Bristol-Myers (NYSE:BMY) has been reeling under declining revenues post patent expiry of its blockbuster cardiovascular drug Plavix in May earlier this year.  The company reported 18% y-o-y decline in sales in the quarter ending June 30, 2012. Also, another cardiovascular drug Eliquis, which prevents heart attacks caused by blood clots by acting as a blood thinner, is central to Bristol-Myers’ strategy of stemming the decline in its top-line. However, approval for the drug was postponed twice by the U.S. Food and Drug Administration (FDA), citing requirement for additional data from its drug trials. And, the drug is pending approval in the EU as well.
Meanwhile, Eliquis recently received a positive opinion for preventing clots and strokes in patients with irregular heart beat, not caused by a heart valve problem, referred to as Nonvalvular Atrial Fibrillation (NVAF), from the advisers to the European Commission (EC). The positive recommendation from the European Medicines Agency (EMA) highly increases the chances of Eliquis receiving approval from the European Union (EU) in the near future. The approval will allow Bristol-Myers to occupy a larger share of the NVAF treatment market, which is a multi-billion dollar market globally. This will help the company stem the decline in its top-line and add to its long-term growth.
We currently have a stock-price estimate of $35 for the company, marginally higher than its current market price.
Positive recommendation from EMA
The results of the phase III Aristotle and Averroes drug trials were highly positive for Eliquis. These studies evaluated Eliquis in approximately 24,000 patients with NVAF. The Aristotle study compared Eliquis to Warfarin, a standard anti-clotting agent used for a long time. And the superior results for Eliquis primarily led the EMA to give a favorable recommendation.
Besides, Eliquis is already approved in the E.U. and the U.S. for prevention of venous thromboembolic events (VTE) in adults who have undergone elective hip or knee replacement surgery. And, it is currently in phase III trials for treatment of VTE. However, the market for NVAF is more lucrative.
Multi-billion dollar market for new generation anti-clotting drugs
The NVAF treatment market is currently dominated by generic drug Warfarin and patented drugs, Pradaxa and Xarelto. Pradaxa is owned by Boehringer Ingelheim and received U.S. approval in late 2010. Xarelto is co-promoted by Johnson & Johnson and Bayer and received approval in the U.S. in November 2011.
Eliquis, on the other hand, was denied approval by the US FDA twice. The regulatory body has requested additional data from the Aristotle study before approving the drug for NVAF indication. However, on the strength of favorable results from the Aristotle trial, approval for Eliquis seems highly likely.
Post approval, Eliquis is poised to play a larger role in the NVAF treatment market as, along with Pradaxa and Xarelto, it has higher efficacy and easier administration in comparison to cheaper generic Warfarin. Getting the right dosage for Warfarin is difficult as a lower dosage can fail to prevent clots and strokes, while a higher dosage increases the risk of internal bleeding. The use of Warfarin requires the patient to undergo frequent blood tests, making its administration relatively cumbersome.
On the whole, the positive recommendation from the EMA brings Eliquis a step closer to NVAF approval in the EU. If approved, the drug could occupy a significant portion of the multi-billion dollar NVAF treatment market and contribute to stemming the decline in Bristol-Myers’s top-line.Notes: