On the defensive, Bristol faces down I/O competition
- Bristol-Myers Squibb cut its earnings guidance for 2017, predicting flat sales for its star cancer immunotherapy Opdivo (nivolumab) after a year in which rivals Merck & Co. and Roche upended the competitive landscape in the fast-growing field.
- Facing pointed questions from analysts about the company's growth prospects, CEO Giovanni Caforio reiterated Bristol-Myers' commitment to expanding in front-line lung cancer. But in light of last summer's clinical setback in the first-line setting, Bristol-Myers' strategy has become more defensive.
- As the market stands, Bristol-Myers hopes to protect its current share in lung cancer, while expanding in other indications, such as renal cell carcinoma and head and neck cancer, and internationally.
On the face of it, Bristol-Myers just concluded a particularly impressive stretch of revenue growth. Fueled by Opdivo's rapid sales growth over 2016, annual revenues jumped 17% over 2015 numbers. Fourth quarter revenues grew even more, increasing 22% over the same period a year previous.
But the story for markets is what Bristol-Myers plans to do to retain and build upon those impressive sales numbers. Merck's October win in first-line non-small cell lung cancer (NSCLC) has given its checkpoint inhibitor Keytruda (pembrolizumab) a significant leg up on Opdivo — an advantage that will accrue to Merck more and more over the quarters to come.
Add in a surprisingly early regulatory filing for Merck's Keytruda/chemotherapy combo, along with pressure from Roche's Tecentriq (atezolizumab) in second-line NSCLC, and Bristol-Myers once rock-solid lead in lung cancer looks increasingly tenuous.
In light of those pressures, Caforio sought to shape expectations on Thursday's call. Bristol-Myers' commercial focus in 2017 will fall into three buckets: defending its position in the U.S. lung cancer market, expanding outside of lung cancer in the U.S. and continuing rollout internationally.
For the second objective, Caforio pointed to opportunities in renal cell carcinoma (RCC), head and neck cancer and in melanoma. Two Phase 3 studies testing Opdivo and Yervoy (ipilimumab) together in first-line RCC and melanoma are expected to read out this year, potentially expanding opportunities there.
Internationally, too, Bristol-Myers has gotten a lift from the conclusion of pricing negotiations in France and Germany. Sales of Opdivo in ex-U.S. markets came in ahead of expectations for the fourth-quarter, driving an overall earnings beat for the drug.
But NSCLC and the broader lung cancer market remains the biggest and most lucrative.
And there, it seems, Bristol-Myers is pinning its hopes on staving off its rivals in second-line NSCLC while it waits for a read-out from its Checkmate-227 study pairing Opdivo and Yervoy. Data from that trial is expected in January 2018 and a success there could help considerably given the interest in combination immuno-oncology therapies.
Unfortunately for Bristol-Myers, Merck expects to win approval for its Keytruda/chemo combo in May of this year — something that Bristol-Myers has already baked into its assumptions.
Gloomy news in lung cancer aside, Bristol-Myers can draw some optimism from strong sales growth from its Eliquis (apixaban) and Orencia (abatacept) brands. Eliquis, for example, earned $3.34 billion last year, putting it in spitting distance of Opdivo's haul.
And the recent patent settlement with Merck will give Bristol-Myers and its Japanese partner Ono Pharma $625 million along with mid-single digit royalties through 2023. (Bristol-Myers and Ono will split royalties 75%/25%.)
Bristol-Myers stock fell by more than 5% through mid-day trading Thursday to trade just above $46 per share.
- Bristol-Myers Squibb Earnings release
- Bristol-Myers Squibb Investor presentation (from J.P. Morgan conference)
- BioPharma Dive Bristol-Myers nixes hopes of early filing for Opdivo combo
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