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Bristol-Myers Squibb Company’s (BMY - Free Report) fourth-quarter 2018 earnings of 94 cents per share exceeded the Zacks Consensus Estimate of 85 cents and the year-ago quarter earnings of 68 cents.
Total revenues of $5.97 billion marginally lagged the Zacks Consensus Estimate of $5.98 billion but increased 10% from $5.45 billion recorded in the year-ago period. Continued strong sales of Opdivo and Eliquis contributed to the top line in the reported quarter, offsetting a decline in sales of virology and hepatitis franchises.
Revenues for full-year 2018 were $22.6 billion, up 9% from the year-ago period. Earnings per share rose 32% to $3.98. In January, the company announced an agreement to acquire another leading biotech player, Celgene Corporation , for a whopping $74 billion.
However, the company announced the voluntary withdrawal of label expansion application for Opdivo in first-line ling cancer, which pulled shares of the company down almost 3% in pre-market trading. Bristol-Myers’ shares have declined 15.4% in the past six months against the industry’s increase of 2.8%.
Quarterly Details
Revenues were up 12% year over year when adjusted for foreign exchange impact. Revenues increased 16% to $3.3 billion in the United States and 3% outside the country. Ex-U.S. revenues were up 7% when adjusted for foreign exchange impact.
Opdivo, which is approved for multiple cancer indications, continued its impressive performance with sales up 33% year over year to $1.8 billion and became the top revenue generator for the company. Cardiovascular drug, Eliquis, also witnessed strong growth. Sales of the drug rose 25% to $1.71 billion. Sales of Opdivo and Eliquis rose 43% and 27%, respectively, in the United States.
Leukemia drug, Sprycel raked in sales of $536 million, up 2% year over year. U.S. sales of the drug remained almost flat at $300 million.
Sales of rheumatoid arthritis drug, Orencia, were up 10% in fourth-quarter 2018 to $731 million. Melanoma drug, Yervoy, contributed $384 million to the top line during the reported quarter, up 43%. U.S. sales of the drug were up 51% to $273 million.
Multiple myeloma drug, Empliciti recorded sales of $69 million, up 10% year over year.
However, the performance of key drugs in the Virology unit continues to disappoint. Sales of Baraclude declined 29% to $165 million. The Sustiva and Reyataz franchises deteriorated 69% and 31% year over year to $54 million and $99 million, respectively. Sales at the Hepatitis C franchise fell 93%.
Adjusted research and development (R&D) expenses in the quarter were down 3.8% to $1.36 billion. Adjusted marketing, selling and administrative expenses increased 1.5% to $1.34 billion.
Gross margin was 71.7% in the quarter compared with 69.2% in the year-ago quarter. The year-ago period results included an inventory charge.
Regulatory Update
In the press release, the company announced the voluntary withdrawal of the supplemental Biologics License Application (sBLA) seeking approval of Opdivo+Yervoy as a treatment for first-line non-small cell lung cancer with tumor mutational burden ≥10 mutations/megabase following discussions with the FDA. In October, the FDA had extended the action date by three months for the sBLA to May 2019 upon submission of updated overall survival (“OS”) data by the company.
Bristol-Myers stated that further evidence is required to understand the relationship of TMB and PD-L1 and evaluate Opdivo’s impact on improving OS in the patient population. The analysis can be done upon receiving final data from part Ia of the Checkmate-227 study, which is expected in the first half of 2019. However, it will be available after May, beyond the review period for the sBLA, which resulted in the withdrawal.
In January, Opdivo+Yervoy received approval in Europe for treating patients with intermediate- and poor-risk advanced renal cell carcinoma in first-line setting. The FDA approved a label expansion of Sprycel in the same month to include pediatric patients one year of age or older with newly diagnosed Philadelphia chromosome-positive (Ph+) acute lymphoblastic leukemia (ALL) in combination with chemotherapy. In December, the Committee for Medicinal Products for Human Use recommended the approval of the drug in similar indication in Europe.
In November, Empliciti’s label was expanded to include third or later-line multiple myeloma in adult patients. The drug was approved in combination with pomalidomide and dexamethasone.
