Bristol-Myers Squibb Earnings: Currency Headwinds Take The Shine Off Encouraging New Drug Sales

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Bristol-Myers Squibb (NSYE: BMY) reported its 2104 fourth quarter results on January 27th. The company’s revenues were down 4%, compared to the year-ago quarter. For the full year, the company’s sales revenue stood at $15.8 billion, down more than $500 million (nearly 4%) from what it achieved in 2013. The revenue decline was amplified to the tune of $184 million by the negative impact of a stronger U.S. dollar. Bristol-Myers Squibb expects currency headwinds to continue this year and has guided its full-year worldwide sales for 2015 to be between $14.4 and $15.0 billion. On a constant currency basis, the company is showing momentum, however, an its pipeline across several disease areas is improving.  The increasing adoption of blood thinner medicine Eliquis, continue growth in its immuno-oncology portfolio of therapies, and inscreasingly robust momentum in its Hepatitis C therapy are all contributing to the year-ahead outlook.   We expect these segments to drive significant earnings growth for Bristol-Myers Squibb in the coming years.

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Eliquis Continues On Its Merry Way

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Eliquis continued its strong growth, with revenues for the fourth quarter totaling $281 million as compared to just $71 million during the same period a year ago. [1] The drug’s adoption among healthcare specialists has been impressive and the approval for conditions beyond atrial fibrillation has certainly helped. 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 full year stood at $774 million, a year-over-year increase of 430%. It could become a blockbuster drug in the coming years for the company. The Cardiovascular division accounts for around 30% of Bristol-Myers Squibb’s total value, by our estimates.

Yervoy Leads Increase In Oncologic Drugs Segment

The oncology drugs segment revenue increased by 20% for the year and crossed the $3 billion mark for the first time in 2014. This growth was led by revenues from the drug Yervoy, which jumped 41% for the quarter and 36% for the whole year. Yervoy is a cancer drug approved for treatment of melanoma, a type of skin cancer, and works by activating the immune system. It is one of a number of therapies in the company’s immuno-oncology (I-O) portfolio.  Sales of leukemia drug Sprycel increased 17% to $1.49 billion for the whole year. The U.S. Food and Drug Administration approved the drug Opdivo last month to treat patients with advanced melanoma. [2] While the drug contributed just $6 million to the company’s revenues in 2014, it will be interesting to see how it performs this year. Melanoma is the fifth most common type of cancer in the United States. According to estimates by the National Cancer Institute, 76,100 Americans were diagnosed with melanoma and 9,710 died from the disease last year. [3]

Daklinza Continues Blistering Start, Saves Virology Segment From A Decline In Q4

Bristol-Myers Squibb saw a revenue decline of about 4% in the Virology segment (anti-infective drugs) for the full year 2014. However, in Q4 2014, the virology segment revenues increased by 4% year over year due to incremental revenues from Hepatitis C franchise (Daklinza and Sunvepra). The revenues from the other drugs in the segment such as Baraclude, Reyataz and Sustiva were down 6%, 12% and 11%, respectively, for the full year. While increased competitive pressure is plaguing Reyataz’s growth, Sustiva is facing the impact of loss of exclusivity in Europe.

Bristol-Myers Squibb earned revenues of $256 million from Hepatitis C drugs, of which $201 million came from Daklinza alone. The company stated that initial response to the drug has been good its approval in Europe and Japan is going to be a key contributor to the franchise’s future growth.

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. The pricing is likely to remain high since the drug helps in reducing treatment window and potentially mitigates patients’ risk of developing liver complications. Liver transplants resulting from these complications can be extremely expensive.

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Notes:
  1. Bristol-Myers Squibb’s SEC Filings []
  2. FDA approves Opdivo for advanced melanoma, December 22, 2014, www.fda.gov []
  3. SEER Stat Fact Sheets: Melanoma of the Skin, National Cancer Institute []