Bristol-Myers Books $1.8 Billion Loss On Discontinuing Development Of Hep-C Drug

BMY: Bristol Myers Squibb logo
Bristol Myers Squibb

Bristol-Myers (NYSE:BMY) has announced that it is discontinuing development of BMS-986094 (formerly known as INX-189), which was targeted at treatment of Hepatitis C. [1] The company had acquired the drug in February earlier this year through the acquisition of Inhibitex Inc., which had costed it $2.5 billion. However, as a result of discontinuing the development of the drug, the company has had to book a $1.8 billion loss, accounted as R&D expense against BMS-986094. [2] The loss is a huge setback for Bristol-Myers as it has been pushing hard to advance its development pipeline to make up for the decline in its top line post patent expiry of Plavix in May earlier this year. The company had reported an 18% y-o-y decline in its sales in the quarter ending June 30 2012, as a result of the patent expiry.

We currently have a stock price estimate of $35 for the company approximately 7% above its current market price.

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Safety concerns for health of patients administered with the drug prompts the discontinuation

The company had earlier indicated that it was suspending clinical trials of BMS-986094 after a patient who was administered with the drug experienced heart failure. However, the step to completely discontinue development of the drug, which was in Phase II of clinical trials has come after nine patients in the study had to be hospitalized, out of which two are still in hospital. Also, the patient who had experienced heart failure subsequently expired. The company has declared that it shall continue to closely monitor the health of patients who were administered with the drug, and also share the results of their investigation in to the matter with broader medical community in the interest of patients. US FDA on its part has put the drug on hold.

Bristol-Myers lags in the race to develop a Hepatitis C oral drug

Hepatitis C infects approximately 130-170 million people worldwide and the potential market for treatment of Hepatitis C is estimated to be $20 billion. Thus, the discontinuation of development of BMS-986094 has pulled Bristol-Myers back in the race to launch an effective treatment for the disease. Other pharmaceutical companies that are in the race to launch an oral drug targeted at Hepatitis C include, Gilead Sciences, Abbott Labs and Medgenics Inc. All these players benefit from the setback of Bristol-Myers. Nonetheless, the company possess several key drugs in its portfolio that can drive revenue growth for it over the next few years.

Understand How a Company’s Products Impact its Stock at Trefis

  1. Bristol-Myers Squibb Discontinues Development of BMS-986094, an Investigational NS5B Nucleotide for the Treatment of Hepatitis C, August 23 2012, []
  2. Big Pharma Knocked Out of the Box – Bristol-Myers’ Hepatitis C Blunder is an Enormous Bonus for Medgenics, August 24 2012, []