Acquisitions
In January, Bristol-Myers announced that it will acquire Celgene in a cash and stock transaction. The acquisition is expected to be 40% accretive to the bottom line on a standalone basis in the first full year and result in cost synergies of approximately $2.5 billion by 2022. The merged entity will generate more than $45 billion in cash flow over the first three full years.
Pipeline Update
In November, the company announced the failure of the phase III CheckMate-451 study evaluating Opdivo in combination with Yervoy as a maintenance therapy in patients with extensive-stage small cell lung cancer without disease progression after completion of first-line platinum-based chemotherapy.
2019 Guidance Reiterated
Bristol-Myers reiterated its adjusted earnings and revenue expectations for 2019. The company projects earnings in the range of $4.10 to $4.20 per share. The Zacks Consensus Estimate for earnings is pegged at $4.14. The company expects worldwide revenues to increase in mid-single digits.
Our Take
We remain positive on the company’s performance as Bristol-Myers continues to beat earnings expectations, primarily on robust sales of Opdivo and Eliquis. We are also encouraged by Bristol-Myers’ efforts to develop its pipeline, especially Opdivo. Several label expansion applications for Opdivo are under review in the United States and Europe. These, if approved, will further boost the prospects of this blockbuster drug. However, failure of the drug and withdrawal of a label expansion application in first-line lung cancer are hampering the prospects of the drug. It is falling behind Merck’s (MRK - Free Report) Keytruda, which is already approved for the lucrative indication.
Bristol-Myers Squibb Company Price, Consensus and EPS Surprise
Lilly’s 2018 earnings per share estimates remained stable at $5.58 for 2018 and moved up from $5.79 to $5.87 for 2019 in the last 60 days. The company delivered a positive earnings surprise in all of the trailing four quarters, with the average being 10.03%. Share price of the company has increased 23.2% in the past six months.
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It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
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Bristol-Myers (BMY) Beats Q4 Earnings, Withdraws Opdivo sBLA
Bristol-Myers Squibb Company’s (BMY - Free Report) fourth-quarter 2018 earnings of 94 cents per share exceeded the Zacks Consensus Estimate of 85 cents and the year-ago quarter earnings of 68 cents.
Total revenues of $5.97 billion marginally lagged the Zacks Consensus Estimate of $5.98 billion but increased 10% from $5.45 billion recorded in the year-ago period. Continued strong sales of Opdivo and Eliquis contributed to the top line in the reported quarter, offsetting a decline in sales of virology and hepatitis franchises.
Revenues for full-year 2018 were $22.6 billion, up 9% from the year-ago period. Earnings per share rose 32% to $3.98. In January, the company announced an agreement to acquire another leading biotech player, Celgene Corporation , for a whopping $74 billion.
However, the company announced the voluntary withdrawal of label expansion application for Opdivo in first-line ling cancer, which pulled shares of the company down almost 3% in pre-market trading. Bristol-Myers’ shares have declined 15.4% in the past six months against the industry’s increase of 2.8%.
Quarterly Details
Revenues were up 12% year over year when adjusted for foreign exchange impact. Revenues increased 16% to $3.3 billion in the United States and 3% outside the country. Ex-U.S. revenues were up 7% when adjusted for foreign exchange impact.
Opdivo, which is approved for multiple cancer indications, continued its impressive performance with sales up 33% year over year to $1.8 billion and became the top revenue generator for the company. Cardiovascular drug, Eliquis, also witnessed strong growth. Sales of the drug rose 25% to $1.71 billion. Sales of Opdivo and Eliquis rose 43% and 27%, respectively, in the United States.
Leukemia drug, Sprycel raked in sales of $536 million, up 2% year over year. U.S. sales of the drug remained almost flat at $300 million.
Sales of rheumatoid arthritis drug, Orencia, were up 10% in fourth-quarter 2018 to $731 million. Melanoma drug, Yervoy, contributed $384 million to the top line during the reported quarter, up 43%. U.S. sales of the drug were up 51% to $273 million.
Multiple myeloma drug, Empliciti recorded sales of $69 million, up 10% year over year.
