FDA Reviewing Bristol Drug

Yesterday, Bristol-Myers Squibb Company (BMY - Analyst Report) announced the acceptance of a biologic license application (BLA) for belatacept by the U.S. Food and Drug Administration (FDA). The candidate is in late-stage development for treating kidney transplant patients. The agency has set May 1, 2010, as the Prescription Drug User Fee Act (PDUFA) action date.

The biological product is being developed internally and is a fusion protein with novel immunosuppressive activity targeted to prevent solid organ transplant rejection. The company owns a patent covering belatacept as a composition of matter which expires in the U.S. in 2021.

We believe that the candidate can prove to be a suitable alternative for transplant patients in this market with huge unmet medical needs. The market encompasses therapies that must be taken lifelong, ensuring a steady stream of revenue throughout a drug’s life cycle. Another attractive feature is that it can serve as a gateway to other, potentially more lucrative markets.

Bristol-Myers possesses a strong product portfolio with an attractive mid-to-late-stage pipeline. However, patent expirations loom large on Bristol starting 2011 when the Plavix patent expires. In order to compensate for the loss in revenues when Plavix loses exclusivity, Bristol-Myers is working on bringing new products to market.

Further, Plavix faces competition from Eli Lilly’s (LLY - Analyst Report) recently launched Effient. Additionally, management is working hard to reduce costs and shed less profitable and non-core businesses. We believe the company could be an attractive takeover candidate for a larger pharma name such as Sanofi-Aventis (SNY - Analyst Report) or AstraZeneca (AZN - Analyst Report). We have an Outperform rating on the stock.

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