Bristol profit tops forecast; outlook is scaled back
(Reuters) - Bristol-Myers Squibb Co (BMY.N) reported better-than-expected quarterly results on Thursday, lifting its shares 2.5 percent, but scaled back its 2013 earnings forecast following setbacks for several of its experimental drugs.
The company said it expects earnings this year of $1.78 to $1.88 per share before special items. That would represent a decline of as much as 11 percent from 2012, mainly because of generic competition for its Plavix blood clot preventer and Avapro blood pressure treatment.
Although the 2013 forecast is in line with the average Wall Street estimate of $1.83 per share - thanks in part to a highly favorable tax rate this year - the company conceded it would not reach its more ambitious earlier goals.
In March 2010, riding high from approvals of new medicines and confidence in other ones in development, Bristol-Myers said 2013 earnings would be "at minimum $1.95" per share, adding it was "well positioned to deliver on the promise of our pipeline."
"Bristol today finally owned up to what most analysts were already aware, that they are unlikely to hit the minimum guidance they set a couple of years ago," said Atlantic Equities analyst Richard Purkiss. "Various things have made that unlikely."
In January 2012, U.S. regulators rejected dapaglifozin, a new type of treatment for type 2 diabetes, citing safety concerns. Just months later, the company's experimental brivanib oncology drug failed in a late-stage trial to prolong survival in liver cancer patients.
The most spectacular setback came last August, when Bristol-Myers scrapped BMS-986094, a high-profile treatment for hepatitis C, after a patient died of heart failure in a mid-stage trial and others were hospitalized. The company took a charge of $1.8 billion in the 2012 third quarter for the failed medicine. Although the drug would not have reached the market for several years, the failure tarnished the company's research prowess.
Bristol-Myers has agreed to pay $80 million to patients hurt in the hepatitis C study, The Wall Street Journal reported on Thursday. The drugmaker confirmed it had an "agreement in principle" to settle the matter but said terms of the pact were confidential.
Despite its research setbacks, Bristol-Myers shares are trading at 19 times expected 2013 earnings per share, well above the average multiple of 12.5 for other large drugmakers.
Purkiss said the premium is partly warranted because of huge sales potential of Eliquis, a new type of blood clot preventer developed with Pfizer Inc (PFE.N) that was approved by U.S. regulators last month. He said several Bristol-Myers cancer drugs in late-stage trials also have blockbuster sales potential.
"Hopes for those drugs, and Eliquis, could justify a premium, but probably not the current premium," Purkiss said, adding that Bristol-Myers shares could be vulnerable to new setbacks.
The company's new 2013 profit outlook assumes a company tax rate this year of 16 percent, far below a rate of up to 23 percent that some analysts had expected. Bristol-Myers officials said the rate is coming down due to a new federal tax credit for research and development and other factors.
The drugmaker said it earned $925 million, or 56 cents per share, in the fourth quarter, up from $852 million, or 50 cents per share, a year earlier.
Excluding special items, such as a $411 million tax benefit from the write-off of the failed hepatitis C drug, the company earned 47 cents per share. On that basis, analysts' average forecast was 43 cents per share.
Revenue plunged 23 percent to $4.19 billion following U.S. patent expirations last year on Plavix and Avapro. Wall Street had expected $4.12 billion.
Plavix sales plunged 97 percent to $49 million, while Avapro sales fell 57 percent to $84 million. Soaring growth of newer drugs helped cushion those declines.
Sales of arthritis treatment Orencia jumped 26 percent to $325 million, and combined revenue from diabetes drugs Onglyza and Kombiglyze rose 29 percent to $198 million. Leukemia treatment Sprycel rose 24 percent to $281 million. Yervoy, a new treatment for melanoma, grew 47 percent to $211 million.
(Reporting By Ransdell Pierson; Editing by Jilian Mincer, Andrew Hay and John Wallace)
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