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Bristol Myers Squibb’s (NYSE:BMY) Q1 results look like a letdown at first glance as the firm reported that its total sales for Q1 2013 were down almost 27% compared to the same quarter last year. ((SEC Filings, Bristol-Myers Squibb)) However, much of this decline was expected as Q1 2012 was the last full quarter in which Bristol-Myers’ best-selling drugs, Plavix and Avapro/Avalide, enjoyed market exclusivity in the U.S.
Plavix and Avapro/Avalide brought in almost $1.7 billion and $207 million respectively in sales in Q1 2012, and since then their sales have declined by 95% and 78% respectively on a year-on-year basis. The loss of revenue on these two drugs explains the majority of y-o-y decline in Bristol’s revenue. 
Excluding the sales of Plavix and Avapro/Avalide, the sales of this pharmaceutical giant actually grew by 10% y-o-y. As mentioned in our pre-earnings note, this increase came from newer products in the firm’s pipeline. We continue to believe that the success of some of these new products will be crucial for Bristol’s growth prospects. The company faces more patent expirations in the coming years and will need to hit it out of the park with some of its new drugs to fill in the vacuum.
In the following sections we look at the current performance of some of most promising drugs in Bristol’s pipeline.
Yeryoy is a biological product that prolongs the survival of patients with inoperable metastatic melanoma (a type of skin cancer). The drug was approved both in the U.S. and in the EU in 2011 and has seen an impressive uptake as “physicians increasingly understand the potential for long term survival”. 
The sales of this drug grew by 49% y-o-y to reach $229 in Q1 2013, almost in line with our expectations. We expect its sales to continue increasing at an impressive rate over the next five years to reach nearly $2 billion in peak sales over the next five years.
Orencia And Nujolix
Orencia and Nujolix are Bristol’s autoimmune drugs for the treatment of moderate to severe rheumatoid arthritis and kidney transplant rejection, respectively. While Nujolix is seeing multifold increases from a very small base, Orencia sales increased 26% y-o-y to reach $320 million in Q1 2013 on the back of growing demand in the U.S. and Europe.
We expect the trend to continue as Bristol expands Orencia’s access in public programs. The drug was very recently approved by UK’s National Institute for Health and Care Excellence (NICE) for the treatment of rheumatoid arthritis.
Bristol’s diabetes portfolio comprises Onglyza/Kombiglyze, Byetta, Bydureon, and Forxiga. Of these Byetta and Bydureon were acquired when Bristol’s acquired Amylin in August 2012, while Forxiga is a new formulation.
The sales of Onglyza/Kombiglyze for Q1 were up 26% to $202 million, somewhat below our expectations due to low growth in new prescription in the U.S. and we will be closely watching the performance of this drug over the next few quarters.
As a portfolio, the sales may continue to grow as the sales volume of Bydureon continues to grow and Forxiga was launched in Germany, the UK and Denmark during the quarter. The company hopes to file for U.S. regulatory approval for Forxiga by the end of Q2. ((Bristol-Myers Squibb’s Management Discusses Q1 2013 Results, SeekingAlpha, April 25, 2013))
Eliquis is Bristol’s new anticoagulant drug for heart patients and has been widely forecasted to become the company’s next big blockbuster drug. The drug was approved by the FDA in the U.S. in December 2012 and according consensus estimates should generate around $390 million in 2013 in order to reach peak sales of around $4 billion in the next 4-5 years.
However, the drug’s Q1 sales were reported to be around $22 million only, which is much less than what it should be to meet the consensus estimate by year end.
Nevertheless we believe that the drug is just one quarter old in the market and it is still too early to say whether or not it will meet our expectations. Bristol’s CFO Charlie Bancroft mentioned on the earnings call that the drug’s “differentiated clinical profile is being recognized and valued by physicians, payors, and patients” and we will wait for another few quarters before modifying our projections significantly. 
Our current price estimate for the company’s stock is around $36 per share, which is at a 10% discount from the current market price. We are in the process of updating our model to reflect all the information released during the earnings call.Notes:
- SEC Filings, Bristol-Myers Squibb [↩]
- Bristol-Myers Squibb’s Management Discusses Q1 2013 Results, SeekingAlpha, April 25, 2013 [↩] [↩]