Bristol-Myers Squibb Co (BMY.N) reported higher-than-expected quarterly earnings, helped by cost cuts and lower taxes, but sparked concerns over a possible delay in completing its marketing application for a high-profile cancer drug.
Shares of the U.S. drugmaker, whose sales missed Wall Street estimates, were down 3.6 percent at $48.54 in afternoon trading on Tuesday.
Bristol-Myers said it had earned $937 million, or 56 cents per share, in the first quarter, compared with $609 million, or 37 cents per share, a year earlier.
Excluding gains from the recent sale of its diabetes drug business to longtime partner AstraZeneca Plc (AZN.L) and other special items, Bristol-Myers earned 46 cents per share. Analysts on average were expecting 43 cents, according to Thomson Reuters
Bristol-Myers said it would begin its U.S. marketing application for lung cancer treatment nivolumab within a few days but would not complete the "rolling submission" of clinical trial data until the end of the year.
Sanford Bernstein analyst Tim Anderson said the prolonged submission process implied a slight delay and that the U.S. Food and Drug Administration might be requiring more clarity on results from of the study.
"Bristol-Myers would not provide details on what exactly the FDA might want to see," Anderson said in a research note. But the company, in a conference call with industry analysts, said trial results suggested there were lasting responses to nivolumab among patients receiving it.
Deemed a potential blockbuster, nivolumab is a member of a promising new class of cancer treatments called PD1 inhibitors, which allow the immune system to recognize cancer cells and go after them.
Despite the year-end timeline for completing the marketing application, JPMorgan analyst Chris Schott said he remained confident in nivolumab and other immuno-oncology drugs that have become Bristol-Myers' biggest focus.
"In our view, nivolumab development and the broader immuno-oncology opportunity remain the core story for Bristol-Myers shares," Schott said.
Bristol-Myers raised the lower end of its 2014 profit forecast to $1.70 a share, excluding special items, from $1.65 while keeping the top end at $1.80.
First-quarter sales fell 1 percent to $3.81 billion, about $80 million shy of Wall Street expectations.
Sales of leukemia treatment Sprycel rose 26 percent to $342 million, while sales of melanoma treatment Yervoy fell 8 percent to $271 million. Rheumatoid arthritis treatment Orencia rose 7 percent to $363 million.
AWAY FROM MEGA-DEAL FRAY
A kind of merger fever seems to have swept the drug industry in the past week, with Pfizer Inc (PFE.N) on Monday disclosing it had been rebuffed after offering to pay almost $100 billion to acquire AstraZeneca.
Last week, Canada's Valeant Pharmaceuticals (VRX.TO) and activist investor Bill Ackman said they had made an unsolicited $47 billion bid to buy Botox maker Allergan Inc (AGN.N).
By contrast, Bristol-Myers is known for steadily pursuing smaller deals, which it calls its "string of pearls" strategy.
In keeping with that pattern, Bristol-Myers on Tuesday said it would spend $175 million to buy privately held iPierian and its early-stage drugs to treat neurodegenerative diseases, including palsy. The purchase price ultimately could include up to $550 million more in milestone payments, plus royalties.
(Reporting by Ransdell Pierson, Editing by Franklin Paul and Lisa Von Ahn)