.5.2019. Several other KOLs stated
     that products of different MoA compete with each other as treatments for moderate-to-severe PsO. See
     Non-confidential minutes of a conference call with a KOL, 30.4.2019, Non-confidential minutes of a
     conference call with a KOL, 29.4.2019, Non-confidential minutes of a conference call with a KOL,
     24.4.2019.
50   See Replies to question 13 – Questionnaire to competitors – Autoimmune diseases.
51   See Replies to question 9 – Questionnaire to competitors – Autoimmune diseases.
52   See Replies to question 22 – Questionnaire to competitors – Autoimmune diseases. See also Non-
     confidential minutes of a conference call with a KOL, 24.4.2019; Non-confidential minutes of a
     conference call with a KOL, 29.4.2019; and Non-confidential minutes of a conference call with a KOL,
     2.5.2019.
53   See Replies to questions 24 and 25 – Questionnaire to competitors – Autoimmune diseases.
                                                         10
 ---pagebreak---         of competitors stated that TYK2 inhibitors have a unique profile of high efficacy and
        safety and are bound to disrupt the market of moderate-to-severe PsO treatments
        when they are marketed.54
(41)    In any event, the exact relevant product market definition can be left open since the
        Transaction does not give rise to serious doubts as to its compatibility with the
        internal market and the functioning of the EEA Agreement even if a separate market
        were defined for TYK2 inhibitor treatments for moderate-to-severe PsO.
(42)    According to two competitors, which constitutes a small minority of all the
        respondents, the possible market for TYK2 inhibitor treatments for PsO should be
        segmented even further. TYK2 inhibition can be achieved with two different
        mechanisms: an orthosteric mechanism (where the drug docks on the active site of
        the TYK2 enzyme) and an allosteric mechanism (where the drug docks on the
        regulatory (non-active) sub-unit of the enzyme). According to the two competitors,
        allosteric TYK2 inhibitors are a distinct and unique class of treatments for
        autoimmune diseases because they are particularly selective and this ensures a good
        safety profile and high efficacy. The market investigation did not support this claim.
        Indeed, the majority of KOLs stated that allosteric mechanisms are not unique and
        orthosteric TYK2 inhibitors could possibly achieve comparable levels of efficacy
        and safety.55 One KOL submitted that “there is no evidence that an allosteric action
        mechanism leads to any benefits for the patient (in terms of efficacy or safety). Nor
        is an allosteric mechanism necessary to target a TYK2”,56 while another KOL
        added: “increased selectivity […] does not necessarily characteri[s]e every inhibitor
        with an allosteric mechanism”.57 Similarly, a competitor who is currently developing
        a TYK2 inhibitor stated that “overall, the use of an allosteric or an orthosteric
        mechanism for TYK 2 inhibition does not make a difference for the patient (i.e. in
        terms of efficacy or safety). […][A]n allosteric mechanism for TYK 2 inhibition is
        not necessarily more targeted than an orthosteric mechanism and may give rise to
        similar side effects.”58 For this reason, the Commission concludes that, at this point
        in time and on the basis of the elements at its disposal, no separate relevant product
        market can be defined for allosteric TYK2 inhibitor treatments for moderate-to-
        severe PsO.
Segmentation by mode of delivery
(43)    The Parties also suggested that different treatments for moderate-to-severe PsO
        compete with each other, regardless of their MoD. The most important factors for a
        physician choosing a treatment against an autoimmune disease are efficacy and
        safety. The physician will consider a wide range of MoDs taking into account the
        specific needs of the patient.59 The Parties suggested that the issue could ultimately
        be left open because the Transaction would not raise competition concerns even if
        one looks at moderate-to-severe PsO treatments sub-segmented by MoD.
54   See Replies to questions 24 and 25 – Questionnaire to competitors – Autoimmune diseases.
55   See Non-confidential minutes of conference call with KOL, 24.4.2019, Non-confidential minutes of
     conference call with KOL, 24.4.2019, Non-confidential minutes of conference call with KOL, 24.4.2019,
     Non-confidential minutes of conference call with KOL, 16.5.2019.
56   Non-confidential minutes of conference call with KOL, 24.4.2019.
57   Non-confidential minutes of conference call with KOL, 16.5.2019.
58   Non-confidential minutes of conference call with a competitor, 21.5.2019.
59   Form CO, paragraph 281.
                                                         11
 ---pagebreak--- (44)     The market investigation was inconclusive on the question of whether the market for
         moderate-to-severe PsO treatments should be further sub-segmented based on the
         MoD, e.g. whether there should be a separate relevant market for oral treatments of
         moderate-to-severe PsO.
(45)     On the one hand, all respondents recognised that efficacy and safety of the
         treatment60 (not MoD) are the key parameters driving prescription decisions.61 The
         majority of competitors and KOLs added that oral products compete with injectable
         drugs (like biologics).62 Many KOLs also indicated that the vast majority of patients
         is open to an injectable product if it would ensure better results. 63 Certain KOLs
         added that in terms of adherence, oral and injectable treatments for PsO are not
         significantly different.64 An injectable treatment, e.g. once every 3-4 weeks is
         comparable in terms of adherence and convenience with an oral drug that the patient
         needs to take twice per day.65
(46)     On the other hand, the majority of competitors confirmed that the MoD plays an
         important role to determine whether different types of moderate-to-severe PsO
         treatments compete with each other.66 Some respondents added that oral products
         have a unique convenience profile and dermatologists prescribe them for special
         categories of patients, e.g. frequent travellers or patients with needle phobia.67
(47)     In any event, the exact relevant product market definition can be left open since the
         Transaction does not give rise to serious doubts as to its compatibility with the
         internal market and the functioning of the EEA Agreement even if a separate market
         were defined for oral third-line treatments for moderate-to-severe PsO.
60 The exact efficacy (i.e. therapeutic effectiveness) and safety (i.e. existence or absence of adverse effects)
   profile of a drug depends on its MoA and the disease targeted. Drugs with different MoA may have, in
   some instances and to some extent, similar efficacy and safety profiles.
61   See Replies to question 11 – Questionnaire to competitors – Autoimmune diseases.
62   Non-confidential minutes of conference call with KOL, 30.4.2019, Non-confidential minutes with
     competitor, 21.5.2019, Replies to questions 9 and 13 – Questionnaire to competitors – Autoimmune
     diseases.
63   Non-confidential minutes of conference call with KOL, 30.4.2019, Non-confidential minutes of
     conference call with KOL, 24.4.2019, , Non-confidential minutes of conference call with KOL,
     24.4.2019, Non-confidential minutes of conference call with KOL, 16.5.2019, Non-confidential minutes
     of conference call with KOL, 2.5.2019.
64   Non-confidential minutes of conference call with KOL, 16.5.2019, Non-confidential minutes of
     conference call with KOL, 24.4.2019, Non-confidential minutes of conference call with KOL, 24.4.2019.
65   Non-confidential minutes of conference call with KOL, 24.4.2019, Non-confidential minutes of
     conference call with KOL, 24.4.2019. As one competitor put it, “compliance rates may not differ too
     much. For injectables you need to visit the doctor’s office, which would improve compliance rates. Tablet
     use is convenient for the end user, in particular if dosing is once-daily. If tablet intake would be more
     that once a day, treatment compliance may be negatively impacted” in Replies to question 14.1 –
     Questionnaire to competitors – Autoimmune diseases.
66   See Replies to question 14 – Questionnaire to competitors – Autoimmune diseases.
67   See Replies to question 14.1 – Questionnaire to competitors – Autoimmune diseases, Non-confidential
     minutes of conference call with KOL, 3.5.2019, Non-confidential minutes of conference call with KOL,
     30.4.2019.
                                                           12
 ---pagebreak---          (B)        Relevant geographic market
         (B.i)      Commission’s Precedents and the Parties’ View
(48)     The Commission has consistently defined the geographic markets for marketed
         products against autoimmune diseases as being national in scope. 68 With respect to
         pipeline products, the Commission has consistently held that the geographic market
         is either global or at least EEA-wide.69
(49)     The Parties submitted that they agree with the Commission’s approach to geographic
         market definition.70
         (B.ii)     Commission’s assessment
(50)     Nothing in the market investigation suggested that the Commission should depart in
         the present case from its previous practice concerning the geographic market
         definition.
(51)     For the purpose of this Decision, the geographic market for marketed products for
         the treatment of moderate-to-severe PsO should be defined at national level.
(52)     The exact geographic scope of the market for pipeline treatments for moderate-to-
         severe PsO can be left open, since the Transaction does not give rise to serious
         doubts as to its compatibility with the internal market and the functioning of the
         EEA Agreement even on the basis of the narrowest plausible geographic market
         definition, i.e. at EEA-wide level.
           4.1.2.2. The Parties’ products
(53)     Parties’ marketed and pipeline drugs for the treatment of moderate-to-severe PsO are
         detailed in Table 1 below.
68   See cases M.7339 - AbbVie/Shire, decision of 16.10.2014, recitals 28-30; M.5865 - Teva/Ratiopharm,
     3.8.2010, recital 83; M.3354 - Sanofi-Synthelabo/Aventis, 26.4.2004, recital 117.
69   See cases M.8955 - Takeda/Shire, decision of 20.11.2018, recital 56; M.8401 – J&J/Actelion, decision of
     9.7.2017, recital 31; M.7275– Novartis/GlaxoSmithKline oncology business, recitals 33 and 72; M.7872 –
     Novartis / GlaxoSmithKline, recital 29; and M.7559 – Pfizer / Hospira, recital 30.
70   Form CO, paragraph 160.
                                                        13
 ---pagebreak---  ---pagebreak--- (57)     Celgene owns an option to acquire the TYK2 inhibitor programme that is developed
         by Nimbus, a US biotech company.76 This programme is currently at preclinical trial
         stage and expected to start the Phase I clinical trials in […]. Nimbus’ programme is
         […].77
(58)     The Transaction gives rise to overlaps between the marketed (existing) products of
         the Parties and their pipeline products at clinical trial stage in (i) a plausible market
         for third-line treatments for moderate-to-severe PsO and (ii) a plausible market for
         oral third-line treatments for moderate-to-severe PsO. Taking into account the
         Nimbus preclinical asset that Celgene has an option to acquire, the Transaction gives
         rise to overlaps in the same markets and also in a plausible market for TYK2
         inhibitor treatments for moderate-to-severe PsO.78
           4.1.2.3. Overlaps involving marketed products and pipeline programmes at clinical
                      trial stage
         (A)        Parties’ views
(59)     The Parties submit that the overlap between Celgene’s marketed drug (Otezla), on
         the one hand, and BMS’ pipeline products (TYK2 inhibitor and RORγt agonist), on
         the other hand, would not give rise to competition concerns under any market
         delineation for the following reasons. First, Otezla has a limited position in EEA
         markets (with market shares well below 20% in all Member States where it is sold).
         Second, Otezla and each of BMS’ TYK2 inhibitor and RORγt agonist are
         differentiated products (with distinct MoA and efficacy/safety profiles). Third, the
         competitive landscape in moderate-to-severe PsO treatments is crowded, with a large
         number of marketed products currently available on the market in the EEA and
         many pipeline projects under development. Fourth, with respect to BMS’ RORγt
         agonist programme, the Parties argue that, assuming the clinical trials are successful,
         this Phase I pipeline product would not enter the market for a very long time, by
         which point Otezla will most likely have lost, or be close to losing, exclusivity.
         Finally, the Parties claim that, post-Transaction, the merged entity would have no
         ability and/or no incentive to discontinue (i) the development of BMS’ two pipeline
         projects or (ii) the supply of Otezla.79
76   [In 2017], Nimbus entered into a warrant-to-acquire agreement with Celgene. Under the terms of this
     agreement, Celgene received an option to acquire Nimbus’ TYK2 inhibitor programme […].
77 Nimbus expects to start the Phase I trial […] by the beginning of […]. (see non-confidential minutes of a
   conference call with Nimbus, 13.5.2019).
78   In a plausible market including all treatments for moderate-to-severe PsO, the Transaction would also give
     rise to a horizontal overlap between the Parties’ activities in France, Italy, and Spain, where BMS markets
     Kenalog and Celgene offers Otezla. However, this potential marketed-to-marketed overlap does not give
     rise to an affected market. The combined share of the Parties would not exceed 20% in any of these
     countries. Moreover, BMS’ Kenalog and Celgene’s Otezla are highly differentiated products with (i)
     different ATC3 classifications (D5B (Systemic Anti Psoriasis Products) for Otezla and H2A (Systemic
     Corticosteroids, Plain) for Kenalog); (ii) different MoA (Otezla is a small molecule PDE-4 inhibitor,
     whereas Kenalog is a corticosteroid); and (iii) different uses (Kenalog is used for the short term relief of the
     symptoms of PsO, whereas Otezla is used to address the underlying cause of moderate-to-severe PsO).