However, the performance of key drugs in the Virology unit continues to disappoint. Sales of Baraclude declined 29% to $165 million. The Sustiva and Reyataz franchises deteriorated 69% and 31% year over year to $54 million and $99 million, respectively. Sales at the Hepatitis C franchise fell 93%.
Adjusted research and development (R&D) expenses in the quarter were down 3.8% to $1.36 billion. Adjusted marketing, selling and administrative expenses increased 1.5% to $1.34 billion.
Gross margin was 71.7% in the quarter compared with 69.2% in the year-ago quarter. The year-ago period results included an inventory charge.
Regulatory Update
In the press release, the company announced the voluntary withdrawal of the supplemental Biologics License Application (sBLA) seeking approval of Opdivo+Yervoy as a treatment for first-line non-small cell lung cancer with tumor mutational burden ≥10 mutations/megabase following discussions with the FDA. In October, the FDA had extended the action date by three months for the sBLA to May 2019 upon submission of updated overall survival (“OS”) data by the company.
Bristol-Myers stated that further evidence is required to understand the relationship of TMB and PD-L1 and evaluate Opdivo’s impact on improving OS in the patient population. The analysis can be done upon receiving final data from part Ia of the Checkmate-227 study, which is expected in the first half of 2019. However, it will be available after May, beyond the review period for the sBLA, which resulted in the withdrawal.
In January, Opdivo+Yervoy received approval in Europe for treating patients with intermediate- and poor-risk advanced renal cell carcinoma in first-line setting. The FDA approved a label expansion of Sprycel in the same month to include pediatric patients one year of age or older with newly diagnosed Philadelphia chromosome-positive (Ph+) acute lymphoblastic leukemia (ALL) in combination with chemotherapy. In December, the Committee for Medicinal Products for Human Use recommended the approval of the drug in similar indication in Europe.
In November, Empliciti’s label was expanded to include third or later-line multiple myeloma in adult patients. The drug was approved in combination with pomalidomide and dexamethasone.
Acquisitions
In January, Bristol-Myers announced that it will acquire Celgene in a cash and stock transaction. The acquisition is expected to be 40% accretive to the bottom line on a standalone basis in the first full year and result in cost synergies of approximately $2.5 billion by 2022. The merged entity will generate more than $45 billion in cash flow over the first three full years.
Pipeline Update
In November, the company announced the failure of the phase III CheckMate-451 study evaluating Opdivo in combination with Yervoy as a maintenance therapy in patients with extensive-stage small cell lung cancer without disease progression after completion of first-line platinum-based chemotherapy.
2019 Guidance Reiterated
Bristol-Myers reiterated its adjusted earnings and revenue expectations for 2019. The company projects earnings in the range of $4.10 to $4.20 per share. The Zacks Consensus Estimate for earnings is pegged at $4.14. The company expects worldwide revenues to increase in mid-single digits.
Our Take
We remain positive on the company’s performance as Bristol-Myers continues to beat earnings expectations, primarily on robust sales of Opdivo and Eliquis. We are also encouraged by Bristol-Myers’ efforts to develop its pipeline, especially Opdivo. Several label expansion applications for Opdivo are under review in the United States and Europe. These, if approved, will further boost the prospects of this blockbuster drug. However, failure of the drug and withdrawal of a label expansion application in first-line lung cancer are hampering the prospects of the drug. It is falling behind Merck’s (MRK - Free Report) Keytruda, which is already approved for the lucrative indication.
Bristol-Myers Squibb Company Price, Consensus and EPS Surprise
Bristol-Myers Squibb Company Price, Consensus and EPS Surprise | Bristol-Myers Squibb Company Quote
Zacks Rank & Stock to Consider
Bristol-Myers currently carries a Zacks Rank #3 (Hold). Eli Lilly and Company (LLY - Free Report) is a better-ranked stock in the pharma sector carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Lilly’s 2018 earnings per share estimates remained stable at $5.58 for 2018 and moved up from $5.79 to $5.87 for 2019 in the last 60 days. The company delivered a positive earnings surprise in all of the trailing four quarters, with the average being 10.03%. Share price of the company has increased 23.2% in the past six months.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>