Nov 5 (Reuters) - Bristol Myers Squibb ( BMY ) reached a

$239 million settlement of claims that former Celgene

shareholders were defrauded about prospects for the psoriasis

drug Otezla, and multiple sclerosis treatment now known as

Zeposia.

A preliminary settlement of the 7-1/2-year-old class action

was filed on Tuesday night in the federal court in Newark, New

Jersey, and requires a judge's approval.

Bristol Myers bought Celgene for $80.3 billion in cash and

stock in November 2019. It did not immediately respond to

requests for comment on Wednesday.

Celgene was accused of overstating the revenue potential for

Otezla and ozanimod, the generic name for Zeposia, as it

prepared for the eventual loss of patent protection for its

blockbuster multiple myeloma drug Revlimid.

The company and two executives allegedly ignored internal

warnings that Otezla would generate less revenue than investors

were being promised, and that the U.S. Food and Drug

Administration would not approve ozanimod without required study

data.

Celgene's alleged misrepresentations inflated its share

price, causing billions of dollars of shareholder losses after

the truth came out, the lawsuit said.

All defendants denied wrongdoing, and settled to avoid the

uncertainty and cost of further litigation.

Amgen ( AMGN ) bought Otezla from Celgene for $13.4 billion

in cash in 2019.

The class is led by Swedish pension fund AMF Tjanstepension

AB, and includes former Celgene shareholders from April 27, 2017

to April 27, 2018.

Matthew Mustokoff, a lawyer for the shareholders, said they

were gratified by the settlement.

Celgene was based in Summit, New Jersey, and Bristol Myers

is based in Princeton, New Jersey.

The shareholders' lawyers plan to seek up to 30% of the

settlement fund, or about $71.7 million, for fees, plus up to

$5.75 million for costs.

The case is In re Celgene Corp Securities Litigation, U.S.

District Court, District of New Jersey, No. 18-04772.

(Reporting by Jonathan Stempel in New York

Editing by Bill Berkrot

)