Bristol Slumps on Merck Competition for Lung Cancer Drug

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Shares of Bristol-Myers Squibb Co. dropped after Merck & Co. indicated its lung cancer drug Keytruda may gain broad approval, threatening sales of Bristol’s newest lung cancer treatment, Opdivo.

Merck said on a conference call Tuesday it’s pushing for Keytruda to be approved by regulators to treat many different forms of lung cancer, putting it more directly in competition with Opdivo.

Bristol-Myers shares fell 1 percent to $64.51 at 11:12 a.m. in New York. They had dropped as much as 2.7 percent earlier, then recovered some ground as the broader stock market reversed losses.

“The fall may be due to the positive comments by Merck’s view on Keytruda’s broad approvability in lung cancer and down with the rest of the market,” said Sam Fazeli, an analyst at Bloomberg Intelligence in London.

Bristol had reported a 6 percent increase in first-quarter revenue earlier Tuesday, crediting strong sales of Abilify, one of its top drugs.

Profit excluding certain items was 71 cents a share, the company said in a statement Tuesday. That topped the 50 cents that analysts projected on average, according to data compiled by Bloomberg. Revenue rose to $4.04 billion, compared with the $3.8 billion average of analyst estimates.

Abilify Royalties

Bristol-Myers gets royalties on Abilify from its partner Otsuka Pharmaceutical Co. Ltd., and revenue from the depression drug exceeded analysts’ estimates by about $160 million. The royalty payments ended on April 20, and the drug is facing competition in the U.S. from cheaper generic copies.

Bristol-Myers also tightened its full-year profit forecast. Adjusted earnings will be $1.60 to $1.70 a share, up from $1.55 to $1.70.

The drugmaker is competing with Merck, Roche Holding AG and Novartis AG to bring to market a new generation of cancer drugs that trigger the body’s immune system to attack tumors. Bristol-Myers, based in New York, is attempting to get Opdivo, its newest immune system-based drug, approved for more uses.

The U.S. Food and Drug Administration approved Opdivo for squamous non-small-cell lung cancer three months ahead of schedule in March. Earlier this month, the company ended an Opdivo study for non-squamous, non-small-cell lung cancer, citing positive results.

“We are obviously aware that this is a very competitive space,” Chief Executive Officer Lamberto Andreotti said on a call with investors Tuesday. “We have invested in our commercial infrastructure in the U.S. early in order to be ready to launch.”

The drug sold $40 million in the first-quarter. Analysts have estimated that it could eventually reach $3.1 billion by 2017.

Merck said last week it has filed for FDA approval for Keytruda for advanced non-small cell lung cancer and plans to file for advanced melanoma later this year.

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