79   See Form CO, Autoimmune Diseases Chapter, paragraphs. 220 and ff.
                                                             15
 ---pagebreak---          (B)         Commission’s assessment
(60)     The evidence in the Commission’s file generally confirms the Parties’ claim. It
         allows the Commission to exclude serious doubts as to the compatibility of the
         Transaction with the internal market and the functioning of the EEA Agreement
         resulting from the overlap of the Parties’ activities in third-line moderate-to-severe
         PsO treatments or (more narrowly) in oral third-line moderate-to-severe PsO
         treatments.
(61)     First, the results of the market investigation show that none of the Parties’ drugs is
         or is expected to hold a particularly strong position in the moderate-to-severe PsO
         treatment space:
         -    Otezla. Contrary to the US where it is considered a blockbuster,80 Celgene’s drug
              has a limited market position in the EEA. In a potential market for third-line
              treatment for moderate-to-severe PsO, Otezla’s market share remains modest at
              national level (below 10% in 2018 in all EEA countries where it was sold).81
              This is mainly due to the fact that, in the EEA, the S3 Guidelines (and national
              clinical guidelines) as well as the national reimbursement regimes, restrict the
              use of Otezla for cost-efficiency reasons.82 Otezla is typically prescribed as third-
              line treatment (i.e. after conventional systemic therapies have failed or in case of
              contraindications) and thus competes with other third-line treatments, including
              biologics and biosimilars. These are all more efficacious than Otezla and
              physicians in the EEA tend to prefer them. The use of Otezla is even more
              limited in some EEA countries, where national or regional guidelines
              recommend Celgene’s drug to be prescribed after biologics have failed or in case
              of contraindications.83 During the market investigation, all competitors and
              KOLs consider Otezla’s efficacy to be lower (or much lower) than biologics’.84
              Several market participants and KOLs also highlighted potential tolerability
              problems associated to Otezla, in particular gastrointestinal issues, such as
              diarrhoea and nausea, and a risk of depression.85 The above considerations
              explain Otezla’s limited market position in the EEA;86
         -    BMS TYK2 inhibitor pipeline project (BMS-986165). Although BMS TYK2
              inhibitor is perceived as a promising drug by several market participants, most
              respondents to the market investigation indicated that its efficacy and safety
80   See minutes of the conference call with a KOL dated 29.4.2019.
81   Source: IQVIA. See also Replies to question 10 – Questionnaire to competitors – Autoimmune diseases.
82   In the US, a large share of health expenditure is covered by private insurances, whereas, in the EEA,
     health expenditure are mostly financed by national public health systems which are under public budget
     constraints. It follows that, in the EEA countries, the level of reimbursement of a therapeutic treatment is
     in general more closely related to the cost-effectiveness of the drug than in the US. See notably Non-
     confidential minutes of a conference call with a KOL dated 24.04.2019; Non-confidential minutes of a
     conference call with a KOL dated 29.04.2019; Non-confidential minutes of a conference call with a
     KOL, dated 16.5.2019; and Non-confidential minutes of a conference call with a KOL, dated 3.05.2019.
83   See notably Non-confidential minutes of a conference call with a KOL dated 24.4.2019.
84   Replies to questions 12 and 15 – Questionnaire to competitors – Autoimmune diseases.
85   See notably Non-confidential minutes of a conference call with a KOL dated 29.4.2019; Non-confidential
     minutes of a conference call with a KOL dated 30.4.2019; Non-confidential minutes of a conference call
     with a KOL dated 2.5.2019. See also Replies to question 12 – Questionnaire to competitors –
     Autoimmune diseases.
86   This is also confirmed by […] surveys […] (see Form CO, Annexes AI.20 and AI.22 […]).
                                                            16
 ---pagebreak---              profile (i.e. the two key elements in the choice of therapy87) will likely be
             comparable to or worse than biologics.88 As a KOL put it, “[t]oday in PsO, there
             are already many efficacious, cost-effective treatments with a proven safety
             profile and it will be difficult for TYK2 inhibitors to compete with them”.89 BMS
             internal documents confirm this, citing public authorities in Europe and
             elsewhere who […];90
        -    BMS RORγt agonist pipeline project (BMS-986251): given its early stage of
             development, the exact efficacy and safety profile of this pipeline drug and the
             line of treatment for which it will be approved are still unknown.91 Assuming it
             reaches the market and is approved as a third-line treatment, it is likely that more
             products will have entered the market and Otezla will likely have lost its
             exclusivity (scheduled to occur around 2028).
(62)    That being said, the results of the market investigation suggest that the MoD of the
        Parties’ drugs (i.e. oral) could constitute a competitive advantage because some
        patients are reluctant to receive injections and because all the alternative third-line
        treatments currently available on the market (biologics) are injectable.92 However,
        this competitive advantage seems limited in practice since (i) in the EEA, the MoD
        does not drive prescription decisions93 (contrary to the US where the competitive
        dynamics are very different),94 especially when it comes to third-line treatments
        where efficacy and safety prevail; (ii) the number of patients reluctant to injections
        appears to be modest (around 5% of the patient population according to some
        KOLs)95; and (iii) many competitors are currently developing alternative oral drugs
        (see below Table 2).
(63)    Second, post-Transaction, the combined entity would continue to face strong
        competitive constraints from a large number of actual and potential competitors.
87   See notably Non-confidential minutes of a conference call with a KOL dated 30.04.2019 and Non-
     confidential minutes of a conference call with a KOL dated 16.5.2019. See also Replies to question 11 –
     Questionnaire to competitors – Autoimmune diseases.
88   See notably Non-confidential minutes of a conference call with a KOL, dated 24.4.2019; Non-
     confidential minutes of a conference call with a KOL, dated 29.4.2019; and Non-confidential minutes of
     a conference call with a KOL, dated 30.4.2019. Replies to questions 24 and 25 – Questionnaire to
     competitors – Autoimmune diseases.
89   Non-confidential minutes of conference calls with a competitor, 29.4.2019.
90   Form CO, Annex AI.17, […].
91   […].
92   Replies to questions 12, 14, 20, 27 and 28 – Questionnaire to competitors – Autoimmune diseases.
93   See notably Non-confidential minutes of a conference call with a KOL dated 30.04.2019 and Non-
     confidential minutes of a conference call with a KOL dated 16.5.2019. See also Replies to question 11 –
     Questionnaire to competitors – Autoimmune diseases.
94   See notably Non-confidential minutes of a conference call with a competitor, dated 4.6.2019; Non-
     confidential minutes of a conference call with a KOL, dated 3.5.2019; and Non-confidential minutes of a
     conference call with a KOL, dated 29.4.2019.
95   See Non-confidential minutes of a conference call with a KOL dated 2.5.2019. See also Non-confidential
     minutes of a conference call with a KOL dated 30.4.2019.
                                                         17
 ---pagebreak---  ---pagebreak---  ---pagebreak--- (68)     Third, although some respondents consider that Otezla and BMS TYK2 inhibitor
         will closely compete because they are both administered orally,108 the market
         investigation confirmed that the Parties’ drugs are differentiated in terms of (i) MoA,
         as well as (ii) efficacy and safety profile109 which is the key factor in the choice of
         the treatment:110
         -    Different MoA. The Parties’ drugs target different enzymes and pathways
              responsible for PsO. Otezla is a PDE-4 inhibitor, which inhibits the actions of
              PDE-4, an enzyme which turns cyclic adenosine monophosphate (“cAMP”) to
              adenosine monophosphate (“AMP”). The inhibition of PDE-4 allows to reduce
              the production of pro-inflammation cytokines (such as TNF-α) and, thus,
              inflammation and other PsO symptoms. BMS-986165 is a TYK2 inhibitor,
              which specifically inhibits the TYK2, in order to target the IL-12 and IL-23
              pathways, which are genetically related to PsO.111 BMS-986251 is a RORγt
              agonist, the way its works remains uncertain but antagonizing RORγt activity
              with synthetic small molecules seems to inhibit expression of IL-17A.
         -    Different efficacy profile. Otezla significantly reduces the skin area affected by
              PsO in around one third of patients (PASI 75 response rate112 of 29-33%), while
              BMS TYK2 inhibitor is expected to be effective in over two thirds of patients
              (PASI 75 response rate of 67-75% based on the Phase II trial results). This
              means the efficacy of the BMS TYK2 inhibitor is comparable to the efficacy of
              biologics, which achieve PASI 75 response rates of approximately 71-91% (as
              shown in the Graph below). The PASI 90113 scores of patients treated with
              Otezla, BMS’ TYK2 inhibitor, and biologics corroborate this conclusion.114 This
              was also confirmed by the vast majority of KOLs and competitors.115
108  See recital (69) below. One competitor also flagged that Otezla is used by BMS as active comparator in
     the BMS TYK2 inhibitor Phase III clinical trials (see Replies to question 22 – Questionnaire to
     competitors – Autoimmune diseases). This does not suggest that BMS TYK2 inhibitors will compete
     more closely with Otezla than with other third-line treatments for moderate-to-severe PsO. The choice of
     Otezla as a comparator is explained by the way clinical trials are designed and executed. For its TYK2
     inhibitor pipeline project, BMS could choose between running (i) a superiority trial, showing that the
     efficacy of its drug exceeds the efficacy of another therapy and (ii) a non-inferiority trial, showing that
     the efficacy of its drug is not lower than the efficacy of another therapy. Non-inferiority trials are much
     larger than superiority trials and they are more difficult to design and execute. BMS thus chose to
     conduct a superiority trial, using Otezla […]. It was also easier to recruit patients for a trial comparing two
     oral products than for a trial involving an injectable product (e.g. a biologic), which would be BMS’
     alternative. In any event, […].
109  As regards BMS RORγt agonist pipeline (BMS-986251), given its early stage of development (Phase I),
     the exact efficacy and safety profile of this pipeline is still unknown.
110  See also recital (45) above.
111  See also recital (39) above.
112  A PASI 75 response rate is the percentage of patients that experienced a 75% reduction of their PASI
     score from the start to the end of the trial.
113  A PASI 90 response rate is the percentage of patients that experienced a 90% reduction of their PASI
     score from the start to the end of the trial.
114  See Form CO, Annex 5.027, […].
115  See Replies to question 24 – Questionnaire to competitors – Autoimmune diseases. In the non-
     confidential minutes of a conference call dated 24.4.2019, a KOL stated: “[t]he clinical results of Otezla
     are closer to conventional systemic therapies (in terms of efficacy), whereas new small molecules, such
     as TYK2, are likely to be marketed as close substitutes to biologics.”
                                                             20
 ---pagebreak---         […]
        Source: Form CO
        -    Different safety profiles and monitoring requirements. While the exact safety
             profile of BMS TYK2 inhibitor will not be known until the completion of the
             ongoing Phase III trials, it will likely sit between Otezla (which has a very
             favourable safety profile) and biologics.116 As one KOL put it, “Otezla has a
             very favourable safety profile and is generally well tolerated by patients with
             comorbidities. BMS-986165’s safety profile is not likely to be as favourable as
             Otezla’s since it has immunosuppressant effects (with an increased risk of
             exposing patients to infections) and will require upfront screening at least for
             tuberculosis and hepatitis B and C”.117 The fact that Otezla is likely to be safer
             than BMS TYK2 inhibitor is corroborated by BMS’ internal documents, […].118
(69)    The above notwithstanding, some respondents consider that Otezla and BMS TYK2
        inhibitor will compete closely because they are both administered orally (as opposed
        to biologics that are injectable).119 However, during the market investigation,
        respondents identified many other drugs as closely competing with the Parties. In
        fact, the majority of respondents consider that all third-line treatments for moderate-
        to-severe PsO closely compete with each other.120 In addition, as already mentioned,
        the market investigation confirmed that the MoD is less important than efficacy and
        safety when a physician chooses treatment for moderate-to-severe PsO.121
(70)    Fourth, the Commission considers that, given the modest shares of Otezla in the
        EEA and the differentiated efficacy/safety profiles of Celgene’s Otezla and BMS
        TYK2, it is unlikely that the combined entity would have an incentive to cease,
        repurpose or delay the development of BMS’ pipelines post-Transaction.
