Good News for BMY Pipeline

Recently, Bristol-Myers Squibb Co.’s (BMY - Analyst Report) pipeline received a boost when the US Food and Drug Administration (FDA) accepted the Biologics License Application (BLA) for oncology candidate, ipilimumab. Furthermore, the agency has decided to review the application on a priority basis.

Bristol-Myers acquired full ownership rights to ipilimumab through the Medarex acquisition in 2009. Bristol-Myers is seeking approval for the treatment of adults suffering from advanced melanoma who have undergone at least one previous therapy.

The US regulatory authority generally reviews those drugs on a priority basis, which offer major advances in treating diseases having no adequate therapy. Applications for priority review designated drugs are reviewed by the FDA within six months of submission instead of the usual ten months. Based on that criterion, a response from the FDA should be out in the fourth quarter of 2010 (projected target date: Dec 25, 2010).

We remind investors that in June 2010, Bristol-Myers presented positive data on ipilimumab at the American Society of Clinical Oncology in previously treated metastatic melanoma patients. Based on the data, the company filed for approval of the candidate in Europe and the US. The European application has already been accepted. The candidate is also under review in other countries for the same indication.

Ipilimumab, which is also being evaluated for other indications, is Bristol-Myers’ second drug to be granted priority review status by the FDA this year. Earlier in the year, leukemia drug Sprycel (dasatinib) was granted similar status in the US with a target date of Oct 28, 2010.

Our Take & Recommendation

We believe that ipilimumab’s approval will broaden the treatment opportunities for patients suffering from the disease and further boost Bristol-Myers’ top line. It is estimated that melanoma, characterized by the uncontrolled growth of pigment-producing cells (melanocytes) in the skin, resulted in 8,700 deaths in the US in 2009. The incidence of the disease is on the rise.

Even though patent expirations loom large on Bristol-Myers in the near future, we believe the company has taken some measures – like the Medarex acquisition, among others – to counter the loss of revenues resulting from the genericization of its key drugs.

The company intends to launch five compounds – apixaban, belatacept, brivanib, dapagliflozin and ipilimumab – by 2012. However, given the present scenario, we believe the ipilimumab launch will be earlier than 2012. The new launches are expected to drive growth and fill the void left by the loss of exclusivity of key drugs at Bristol.

Bristol-Myers currently has a Zacks #3 Rank, which translates into a short-term Hold rating. We are also Neutral on the stock in the long term. Our Neutral stance indicates that the stock is expected to perform in line with the US equity market over the next 6+ months. We advise investors to retain the stock over the time period.

Read the full analyst report on BMY