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Bristol-Myers Squibb Company (BMY - Free Report) reported better-than-expected results for the third quarter of 2023 and updated its annual outlook for earnings. The company reported adjusted earnings per share of $2, which beat the Zacks Consensus Estimate of $1.76. In the year-ago quarter, BMY posted adjusted earnings per share of $1.99.
Total revenues of $10.97 billion surpassed the Zacks Consensus Estimate of $10.94 billion. However, revenues decreased by 2% from the year-ago period due to generic competition for the multiple myeloma (“MM”) drug Revlimid, partially offset by in-line products (primarily Opdivo) and new product portfolios (primarily Opdualag, Reblozyl and Zeposia).
The company’s shares have lost 21.3% year to date compared with the industry's decline of 22.7%.
Image Source: Zacks Investment Research
BMY stated that it now expects its current new-product portfolio to generate $10 billion in revenues by 2026. The company had earlier expected the same by 2025. Shares are trading down post-earnings release as investors are disappointed with the delay in the time frame by a year.
Quarterly Details
Revenues decreased 4% to $7.6 billion in the United States due to lower sales of Revlimid because of generic erosion and an increase in the number of patients receiving free drug products for Revlimid and, to a lesser extent, Pomalyst, from the company’s patient assistance program. International revenues increased by 2% to $3.3 billion. International revenues increased 1%, primarily due to Opdivo and the new product portfolio, partially offset by lower average net selling prices.
Revenues from in-line and new product portfolios increased by 8% to $9.3 billion.
Total in-line product revenues came in at $8.3 billion. Within this segment, Eliquis’ sales were up 2% to $2.7 billion but missed both the Zacks Consensus Estimate and our model estimate of $2.8 billion. Sales in the United States increased 4% to $1.8 billion. Revenues in international markets declined 2% to $906 million, primarily driven by generic erosion in Canada and the U.K.
Bristol-Myers has a collaboration agreement with Pfizer for Eliquis. The companies collaborated in 2007. Profits and losses are shared equally on a global basis, except in certain countries where Pfizer commercializes Eliquis and pays BMY a sales-based fee.
Sales of the immuno-oncology drug Opdivo, approved for multiple cancer indications, were up 11% year over year to $2.3 billion, beating the Zacks Consensus Estimate by 0.16% and our estimate of $2.2 billion. Sales in the United States grew by 9%. Revenues in the international markets were up 15%, driven by higher demand due to launches in additional indications and growth in core indications.
Another MM drug, Pomalyst, generated sales of $872 million, down 2% year over year.
Sales of the rheumatoid arthritis drug Orencia increased 5% to $925 million.
Leukemia drug Sprycel generated sales of $517 million, down 8% year over year due to a 30% decline in international sales.
Melanoma drug Yervoy contributed $579 million to the top line, up 11% year over year.
New product portfolio revenues were $928 million, up 68% year over year, driven by higher demand for Reblozyl (up 31% to $248 million), Abecma ($93 million), Opdualag ($166 million), Breyanzi ($92 million) and Zeposia ($123 million).
However, Revlimid revenues declined 41% to $1.4 billion from the year-ago quarter due to lower demand due to generic erosion. Revenues surpassed the Zacks Consensus Estimate and our estimate of $1.2 billion. Abraxane revenues were up 47% to $260 million.
Adjusted research and development expenses decreased by 4% to $2.2 billion in the quarter. Adjusted marketing, selling and administrative expenses increased by 4%. Gross margin fell to 77.3% from 79.8% in the quarter.
2023 Guidance Updated
Bristol-Myers expects adjusted earnings of $7.50-$7.65 per share in 2023 (previous guidance: $7.35 - $7.65). Revenues are still anticipated to decrease in low single digits. Revlimid sales are expected to reach $6 billion (previous guidance: $5.5 billion).
