February 3, 2017
By Mark Terry, BioSpace.com Breaking News Staff
At its fourth-quarter conference call, executives from Bristol-Myers Squibb found themselves on the defensive, describing the competition from three other big players. Keith Speights, writing for The Motley Fool, discusses what Bristol-Myers had to say about Merck , Roche and Gilead Sciences .
On January 20, Merck agreed to pay $625 million and royalties to Bristol-Myers Squibb and Ono Pharmaceutical Co. over a patent suit over Merck’s Keytruda. All patent litigation is dismissed and the two companies agreed to grant certain patent rights to each other. In addition, Merck will pay royalties to Bristol-Myers on global Keytruda sales worth 6.5 percent between 2017 and the end of 2023. From 2024 to 2026, those royalties drop to 2.5 percent. There is a 75/25 royalty split between Bristol-Myers and Ono.
Clearly, though, Bristol-Myers is concerned about competition from Keytruda for its own Opdivo. Speights writes, “Murdo Gordon, Bristol-Myers Squibb’s chief commercial officer, was asked point-blank how the company would defend Opdivo against Keytruda if the drug gains approval as a first-line treatment for lung cancer. Gordon acknowledged that BMS was assuming Merck will win a thumbs-up from the FDA and said, ‘that clearly puts our lung business under some pressure going forward.’”
But BMS is studying Opdivo in numerous combination studies, which it hopes will broaden its market and help fend off competition.
While Merck is hot on BMS’s heels in the lung cancer market, it’s not the only one. Roche ’s Tecentriq was eating into Opdivo’s market share for second-line lung cancer treatment. Speights writes, “Gordon said Bristol-Myers Squibb ended 2016 with around a 40 percent share of the second-line market, which was in line with the company’s expectations. He added later that Tecentriq took 10 percent of market share away from Opdivo in the fourth quarter.”
Although Roche hasn’t disclosed Tecentriq sales figures yet, analysts project its sales for bladder cancer could hit $70 million. Shobhit Seth, writing for Investopedia on January 30, said, “The success of Roche’s Tecentriqu has forced rival Bristol-Myers to cut its 2017 earnings forecast. Bristol-Myers has acknowledged that Tecentriq ‘is grabbing market share from its I/O drug Opdivo for second-line non-small-cell lung cancer.’”
Speights writes, “Bristol-Myers Squibb’s fourth-quarter numbers looked good overall. However, a glaring weak spot was with its hepatitis C virus (HCV) franchise. Sales fell off a cliff in the fourth quarter, coming in 51 percent below the prior-year period.”
Basically, the company said it was getting beat up by Gilead ’s new Epclusa for HCV. And BMS had decided to stop all promotional activities for its own HCV franchise in the U.S., which will likely cut sales even further. In a lot of ways, it sounds like BMS is abandoning its HCV market, even though sales didn’t falter as badly in Europe, although it expects it will.
All of which sounds bad, but the annual report was pretty good. Fourth quarter revenues rose 22 percent to $5.2 billion, and 17 percent for the full year to $19.4 billion. It’s fourth-quarter GAAP earnings per share (EPS) rose $0.53 and Non-GAAP EPS rose $0.63. The Merck litigation is done and royalties will be incoming. Opdivo was approved in the U.S. for metastatic squamous cell carcinoma of the head and neck and in Europe for classical Hodgkin Lymphoma.
“Bristol-Myers Squibb achieved outstanding operating and financial results in 2016, driven by strong commercial performance across our portfolio,” said Giovanni Caforio, the company’s chief executive officer, in a statement. “In 2017, we will continue to advance our pipeline, drive strong commercial execution across the business and progress our broad portfolio of Immuno-Oncology medicines.”
