Bristol-Myers Squibb Earnings Preview: Increasing Sales From New Drugs May Ease The Pressure Off Revenue Growth

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As Bristol-Myers Squibb (NYSE:BMY) reports its Q4 2014 earnings on January 27th, we expect the growing adoption of Eliquis and the ramp up in sales of Hepatitis C and oncology drugs will ease some of the pressure on the company’s revenue growth. We believe that these segments are likely to be major growth contributors for Bristol-Myers Squibb in the coming years. Sustiva, which brought in more than $1 billion in revenues in the first nine months of 2014, will continue to face the impact of loss of patent exclusivity in Europe. Additionally, we look forward to an update on the FDA review of Bristol-Myers Squibb’s drug Nivolumab which is intended to treat  advanced melanoma. The agency had granted breakthrough status to the medicine and had agreed to review the license application on a priority basis. Once the review is complete, Bristol-Myers Squibb’s revenues should experience significant additional support, perhaps even this year.

Our current price estimate for Bristol-Myers Squibb stands at $52.70, implying a discount of about 15% to the market.

See our complete analysis for Bristol-Myers Squibb


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Eliquis Is Likely To Show Strong Ramp Up In Sales

We expect the blood thinning drug Eliquis to exhibit a strong ramp up in sales. The drug’s revenues stood at $216 million in Q3 2014 as compared to $41 million during the same period a year ago. [1] Eliquis’ adoption has been encouraging and the approval for conditions beyond atrial fibrillation has broadened its market. At the end of July 2014, the European Commission approved the drug for the treatment of Deep Vein Thrombosis (DVT) and Pulmonary Embolism (PE), as well as for the prevention of recurrence of these conditions. Eliquis’ sales for the first nine months of 2014 stood at $493 million, a year-over-year jump of 557%. It could become a blockbuster drug this year for the company. We estimate that cardiovascular division accounts for more than 20% of Bristol-Myers Squibb’s value as per our estimates.

Daklinza Could Be Another Positive Factor

Bristol-Myers Squibb saw a decline of about 7% in revenues from its virology segment (anti-infective drugs) in the first half of 2014. This decline came down slightly to 6.4% in Q3 2014 due to incremental revenues from Hepatitis C franchise (Daklinza and Sunvepra). For the past few quarters, the growth in Baraclude has been more than offset by the decline in sales of Reyataz and Sustiva. While increased competitive pressure is plaguing Reyataz’s growth, Sustiva is facing the impact of loss of exclusivity in Europe. In such a situation, Bristol-Myers Squibb will be hoping from some support from Daklinza. The company has stated that the initial response has been good and the drug’s approval in Europe and Japan is going to be a key contributor to the franchise’s growth going forward. It will be interesting to see the drug’s performance in the fourth quarter of 2014.

Daklinza is effective across several genotypes of diseases and has shown cure rates of up to 100% when used in combination with Gilead Sciences’ blockbuster drug Sovaldi. The encouraging data of Daklinza-Sovaldi therapy could influence healthcare providers to go for this combination. Bristol-Myers Squibb could add significant incremental revenues by targeting roughly 9 million HCV  (i.e., Hepatitis C Virus) patients in Europe and 1.2 million patients in Japan.

Abilify Will Lose Sales

Bristol-Myers Squibb company will have to brace for the impact of expiry of Abilify’s patent in 2015. Abilify is the biggest selling anti-depressant in the U.S. and accounted for about $1.54 billion of Bristol-Myers Squibb’s revenues in the first nine months of 2014. The company has already lost the marketing rights in EU, which has resulted in a slight decline in Abilify’s sales in 2014, and this trend will be increasingly visible in the upcoming quarterly results.

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Notes:
  1. Bristol-Myers Squibb’s SEC Filings []