In August, BMY entered accelerated share repurchase agreements to repurchase, in aggregate, $4 billion of Bristol Myers Squibb’s common stock. The company anticipates that the final settlement of these transactions will occur during the fourth quarter of 2023.
Mirati Acquisition
BMY announced that it will acquire commercial-stage oncology company Mirati Therapeutics, Inc. for $58.00 per share in cash, amounting to a total equity value of $4.8 billion. In addition to cash, each Mirati stockholder will receive one non-tradeable Contingent Value Right for each share held. This, in turn, will entitle its holder to receive a one-time potential payment of $12.00 in cash, for a total value of approximately $1.0 billion.
The payment is contingent upon a potential FDA acceptance of a new drug application for MRTX1719 for treating either locally advanced or metastatic non-small cell lung cancer in patients who have received no more than two prior lines of systemic therapy within seven years after the merger's closing.
The acquisition will be completed by the first half of 2024, subject to the receipt of required regulatory approvals. The transaction is expected to dilute Bristol Myers’ bottom line (non-GAAP) by approximately $0.35 per share in the first 12 months after closing.
Our Take
Bristol-Myers reported better-than-expected third-quarter results. However, BMY stated that it now expects its current new-product portfolio to generate $10 billion in revenues by 2026. The company had earlier expected the same by 2025.
Zacks Rank & Stocks to Consider
Bristol-Myers currently carries a Zacks Rank #3 (Hold).
Estimate for Dynavax for 2023 has narrowed to a loss of 22 cents per share from a loss of 51 cents in the past 90 days. Earnings estimate for 2024 is pinned at 8 cents per share in the same time frame.
Estimate for Acadia for 2023 have narrowed to a loss of 37 cents per share from a loss of 41 cents in the past 60 days. Earnings estimate for 2024 is pegged at 68 cents per share in the same time frame. The stock has improved 41.8% year to date.
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Bristol-Myers (BMY) Q3 Earnings & Sales Beat, Opdivo Sales Grow
Bristol-Myers Squibb Company (BMY - Free Report) reported better-than-expected results for the third quarter of 2023 and updated its annual outlook for earnings. The company reported adjusted earnings per share of $2, which beat the Zacks Consensus Estimate of $1.76. In the year-ago quarter, BMY posted adjusted earnings per share of $1.99.
Total revenues of $10.97 billion surpassed the Zacks Consensus Estimate of $10.94 billion. However, revenues decreased by 2% from the year-ago period due to generic competition for the multiple myeloma (“MM”) drug Revlimid, partially offset by in-line products (primarily Opdivo) and new product portfolios (primarily Opdualag, Reblozyl and Zeposia).
The company’s shares have lost 21.3% year to date compared with the industry's decline of 22.7%.
Image Source: Zacks Investment Research
BMY stated that it now expects its current new-product portfolio to generate $10 billion in revenues by 2026. The company had earlier expected the same by 2025. Shares are trading down post-earnings release as investors are disappointed with the delay in the time frame by a year.
Quarterly Details
Revenues decreased 4% to $7.6 billion in the United States due to lower sales of Revlimid because of generic erosion and an increase in the number of patients receiving free drug products for Revlimid and, to a lesser extent, Pomalyst, from the company’s patient assistance program. International revenues increased by 2% to $3.3 billion. International revenues increased 1%, primarily due to Opdivo and the new product portfolio, partially offset by lower average net selling prices.
Revenues from in-line and new product portfolios increased by 8% to $9.3 billion.
Total in-line product revenues came in at $8.3 billion. Within this segment, Eliquis’ sales were up 2% to $2.7 billion but missed both the Zacks Consensus Estimate and our model estimate of $2.8 billion. Sales in the United States increased 4% to $1.8 billion. Revenues in international markets declined 2% to $906 million, primarily driven by generic erosion in Canada and the U.K.
Bristol-Myers has a collaboration agreement with Pfizer for Eliquis. The companies collaborated in 2007. Profits and losses are shared equally on a global basis, except in certain countries where Pfizer commercializes Eliquis and pays BMY a sales-based fee.
