Bristol-Myers Squibb: Looking Ahead With Opdivo

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For the next year or so, the most important developments concerning Bristol-Myers Squibb‘s (NYSE:BMY) business are likely to be around its immuno-oncology pipeline. In Q1 2015, sales of its cancer drugs Yervoy and Opdivo (Nivolumab) surged. While Yervoy’s revenues jumped 20% amounting to $325 million, Opdivo’s sales benefited from additional approval granted by the FDA. Going forward, the key events to watch out for are the upcoming the American Society of Clinical Oncology (ASCO) conference, and subsequent filings by Bristol-Myers Squibb for broader usage of Opdivo. We are particularly interested in how the quality of data that will be shared at ASCO from the  Phase 3 trials of both Opdivo (for non-small cell lung cancer) and the combination therapy (Opdivo and Yervoy).

Opdivo 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. Now there is a possibility that the company can get approval for non-squamous NSCLC over the course of next year, assuming that the clinical trial data is promising.

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

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See our complete analysis for Bristol-Myers Squibb

Bristol-Myers Squibb appears to be positioned strongly as far as lung cancer treatment with immuno-oncology drugs is concerned. Lung cancer is one of the most common cancers in the world, accounting for nearly 13% of all diagnosed cases and 20% of cancer related deaths each year. [1] Also, NSCLC constitutes roughly 85% of all lung cancers, which is what Bristol-Myers Squibb is targeting. [1] About 25% to 30% of NSCLC is squamous, with remaining being non-squamous. [1] Opdivo is currently approved for squamous NSCLC, which means that with an approval for non-squamous NSCLC, the drug will expand its usage by almost threefold. Also, Opdivo has a headstart over rival Merck’s Keytruda, which is still only approved for melanoma. However, Merck is working on getting approval for lung cancer as well. The future swing in Bristol-Myers Squibb’s value will likely come from the company’s immuno-oncology pipeline. The upcoming ASCO conference will be an important event to monitor.

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Notes:
  1. Cancer Research Institute [] [] []