The day-of stock reaction to Friday’s Bristol-Myers Squibb financial and pipeline report was not a good one—Bloomberg reported shares plunged to their lowest level in 17 months. But longer-view analysts are not in a punishing mood, despite the headline news that the company did not share data about its experimental immuno-oncology combination of Yervoy and nivolumab for non-small cell lung cancer (NSCLC), deferring the data read-out until the May ASCO meeting.
Credit Suisse analyst Vamil Divan wrote in a Friday research note that “[while] lack of clarity on progression of BMY’s I-O combination regimen…is not ideal, we are more encouraged by the positive disclosures from the call and remain bullish on the long-term opportunity BMY has in front of them in I-O.”
Divan’s pre-earnings mood was similarly upbeat, but his analysis also showed just how much his group is depending on I-O to bring long-term benefits: A January 21 presentation showed Credit Suisse estimates BMS’s immuno-oncology business could hit $8 billion by 2020, $1 billion more than consensus estimates.
This forecast translates into BMS controlling about 40% of the immuno-oncology market. It also depends on aggressive pricing. The firm’s January 21 optimism assumes a Yervoy/nivolumab mix would cost $140,000 per year per patient, compared to $100,000 for nivolumab-only. Divan wrote at the time that a successful combination treatment could “change the standard of care in NSCLC,” and that the firm sees “pricing more likely to increase than decrease,” because of pricing in the would-be competitive set.
Divan’s earnings-day research did note that one immediate downside of Friday’s news was that it could take longer for the combination to move to Phase III. The other: analysts have to wait until May to get a read on what’s going on.
Bernstein analyst Tim Anderson also took Friday’s no-nivolumab news in stride, but did indicate in his Friday research note that the drug maker left a few PD-1 questions un- or partially answered, both in terms of NSCLC as well as other possible indications, such as renal cell cancer.
Anderson indicated that years of pipeline wins have earned the firm a considerable amount of good will. He also pinned a good deal of the company’s immuno-oncology future on Yervoy. He called the drug a “substantial swing-factor in BMY’s longer-term financial future,” and wrote that this outlook depends on the extent to which the company will be able to make the drug “a backbone agent to be combined with PD1/L1’s across multiple tumor types (not limited to melanoma).”
BMS also told investors Friday that acquisitions and sell-offs may be part of 2014. Such maneuvers would be in line with recent initiatives, including selling its stake in the AstraZeneca-BMS diabetes collaboration, and pushing hepatitis and neuroscience discoveries to the side.
Meanwhile, the company pulled in $4.4 billion in fourth-quarter 2013 sales, up 6% from the same 2012 period, ended December 31. Hepatitis B drug Baraclude, oncology drug Sprycel, and diabetes medication Bydureon saw sales jump 14%, 30% and 60%, respectively, compared to 2012’s fourth quarter. Although marketing and SG&A expenses shrank by 7% to $1 billion, the company poured 20% more into advertising and promotion compared to the same period last year, bringing the spend to $254 million.
Year-end sales were $16.4 billion, down 7% compared to $17.6 billion in 2012.