Bristol-Myers Misses Earnings Estimates on Drug Sales

Bristol-Myers Squibb Co. (BMY), the only drugmaker among the top 12 to decline in trading this year, reported sales and earnings trailed analyst estimates after revenue from its top medicine vanished to generic competition.

The third-quarter net loss attributable to Bristol-Myers was $711 million, or 43 cents a share, the New York-based company said today in a statement. The loss included a $1.83 billion charge for the failure of a hepatitis C drug. Excluding the charge, profit was 41 cents a share, 1 cent below the average of 16 analyst estimates compiled by Bloomberg.

The drugmaker has been trying to manage the loss of Plavix, its anti-stroke medicine that sold $7.09 billion last year, by acquiring and developing therapies to diversify its portfolio. That effort was set back with the failure of the hepatitis C drug and when regulators delayed approval of Eliquis, a blood thinner being developed with Pfizer Inc.

“Bristol-Myers Squibb faced challenges in the third quarter,” said Chief Executive Officer Lamberto Andreotti said in the statement “We remain strong and well-positioned for future success.”

Bristol-Myers shares declined less than 1 percent to $33.05 at the close in New York. The shares have dropped 6.2 percent this year.

Sales fell 30 percent to $3.74 billion, 6.3 percent less than analyst projections. Revenue for Plavix dropped 96 percent to $64 million in the first full quarter of generic competition after losing its patent protection in May.

Diabetes Drug

“Plavix was a big part,” said Mark Schoenebaum, an analyst with an analyst with International Strategies and Investment Group in New York. He also said the company’s sales of its virology drugs had underperformed outside the U.S.

Bristol-Myers will try to resuscitate one drug that was rejected by the U.S. Food and Drug Administration earlier this year, the company said. It plans to re-file an application for its diabetes drug dapagliflozin, to be sold as Forxiga.

“We believe the FDA is willing to reconsider the benefit- risk of this drug,” Elliott Sigal, the company’s chief scientific officer, said on a conference call discussing the third-quarter results. The drug will likely go before an FDA advisory panel and need about six months for review after the application is turned in next year.

The delay may allow Johnson & Johnson to take the lead in in getting a new drug to market in the class, known as SGLT2 inhibitors, said Seamus Fernandez, a Leerink Swann & Co. analyst.

Starting Behind

“They kind of lost pole position versus J&J,” he said in a telephone interview. Eli Lilly also has a drug in development. “It’s going to be a much more competitive market.”

Bristol-Myers confirmed the forecast for 2012 earnings excluding one-time items of $1.90 to $2 a share, and expects to hit “the upper end of the range.” The company also projected full-year sales of $17.4 billion to $17.8 billion, below the $18 billion average of 16 analyst estimates compiled by Bloomberg.

A lower-than-expected tax rate is driving the company’s annual forecast, Fernandez said. Bristol-Myers projected an effective tax rate of 23 percent, compared with the 25 percent to 26 percent Fernandez had expected.

Next year is less certain. Andreotti, in 2010, promised 2013 earnings excluding items of at least $1.95 per share “at a minimum.” Last month, his chief financial officer told investors there have “been a lot of pulls and pushes” on the drugmaker’s business since then.

Seeking Deals

The setback with the hepatitis C drug hasn’t slowed the company’s aggressive approach to deals, Andreotti said.

“Nothing has changed with regard to our business development strategy,” Andreotti said on the conference call. He said the company was interested in long-term growth targets and assets that could boost near-term sales.

The focus for investors will be on what new drugs the company can bring to market. “The pipeline has to succeed,” Fernandez said.

Bristol-Myers will move forward with another hepatitis C regimen that it may take into the final stage of clinical testing in 2014. The company wants to formulate the therapy, a combination of three medicines, into a single pill that could be taken twice a day, Sigal said on the call.

Pfizer’s Strategy

In the third quarter, Bristol-Myers was unable to hang on to revenue from its drugs that lost patent protection in the way that Pfizer did with Lipitor (PFE), its top-selling cholesterol pill. Pfizer, which faced limited competition for six months after the patent expired, used coupons and promotions to keep sales as long as possible. It also reached an agreement with Watson Pharmaceuticals Inc. (WPI) to sell an “authorized generic” to compete with other copies.

Revenue from Avapro and Avalide, a blood pressure medication, fell 56 percent to $95 million after losing patent protection in March.

Sales of its Bristol-Myers’s top two drugs after Plavix fell as well. Abilify, used for depression and schizophrenia, saw revenue fall 2 percent to $676 million. Reyataz, an HIV drug, declined 7 percent to $363 million.

Those declines were offset by drugs that Bristol-Myers is counting on for its future, though. Sales of Orencia, a rheumatoid arthritis treatment, grew 32 percent to $307 million. And sales of Yervoy, a cancer drug to treat melanoma, rose 48 percent to $179 million.

The company reported net income of $969 million, or 56 cents, for last year’s third quarter.

To contact the reporter on this story: Drew Armstrong in New York at darmstrong17@bloomberg.net;

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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