Max Nisen is a Bloomberg Gadfly columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.

Bristol-Myers Squibb Co. started 2016 as the acknowledged king of immune-boosting cancer drugs. That position has never looked shakier. 

Thursday evening, Bristol announced it won't seek accelerated FDA approval for a combination of its leading cancer drug Opdivo and another immune-oncology (IO) drug called Yervoy in treating newly diagnosed lung-cancer patients.

This decision reinforces something I've noted before: After a series of shocking setbacks for Bristol, Merck & Co. Inc. and its competing drug Keytruda have taken a possibly insurmountable lung-cancer lead with a different and likely safer approach. Bristol shares were down 9 percent on Friday. 

It also highlights the risks of Bristol's decision to hang too much of its hopes for growth on Opdivo. According to Bloomberg Intelligence, Bristol has 41 trials of the Opdivo-Yervoy combo ongoing, 12 of them in late stages. An estimated 24 percent of the company's sales came from those two drugs in 2016.

Bristol's R&D spending is also narrowly focused on expanding Opdivo's opportunity. The company only has two new drugs in Phase 3 trials, and neither are expected to be blockbusters or to have much impact on sales growth through 2020. Beyond its growing blood-thinner Eliquis, which is expected to add more than $2 billion in sales through 2020, Bristol doesn't have much going for it, other than a set of relatively early-stage projects. 

Bristol's singular focus on Opdivo looked fine when the drug was growing at a breakneck pace with a seemingly unassailable lead; I argued as much a year ago. And Opdivo still has its lead, with analysts estimating it outsold Keytruda by more than $2 billion in 2016. But now Bristol's lack of balance is a liability. 

To The Victor Go The Spoils
The race for dominance in the multi-billion-dollar immune-oncology market has caused multi-billion-dollar swings in the market caps of two leading competitors
Source: Bloomberg

Lung cancer is a huge market, and it causes more deaths than any other kind of cancer. A substantial portion of Opdivo's estimated $3.5 billion in 2016 revenue came from treating lung-cancer patients that had failed other therapies, a market in which Bristol recently claimed 60 to 70 percent share.

Treating newly diagnosed patients would have vastly expanded the drug's reach. But Bristol's setbacks have limited that opportunity and shaved more than $4 billion from analyst estimates of the drug's 2020 sales. It was once unthinkable that Keytruda would exceed Opdivo in total sales. Now it may be inevitable. 

The Higher You Go...
The harder you fall. Buoyed by a rapid series of approvals, Opdivo's sales potential looked limitless until it hit a wall in lung cancer
Source: Bloomberg

Bristol's pain is partly due to its own aggressive approach; it sought overly broad FDA approval for Opdivo as a stand-alone treatment in a trial that failed in August. And its chose to focus on a combo of its own IO drugs, while Merck mixed its drug with another company's older, relatively safer chemotherapy. 

Lung cancer may just be the start of Bristol's problems. IO drugs are also used or are being tested in a variety of other cancers, including Hodgkins Lymphoma and gastric cancer. Opdivo still has a leading position in some of these areas, and its combination with Yervoy in treating some patients with melanoma was the first IO duo to make it to market.

Opdivo may have better luck in treating other cancers. But if Bristol doesn't make up the ground it loses in lung cancer, then sales estimates may have to come down even more. 

Shaky Ground
Opdivo and Yervoy are expected to account for an ever greater proportion of Bristol-Myers' revenue in the years to come
Source: Bloomberg

It's critical that Bristol try to keep a lead -- Opdivo is estimated to have outsold Keytruda by more than $2 billion in 2016  -- in the broader IO race. But it can't afford to tie up all of its resources there. It's time for Bristol to stop doubling down and start diversifying. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Max Nisen in New York at

To contact the editor responsible for this story:
Mark Gongloff at