BMY’s Q4 Growth Aided By Eliquis, Update On Checkmate-227 Trials Looks Encouraging

by Trefis Team
Bristol-Myers Squibb
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Bristol-Myers Squibb’s (NYSE:BMY) recently released Q4 numbers were about in line with street estimates, and reflect continued uptick in its blockbuster drugs  – Opdivo and Eliquis. A key highlight from the earnings call was the update on Checkmate-227 trials. The company’s management stated that the combination of Opdivo and Yervoy works better than chemotherapy for patients with a high tumor mutation burden (TMB), regardless of PD-L1 expression. It should be noted that Bristol-Myers Squibb’s future growth, and its current market value, relies significantly on the expected growth of cancer drug Opdivo. The drug raked in roughly $5 billion in sales in 2017, and we estimate the figure to be north of $6 billion by 2020. Opdivo is used for the treatment of lung cancer, which is one of the most common cancers in the world, accounting for nearly 14% of all diagnosed cases while non-small lung cancer constitutes roughly 80-85% of all lung cancers, which is an area that BMY has been targeting. The drug’s patent is protected through 2026-2027, and we believe its sales will continue to ramp up in the coming years. Also see our interactive dashboard on BMY’s Oncology segment, and why we estimate that it accounts for 65% of the company’s overall value.

Looking at Q4, Opdivo posted 4% growth while full year sales grew 31%. Eliquis, now BMY’s second best selling drug, also performed well, with a 44% jump in Q4 revenues to $1.36 billion. Eliquis will likely continue its growth trajectory, primarily due to higher demand given the drug’s increased acceptance and market share gains. Overall, we continue to believe that BMY’s future growth is primarily tied to the success of Opdivo. While the news on Checkmate-227 is surely encouraging, the stock price fell after an initial surge on Monday’s trading session. This can primarily be attributed to the overall negative sentiments in the markets, which led to a nearly 5% drop in the Dow Jones index.

Our price estimate of $52 for the company’s stock is over 10% below the current market price.

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