(71)    BMS TYK2 inhibitor is expected to be comparable to (injectable) biologics,
        including in particular the first generation of biologics (i.e. TNF-α inhibitors), in
        terms of efficacy and safety. The successful introduction of BMS TYK2 inhibitor
        would likely lead to an overall increase in the number of PsO patients receiving
        treatment.122 BMS TYK2 inhibitor will also likely claim market share from all
        competing third-line treatments (including biologics and biosimilars).123 Moreover,
        BMS’ pipeline project is trialled for a much wider range of indications than merely
        PsO, for example in CD and Lupus, where there are no or limited overlaps between
        the activities of the Parties. As a result, discontinuing or delaying the development of
        BMS TYK2 in an attempt to exclusively commercialise Otezla would result in the
        delay or loss of revenue streams in PsO and also in other indications. In addition, in
        BMS’ investor presentations, BMS TYK2 inhibitor is highlighted as one of the six
        new medicines to be launched by the merged entity in the next two years.124 This
116  See Replies to questions 16-17 and 25-26 – Questionnaire to competitors – Autoimmune diseases.
117  Non-confidential minutes of a conference call with a KOL, 16.5.2019.
118  See Form CO, Annex AI.27, […].
119  See Replies to questions 21 and 22 – Questionnaire to competitors – Autoimmune diseases.
120  See Replies to questions 19, 21, 22 and 29 – Questionnaire to competitors – Autoimmune diseases.
121  See notably Replies to question 11 – Questionnaire to competitors – Autoimmune diseases.
122  See Replies to question 23 – Questionnaire to competitors – Autoimmune diseases.
123  See Replies to question 23 – Questionnaire to competitors – Autoimmune diseases.
124  See, for example, https://bestofbiopharma.com/wp-content/uploads/2019/02/Bristol-Myers-Squibb-
     Investor-Update.pdf.
                                                         21
 ---pagebreak---         shows that BMS is publicly building up expectations amongst its investors that no
        delay in the development of BMS TYK2 inhibitor will take place.
(72)    With respect to BMS RORγt agonist, given the early stage of this pipeline (Phase I)
        and the fact that Otezla will lose exclusivity in Europe around the time this asset
        would launch, if successful in trial, it is unlikely that the combined entity would
        have incentives to stop the development of BMS-986251. Rather, it would make
        sense for the combined entity to continue the development of the project for life-
        cycle management purposes.
(73)    Fifth, post-Transaction, it is unclear whether the Parties would have the ability
        and/or incentives to stop supplying or to repurpose Otezla in the EEA. Although one
        of the Parties’ internal documents125 suggests that, post-Transaction, […], this
        document seems to relate to the US market, where competitive dynamics are
        different from the EEA.
(74)    In the EEA, for cost-efficiency reasons, the use and reimbursement of Otezla is
        restricted to patients who have first failed a conventional systemic therapy (or have
        contraindications). By contrast, in the US, there is no such requirement, which
        allows Otezla to be used as an earlier stage treatment and for milder cases. 126 […]. In
        fact, today Celgene is seeking to have Otezla approved for mild-to-moderate PsO
        […] in the US.127 In any event, if the Parties decided to stop the supply of Otezla or
        to reposition it in the EEA (which remains unclear), the impact on the market would
        be limited given Otezla’s relatively modest market shares in the EEA (well below
        10% in all the EEA countries where Otezla is sold) and the existence of many actual
        and potential competitors (including oral drugs).128
        (C)        Conclusion
(75)    In view of the above, taking into account the results of the market investigation and
        all the evidence available to it, the Commission concludes that the Transaction does
        not raise serious doubts as to its compatibility with the internal market and with the
        functioning of the EEA Agreement resulting from the overlap of the Parties’
        activities in third-line moderate-to-severe PsO treatments or (more narrowly) in oral
        third-line moderate-to-severe PsO treatments.
          4.1.2.4. Overlap involving a pipeline programme at preclinical trial stage
(76)    During the market investigation, two competitors identified an overlap between
        BMS TYK2 inhibitor pipeline, currently in Phase III trials, and the preclinical TYK2
        inhibitor programme developed by Nimbus, in which Celgene has a financial option.
        According to these competitors, the combination of these two assets under the
        control of the merged entity could negatively impact competition in the market for
        moderate-to-severe PsO treatments. The Commission assesses these concerns in the
        remainder of this section.
125  Form CO, Annex 5.027, […].
126  This explains why Celgene’s drug is considered a blockbuster in the US and not in the EEA. See recital
     (61) above.
127 Form CO, Section 6 – Autoimmune Diseases, paragraph 248.
128 See Table 3 above.
                                                        22
 ---pagebreak---         (A)        The Parties’ view
(77)    The Parties submit that the Transaction does not raise serious doubts as a result of
        the overlap between BMS TYK2 inhibitor pipeline and Celgene’s option in Nimbus’
        TYK2 inhibitor programme for two reasons. First, Nimbus’ TYK2 inhibitor project
        is at preclinical stage of development and has a very low probability of success so
        that it is wholly uncertain if it will ever reach the (EEA) market. Second, even if
        successful, Nimbus’ TYK2 inhibitor will be launched in the EEA no earlier than
        […], that is to say several years after the launch of BMS TYK2 inhibitor. This
        means that the two pipeline projects do not have “similar timing”129 and should not
        be considered as competing research programmes.
        (B)        The Commission’s assessment
(78)    The Commission investigated the overlap between BMS TYK2 inhibitor pipeline
        (Phase III) and Celgene’s option in Nimbus’ TYK2 inhibitor pipeline (preclinical).
        The market investigation of the Commission showed that the Transaction would not
        give rise to serious concerns as to its compatibility with the internal market and the
        functioning of the EEA Agreement resulting from this overlap, irrespective of the
        relevant market delineation.
(79)    In a possible relevant market comprising all third-line treatments for moderate-to-
        severe PsO, the combined entity would have one marketed product (Celgene’s
        Otezla) and three pipeline projects (BMS TYK2 inhibitor, Nimbus’ TYK2 inhibitor
        programme, assuming the relevant option is exercised, and BMS’ Rorγt antagonist in
        Phase I […]). In this market, the Transaction does not give rise to competition
        concerns for the reasons explained above regarding the overlap between BMS TYK2
        inhibitor and Otezla.130 The addition of Nimbus’ TYK2 inhibitor programme does
        not change that conclusion because the Parties’ drugs are not expected to exert
        strong competitive constraints in the market for moderate-to-severe PsO and they
        would continue to face a large number of actual and potential competitors, including
        biologics, biosimilars and small molecule drugs.
(80)    In a possible relevant market comprising oral third-line treatments for moderate-to-
        severe PsO, the combined entity would again have one marketed product (Otezla),
        the two TYK2 inhibitor programmes, and BMS-986251 (a RORγt agonist in Phase I
        […]). In this market, the Transaction does not give rise to competition concerns for
        the reasons explained above regarding the overlap between BMS TYK2 inhibitor,
        Otezla and BMS-986251.131 The addition of Nimbus’ TYK2 inhibitor programme
        does not change that conclusion because the Parties would continue to face a large
        number of potential competitors, with several oral drugs at a more advanced stage of
        development than Nimbus’ TYK2 inhibitor preclinical programme.
(81)    In a possible relevant market including only TYK2 inhibitors for the treatment of
        moderate-to-severe PsO, the combined entity would own BMS TYK2 inhibitor and
        the financial option to acquire Nimbus’ TYK2 inhibitor preclinical programme. In
129  See case M.7275 - Novartis/GSK Oncology, decision of 28.1.2015, recital 90.
130  See Section 4.1.2.3 above.
131 See Section 4.1.2.3 above.
                                                      23
 ---pagebreak---         this segment, the Transaction does not give rise to competition concerns for the
        reasons explained below.
(82)    First, post-Transaction, the combined entity will continue to face strong competitive
        constraints from several players developing TYK2 inhibitors for moderate-to-severe
        PsO. Post-Transaction, there will be at least five players developing TYK2 inhibitors
        as treatments for moderate-to-severe PsO. In addition to the combined entity, these
        include large pharmaceutical companies (such as Pfizer and AbbVie) and also
        smaller pharmaceutical companies (such as Nuevolution and Sareum). The pipeline
        projects of Pfizer and AbbVie are in clinical trial stage (Phase II and Phase I,
        respectively) which means that they are more advanced than the Nimbus preclinical
        asset. The pipeline projects of Nuevolution and Sareum have not entered clinical
        development stage (similar to the Nimbus’ preclinical asset). Therefore, post-
        Transaction, several competing TYK2 inhibitor research programmes will remain on
        the market, in addition to the Parties’ programmes.
(83)    Second, each of the Parties’ pipeline products appear to compete more closely with
        competitors’ pipeline products than the Parties' competing ones. BMS TYK2
        inhibitor programme is at the most advanced clinical trial stage (Phase III). It is
        expected to receive approval in the EEA in […] for the treatment of moderate-to-
        severe PsO. By contrast, Nimbus’ TYK2 inhibitor is still at preclinical trial stage and
        it is expected to enter Phase I clinical trials in […]. In this sense, BMS TYK2
        inhibitor competes more closely with AbbVie’s and Pfizer’s pipelines (both at
        clinical trial stage) than it does with Nimbus’ programme. These projects have
        significantly higher chances of success, compared to Nimbus’ pipeline which is still
        at preclinical trial stage.132 In the market investigation, the vast majority of
        respondents did not identify Nimbus as a close competitor of BMS TYK2 inhibitor
        programme. Rather, most of them referred to Pfizer’s TYK2 inhibitor pipeline
        project (as well as to other treatments with different MoA).133 Nimbus’ TYK2
        inhibitor programme competes more closely with other programmes which have not
        yet entered clinical trial stage, such as Sareum’s and Nuevolution’s projects.
(84)    During the market investigation, two competitors flagged that BMS and Nimbus are
        the only two companies developing allosteric TYK2 inhibitors.134 The two
        competitors, which constitute a small minority of the respondents, argued that
        allosteric TYK2 inhibitors have a distinct and unique efficacy and safety profile and
        that, post-Transaction, all the relevant pipeline projects would be controlled by the
        combined entity. The market investigation did not support these concerns. The
        majority of KOLs and market participants indicated that allosteric mechanisms are
        not unique and orthosteric TYK 2 inhibitors could possibly achieve comparable
        levels of efficacy and safety.135 In any event, even assuming that allosteric TYK2
        inhibitors do have unique characteristics, the market investigation revealed that such
132 The market investigation confirmed that preclinical assets in autoimmune diseases (like Nimbus’
     programme) have a likelihood of success of less than 11%. Replies to question 31 – Questionnaire to
     competitors – Autoimmune diseases.
133 See Replies to question 29 – Questionnaire to competitors – Autoimmune diseases.
134 Replies to question 34.1 – Questionnaire to competitors – Autoimmune diseases.
135 See recital (42) above.
                                                        24
 ---pagebreak---          drugs are currently under development by companies other than BMS and
         Nimbus.136
(85)     Third, the Commission takes into account the competitive pressure to be exerted on
         TYK2 inhibitors by alternative treatments for moderate-to-severe PsO (already
         marketed or under development). The market investigation showed that TYK2
         inhibitors will be one of the many drugs in the unconcentrated space of moderate-to-
         severe PsO treatments. TYK2 inhibitors will face competition from marketed
         biologics (including TNF-α inhibitors, IL-17 inhibitors, IL-23 inhibitors, and IL-
         12/23 inhibitors), their biosimilars, and also a large number of pipeline drugs,
         including several oral pipelines in Phase II and Phase III. 137 A competitor developing
         a TYK2 inhibitor took the view that its drug will “not just compete with other small
         molecules (e.g. Otezla or BMS’s TYK2 inhibitor) but also with biologics in the very
         crowded space of moderate-to-severe PsO treatments”.138
(86)     This is also confirmed by the majority of respondents to the market investigation
         who do not expect TYK2 inhibitors to be more efficacious139 or significantly safer140
         than existing treatments. A KOL indicated that “BMS’ TYK2 inhibitor seems to be
         one of the many pipeline projects that exist today for the treatment of PsO.”141
         Another KOL added that “[m]any products currently on the market for PsO have an
         efficacy and safety profile that is superior to the efficacy and safety profile of the
         combined BMS/Celgene portfolio. The fact that Celgene purchased an option to
         acquire the TYK2 inhibitor programme of a US company, Nimbus, does not change
         this conclusion. There are several companies that develop pipeline projects for
         PsO”.142
(87)     Fourth, it is unlikely that the Transaction will lead to a loss of innovation on the
         hypothetical market for TYK2 inhibitors PsO treatments. Indeed, Celgene is not
         developing the Nimbus programme itself. It simply has a financial option to
         purchase the programme, with a set expiry date.143 Assuming that the combined
         entity decides not to exercise this option (e.g. because it also owns the BMS TYK2
         inhibitor programme), the Nimbus project would not be necessarily discontinued.
