New Drugs Drive Bristol-Myers Squibb’s Results

Bristol-Myers Squibb (NYSE:BMY) did not throw any surprises in its Q2 2013 results. The company’s total revenue for the quarter was around $4 billion, down 9% year-on-year. The decline was expected as it was caused by the U.S. patent expiries of Avapro/Avalide and Plavix (two of the company’s best-selling drugs) in March 2012 and May 2012, respectively. Excluding the impact of these two drugs, the pharmaceutical giant’s net revenue actually grew by 10% compared to the year-ago quarter. As mentioned in our pre-earnings note, this growth came from newer products in the firm’s pipeline.

We continue to believe that the success of some of these new products will be crucial for Bristol’s growth prospects. The company faces more patent expiries in the coming years and will need to hit it out of the park with some of its new drugs to fill the vacuum.

Below we look at the current performance of some of the most promising drugs in Bristol’s pipeline.

See our full analysis for Bristol-Myers Squibb

Eliquis

Eliquis is a new anticoagulant drug developed by Bristol-Myers in collaboration with Pfizer Inc. (NYSE:PFE). It was approved by the FDA in December 2012 for preventing blood clots in patients with atrial fibrillation. As mentioned in our pre-earnings note, the drug is estimated to reach almost $4 billion in peak sales over the next 4-5 years, but it seems to be facing some problems in its initial uptake. At $12 million, the drug’s sales in Q2 2013 were significantly below expectations. The sales figure was lower than even the $22 million achieved by Eliquis in the first quarter of its launch (Q1 2013).

However, we feel that the drug can still gain ground as awareness about its superior clinical profile increases. Bristol’s management has stated that they will now reach out to physicians in key U.S. territories through medical, educational activities and explain its benefits. They will also launch a direct-to-consumer marketing campaign in Q3 2013 to increase awareness about the drug among end consumers. Outside the U.S., there are plans to launch the drug in nine additional countries by the year-end. ^[1]

Yervoy

Yervoy 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 E.U. in 2011 and has seen an impressive uptake since then. The drug’s sales grew by 44% year-on-year to reach $233 million in Q2 2013, almost in line with our expectations. We expect its sales to continue increasing at an impressive rate to reach nearly $2 billion in peak sales over the next five years.

Onglyza/Kombiglyze

Onglyza/Kombiglyze is one of the most promising drugs in Bristol’s diabetes portfolio. Last quarter, the drug’s sales increased year-over-year by 26%, somewhat below our expectations. However, in Q2, Onglyza/Kombiglyze sales grew by 40% year-on-year, which is higher than what we expected. The impressive growth rate allays our concern about the drug’s future prospects. We expect Bristol’s diabetes portfolio sales will reach around $3.5 billion by the end of our forecast period.

Sprycel

Sprycel is a cancer drug used to treat Leukemia. Its sales increased by 28% year-on-year in Q2 2013 to reach $312 million on “higher demand and higher average net selling prices.” ^[2] We expect this trend to continue and the drug’s sales to reach around $1.8 billion by the end of our forecast period.

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 multifold increases from a very small base, Orencia sales increased 21.4% year-on-year to reach $352 million in Q2 2013 “due to higher demand and higher average net selling prices”. ^[2] We expect the trend to continue as prescription demand for the subcutaneous formulation of the drug remains strong.

We are in the process of updating our model for the company and will soon come out with a new price target.

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1. Bristol Myers Squibb Co. CEO Discusses Q2 2013 Results, SeekingAlpha, July 25, 2013 [↩]
2. 2Q 2013 Form 10Q, Bristol-Myers Squibb, July 25, 2013 [↩] [↩]