Sales of the immuno-oncology drug Opdivo, approved for multiple cancer indications, were up 11% year over year to $2.3 billion, beating the Zacks Consensus Estimate by 0.16% and our estimate of $2.2 billion. Sales in the United States grew by 9%. Revenues in the international markets were up 15%, driven by higher demand due to launches in additional indications and growth in core indications.
Another MM drug, Pomalyst, generated sales of $872 million, down 2% year over year.
Sales of the rheumatoid arthritis drug Orencia increased 5% to $925 million.
Leukemia drug Sprycel generated sales of $517 million, down 8% year over year due to a 30% decline in international sales.
Melanoma drug Yervoy contributed $579 million to the top line, up 11% year over year.
New product portfolio revenues were $928 million, up 68% year over year, driven by higher demand for Reblozyl (up 31% to $248 million), Abecma ($93 million), Opdualag ($166 million), Breyanzi ($92 million) and Zeposia ($123 million).
However, Revlimid revenues declined 41% to $1.4 billion from the year-ago quarter due to lower demand due to generic erosion. Revenues surpassed the Zacks Consensus Estimate and our estimate of $1.2 billion. Abraxane revenues were up 47% to $260 million.
Adjusted research and development expenses decreased by 4% to $2.2 billion in the quarter. Adjusted marketing, selling and administrative expenses increased by 4%. Gross margin fell to 77.3% from 79.8% in the quarter.
2023 Guidance Updated
Bristol-Myers expects adjusted earnings of $7.50-$7.65 per share in 2023 (previous guidance: $7.35 - $7.65). Revenues are still anticipated to decrease in low single digits. Revlimid sales are expected to reach $6 billion (previous guidance: $5.5 billion).
In August, BMY entered accelerated share repurchase agreements to repurchase, in aggregate, $4 billion of Bristol Myers Squibb’s common stock. The company anticipates that the final settlement of these transactions will occur during the fourth quarter of 2023.
Mirati Acquisition
BMY announced that it will acquire commercial-stage oncology company Mirati Therapeutics, Inc. for $58.00 per share in cash, amounting to a total equity value of $4.8 billion. In addition to cash, each Mirati stockholder will receive one non-tradeable Contingent Value Right for each share held. This, in turn, will entitle its holder to receive a one-time potential payment of $12.00 in cash, for a total value of approximately $1.0 billion.
The payment is contingent upon a potential FDA acceptance of a new drug application for MRTX1719 for treating either locally advanced or metastatic non-small cell lung cancer in patients who have received no more than two prior lines of systemic therapy within seven years after the merger's closing.
The acquisition will be completed by the first half of 2024, subject to the receipt of required regulatory approvals. The transaction is expected to dilute Bristol Myers’ bottom line (non-GAAP) by approximately $0.35 per share in the first 12 months after closing.
Our Take
Bristol-Myers reported better-than-expected third-quarter results. However, BMY stated that it now expects its current new-product portfolio to generate $10 billion in revenues by 2026. The company had earlier expected the same by 2025.
Zacks Rank & Stocks to Consider
Bristol-Myers currently carries a Zacks Rank #3 (Hold).
A couple of better-ranked stocks in the healthcare industry are Dynavax Technologies (DVAX - Free Report) and Acadia Pharmaceuticals (ACAD - Free Report) . DVAX currently sports a Zacks Rank #1 (Strong Buy) and ACAD carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Estimate for Dynavax for 2023 has narrowed to a loss of 22 cents per share from a loss of 51 cents in the past 90 days. Earnings estimate for 2024 is pinned at 8 cents per share in the same time frame.
Estimate for Acadia for 2023 have narrowed to a loss of 37 cents per share from a loss of 41 cents in the past 60 days. Earnings estimate for 2024 is pegged at 68 cents per share in the same time frame. The stock has improved 41.8% year to date.