         Nimbus would be free to continue the development of its TYK2 inhibitor
         programme on its own and/or look for an alternative partner.144 As Nimbus itself put
         it, “if Celgene does not exercise the option, Nimbus will be free to continue the
         development of the TYK2 inhibitor programme on its own and/or look for an
136  See notably non-confidential minutes of conference calls with competitors, 21.5.2019 .
137  Replies to questions 8.2 and 22 – Questionnaire to competitors – Autoimmune diseases and non-
     confidential minutes of conference calls with a competitor, 29.4.2019.
138  See non-confidential minutes of a conference call with a competitor, 21.5.2019. Another competitor
     having a TYK2 inhibitor programme in clinical trial indicated that “the relevant market for moderate-to-
     severe PsO treatments includes topical and biologic treatments”; see non-confidential minutes of a
     conference call with a competitor, 24.5.2019.
139  See replies to question 24 – Questionnaire to competitors – Autoimmune diseases.
140  See replies to question 25 – Questionnaire to competitors – Autoimmune diseases
141  See non-confidential minutes of a conference call with a KOL, 29.4.2019.
142  See non-confidential minutes of a conference call with a KOL, 29.4.2019.
143  [Confidential contractual terms]. See Form CO, Annex AI.3, […] See the Parties’ reply to RFI 8,
     15.7.2019.
144  See non-confidential minutes of a conference call with competitor, 21.5.2019, who stated: “Post-
     Transaction, if Celgene were to not exercise its option to purchase Nimbus’ project, Nimbus would seek
     to conclude a new partnership agreement, which can be expected to be easy.”
                                                          25
 ---pagebreak---          alternative partner.”145 Nimbus added: “[i]f the merged entity does not exercise the
         option, other pharmaceutical companies are likely to be interested in acquiring
         Nimbus’ TYK2 programme. In this respect, Nimbus explained that, before reaching
         an agreement with Celgene, it had engaged in discussions with several
         pharmaceutical companies (excluding BMS, precisely because it already had its own
         TYK2 inhibitor pipeline) and that several of them had expressed interest in its TYK2
         inhibitor programme.”146
(88)     It is also unlikely that the combined entity would have an incentive to exercise the
         option, purchase the Nimbus pipeline asset, and then discontinue it. This would
         involve automatically a significant investment, because the exercise of the option
         requires an upfront payment of […]147 by the combined entity to Nimbus for an asset
         whose development and launch on the market remain highly uncertain (5% for small
         molecule drugs).148
(89)     During the market investigation, two competitors, which constitute a small minority
         of the respondents, also raised the concern that by holding an option over the
         Nimbus TYK2 inhibitor programme, the combined entity could delay the
         programme’s development to limit the competitive constraints on the BMS TYK2
         inhibitor drug. However, any such delay (e.g. through requests of excessive amounts
         for information by the combined entity) is unlikely to have a significant impact on
         the overall timeline of the Nimbus project, which is today more than […] away from
         the market, and its launch is still uncertain.149 In any event, as explained above,150
         before […] (when Nimbus’ TYK2 inhibitor is expected to be launched), other TYK2
         inhibitor products more likely to have entered the EEA market and exert competitive
         constraints on BMS TYK2 inhibitor.
        (C)         Conclusion
(90)     For all these reasons, the Commission concludes that the Transaction would not give
         rise to serious concerns as to its compatibility with the internal market and the
         functioning of the EEA Agreement resulting from this overlap, irrespective of the
         relevant market delineation.
4.1.3. Treatments for Psoriatic Arthritis (“PsA”)
(91)     PsA is a chronic, systemic, autoimmune joint disease associated with PsO. It occurs
         when cells from the immune system move into a patient’s skin and joints, and
         produce proteins that cause swelling and pain.
145  See non-confidential minutes of a conference call with Nimbus, 13.5.2019.
146  See non-confidential minutes of a conference call with Nimbus, 13.5.2019.
147  [Confidential contractual terms] See the Parties’ reply to RFI 8.
148  See http://www.appliedclinicaltrialsonline.com/large-vs-small-molecule-success-rates. The likelihood of
     success appears slightly higher (11%) for preclinical assets in autoimmune diseases, (i.e. including both
     biologics and small molecule drugs) See Replies to question 31 – Questionnaire to competitors –
     Autoimmune diseases.
149  The market investigation largely confirmed that preclinical assets in autoimmune diseases (like Nimbus’
     programme) have a likelihood of success of less than 11%. Replies to question 31 – Questionnaire to
     competitors – Autoimmune diseases.
150  See recitals (82)-(84) above.
                                                           26
 ---pagebreak---  ---pagebreak--- (96)     Celgene markets Otezla in the EEA as a third-line treatment for PsA. Otezla is a
         PDE-4 inhibitor with the active ingredient apremilast. It received a marketing
         authorisation from the EMA for PsA in 2015 and since then has been launched in
         Austria, Belgium, Croatia, Cyprus, Denmark, Estonia, Finland, France, Germany,
         Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Slovakia, Slovenia,
         Spain, Sweden, the UK, and Liechtenstein.153
(97)     BMS markets Kenalog for the treatment of PsA in Spain. Launched in the 1960s,
         Kenalog is a synthetic glucocorticoid corticosteroid with the active ingredient
         triamcinolone acetonide. Kenalog is used for short-term relief of the symptoms of PsO
         as opposed to the long-term treatment of the underlying disease. Kenalog has lost
         market exclusivity and there is a large number of generic alternatives for Kenalog.
(98)     BMS markets Orencia for the treatment of PsA in Germany. Launched in 2017,
         Orencia is a T cell costimulatory agent with the active ingredient abatacept.
(99)     BMS is developing an oral small molecule drug for PsA, namely BMS-986165,
         which is a TYK2 inhibitor.154 The project will shortly commence Phase II trials for
         this indication. It is expected to enter the EEA markets in 2026 as a third-line
         treatment.
(100) […]. The way it works remains uncertain but antagonizing RORγt activity with
         synthetic small molecules seems to inhibit expression of IL-17A.
(101) The Transaction gives rise to overlaps between the marketed (existing) products of
         the Parties and their pipeline products at clinical trial stage in (i) in a plausible
         market including all treatments for moderate-to-severe PsA,155 (ii) a plausible market
         for third-line treatments for moderate-to-severe PsA and (ii) a plausible market for
         oral third-line treatments for moderate-to-severe PsA.
           4.1.3.3. Competitive assessment
(102) The Transaction gives rise to marketed-to-pipeline overlaps between (i) Celgene’s
         Otezla (marketed), on the one hand, and (ii) BMS TYK2 inhibitor (Phase II pipeline)
         and RORγt agonist (Phase I pipeline), on the other hand.
(103) The Parties argue that no competition concerns arise in the market for PsA
         treatments or any of its plausible sub-segmentations as (i) Otezla has a limited
         market share in EEA markets; (ii) Otezla and each of the BMS pipeline projects are
         differentiated products (with different MoA, projected levels of efficacy, and
153  Otezla is reimbursed in Czechia for PsO only. Otezla is not reimbursed for either PsO or PsA in Hungary,
     Malta, Norway and Portugal, but Celgene […].
154 See recital (39) above.
155 Should the market be defined as encompassing all treatments for PsA, marketed-to-marketed product
    overlaps potentially arise (i) between Celgene’s Otezla and BMS’ Kenalog in Spain and (ii) between
    Celgene’s Otezla and BMS’ Orencia in Germany. However, these potential overlaps do not give rise to
    any affected market, the Parties’ combined shares in PsA in Germany and Spain being lower than 20%
    under any plausible market definition. Moreover, Celgene’s and BMS’s marketed PsA treatments are
    differentiated products with (i) different ATC3 classifications (D5B (Systemic Anti PsO Products) for
    Otezla, M1C (Specific Anti-Rheumatic Agents) for Orencia and H2A (Systemic Corticosteroids, Plain)
    for Kenalog); (ii) different MoA; and (iii) different uses and patient groups.
                                                            28
 ---pagebreak---         expected safety profiles); (iii) there is a number of competing products for the
        treatment of PsA (in the market and under development). The Parties also claim that,
        post-Transaction, the merged entity would have no ability or incentive to discontinue
        (i) the development of BMS’ pipeline products or (ii) the supply of Otezla.
(104) The market investigation broadly confirmed the Parties’ arguments regarding PsA
        treatments and allows the Commission to exclude serious doubts as to the
        compatibility of the Transaction with the internal market and the functioning of the
        EEA Agreement.
(105) First, in the market for third-line treatment for PsA in the EEA, Otezla’s market
        share remains limited at national level. Otezla holds less than 20% in each of the
        EEA countries where it is marketed.156 Otezla is one of the many drugs available on
        the market, including biologics and small molecules (JAK inhibitors) but it is less
        efficacious. One KOL confirmed that “Otezla has a lower efficacy profile than
        biologics, including TNF inhibitors, and JAK inhibitors. […] Otezla is widely used
        in the US but is much less popular in Europe (for costs-efficiency reasons)”157 and
        another explained: “[in PsA] Otezla does not have a strong profile compared to the
        most effective treatments, which are TNF inhibitors and IL-17 inhibitors”.158
(106) Second, Celgene’s Otezla and BMS TYK2 inhibitor and RORγt agonist are
        differentiated compounds with (i) different MoA (Otezla is a PDE-4 inhibitor and
        BMS pipeline drugs are a TYK2 inhibitor and a RORγt agonist); (ii) different
        expected efficacy profiles (BMS TYK 2 will likely have higher efficacy than
        Otezla);159 and (iii) different safety profiles and monitoring requirements (Otezla’s
        safety profile is expected to be higher than BMS TYK2 inhibitor, which could
        potentially have immunosuppressant effects and require monitoring, similarly to
        other JAK inhibitors).160 For all these reasons, BMS TYK2 inhibitor is expected to
        compete more closely with biologics and other JAK inhibitors (such as Pfizer
        marketed drug Xeljanz (tofacitinib))161 than with Otezla. BMS RORγt agonist will
        likely compete with other products that are under development for PsA and have a
        RORγt agonist MoA (e.g. Arrien’s ARN-6039, Akros’ JTE-451, and AstraZeneca’s
        AZD-0284).162
(107) Third, post-Transaction, the combined entity will continue facing competitive
        constraints from a large number of actual and potential competitors (including under
        the narrowest market definition giving rise to an overlap, i.e. oral third-line
        treatments for PsA).
156 The market share of the combined entity would remain below 20% in Germany, combining the shares of
    Celgene’s Otezla and BMS’ Orencia. The market share of the combined entity would remain below 20%
    in Spain, combining the shares of Celgene’s Otezla and BMS’ Kenalog.
157 See non-confidential minutes of a conference call with a KOL, 3.5.2019.
158 See non-confidential minutes of a conference call with a KOL, 30.4.2019.
159 At Phase I clinical trial stage, the exact efficacy and safety profile of BMS RORγt agonist remains to be
    confirmed.
160 The exact safety profile of BMS TYK2 inhibitor remains unknown at this stage.
161 See non-confidential minutes of a conference call with a KOL, 24.4.2019. This Key Opinion Leader
    indicated that “JAK inhibitors other than TYK2 have proven to work very well on patients with significant
    joint involvement and minimal skin disease. JAK inhibitors, therefore, are a promising option for the
    treatment of PsA. Pfizer’s Xeljanz (tofacitinib) recently launched in Europe and many other JAK
    inhibitors are at clinical trial stage for a PsA indication”.
162 Form CO, Section 6 – Autoimmune Diseases, Table AI.9.
                                                            29
 ---pagebreak---  ---pagebreak---         efficacy/safety profiles of the Parties’ products, it is unlikely that the combined
        entity would have incentives to cease, repurpose or delay the development of BMS’
        pipelines post-Transaction.
(112) BMS TYK2 inhibitor is expected to compete more closely with JAK inhibitors and
        biologics, in terms of efficacy and safety, than with Otezla. Moreover, BMS TYK2
        inhibitor pipelines are seeking authorisation for a much wider range of indications
        than merely PsA. As a result, discontinuing or delaying the development of BMS
        TYK2 inhibitor in an attempt to exclusively commercialise Otezla would result in
        the delay or loss of revenue streams from PsA and other indications.
(113) As regards Otezla, if the combined entity decided to stop the supply of the drug or to
        reposition it in the EEA, the impact on the market would be limited given Otezla’s
        relatively modest market shares in the EEA (less than 20% at national level).
