The surprise move sent Bristol’s shares down 4.3% in morning trading, while Celgene fell nearly 4%.
Bristol announced its plans to buy Celgene in a cash-and-stock deal in early January to bring together the companies that specialize in oncology and cardiovascular drugs in the largest pharmaceutical industry merger ever. It had said it would close the deal in the third quarter of 2019.
However, now it expects the merger to close by the end of 2019 or the beginning of 2020.
The divestiture is subject to further review by the U.S. Federal Trade Commission (FTC) and requires Bristol to enter into a consent decree with the agency, Bristol said.
In March, the FTC had sought additional information from the companies as it focused on their psoriasis treatments as part of its review of their planned merger.
Otezla brought in revenue of $1.61 billion for Celgene in 2018. Bristol is also developing a treatment for the condition and in September reported positive results from a mid-stage trial of its plaque psoriasis drug.
“The company is continuing to develop its promising immunology pipeline asset, tyrosine kinase 2 (TYK2) inhibitor, in several autoimmune diseases, including psoriasis,” Bristol said in a statement.
Jefferies analyst Michael Yee said the divestiture came as a surprise to the brokerage and can be seen as a sign that the FTC is being tougher on regulating competition.
Bristol said it remains actively engaged in discussions with the FTC on continued review of its offer to buy Celgene.
Separately on Monday, Bristol said its blockbuster cancer treatment Opdivo failed to meet the main goal of statistically significant improvement in overall survival in patients in a late-stage study.
The companies have submitted a formal application for the merger clearance by the European Commission, Bristol said.
(Reporting by Aakash Jagadeesh Babu in Bengaluru; Editing by Shinjini Ganguli)