By Ransdell Pierson
Jan 24 Bristol-Myers Squibb Co on Friday
reported stronger-than-expected quarterly results, but its
shares fell because of investors' jitters about the pace at
which the company is developing a promising new combination of
The stock dropped as much as 6.7 percent after company
officials said on a conference call with investors that they
were not yet planning a late-stage trial that would combine two
of its high-profile drugs as a treatment for lung cancer.
Instead, Bristol-Myers said it would continue a mid-stage
study of the drugs - an experimental medicine called nivolumab
and an approved melanoma treatment called Yervoy - before moving
them into a larger Phase III lung cancer trial. Both drugs
enhance the immune system's ability to fight cancer.
"Many investors expected Bristol-Myers to rapidly advance
the Nivo-Yervoy combo to Phase III, with the plans for such a
move perhaps being announced as early as today," BMO analyst
Alex Arfaei said in a research note.
The company's slower timetable might be interpreted as a
sign of caution or suggest a lack of "synergy" between the two
drugs when targeting lung cancer, he said.
Results of the mid-stage trial, called Checkmate-012, are
expected to be released at a cancer meeting in late May or early
"We believe today's news is incrementally positive for Merck
& Co," Arfaei said, which is developing a rival drug in
the same PD-1 inhibitor class as nivolumab.
Shares of Bristol were down 3.7 percent at $51.93 in
afternoon trading after dropping as low as $50.35. Merck was up
0.2 percent at $51.71 amid a sharp downturn for the broad stock
ELIQUIS SALES JUMP
In announcing its fourth-quarter results, Bristol-Myers said
it had benefited from cost cuts and growing sales of its
treatments for cancer, blood clots and diabetes.
Sales increased sharply for Eliquis, a closely watched new
blood clot preventer, but the product is off to a far slower
start than Wall Street had hoped.
Eliquis, which is used to prevent strokes among patients
with an irregular heartbeat condition called atrial
fibrillation, generated sales of $71 million, up from $41
million in the prior quarter.
But when the pill was approved in late 2012, analysts had
predicted sales would eventually reach $3 billion to $5 billion
"We're waiting for Eliquis to hit an inflection point, but
it hasn't hit that big pop yet," said Morningstar analyst Damien
Conover. "It will still get there, to $5 billion."
Eliquis, which Bristol-Myers markets with Pfizer Inc
, proved safer and more effective in clinical trials than
the standard oral treatment, warfarin, in preventing strokes
among patients with atrial fibrillation.
Many patients instead are taking two new blood clot
preventers that were approved before Eliquis - Pradaxa from
Boehringer Ingelheim and Xarelto from Johnson & Johnson
and Bayer AG. But many industry analysts and doctors
consider Eliquis to be the best of the new crop of oral agents.
Other Bristol-Myers drugs that stood out in the quarter
include Yervoy, whose sales rose 23 percent to $260 million, and
leukemia treatment Sprycel, whose sales jumped 30 percent to
$365 million. And sales of HIV treatment Sustiva increased 11
percent to $427 million.
COST CUTS DELIVER
The company reported quarterly earnings of $726 million, or
44 cents per share. That compares with $925 million, or 56 cents
per share, in the year-earlier period, when it took a big
write-off for a failed hepatitis C drug.
Excluding special items, the profit was 51 cents per share,
above the analysts' average estimate of 43 cents, according to
Thomson Reuters I/B/E/S.
Revenue rose 6 percent to $4.44 billion, topping Wall Street
expectations of $4.3 billion.
Marketing, selling and administrative expenses fell 7
percent, and research spending shrank 12 percent.
"Bristol-Myers' execution on cost structure continues to
impress, with lower-than-expected spending" that helped the
company handily beat earnings estimates, Leerink Swann analyst
Seamus Fernandez said.
Bristol said it still expected 2014 earnings of $1.65 to
$1.80 per share, excluding special items. The forecast assumes
current foreign exchange rates and the closing of a deal with
British drugmaker AstraZeneca Plc in the first quarter.
AstraZeneca last month agreed to buy Bristol-Myers' stake in
a longstanding diabetes joint venture between the two drugmakers
for an initial $2.7 billion, up to $1.4 billion in additional
milestone payments, and royalties on net sales through 2025.
The joint venture includes oral medicines Onglyza,
Kombiglyze and Forxiga, as well as injectable treatments
Bydureon and Byetta.
The sale will give Bristol more funds to invest in other
areas, such as cancer.