Bristol-Myers Misses Estimates as Cancer Drug’s Sales Slow

Updated on
  • Opdivo oncology treatment almost triples year-earlier revenue
  • Sales for hepatitis C treatments drop 51%; Yervoy stays flat

Bristol-Myers Squibb Co. reported fourth-quarter profit that fell short of analysts’ estimates as sales slowed for its antiviral drugs and the Yervoy cancer treatment.

Profit excluding some items totaled 63 cents a share, below the 67-cent average of analysts’ estimates compiled by Bloomberg. The New York-based drugmaker also lowered its forecast for 2017 profit to a range of $2.70 to $2.90 a share, compared with the average estimate of $2.96. 

The shares dropped 5.7 percent to $46.75 at 1:42 p.m. in New York.

Opdivo, which is approved to treat melanoma and lung cancer, and Yervoy, approved just for melanoma, remain the company’s main drivers of growth. Bristol-Myers is focusing mostly on these immune-based therapies, though investors hope their performance in clinical trials improves. In August, Opdivo failed in a lung cancer trial that would have widened its use.

Combination Treatment

Last week, the company announced that it wouldn’t seek early approval for its cocktail of Opdivo and Yervoy as a primary, or first-line, treatment for advanced non-small cell lung cancer. The decision doesn’t remove the possibility that the combination may succeed, and Bristol-Myers is relying on them working, Credit Suisse analyst Vamil Divan wrote in a research note. 

Still, the decision was seen by analysts and investors as another boon to chief rival Merck & Co., whose similar drug Keytruda is now approved as a primary treatment for lung cancer. The decision adds long-term risk of failure for the Bristol-Myers trial, according to Bloomberg Intelligence.

The company didn’t provide details about its decision not to seek quicker approval on a Thursday conference call with analysts. Bristol-Myers still has multiple trials in which various uses of the drug are being tested, Chief Executive Officer Giovanni Caforio told analysts. 

“We do believe we have an opportunity to have a meaningful role to play in the future in lung cancer,” he said.

He said the company is fully committed to exploring the drug combination in multiple tumors and is optimistic about additional immune-oncology data for several types of cancer coming out in 2017.

Hepatitis C Drugs

Yervoy generated $264 million in fourth-quarter sales, little changed from $265 million a year earlier and well short of the $300 million predicted by analysts. Revenue from Opdivo almost tripled to $1.31 billion, compared with $1.16 billion predicted by analysts.

The company is projecting U.S. sales for Opdivo to remain flat in 2017, Chief Commercial Officer Murdo Gordon said on the call, although it’s confident it can defend its market position in second-line lung cancer. Roche’s cancer treatment Tecentriq captured 10 percent of Bristol-Myers’s’ U.S. market in second-line lung cancer, the company said Thursday.

Sales dropped for the four franchises within the company’s virology unit, which generated about 19 percent of revenue. That included a 51 percent drop of hepatitis C drug sales to $226 million, missing predictions of $256 million. Analysts expect sales to continue to decline because of competing products from Gilead Sciences Inc. and AbbVie Inc. HIV franchises for Sustiva and Reyataz each saw sales declines of more than 20 percent, while hepatitis B drug Baraclude fell 4 percent.

Bristol-Myers, the smallest major U.S. drugmaker by market value, is the second member of Big Pharma to report its fourth-quarter earnings since Donald Trump was sworn in as president last week. Cancer treatments such as Bristol-Myers’s are expensive, though they haven’t drawn the scrutiny from Trump and Congress that other high-priced medicines have attracted.

Sales of heart drug Eliquis, another key to the company’s growth, increased 57 percent to $948 million, while analysts anticipated $967 million.

Other highlights from the second quarter:

  • Revenue increased 22 percent to $5.24 billion from a year earlier, above the $5.12 billion predicted by analysts.
  • Net income was $894 million, or 53 cents a share, compared to a net loss of $197 million, or 12 cents, a year earlier. Analysts predicted $1.04 billion, or 61 cents a share.
  • Orencia sales rose 16 percent to $625 million, topping the $607 million forecast by analysts.
  • Sprycel sales rose 15 percent to $494 million, above estimates of $474 million.

— With assistance by Katherine Greifeld

(Updates share price in third paragraph, adds CEO comments in seventh.)
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