Bristol-Myers Squibb (NYSE:BMY) is scheduled to release its earnings for Q4 2013 on January 24. Over the last year, the pharmaceutical company’s revenue has declined drastically due to the patent expiry of Plavix and Avapro/Avalide, two of its best selling drugs, but it seems to be recovering gradually as most of its other drugs are growing at healthy rates. In Q3 2013, its sales bounced back 9% over the year ago period, driven by the sales of some new drugs such as Yervoy (+33%), Sprycel (+20%), Orencia (+22%), and Bydureon (>300% growth but from a small base). Sales of Eliquis, Bristol’s new flagship blood thinner drug, also resumed growth after trailing expectations for more than two quarters. In the upcoming release, we expect this trend to continue as some of Bristol’s new drugs continue to achieve regulatory milestones and are witnessing impressive uptake.
We currently have a price target of almost $39 for Bristol-Myers’ stock, which is nearly 30% below the current market price.
Company Is Focusing On Its Immuno-Oncology Division
Over the past few quarters, Bristol’s stock has soared primarily due to bullishness surrounding the company’s immuno-oncology drug pipeline. Within this pipeline, a Phase III experimental drug called Nivolumab has shown the most promise due to its superior performance in clinical trials and has even been called the “beginning of the end of cancer” by some analysts.   We currently have a very conservative forecast for sales of this drug, keeping in mind the abundant uncertainties involved in securing regulatory approval. However, management seems to be increasingly confident about its eventual success. According to the company, the drug is being currently tested over eight types of tumors in more than 25 clinical trials.  Moreover, it recently decided to divest its diabetes drug portfolio and stopped development in Hepatitis C and Neuroscience segments so that all resources can be targeted on cancer drugs.  We expect Bristol’s management to shed some more light on this strategy during the upcoming earnings call, and will revise our projections accordingly (see Why We Are Cautious About Bristol-Myers Squibb).
Eliquis’ Performance Is Crucial For Near-Term Performance
We also expect Bristol’s management to provide more color around the performance of Eliquis during the upcoming earnings call. As mentioned above, Eliquis is Bristol’s flagship blood thinner drug and its success is important for the company’s leadership in the anticoagulant market. The drug has tested favorably relative to many competitors, but its sales were struggling to take off until Q2 due to its delayed launch. To address this issue, the company started marketing Eliquis aggressively in Q3, and we saw an uptick in sales during the quarter due to these initiatives. We believe that the company must continue to report impressive sales growth for another few quarters in order to prove that that Eliquis’ sales growth is sustainable. We currently forecast Eliquis to reach around $4 billion in peak sales, and will revise our projections based on the data released during the earnings call.Notes:
- Nivolumab Benefits Durable in Three Tumor Types, OncLive, August 19, 2013 [↩]
- Bristol-Myers shares jump on ‘beginning of the end of cancer’, MarketWatch, May 22, 2013 [↩]
- Bristol-Myers Squibb CEO Discusses Q3 2013 Results – Earnings Call Transcript, SeekingAlpha, October 23, 2013 [↩]
- Bristol-Myers Squibb Co. Doubles Down On Immuno-oncology, The Motley Fool, January 17, 2014 [↩]