Bristol-Myers Squibb (NYSE:BMY) is scheduled to report its earnings for Q2 2013 on July 25. The company’s stock has run up almost 15% since May in the anticipation that its oncology drug Nivolumab will be a blockbuster when it eventually comes out in the market. The drug is a new type of cancer treatment that enables the human immune system to attack and destroy cancers. It caught the market’s attention when the company announced the primary results of its clinical trials. The results suggest that Nivolumab was able to reduce tumors in the majority of melanoma patients when combined with Yervoy, another drug belonging to Bristol. The news was particularly interesting because the clinical trial data released by Bristol-Myers out-shined the results of competing drugs from Merck (NYSE:MRK) and Roche (PINK:RHHBY). (You can read more about the clinical trial data here)
While this is great news for Bristol, and we are optimistic about the future of its oncology division, we believe that Nivolumab still has some regulatory hurdles to cross and will only start impacting the company’s top line after a few years. That is because it entered Phase III trials in 2012, and it usually takes up to three years to clear this stage, according to the company’s SEC filings.  Meanwhile, the company is likely to look at some of the other drugs in its pipeline to drive growth, especially because two of its top-selling drugs, Plavix and Avapro/Avalide, lost patent protection last year and will no longer be able to do so.
Eliquis’ Performance Is Crucial But Its Sales In Q2 Are Likely To Disappoint
Eliquis is a new anticoagulant drug that was developed by Bristol-Myers, in collaboration with Pfizer Inc. (NYSE:PFE). In December 2012, it was approved by the FDA in the U.S. for preventing blood clots in people with atrial fibrillation, and has been widely forecasted to become the company’s next big blockbuster drug. We currently forecast its sales to peak around $4 billion in the next 4-5 years.
While our current forecasts about the drug’s future are optimistic, it seems that the drug is facing some problems in initial uptake. A Pfizer executive, Geno Germano, recently acknowledged that Eliquis’ sales are not meeting expectations because it was late to enter the market. Competing drugs such as Pradaxa (a Boehringer Ingelheim drug) and Xarelto (a Bayer AG and Johnson & Johnson drug) entered the market before Eliquis and have gained favor from patients and doctors alike, which makes it tough for Eliquis to gain market share.  It is possible that Eliquis’ Q2 sales figures will reflect this market reality.
However, we feel that the drug can still gain ground as awareness about its superior clinical profile increases and it gets approved for additional indications. In July, the FDA started reviewing Eliquis for the prevention of deep vein thrombosis (DVT) in adults who have had hip or knee replacement surgery in the past. 
Other New Drugs Likely To Continue Growing
Apart from Eliquis, Bristol-Myers has several other drugs that have been performing well and are likely to drive its drug pipeline revenue in Q2. Here is a look at some of its most promising medicines:
Yervoy: Yeryoy is a biological product that prolongs the survival of patients with inoperable metastatic melanoma (a type of skin cancer). The drug was approved both in the U.S. and in the EU in 2011 and has seen an impressive uptake as “physicians increasingly understand the potential for long term survival”.  The sales of this drug grew by 49% year-on-year to reach $229 in Q1 2013, almost in line with our expectations. We expect its sales to continue increasing at an impressive rate over the next five years to reach nearly $2 billion in peak sales over the next five years.
Orencia And Nujolix: Orencia and Nujolix are Bristol’s autoimmune drugs for the treatment of moderate to severe rheumatoid arthritis and kidney transplant rejection, respectively. While Nujolix is seeing multi-fold increases from a very small base, Orencia sales increased 26% y-o-y to reach $320 million in Q1 2013 on the back of growing demand in the U.S. and Europe. We expect the trend to continue as Bristol expands Orencia’s access in public programs. The drug was recently approved by UK’s National Institute for Health and Care Excellence (NICE) for the treatment of rheumatoid arthritis.
Diabetes Portfolio: Bristol’s diabetes portfolio comprises Onglyza/Kombiglyze, Byetta, Bydureon, and Forxiga. Of these, Byetta and Bydureon were acquired when Bristol acquired Amylin in August 2012, while Forxiga is a new formulation. We believe that the revenue from this portfolio is likely to continue growing as sales volume of Bydureon continues to increase and Forxiga gains acceptance in the European countries, such as Germany, the UK and Denmark, where it was recently launched. The company also hopes to file for U.S. regulatory approval for Forxiga by the end of Q2. ((Bristol-Myers Squibb’s Management Discusses Q1 2013 Results, SeekingAlpha, April 25, 2013))Notes:
- SEC Filings page 9, BMS [↩]
- Pfizer’s potential stars Eliquis, Xeljanz see sluggish sales, FiercePharma, June 14, 2013 [↩]
- BMS, Pfizer gets FDA nod to review Eliquis, BioSpectrum, July 12, 2013 [↩]
- Bristol-Myers Squibb’s Management Discusses Q1 2013 Results, SeekingAlpha, April 25, 2013 [↩]