(114) With respect to BMS RORγt agonist, given the early stage of this pipeline (Phase I)
        and the fact that Otezla will lose exclusivity in Europe around the time this asset
        would be launched, if successful in trial, it is unlikely that the combined entity
        would have incentives to stop the development of BMS-986251.
(115) Fifth, the market investigation did not reveal any substantiated competition concerns
        in relation to the Transaction in a possible market for third-line PsA treatments or
        any of its plausible sub-segmentations.
(116) For all these reasons, the Commission concludes that the Transaction does not give
        rise to serious doubts as to its compatibility with the internal market and the
        functioning of the EEA Agreement as regards its impact on competition in the
        possible market for PsA treatments (and its plausible sub-segmentations).
4.1.4. Treatments for inflammatory bowel disease (“IBD”)
(117) IBD typically refers to two conditions: UC and CD, which are inflammatory diseases
        that affect the digestive system. The main difference between them is that CD can
        affect any part of the gastroenterology tract, whereas UC is limited to the colon.
        Similarly, CD affects the full thickness of the intestinal wall whereas the
        inflammation caused by UC remains within the superficial lining of the intestine.
        Both diseases are found to have similarly debilitating effects.165
(118) Clinical guidelines, in particular the treatment guidelines issued by the European
        Crohn’s and Colitis organisation (ECCO), recommend a phased treatment for UC
        and CD consisting of three lines of treatment. The first-line treatment include
        aminosalicylates (such as mesalazine or sulfasalazine), which are effective at
        inducing and maintaining remission. The second line-treatment include
        corticosteroids and immunosuppressants, which are used for moderate-to-severe
        cases, although remission cannot be maintained with steroid. The third-line
        treatment include biologics such as TNF-α inhibitors, anti-integrins and ustekinumab
        and small molecules.
165  See case M.8955 - Takeda/Shire, decision of 20.11.2018, recital 11.
                                                        31
 ---pagebreak---  ---pagebreak--- (124) Celgene has one pipeline product that is undergoing Phase III trials for the treatment
       of UC and CD, namely RPC-1063 (“Ozanimod”), which is a small molecule agonist
       of sphingosine-1- phosphate receptor 1 (“S1P1”) and sphingosine-1-phosphate
       receptor 5 (“S1P5”). Ozanimod works by preventing lymphocytes (including T and
       B cells) from migrating from lymphoid tissues to the sites of inflammation. If
       successful in Phase III trials, Ozanimod is expected to enter the EEA market in […]
       (UC) and […] (CD) as a third-line treatment.
(125) BMS is developing an oral small molecule drug for both UC and CD, namely, BMS-
       986165, which is a TYK2 inhibitor.171 The projects are undergoing Phase II trials
       and are expected to enter the EEA market in 2026 as a third-line treatment.
(126) […]. The way it works remains uncertain but antagonizing RORγt activity with
       synthetic small molecules seems to inhibit expression of IL-17A.
(127) The Transaction gives rise to overlaps between the Parties’ pipeline products at
       clinical trial stage in (i) plausible markets including all treatments for IBD and each
       of UC and CD (ii) plausible markets for third-line treatments for IBD and each of
       UC and CD, and (iii) plausible markets for oral third-line treatments for IBD and
       each of UC and CD.
         4.1.4.3. Competitive assessment
(128) The Parties argues that no competition concerns arise in relation to UC and CD
       treatments in the EEA, under any plausible market definition, given that (i) the
       Parties’ pipeline products are at different clinical phases and consequently do not
       have a “similar timing” 172 as regards their potential market entry, (ii) there is a
       crowded pipeline for treatments of IBD and, (iii) the Parties’ products have different
       MoA, different anticipated usage and very different expected safety and efficacy
       profiles, so that they are unlikely to be close competitors. In addition, BMS-986251
       is seeking an indication only for UC.
(129) The market investigation broadly confirmed the Parties’ arguments and allows the
       Commission to exclude serious doubts as to the compatibility of the Transaction
       with the internal market and the functioning of the EEA Agreement in relation to UC
       and CD treatments, under any plausible market definition.
(130) First, the Parties’ compounds and research programmes are very differentiated.
       Celgene’s Ozanimod is an agonist of the S1P1 and S1P5 receptors, whereas BMS
       TYK2 is a selective inhibitor of tyrosine kinase 2 and BMS-986251 is a RORγt
       agonist. The significant differences in Celgene’s Ozanimod as opposed to BMS
       TYK2 inhibitor are presented in the Figure below, from which it can be seen that
       S1P1 inhibition targets UC and CD within a completely different stage of the
       inflammatory process than small molecules belonging to the JAK inhibitor family
       such as BMS TYK2 inhibitor. According to the Parties, the different MoA in
       Ozanimod and BMS TYK2 inhibitor suggest that the two products will likely have
       differentiated efficacy and safety profiles (if and when they reach the market).
171 See recital (39) above.
172 See case M.7275 - Novartis/GSK Oncology, decision of 28.1.2015, recital 90.
                                                     33
 ---pagebreak---                                                       Figure 1
       […]
       Source: Form CO.
(131) The only similarity between the Parties’ pipeline products is their oral MoD, which
       does not seem to constitute a key element for physicians when they prescribe third-
       line treatments for UC and CD. According to a KOL, “the percentage of patients
       that insist on an oral drug is limited. The most important consideration for patients
       is the efficacy of the drug, especially by the time they reach the stage of third-line
       defence followed by safety”.173
(132) Second, each of Parties’ pipeline products are expected to compete more closely
       with pipeline products of the competitors of combined entity. Other companies are
       indeed developing pipeline products that are expected to compete more closely with
       BMS TYK2 and Celgene’s Ozanimod respectively.174 BMS TYK2 inhibitor is
       expected to complete more closely with other compound from the JAK inhibitor
       family (e.g. Pfizer’s Xeljanz (marketed), Abbvie’s Upadacitinib (Phase III) and
       Gilead’s Filgotinib (Phase III)). Based on the data publicly available “there seems to
       be no difference in efficacy or safety, when comparing TYK2 inhibitors and JAK 1 or
       pan-JAK inhibitors for UC and CD”.175 On the other hand, Celgene’ Ozanimod is
       expected to closely compete with etrasimod, which is a being developed by Arena
       Pharmaceuticals in the US. According to one KOL, etrasimod, which is currently
       undergoing Phase III clinical trials, “will likely be as efficacious as ozanimod but it
       may have an advantage over ozanimod in terms of safety profile [as it] is expected to
       affect the patients’ heart less than other S1P1 receptor modulators”.176
(133) Third, post-Transaction, the combined entity will continue facing competitive
       constraints from a large number of actual and potential competitors (including under
       the narrowest market definition giving rise to an overlap, i.e. oral third-line
       treatments for each of UC and CD).
(134) Set forth below is a list of the main competing treatments (marketed in the EEA and
       under development) in third-line UC treatments and third-line CD treatments.
173 See non-confidential minutes of a conference call with a KOL, 26.4.2019.
174 By the time, and if, BMS RORγt agonist reaches the market, many other drugs, including several oral
    drugs will be available on the market.
175 See non-confidential minutes of a conference call with a KOL, 26.4.2019.
176 See non-confidential minutes of a conference call with a KOL, 26.4.2019.
                                                        34
 ---pagebreak---  ---pagebreak---         and Gilead/Galapagos’ filgotinib, which are both in Phase III for each of UC and
        CD, and Arena’s Etrasimod, which is in Phase III for UC and has the same MoA as
        Celgene’s Ozanimod).
(137) Finally, the market investigation did not reveal any substantiated competition
        concerns in relation to UC and CD treatments in the EEA. Given the differentiated
        MoA of Celgene’s and BMS’ pipeline projects, the risk of discontinuation or delay
        for some of them is limited
(138) In light of the above considerations supported by evidence collected over the course
        of the market investigation, the Commission concludes that the Transaction does not
        give rise to serious doubts as to its compatibility with the internal market and the
        functioning of the EEA Agreement as regards its impact on competition in relation
        to UC and CD treatments, under any plausible market definition.
4.1.5. Treatments for Lupus
(139) Lupus is a long-term systemic autoimmune disease which is difficult to diagnose
        because it is a very heterogeneous disease (no two cases of Lupus are exactly alike)
        and its symptoms often mimic those of many other diseases. Lupus can cause
        inflammation in a wide range of bodily systems, and can involve a wide range of
        complications depending on which bodily systems are affected. Symptoms include
        tiredness, mild skin rash or joint pain (in milder cases) and serious inflammation and
        damage in the skin, lungs, heart, kidneys.
(140) Lupus is a very heterogeneous disease and it is difficult to identify clear lines of
        treatment.179 Lupus treatments include (i) nonsteroidal anti-inflammatory drugs
        (such as aspirin and ibuprofen); (ii) antimalarials (such as hydroxychloroquine); (iii)
        corticosteroids (such as prednisolone); and (iv) immunosuppressant drugs (such as
        azathioprine and methotrexate). The use of biologics is less common in Lupus than
        in other autoimmune diseases. There is only one biologic on the market approved for
        lupus, namely, GSK’s Benlysta (belimumab). Another biologic, Roche’s Rituxan
        (rituximab), is also now widely used for the treatment of Lupus on an off-label basis.
          4.1.5.1. Market definition
(141) The Commission has not previously analysed the relevant product market for Lupus
        treatments. In J&J/Actelion, whilst the Commission did not define the relevant
        product market for Lupus treatments, it excluded competition concerns in the Lupus
        space based of the differentiated MoA, MoD and likely line of treatment of J&J and
        Actelion’s products.180 The Parties suggested that the relevant product for treatments
        of Lupus can be left open, as no competition concerns arise under any plausible
        market delineation (i.e. by line of treatment, by MoA and by MoD). For the purposes
        of this Decision, it can be left open whether the market for Lupus treatments should
        be sub-segmented. This is because the Transaction does not give rise to serious
        doubts as to its compatibility with the internal market and the functioning of the
179  The main guidelines in Europe for the treatment of lupus are the EULAR recommendations for the
     management of SLE (2008). More recent guidelines regarding the management of lupus in adults have
     been published by the British Society for Rheumatology in October 2017.
180 Case M.8401 - J&J/Actelion, decision of 9.6.2017, footnote 5.
                                                        36
 ---pagebreak---  ---pagebreak---  ---pagebreak--- (153) There are many competitors developing pipeline drugs for Lupus. One KOL recalled
       that “Celgene, BMS, and many of their rivals have pipeline products for the treatment
       of lupus”.184 As shown in Table 9, more than 10 competing pipeline products for the
       treatment of Lupus are expected to be launched in the EEA by 2023, that is before the
       most advanced pipeline product of the Parties reaches the EEA market. Many of the
       competing pipeline projects are based on MoA similar to the MoA of the Parties’
       pipeline programmes. For example, Eli Lilly’s baricitinib is a JAK inhibitor, involving
       a MoA similar to the BMS TYK2 inhibitor. Roche’s fenebrutinib and Merck KGaA’s
       evobrutinib constitute BTK inhibitors, similar to BMS-986195.
(154) On the narrowest plausible market giving rise to an overlap between the Parties’
       pipeline products, which is the market restricted to oral treatments for Lupus, the
       combined entity will also face strong competitive constraints. Post-Transaction,
       competing oral treatments will include at least three Phase II projects developed by
       large pharmaceutical companies, such as Eli Lilly, Merck KGaA, and Roche. If
       successful, Eli Lilly’s baricitinib is expected to enter the market approximately 3
       years earlier than any of the pipeline projects of the Parties.
(155) Third, the market investigation did not reveal any substantiated competition
       concerns in relation to the Transaction in a possible market for Lupus treatments or
       any of its plausible sub-segmentations. A KOL added that “[t]he fact that there is
       still a need for an efficacious lupus treatment makes it unlikely that the combined
       entity would decide to discontinue one of the pipeline projects that the Parties are
       developing today”.185
(156) For all these reasons, the Commission concludes that the Transaction does not give
       rise to serious doubts as to its compatibility with the internal market and the
       functioning of the EEA Agreement as regards its impact on competition in the
       possible market for Lupus treatments (and its plausible sub-segmentations).
4.2.   Fibrotic diseases
4.2.1. Introduction
(157) Fibrotic diseases include a broad range of diseases (e.g. idiopathic pulmonary
       fibrosis, non-alcoholic steatohepatitis, advanced liver fibrosis) that involve fibrosis
       in some part of the body. Fibrosis is the formation of excessive tissue scarring and
       can occur in different organs, such as the lungs, liver, skin, eyes, heart, and kidneys.
(158) Fibrosis often occurs as a result of sustained injury, which could be caused by, for
       example, trauma, toxins, inflammation or infection. Normally, an organ or tissue that
       is affected by an injury undergoes a process of healing through deposition of new
       collagen fibres, repair of blood vessels, and other activities which restore the
       integrity of the tissue involved. When these repair processes – specifically the laying
       down of new collagen fibres – become dysregulated, excessive scarring can form.
       Excessive scarring in turn can have a very significant impact on the function of the
       impacted organ.
184  Non-confidential minutes of a conference call with a KOL, 25.4.2019.
185  Non-confidential minutes of a conference call with a KOL, 25.4.2019.
                                                         39
 ---pagebreak--- (159) In fibrotic diseases, the Parties activities overlap with respect to the following
         indications: Idiopathic Pulmonary Fibrosis (“IPF”) (Section 4.2.2) and Non-
         alcoholic steatohepatitis (“NASH”) (Section 4.2.3).
4.2.2. Treatments for idiopathic pulmonary fibrosis
(160) Idiopathic pulmonary fibrosis (“IPF”) is a relatively rare chronic progressive disease
         that affects the lungs. The cause is unknown, and the disease is particularly complex
         as it is not driven by a single gene or cell type.
(161) IPF is caused by lung tissue becoming thick and stiff and eventually forming scar
         tissue within the lungs. The scarring, or fibrosis, seems to result from a cycle of
         damage and healing that occurs in the lungs. Over time, the healing process stops
         working correctly and scar tissue forms. What causes these changes in the first place
         is unknown. Symptoms of IPF include: shortness of breath, a dry cough, fatigue,
         unexplained weight loss, aching muscles and joints, and widening or rounding of the
         tips of the fingers or toes (clubbing). Disease progression can vary - some patients
         become ill very quickly and for others the disease progresses over months or years.
         The mean survival time from diagnosis is 2 to 5 years
(162) There is currently no cure for IPF. The main aim of the two marketed treatments
         currently available in the EEA (Roche’s pirfenidone and Boehringer Ingelheim’s
         nintedanib) is to relieve symptoms and to slow progression. As the condition becomes
         more advanced, palliative care is offered. In addition, lung transplants may be an
         option for a small subgroup of patients with IPF who meet the necessary criteria.
(163) In 2015, the European Respiratory Society published, jointly with the American
         Thoracic Society, Japanese Respiratory Society and Latin American Thoracic
         Association, published guidelines on idiopathic pulmonary fibrosis treatment.186
         Only nintedanib and pirfenidone are conditionally recommended by the guidelines.
           4.2.2.1. Market definition
(164) The Commission has not previously analysed the relevant product market for IPF
         treatments. The Parties suggested that the relevant product for treatments of IPF can
         be left open, as no competition concerns arise under any plausible market delineation
         (i.e. by line of treatment, by MoA and by MoD). For the purposes of this Decision, it
         can be left open whether the market for IPF treatment should be sub-segmented.
         This is because the Transaction does not give rise to serious doubts as to its
         compatibility with the internal market and the functioning of the EEA Agreement
         even under the narrowest market definition giving rise to an overlap between the
         Parties’ drugs (i.e. oral treatments for IPF).
(165) As regards the geographic market definition, the Commission has consistently
         considered the market for pipeline products to be at least EEA-wide in scope.187 The
         Parties do not contest this. Nothing in the market investigation suggests that the
         Commission should depart in the present case from its previous practice with respect
         to IPF treatments.
186  https://www.thoracic.org/statements/resources/interstitial-lung-disease/IPF-Full-length.pdf.
187  See recital (16) above.
                                                         40
 ---pagebreak---  ---pagebreak---          4.2.2.3. Competitive assessment
(172) The Parties argue that no competition concerns arise in the market for IPF treatments
       or any of its plausible sub-segmentations, in particular because: (i) the products have
       different MoA, (ii) there is a crowded pipeline of competing IPF trials, and (iii) the
       products are in early stages of clinical development.189
(173) Based on the available information, the Commission considers that the proposed
       Transaction does not raise serious doubts as to the compatibility of the Transaction
       with the internal market and the functioning of the EEA Agreement.
(174) First, Celgene’s CC-90001 (JNK inhibition) and BMS’ pipeline products, namely its
       financial option in ND-L02-s0201 (HSP47 inhibition) and BMS-986278 are very
       differentiated. The Parties’ compounds have different MoA that affect different
       inflammatory pathways. Given the very different MoA of these molecules, it is very
       likely that these drugs (if they ever reach the market) will serve different patient
       groups and will likely have different efficacy and safety profiles.
(175) According to the Parties, and based on the public data available at this stage,
       competing pipeline products are therefore likely to compete more closely with the
       Parties’ pipeline products:
       -      […] appears to be the closest competing pipeline product for BMS-986278 as
              it inhibits autotaxin, which is upstream of the LPA pathway that is targeted by
              BMS-986278;
       -      […] appears to be the closest competing pipeline product for BMS’ ND-L02-
              s020 since […], is a direct antifibrotic, and it is administered […];
       -      CC-90001’s MoA is unique, as it is the only JNK inhibitor in development for
              IPF. The closest competing pipeline product could be […] as they both lower
              the level of the same protein in the body.
(176) Second, post-Transaction, the combined entity will continue facing competitive
       constraints from a large number of actual and potential competitors (including under
       the narrowest market definition giving rise to an overlap, i.e. oral treatments for IPF).
(177) Set forth below is a list of the main competing treatments (marketed in the EEA and
       under development) in IPF treatments.
189 See Form CO, Fibrotic diseases Chapter, paras. 48 and ff.
                                                       42
 ---pagebreak---  ---pagebreak---       stage which begins with an abnormal build-up of fat in the liver, which can progress
      to inflammation, hepatocyte degradation, fibrosis, cirrhosis and ultimately liver
      failure or liver cancer.
(183) Where there is steatosis (i.e. abnormal retention of lipids in the liver) as well as
      inflammation and ballooning of cells in the liver, the condition is classified as
      NASH. NASH may initially present without fibrosis, but as the condition progresses,
      fibrosis develops. NASH is generally caused by lifestyle choices (such as poor diet
      and lack of exercise); however, unlike other fatty liver diseases, it is not caused by
      alcohol abuse or as a side effect of medication.
(184) The most common symptoms are fatigue and mild pain in the upper right abdomen.
      As the disease progresses to more advanced stages, more symptoms may become
      apparent including: bleeding easily, bruising easily, itchy skin, jaundice and fluid
      accumulation in abdomen.
(185) There are currently no treatments specifically marketed for NASH. Doctors may
      recommend lifestyle interventions (such as changing diet and losing weight) and
      treating comorbidities (i.e. one or more additional conditions that occur
      concomitantly or concurrently with a primary condition). Other options also include
      bariatric surgery or pharmacotherapy, including treatments with vitamin E, an
      SGLT2 inhibitor (such as Invokana which is approved as a diabetes medicine in the
      EEA), or pemafibrate (currently not approved in the EEA).
(186) In 2016, the European Association for the Study of the Liver (“EASL”), the
      European Association for the Study of Diabetes (“EASD”) and the European
      Association for the Study of Obesity (“EASO”) have published Clinical Practice
      Guidelines for the management of NAFLD (“NAFLD Guidelines”). The NAFLD
      Guidelines note that no drug is approved for NASH by regulatory agencies and that
      no specific therapy can be recommended. The NAFLD Guidelines note that insulin
      sensitisers, antioxidants (such as vitamin E) and cytoprotective and lipid lowering
      agents may be helpful. In patients that are unresponsive to lifestyle changes and
      pharmacotherapy, bariatric surgery may be an option. The NAFLD Guidelines
      recommend diet and lifestyle changes as an important treatment.
        4.2.3.1. Market definition
(187) The Commission has not previously analysed the relevant product market for NASH
      treatments. The Parties suggested that the relevant product for treatments of NASH
      can be left open, as no competition concerns arise under any plausible market
      delineation (i.e. no line of treatment have been identified for the treatment of NASH
      and the Parties’ pipeline products neither have the same MoA nor the same MoD).
      For the purposes of this Decision, it can be left open whether the market for NASH
      treatment should be sub-segmented. This is because the Transaction does not give
      rise to serious doubts as to its compatibility with the internal market and the
      functioning of the EEA Agreement even under the narrowest market definition
      giving rise to an overlap between the Parties’ drugs (i.e. treatments for NASH).
                                                44
 ---pagebreak---  ---pagebreak--- (193) BMS is also developing a HSP47 inhibitor. The HSP47 protein is essential for the
       formation of mature collagen (chronic injuries cause fibrosis by inducing collagen
       production). When stimulated, hepatic stellate cells, which store vitamin A,
       transform into myofibroblasts, which produce collagen responsible for fibrosis. The
       HSP47-targeting siRNA is encapsulated in a vitamin A coupled liposome which
       delivers the siRNA to hepatic stellate cells, leading to decreased collagen production
       and cell apoptosis (programmed cell death). BMS-986036 is currently undergoing
       Phase II clinical trials and is not expected to reach the EEA market before […].
(194) The Transaction gives rise to overlaps between the Parties’ pipeline products at
       clinical trial stage in a plausible market for NASH treatments.
         4.2.3.3. Competitive assessment
(195) The Parties argue that no competition concerns arise in the market for NASH
       treatments or any of its plausible sub-segmentations no competition concerns arise,
       in particular because: (i) the products have different MoA, (ii) there is a crowded
       pipeline of competing NASH trials, and (iii) the products are in early stages of
       clinical development.196
(196) Based on the available information, the Commission considers that the proposed
       Transaction does not raise serious doubts as to the compatibility of the Transaction
       with the internal market and the functioning of the EEA Agreement in relation to
       NASH treatments.
(197) First, Celgene’s CC-90001 and BMS’ pipeline products, namely BMS-986036 and
       BMS-986263 are differentiated compounds with (i) different MoA (CC-90001 is a
       JNK inhibitor and BMS pipeline drugs are a HSP47 inhibitor and a Pegylated
       FGF21); and (ii) different MoD (while Celgene drug will be taken orally, BMS’
       products will be administered through subcutaneous injection (BMS’ Pegylated
       FGF21) and through intravenous injection (BMS’ HSP47). Based upon published
       preclinical data and early clinical data, it is very likely that these drugs (if they ever
       reach the market) will serve different patient groups. In particular, they would likely
       have different efficacy and safety profiles.197
(198) Second, post-Transaction, the combined entity will continue facing competitive
       constraints from a large number of actual and potential competitors (including under
       the narrowest market definition giving rise to an overlap, i.e. treatments for NASH).
196 See Form CO, Fibrotic diseases Chapter, paragraphs 56 and ff.
197 Whilst the target NASH population for CC-90001 are patients with NASH with advanced fibrosis, BMS-
    986036 and BMS-986263 target different pathways, and may be suited to different populations (BMS’
    may be appropriate patients [description of anticipated target patient population] (Celgene’s CC-90001
    […]) and BMS-986263 may be more appropriate for patients […] (Celgene’s CC-90001 excludes
    subjects with a history of hepatitis and fibrosis from causes other than NASH […])).
                                                           46
 ---pagebreak---  ---pagebreak---         determination of the extent to which a cancer has spread is called ‘staging’. While
        the ‘stages’ by which the spread of a cancer is measured differs from cancer to
        cancer, in general, more severe cases are delineated by higher numbers.
(205) The range of treatments for cancer include traditional types of therapies (such as
        surgery, radiotherapy and chemotherapy) and newer forms of treatment (such as
        targeted therapies and immunotherapies).
(206) These different types of treatment may be approved as monotherapies or
        combination therapies. A combination therapy is when two or more drugs (or
        therapies) are used in parallel for the same indication, which may help to improve
        the efficacy and safety of the treatment. Each product that is part of the combination
        treatment is typically marketed by the company controlling the product. and
        procured by customers on a stand-alone basis.199
(207) The oncology treatments offered by BMS and Celgene include chemotherapies,
        targeted therapies and immunotherapies. 200
(208) Given the different ways in which they treat cancer, chemotherapies, targeted
        therapies, and immunotherapies are most often used as complementary treatments:
        -    Chemotherapies involve the use of cytotoxic drugs to kill cancer cells, targeting
             cells that grow and divide at rapid rates. However, chemotherapies can also
             attack healthy cells, particularly fast-growing healthy cells, such as red and white
             blood cells and cells comprising the hair follicles;
        -    Targeted therapies are drugs or other substances that interfere with specific
             molecules involved in tumour growth and progression. Targeted therapies are
             designed to specifically ‘target’ and act upon specific mutations, amplifications,
             molecular aberrations or proteins that are expressed by the form of cancer being
             targeted. As a result, targeted therapies each have a highly specific MoA;
        -    Immunotherapies are products that utilise a patient’s own immune system to
             fight cancerous cells. Immunotherapies do not attack cancerous cells directly but
             are designed to enhance the body’s natural mechanisms to fight cancer, helping
             the immune system to increase its natural ability to eliminate cancer cells.
