Bristol-Myers Squibb Pins Its Hopes On Eliquis And Immuno-Oncology

Bristol-Myers Squibb (NYSE:BMY) reported reasonably good operational growth excluding the impact of adverse currency movements and business divestitures. As expected, its blood thinning drug Eliquis and oncology segment showed impressive performance. In addition to this, hepatitis C sales improved owing to success in Japan. While these are some good developments, the competition from generics is still dragging the overall growth down. Moreover, we take cautious view about the company’s hepatitis C franchise as the competition in this lucrative market is increasing. That said, the immuno-oncology pipeline does hold some upside potential for Bristol-Myer’s Squibb’s valuation. The company is expected to release data from multiple cancer trials over the course of next 18 months.

Our current price estimate for Bristol-Myers Squibb stands at $54.70, implying a discount of about 20% to the market.

See our complete analysis for Bristol-Myers Squibb

Eliquis And Daklinza Are Doing Well

Eliquis is doing well in Europe, especially in the U.S., Japan, the U.K., Spain and Germany. The drug could become a multi-billion dollar franchise for Bristol-Myers Squibb. The company is in a strategic partnership with Pfizer to market this drug. Eliquis has become the top anticoagulant in new-to-brand prescriptions among cardiologists in the U.S., gaining special acceptance among physicians for atrial fibrillation. The label expansion has helped as well.

Besides Eliquis, Bristol-Myers Squibb saw an impressive uptake in Daklinza, its hepatitis C drug. The growth was primarily driven by the success of Daklinza-Sunvepra combination therapy in Japan. The company acknowledged that there is some strong competition in this market. Despite this, the execution so far has been good. We remain cautious about the drug’s future growth considering growing competition and what happened to Johnson & Johnson’s hepatitis C drug Olysio.

Immuno-Oncology Could Hold Swing Potential

As expected, the sales of Yervoy and Opdivo (Nivolumab) remained strong. Yervoy’s revenues jumped 20% during the first quarter amounting to $325 million. The growth rate was below what we saw in full year 2014, but this can be attributed to tougher comparison and higher base effect. The momentum continues. Yervoy has been approved for treatment of melanoma which is the deadliest form of skin cancer. In addition, Opdivo’s sales benefited from additional approval granted by the FDA. The drug was initially approved for melanoma, but was granted approval in early March for the treatment of patients who have been previously treated for metastatic squamous non-small cell lung cancer.

The future swing in Bristol-Myers Squibb’s value could possibly come from the company’s immuno-oncology pipeline. The upcoming American Society for Clinical Oncology conference will be an important event to watch out for. Bristol-Myers Squibb will present couple of phase 3 survival rate studies in lung cancer, which is one of the most common cancer types in the world. Additionally, the company will present new data on melanoma as well as in new tumor types including  hepatocellular carcinoma, small-cell lung cancer and glioblastoma. The next 1-2 years look promising, and potential new successful filings could significantly improve the outlook.

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