Bristol-Myers’ Rosy Outlook Trumps Trial Setback as Stock Gains

(Bloomberg) -- Bristol-Myers Squibb Co. acknowledged that its top-selling cancer drug faces challenges in coming years, one day after reporting a clinical setback that caused the drugmaker’s shares to fall.

Still, a rosier outlook for the rest of the year and a strong second quarter were enough to ease investors’ concerns, at least for now.

Bristol-Myers has bet heavily on oncology to spur its future growth. Earlier this year, it agreed to acquire Celgene Corp., maker of the blockbuster blood-cancer treatment Revlimid, for $74 billion. Meanwhile, the company has been looking to expand the approved uses of its lucrative immunotherapy Opdivo.

Late Wednesday, the company said a closely watched trial of Opdivo combined with chemotherapy had fallen short of its goals. On Thursday, after Bristol-Myers posted healthy earnings, Chief Executive Officer Giovanni Caforio said Opdivo would face increasing pressure in 2020, particularly in light of the disappointing trial results.

Despite the setbacks in the laboratory, Bristol-Myers issued an upbeat forecast for the rest of this year. It said in a statement it now expects 2019 adjusted earnings per share in a range of $4.20 to $4.30, up from the previous $4.10 to $4.20. Analysts have been expecting earnings of $4.19 a share for the year.

That helped push the stock higher after it had fallen more than 4% in late trading Wednesday on news of the Opdivo results. At 10:10 a.m. in New York, they were up 3.7% at $44.82.

See more details about Bristol-Myers second-quarter financial results

Though much of the second quarter’s gains were attributed to Opdivo, the trial could undermine the medicine’s position in the burgeoning market for innovative cancer treatments.

“This is not what we hoped for, but it’s consistent” with tests of competing treatments that harness the immune system to fight cancer, said Fouad Namouni, head of oncology development, in an interview.

In a separate study evaluating Opdivo with low-dose Yervoy, another immunotherapy treatment, certain trial participants saw improved survival rates. Namouni said that was “very, very good news for patients.”

Sales of Opdivo increased 12% year-over-year to $1.82 billion in the second quarter, slightly outpacing analyst estimates of $1.80 billion. As the drug’s growth moderates, investors remain concerned that it could lose market share to Merck & Co.’s rival treatment Keytruda.

Eliquis Elevates

While Bristol-Myers has been giving top billing to its cancer push, other drugs have quietly carried it along, bringing in billions as the company integrates Celgene and find more uses for Opdivo and Yervoy.

Sales of the blockbuster blood thinner Eliquis jumped 24% to $2.04 billion, beating analyst estimates of $1.95 billion. Eliquis this year surpassed Opdivo to become the company’s top-selling drug.

Second-quarter adjusted earnings were $1.18 a share, up 17% from a year earlier and topping the $1.07 expected on average by analysts. The drugmaker also beat sales estimates, bringing in $6.27 billion, up 10% from the same period a year earlier and beating expectations of $6.11 billion.

To help cinch its deal for Celgene, Bristol-Myers agreed to divest Celgene’s blockbuster psoriasis pill Otezla to appease antitrust regulators’ objections.

Caforio told investors Thursday that the drugmaker is trying to sell Otezla and has seen significant interest from buyers. The company expects the divestiture will satisfy the Federal Trade Commission, allowing the deal to close toward the end of this year or in the beginning of 2020.

To contact the reporter on this story: Riley Ray Griffin in New York at rgriffin42@bloomberg.net

To contact the editors responsible for this story: Drew Armstrong at darmstrong17@bloomberg.net, Timothy Annett, Mark Schoifet

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