(209) In oncology, the Transaction gives rise to limited number of marketed-to-pipeline
        overlaps and pipeline-to-pipeline overlaps involving early stage pipelines (Phase I or
        Phase I/II)201, with the same MoA or different MoA. More specifically, the Parties’
199 Development of combination therapies in oncology is typically done through clinical collaboration
    agreements, whereby two parties collaborate to conduct the applicable studies. In most cases, each party
    will contribute supply of their proprietary product for the study, the parties will share costs equally, and
    one party will be responsible for the operational conduct (and sponsorship) of the study. However, cost-
    sharing and operational responsibilities are negotiated terms, and it is not uncommon for one party to
    bear greater than 50% of the costs of a given study. These clinical collaboration agreements very rarely
    contain co-commercialisation provisions (including bundling).
200 Neither BMS nor Celgene offer surgery and radiotherapy as part of their oncology treatment solutions.
201 Phase I/II trials are possible (and frequently used in oncology). A Phase I/II study is a single study that
    includes a typical Phase I trial and a Phase II signal-seeking trial in a single study protocol. The next step
    after a Phase I/II study will depend on the strength of the evidence. Usually the drug candidate will be
    studied next in a larger Phase II trial, but where the evidence is particularly strong, it may be possible to go
                                                            48
 ---pagebreak---          activities overlaps with respect to BET inhibitors (a targeted therapy) (Section 4.3.2)
         and various immunotherapies (Section 4.3.3).202
4.3.2. BET Inhibitors
(210) BET inhibitors belong to targeted therapies. Bromodomain and extra-terminal
         (“BET”) proteins are involved in the expression of several genes controlling
         activities which are key for cancer development, such as cell proliferation and
         metastatic spreading. BET inhibitors block the BET proteins, thus preventing the
         expression of the relevant genes and limiting cancer development.
(211) There are currently no marketed BET inhibitors and all BET inhibitors under
         development are at an early stage (e.g. Phase I or Phase I/II clinical trials). BET
         inhibitor development covers several possible oncology indications.
           4.3.2.1. Market Definition
(212) The Parties submitted that it is not necessary for the Commission to reach a
         conclusion on precise market definition in this case as no competition concerns arise
         under any plausible market delineation (i.e. by MoA or by indication).
(213) The Commission has discussed relevant product market definition for Phase I/II and
         Phase II pipeline projects in targeted oncology therapies in GSK/Novartis Oncology.
         In this case, the Commission found that “the potential for […] clinical research
         programs to deliver substitutable products should be assessed by reference to the
         products’ characteristics and intended therapeutic use, in particular by reference to
         their mechanism of action and to the cancer types for which they are being
         investigated”.203
(214) In the present case, the market investigation suggested that the relevant product market
         should be sub-segmented on the basis of the MoA, i.e. as a market for BET inhibitor
         drugs.204 The market investigation also indicated that the market for BET inhibitor
         drugs should not be sub-segmented further, i.e. by indication.205 This is due to the fact
     on to a Phase II/III trial. The latter usually includes two stages: the first stage will be a typical Phase II trial
     and the second stage may allow for the trial to be expanded into a full Phase III if there is sufficient
     evidence.
202  As regards chemotherapies, the Transaction only gives rise to a de minimis overlap between the Parties’
     activities in Czechia where BMS markets Taxol and Celgene offers Abraxane. Czechia is the […] EEA
     countries where BMS’ Taxol is sold (less than […] of sales in 2018). Abraxane and Taxol fall within the
     same ATC3 category (L1C ‘plant based antineoplastics’) and are both based on the paclitaxel molecule.
     However, this de minimis marketed-to-marketed overlap does not give rise to an affected market, the
     Parties' combined market share being lower than 20% under any plausible market definition in Czechia.
203  Case M.7275 Novartis/GSK Oncology, decision 18.12.2015, recital 90. In this case, the Commission thus
     defined a relevant product market for pipeline programmes involving MEK and B-Raf inhibitors for
     specific indications.
204  None of the competitors and the KOLs participating in the market investigation contested that the Parties’
     pipeline projects compete in a separate market for BET inhibitor drugs. See Replies of competitors on
     pre-notification BET inhibitor questionnaire of 27.5.2019. Each of the Parties submitted internal
     documents showing that BMS and Celgene were […]. See Form CO, Annexes ONC.04 and ONC.06 for
     BMS and Annexes ONC.05 and ONC.07 for Celgene.
205  A sub-segmentation based on MoD would not make a difference to the competitive assessment as all the
     pipeline programmes of the Parties and their competitors are oral.
                                                               49
 ---pagebreak---  ---pagebreak---  ---pagebreak--- (225) As shown in Table 15 above, the BET inhibitor pipeline is crowded, including
          several pipeline projects that would compete with the pipelines of the combined
          entity post-Transaction. These projects are at approximately the same stage as the
          Parties’ BET inhibitor clinical trials.
(226) In a narrower market that includes only BET inhibitors for […],213 the combined
          entity will still face competitive constraints from several competitors. There is at
          least one company which continues to develop a BET inhibitor drug specifically for
          […]. Moreover, all the companies developing BET inhibitors for other indications
          take the view that it is easy to expand the indications associated with their pipeline
          programme, for example to cover […].214
(227) Moreover, the market investigation did not reveal any substantiated competition
          concerns in relation to the Transaction in a possible market for BET inhibitor drugs
          or specifically in BET inhibitor drugs for […].215
(228) For all these reasons, the Commission concludes that the Transaction does not give
          rise to serious doubts as to its compatibility with the internal market and the
          functioning of the EEA Agreement as regards its impact on competition in the
          possible market for BET inhibitor drugs (and its plausible sub-segmentations).
4.3.3. Other Overlaps
(229) Other areas where the Parties have early stage pipelines with the same indication but
          a different MoA are:
          -   Immunotherapies for colorectal cancer;
          -   Immunotherapies for head and neck squamous cell cancer ("HNSCC");
          -   Immunotherapies non-small cell lung cancer ("NSCLC");
213  In a plausible market including all targeted therapies for […], post-Transaction, the combined entity
     would control CC-90010 and BMS-986158, which are both described in Table 14. The combined entity
     would also have a Phase I pipeline project, CC-486, which has a different MoA, namely, it is a DNA
     methylase inhibitor. The Transaction does not give rise to serious doubts as to its compatibility with the
     internal market and the EEA Agreement in a possible market for targeted therapies for […] for the
     following reasons. First, BMS-986158 and Celgene’s CC-486 do not have the same MoA. Second,
     BMS-986158 and Celgene’s CC-90010 do have the same MoA (BET inhibitor) but there are several
     pipeline BET inhibitor drugs which are indicated for or could be expanded to […] (see recital (226)
     above). Third, the combined entity will face competition from at least three marketed targeted therapies
     (i.e. Roche’s rituximab and the rituximab biosimilars marketed by Celltrion and Sandoz) and at least
     seven pipeline programmes (developed by Roche, Jonhson & Jonhnson, MSD, and Gilead), some of
     which are more advanced than the pipeline projects of the Parties. Fourth, the market investigation did
     not reveal any substantiated competition concerns in relation to the Transaction in a possible market for
     targeted therapies for […].
214 See recital (214) above and Replies of competitors on pre-notification BET inhibitor questionnaire of
     27.5.2019.
215 See Replies of competitors on pre-notification BET inhibitor questionnaire of 27.5.2019. For example,
     one competitor stated “quite a few companies are already in Ph I and therefore it is unlikely to impact the
     future market shares or price”. Similarly, another competitor stated “Given that there are over 10
     companies competing in the field of BET inhibitors in a wide range of indications, […] the acquisition of
     Celgene by BMS is likely not going to have a significant impact on the competitive landscape of BET
     inhibitors”.
                                                         52
 ---pagebreak---         -    Immunotherapies small cell lung cancer ("SCLC");
        -    Immunotherapies for ovarian cancer;
        -    Immunotherapies for pancreatic cancer; and
        -    Immunotherapies for multiple myeloma.216
          4.3.3.1. Market definition
(230) The Commission has not previously considered the product markets for
        immunotherapies treating colorectal cancer, HNSCC, NSCLC, SCLC, ovarian
        cancer, pancreatic cancer, and multiple myeloma.
(231) For the purpose of this Decision, it can be left open217 whether the market for (i)
        immunotherapies for colorectal cancer, (ii) immunotherapies for HNSCC, (iii)
        immunotherapies for NSCLC, (iv) immunotherapies for SCLC, (v) immunotherapies
        for ovarian cancer, (vi) pancreatic cancer, and (vii) immunotherapies for multiple
        myeloma (i.e. by type and stage of the disease, by line of treatment, by MoA and by
        MoD) as the Transaction does not give rise to serious doubts as to its compatibility
        with the internal market and the functioning of the EEA Agreement under any
        plausible market definition.
(232) As regards the geographic market definition, the Commission has consistently
        considered the markets for marketed pharmaceuticals to be national in scope and the
        market for pipeline products to be at least EEA-wide in scope.218 The Parties do not
        contest this. Nothing in the market investigation suggests that the Commission
        should depart in the present case from its previous practice with respect to the
        above-mentioned immunotherapies.
          4.3.3.2. Competitive assessment
        (A)        Immunotherapies for colorectal cancer
(233) The Parties’ immunotherapies for colorectal cancer, and their main competitors are
        detailed in Table 16 below.
216 In oncology, both Parties are also developing drugs, at an early stage of development, which are currently
    indicated for "solid tumours" (with different MoA). Earlier stage trials (including Phase I and II studies)
    often investigate broader categories of cancer types, such as "solid tumours", because they are signal-
    seeking and are looking to see which types of tumours the treatment will be most effective against. Once
    a cancer type (or several cancer types) has positive results, the next trials will then focus on those
    particular indications and will no longer be listed as being for “solid tumours”. Given the different MoA
    of the Parties' early stage pipelines for "solid tumours" and the uncertainty as to whether these pipelines
    will result in products being approved for the same indications, the Commission considers that the
    potential pipeline-to-pipeline overlaps arising in "solid tumours" do not give rise to competition concerns.
217 As explained in recital (14) above, as regards pipeline products, the Commission has in previous
    decisions considered that when R&D activities are assessed in terms of importance for future markets,
    the product market definition can be left open, reflecting the intrinsic uncertainty in analysing products
    that do not exist yet.
218 See recital (16) above.
                                                           53
 ---pagebreak---  ---pagebreak---          stop a patient’s immune system from attacking cancerous cells;221 (ii) BMS-813160
         targets the C-C chemokine receptor pathway that involves C-C chemokine receptor
         types 2 (CCR2) and 5 (CCR5); this pathway is involved with inflammatory
         processes, tumour cell migration and tumour cell proliferation. BMS-813160 binds
         to CCR2 and CCR5 and prevents their activation; and (iii) […] to encourage
         immune activation and stimulate immune cells to attack cancer. Celgene's does not
         have any treatments with the same MoA. […]. Should the Parties’ pipelines reach
         the market (which is uncertain), there is, at this point in time and based on the
         available information, no indication that the efficacy and safety profiles of these
         drugs (which have different MoA) would be similar.222
(238) Second, the development of […] is at a very early stage, the first in-human clinical
         study began in […] and the completion the Phase I trial is not expected before […].
         Assuming the clinical trials are successful, which remains highly uncertain, […] is
         not expected to be launched on the market before […]. Moreover, at such an early
         stage, prospective indications remain uncertain and subject to change especially with
         respect to immunotherapies.223
(239) Third, the combined entity will face competition from several pipeline programmes,
         including the pipeline projects of MSD, Merck KGaA, and Mologen, which are in
         Phase III trial, i.e. more advanced than the pipeline projects of the Parties.
(240) Finally, the market investigation did not reveal any substantiated competition
         concerns regarding immunotherapies for colorectal cancer.
(241) For all these reasons, the Commission concludes that the Transaction does not give
         rise to serious doubts as to its compatibility with the internal market and the
         functioning of the EEA Agreement as regards its impact on competition in relation
         to immunotherapies for colorectal cancer.
