(Reuters) - Bristol-Myers Squibb Co (BMY.N) reported a 7 percent increase in third-quarter revenue as sales of key drugs met Wall Street expectations, but earnings fell short due to higher costs and an inventory write-off, sending shares down 4 percent.
Sales of cancer immunotherapy Opdivo rose 39 percent to $1.27 billion, in line with the average estimate of $1.21 billion, while sales of blood thinner Eliquis rose 38 percent to $1.23 billion, matching analyst estimates.
The company said it expects to have final data in the first half of next year from a key trial of Opdivo as a treatment for newly-diagnosed lung cancer patients. Bristol has faced pressure from investors after losing ground to rival Merck & Co’s (MRK.N) cancer immunotherapy Keytruda.
Excluding one-time items, the drugmaker said it earned 75 cents a share in the third quarter, compared with the 77 cents a share average analyst estimate, as compiled by Thomson Reuters I/B/E/S.
“The bottom-line miss was due primarily to lower gross margin, resulting from changes in product mix and inventory,” Leerink analyst Seamus Fernandez said in a research note.
Bristol said its gross margin as a percentage of revenue fell to 70.1 percent from 73.5 percent a year earlier due to product mix and higher costs, including a $70 million write-off of inventory for hepatitis C products.
Stronger sales of Eliquis hurt the company’s overall profit margin, since the blood thinner is co-marketed with Pfizer Inc (PFE.N).
Research and development costs for the quarter rose 36 percent to $1.5 billion, while the company’s effective tax rate increased to 27.6 percent from 22.1 percent in part due to the hurricane in Puerto Rico, where Bristol operates two manufacturing plants.
Looking ahead, Bristol raised its full-year outlook for adjusted earnings per share by 5 cents to between $2.90 and $3.00. But the drugmaker lowered its net EPS outlook to a range of $2.36 to $2.46 from $2.66 to $2.76, citing higher research and development costs and taxes.
Overall third-quarter revenue rose 7 percent to $5.25 billion, meeting Wall Street estimates.
Net earnings rose to $845 million, or 51 cents a share, from $384 million, or 24 cents a share, a year earlier.
Shares of Bristol were down $2.62, or 4 percent, at $61.38 on the New York Stock Exchange.
Reporting by Deena Beasley; editing by Jason Neely and David Gregorio