Bristol-Myers Squibb’s Oncology Revenues Will Likely Be Around $11 Billion By Next Year

by Trefis Team
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Bristol-Myers Squibb’s (NYSE:BMY) oncology business accounts for over 65% of the company’s valuation, according to our estimates. The segment has seen strong sales growth in the recent years, primarily led by Opdivo, which is the one of the top selling drug in the immuno-oncology space, and will likely continue to see strong growth, in our view. The drug has been approved for a number of indications, and it is further being tested under various combinations for additional indications, which if approved would further aid the sales growth. We have created an interactive dashboard ~ How Much Can Bristol-Myers Squibb’s Oncology Revenue Grow In The Near Term ~ highlighting the company’s oncology portfolio. You can adjust the drug revenues and margin drivers to see the impact on the overall oncology revenues and profits.

Expect Oncology Revenues To Grow In High Teens In 2018 And Low Double Digits In 2019

We forecast the oncology revenues to grow in double digits from $8.4 billion in 2017 to a little under $11 billion in 2019. This growth will primarily be led by Opdivo. In fact, Opdivo sales were up 37% for the nine months period ending September 2018. Opdivo is one of the top selling oncology drugs, and it has received approvals for several indications, including advanced melanoma, lung cancer, metastatic renal cell carcinoma, metastatic melanoma, Hodgkin’s Lymphoma, head and neck cancer, and metastatic urothelial carcinoma. The drug’s wide scope to treat multiple indications has aided the sales growth, and will likely continue to aid the future sales growth. The overall immuno-oncology drug market could be as as big as $35 billion, and the company is looking to increase Opdivo’s penetration. The drug is currently being tested in combinations with other drugs for additional indications, which if approved would further lead to sales growth. However, the recent data from the CheckMate-451 study indicated that Opdivo in combination with Yervoy being tested for small-cell lung cancer, showed no survival benefit over a placebo. This will likely lower the overall expected peak sales of Opdivo. Note that Opdivo’s peak sales are estimated to be north of $10 billion, which is dependent on successful trials and approvals. The drug’s patent is protected through 2026-2027, and it will not see any biosimilar competition till then. 

In addition, the company’s deal with Nektar Therapeutics has granted it a period of exclusivity for a development program covering 20 indications involving 9 tumors, matching NKTR-214 with Opdivo and Yervoy combinations. NKTR-214 is an important therapy designed to spur cancer-fighting T cells directly in the tumor micro-environment and also increase expression of PD-1 on these immune cells. Given these properties, and the extended use case with combinations of Opdivo and Yervoy, NKTR-214 appears to be a roadmap for Bristol-Myers Squibb in increasing its share in the immuno-oncology market. However, Opdivo faces competition from Merck’s Keytruda, which was the leading immunotherapy in new patient starts, as well as total patient volume in the U.S. in Q3 2018.

Apart from Opdivo, the oncology portfolio includes Sprycel, Yervoy, and Empliciti. Yervoy has been approved by the U.S. FDA for the treatment of patients with metastatic melanoma, and in an adjuvant therapy for patients suffering from stage 3 melanoma, to reduce the risk of melanoma returning after the surgery. However, the drug sales haven’t seen any significant growth so far, given the ramp up in Opdivo. Empliciti is a biologic used for the treatment of patients suffering from multiple myeloma, who have received 1 to 3 prior medications. We don’t expect any significant growth in Sprycel and Yervoy revenues in the coming years. In fact, the revenues will likely decline as they approach patent expiry over the next few years. As such, the overall growth in oncology revenues can largely be linked to the continued ramp up in Opdivo sales. 

Our current price estimate for Bristol-Myers Squibb stands at $56, which is slightly above the current market price.

 

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