         (B)       Immunotherapies for head and neck squamous cell cancer ("HNSCC")
(242) The Parties’ immunotherapies for the treatment of HNSCC, and their main
         competitors are detailed in Table 17 below.
221 BMS has trials with Opdivo, which involves several different combinations with different compounds,
    including (i) three targeted therapies (i.e. Cobimetinib, Daratumumab, trametinib), as well as (ii) Yervoy
    (CTLA-4 inhibitor) and (iii) Relatlimab (LAG-3 inihibitor), which inhibit different immune pathways
    that controls the response, activation and growth of T-cells that fight cancer.
222 Given their early stage of development, the exact efficacy and safety profile of the Parties’ pipelines is
    still unknown.
223 As explained in recital 27, Phase I trials focus on safety and dosage and are not signal-seeking studies
    looking at the indications in which the immunotherapy may show some activity. Moreover, early studies for
    immunotherapies are generally intended to test multiple hypotheses to see which ones are proven true (i.e. a
    number of different indications are trialled to see in which ones the pathway seems to be implicated and
    where the treatment shows some activity). For this reason, early stage trials for immunotherapies typically
    include a range of different cancer types, which do not serve as a definitive guide as to the indications that
    may or may not be pursued in later stage trials (see Parties’ reply to RFI 7).
                                                           55
 ---pagebreak---  ---pagebreak---         (which is uncertain), there is, at this point in time and based on the available
        information, no indication that the efficacy and safety profiles of BMS’ and
        Celgene’s drugs (which have different MoA) would be similar.229
(247) Second, the development of [Confidential Celgene pipeline product] is at a very
        early stage. Assuming the clinical trials are successful, which remains highly
        uncertain, [Confidential Celgene pipeline product] is not expected to be launched on
        the market before [Confidential Celgene pipeline product]. Moreover, at such an
        early stage, prospective indications remain uncertain and subject to change
        especially with respect to immunotherapies.230
(248) Third, the combined entity will face competition from one marketed product (i.e.
        Keytruda, a PD-1 inhibitor which directly compete with Opdivo) and several
        pipeline programmes, including the pipeline projects of MSD, AstraZeneca, Sanofi,
        Merck KGaA, and Roche, which are in Phase II or III trials, i.e. a stage of
        development which is more advanced than Celgene's […] and similar to or more
        advanced than BMS' pipelines.
(249) Finally, the market investigation did not reveal any substantiated competition
        concerns regarding immunotherapies for HNSCC.
(250) For all these reasons, the Commission concludes that the Transaction does not give
        rise to serious doubts as to its compatibility with the internal market and the
        functioning of the EEA Agreement as regards its impact on competition in relation
        to immunotherapies for HNSCC.
        (C)       Immunotherapies for non-small cell lung cancer (“NSCLC”)
(251) The Parties’ immunotherapies for the treatment of NSCLC, and their main
        competitors are detailed in Table 18 below.
229 Given the early stage of development of Celgene’s pipeline and most of BMS’ pipelines, their exact
    efficacy and safety profiles are still unknown.
230 See footnote 223.
                                                    57
 ---pagebreak---  ---pagebreak---         inhibitor).234 Should the Parties’ pipelines reach the market (which is uncertain),
        there is, at this point in time and based on the available information, no indication
        that the efficacy and safety profiles of BMS’ and Celgene’s drugs (which have
        different MoA) would be similar.235
(256) Second, the development of MSC-1 is at a very early stage. Assuming the clinical
        trials are successful, which remains highly uncertain, MSC-1 is expected to be
        launched on the market after […]. Moreover, at such an early stage, prospective
        indications remain uncertain and subject to change especially with respect to
        immunotherapies.236
(257) Third, the combined entity will face competition from at least three marketed
        product (namely Keytruda (MSD), Imfinzi (AstraZeneca) Tecentric (Roche), three
        PD-1/PD-L1 inhibitors which directly compete with BMS' Opdivo) and several
        pipeline programmes, including Phase III pipeline projects developed by Sanofi
        Genzyme/Regeneron, Novartis, and Merck KGaA/Pfizer, which are more advanced
        that Celgene's pipeline.
(258) Finally, the market investigation did not reveal any substantiated competition
        concerns regarding immunotherapies for NSCLC.
(259) For all these reasons, the Commission concludes that the Transaction does not give
        rise to serious doubts as to its compatibility with the internal market and the
        functioning of the EEA Agreement as regards its impact on competition in relation
        to immunotherapies for NSCLC.
        (D)       Immunotherapies for small cell lung cancer ("SCLC")
(260) The Parties’ immunotherapies for the treatment of SCLC, and their main competitors
        are detailed in Table 19 below.
234 See footnote 221 above for a description of the MoA of Yervoy.
235 Given the early stage of development of Celgene’s pipeline and some of BMS’ pipelines, their exact
    efficacy and safety profiles are still unknown.
236 See footnote 223.
                                                       59
 ---pagebreak---  ---pagebreak---  ---pagebreak--- (273) First, Celgene's and BMS' pipelines have very different MoA: MSC-1 inhibits is LIF
       inhibitor,244 while Yervoy is a CTLA-4 inhibitor.245 Should the Parties’ pipelines
       reach the market (which is uncertain), there is, at this point in time and based on the
       available information, no indication that the efficacy and safety profiles of these
       drugs (which have different MoA) would be similar.246
(274) Second, the development of MSC-1 is at a very early stage. Assuming the clinical
       trials are successful, which remains highly uncertain, MSC-1 is expected to be
       launched on the market after […]. Moreover, at such an early stage, prospective
       indications remain uncertain and subject to change especially with respect to
       immunotherapies.247
(275) Albeit more advanced (Phase II), the development BMS’ pipeline for ovarian cancer
       is also highly uncertain. In this respect, BMS explained that […].
(276) Third, the combined entity will face competition from several pipeline programmes,
       including at least three programmes developed by AstraZeneca, MSD and Roche,
       which are at a more advanced stage of development than the Parties' (Phase III).
(277) Finally, the market investigation did not reveal any substantiated competition
       concerns regarding immunotherapies for ovarian cancer.
(278) For all these reasons, the Commission concludes that the Transaction does not give
       rise to serious doubts as to its compatibility with the internal market and the
       functioning of the EEA Agreement as regards its impact on competition in relation
       to immunotherapies for ovarian cancer.
       (F)          Immunotherapies for pancreatic cancer
(279) The Parties’ immunotherapies for the treatment of pancreatic cancer, and their main
       competitors are detailed in Table 21 below.
244 See recital (255) above for a description of the MoA of MSC-1.
245 See footnote 221 above for a description of the MoA of Yervoy.
246 Given the early stage of development of the Parties’ pipeline drugs, their exact efficacy and safety
    profiles are still unknown.
247 See footnote 223.
                                                         62
 ---pagebreak---  ---pagebreak---        available information, no indication that the efficacy and safety profiles of these
       drugs (which have different MoA) would be similar.254
(284) Second, the development of MSC-1 is at a very early stage. Assuming the clinical
       trials are successful, which remains highly uncertain, MSC-1 is expected to be
       launched on the market after […]. Moreover, at such an early stage, prospective
       indications remain uncertain and subject to change especially with respect to
       immunotherapies.255
(285) Third, the combined entity will face competition from several pipeline programmes,
       including pipelines which are at an advanced stage of development (such as
       Pegilodecakin developed by Eli Lilly, which is currently in Phase III trials).
(286) Finally, the market investigation did not reveal any substantiated competition
       concerns regarding immunotherapies for pancreatic cancer.
(287) For all these reasons, the Commission concludes that the Transaction does not give
       rise to serious doubts as to its compatibility with the internal market and the
       functioning of the EEA Agreement as regards its impact on competition in relation
       to immunotherapies for pancreatic cancer.
       (G)        Immunotherapies for multiple myeloma
(288) Multiple myeloma is a haematological malignancy that affects plasma cells. It is
       highly treatable, but rarely curable. Multiple myeloma is staged by estimating the
       myeloma tumour cell mass based on the amount of myeloma protein in the serum
       and urine.
(289) The Parties’ immunotherapies for the treatment of multiple myeloma, and their main
       competitors are detailed in Table 22 below.
254 Given their early stage of development, the exact efficacy and safety profiles of Celgene’s pipeline and
    most of BMS’ pipelines are still unknown.
255 See footnote 223.
                                                       64
 ---pagebreak---  ---pagebreak---        compatibility of the Transaction with the internal market and the functioning of the
       EEA Agreement in relation to immunotherapies for multiple myeloma.
(293) First, the Parties' pipelines are differentiated products, with distinct MoA and
       different lines of treatment.
(294) BMS' Opdivo is a PD-1 inhibitor.260 Celgene’s pipelines have different MoA:
                 Imnovid, Revlimid and Thalidomide are immunomodulators (IMid), which
                  modulate (or strengthen) the activity of the body’s immune system to enable
                  it to attack cancerous cells; whilst their exact modality is unclear,
                  immunomodulators demonstrate anti-proliferative effects and help to ‘down-
                  regulate’ certain cytokines to assist the immune system to fight cancer;
                 CC-92480 and CC-220 are cereblon modulators, which act in a similar way
                  to immunomodulators and work by binding to the cereblon protein which
                  modulates the activity of the immune system;
                 bb2121, bb21217, and JCARH125 are CAR-T therapies, a novel form of
                  immunotherapy involving the use of genetic programming to improve the
                  ability of immune cells to fight cancer. This is done by (i) removing a
                  patient’s own T cells from their body, then (ii) in a laboratory, genetically
                  modifying those T cells, so that they subsequently include a gene called
                  chimeric antigen receptor (“CAR”) which is able to bind to certain proteins
                  on the patient’s cancerous cells, and finally (iii) injecting the genetically
                  modified T cells back into the patient’s body to attack their cancer; and
                 CC-93269 binds to both (i) the BCMA, a protein found on the tumour cells
                  and (ii) the CD3 antigen, which is found on cytotoxic T-lymphocytes (T-cells
                  that kill cancer), which helps to bring the T-cell to the tumour.
(295) Should the Parties’ pipelines reach the market (which is uncertain), there is, at this
       point in time and based on the available information, no indication that the efficacy
       and safety profiles of BMS’ and Celgene’s drugs (which have different MoA) would
       be similar.261
(296) Moreover, BMS’ Opdivo combination pipeline is for patients with relapsed and
       refractory multiple myeloma and is being trialled for a very late line of treatment
       (i.e. patients with at least three prior lines of treatment), whereas Celgene’s marketed
       and pipeline products are mostly prescribed or trialled as earlier lines of treatment.
       The Commission also notes that the study population in BMS’ Phase I trials includes
       patients who are refractory to immunomodulators, that is to say the MoA of
       Celgene’s marketed products.
(297) Second, BMS’ immunotherapy pipeline for multiple myeloma is at a very early stage
       (Phase I/II). Assuming the clinical trials are successful, which remains highly
       uncertain, it is not expected to be launched before many years. Moreover, at such an
260 See recital (237) above for a description of the MoA of Opdivo.
261 Given their early stage of development, the exact efficacy and safety profiles of BMS’s pipeline and
    several of Celgene’s pipelines are still unknown.
                                                         66
 ---pagebreak---        early stage, prospective indications remain uncertain and subject to change
       especially with respect to immunotherapies.262 In this respect, the Parties explained
       that trials investigating the expression of PD-1/PD-L1 molecules on malignant
       plasma cells have yielded discordant results and that monotherapies based on PD-
       /PD-L1 inhibition have shown very limited efficacy in multiple myeloma.
(298) Third, the combined entity will face competition from several pipeline programmes,
       including (i) pipelines which are at a more advanced stage of development than
       BMS’ pipeline (such as Keytruda developed by Merk) and (ii) pipelines with the
       same MoA as the Parties’ (e.g. PD-1 inhibitors, CAR-T therapy, CD3/BCMA
       Bispecific T cell Engager).
(299) Finally, the market investigation did not reveal any substantiated competition
       concerns regarding immunotherapies for multiple myeloma.
(300) For all these reasons, the Commission concludes that the Transaction does not give
       rise to serious doubts as to its compatibility with the internal market and the EEA
       Agreement as regards its impact on competition in relation to immunotherapies for
       multiple myeloma.
5.     CONCLUSION
(301) For the above reasons, the European Commission has decided not to oppose the
       notified operation and to declare it compatible with the internal market and with the
       EEA Agreement. This decision is adopted in application of Article 6(1)(b) of the
       Merger Regulation and Article 57 of the EEA Agreement.
                                                     For the Commission
                                                     (Signed)
                                                     Margrethe VESTAGER
                                                     Member of the Commission
262 See footnote 223.
                                                67