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Bristol-Myers Squibb Company (BMY - Analyst Report) recently presented encouraging data from a late-stage study (AMPLE: n=646), which evaluated the efficacy of the subcutaneous formulation of its rheumatoid arthritis (RA) drug Orencia versus Abbott Laboratories’ (ABT - Analyst Report) anti-inflammatory drug Humira. The data was presented at the European League Against Rheumatism (EULAR) annual European congress of rheumatology.

The randomized, investigator-blinded multinational head-to-head study compared the efficacy of both the drugs in combination with methotrexate as a first-line therapy in patients suffering from moderate-to-severe RA. Data revealed that treatment with Orencia was as effective as that by Humira. Effectiveness was measured by the criteria laid down by the American College of Rheumatology – ACR20 response at 1 year. While 64.8% patients in the Orencia arm met the criteria, 63.4% did so in the Humira arm.

We note that the US Food and Drug Administration (FDA) cleared the subcutaneous formulation of Orencia last year. Only the intravenous version was available prior to that. Even though pleased with the positive data on Orencia, we believe that investor focus will remain on how Bristol-Myers fares following the US loss of exclusivity of its blockbuster blood thinner Plavix on May 17, 2012.

Bristol-Myers has co-developed Plavix with Sanofi (SNY - Analyst Report). The loss of exclusivity is likely to result in substantial revenue losses for Bristol-Myers. Companies such as Mylan Inc. (MYL - Analyst Report) and Dr. Reddy’s Laboratories (RDY - Analyst Report) have already launched their respective generic versions of the drug.

Bristol-Myers is looking to combat the generic threat through partnering deals and acquisitions. Apart from acquisitions and partnership deals, Bristol-Myers is looking to introduce new products to augment its product portfolio to combat the generic threat. Bristol-Myers has met with a fair amount of success towards achieving this objective. Many new products were launched/ approved in 2011.

A key action date is coming up at Bristol-Myers later this month when the FDA is scheduled to decide on blood thinner Eliquis, co-developed with Pfizer Inc. (PFE - Analyst Report), for preventing stroke in patients suffering from atrial fibrillation. Positive news from the FDA will help boost the stock.

Our Recommendation

We currently have a Neutral recommendation on Bristol-Myers. The stock carries a Zacks #3 Rank (Hold rating) in the short run.

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