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Bristol-Myers (BMY) Beats on Q2 Earnings, Raises Outlook
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Bristol-Myers Squibb Company’s (BMY - Free Report) second-quarter 2018 earnings of $1.01 per share exceeded the Zacks Consensus Estimate of 87 cents and the year-ago quarter earnings of 74 cents.
Total revenues of $5.7 billion were higher than the Zacks Consensus Estimate of $5.48 billion and increased 11% from $5.14 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.
Shares of the company were up almost 2% in pre-market trading, presumably on strong drug sales. However, Bristol-Myers’ shares have declined 3.6% so far this year against the industry’s increase of 1%.
Quarterly Details
Revenues were up 9% year over year when adjusted for foreign exchange impact. Revenues increased 13% to $3.2 billion in the United States and 9% outside the country. Ex-U.S. revenues were up 4% when adjusted for foreign exchange impact.
Opdivo, which is approved for multiple cancer indications, continued its impressive performance with sales up 36% year over year to $1.63 billion. Cardiovascular drug, Eliquis, also witnessed strong growth. Sales of the drug rose 40% to $1.65 billion, becoming the top revenue generator for the company. Sales of Opdivo and Eliquis rose 33% and 39%, respectively, in the U.S. market.
Leukemia drug Sprycel raked in sales of $535 million, up 6% year over year. U.S. sales of the drug were up 10% to $310 million.
Sales of rheumatoid arthritis drug, Orencia, were up 9% in second-quarter 2018 to $711 million. Melanoma drug, Yervoy contributed $315 million to the top line during the reported quarter, down 2%. U.S. sales of the drug were down 7% to $228 million. However, the drug’s performance improved from the disappointing first-quarter numbers.
Multiple myeloma drug, Empliciti recorded sales of $64 million, up 16% year over year.
However, the performance of key drugs in the Virology unit continues to disappoint. Sales of Baraclude declined 34% to $179 million. The Sustiva and Reyataz franchises deteriorated 61% and 38% year over year to $73 million and $117 million, respectively. The Hepatitis franchise declined 89% from the year-ago quarter and contributed a mere $12 million to revenues.
Research and development (R&D) expenses in the quarter surged 45% to $2.44 billion due to a $1.1 billion charge related to collaboration agreement with Nektar Therapeutics (NKTR - Free Report) closed in April. Marketing, selling and administrative expenses declined 4.7% to $1.13 billion.
Gross margin was 71.5% in the quarter compared with 69.5% in the year-ago quarter. The year-ago period results included an impairment charge.
Regulatory Update
Subsequent to the quarter in July, the FDA approved Opdivo+Yervoy combination regimen for treating microsatellite instability high or mismatch repair deficient metastatic colorectal cancer patients whose disease progressed following a chemotherapy regimen. Moreover, the European Commission also approved a label expansion of Sprycel to include pediatric patients (aged 1 year to 18 years) with Philadelphia chromosome-positive chronic myeloid leukemia in chronic phase. The regulatory body also approved a powder formulation of the drug.
In June, Opdivo received approval in China for the treatment of non-small cell lung cancer (“NSCLC”) without EGFR or ALK mutations in second-line setting. The CHMP also recommended approval of Opdivo as adjuvant treatment for melanoma patients with involvement of lymph nodes or metastatic disease who have undergone complete resection.
Regulatory applications seeking approval of Opdivo-Yervoy combination for treating first-line metastatic NSCLC were accepted in the United States and Europe.
In April, the FDA granted priority review to the sBLA seeking approval of Opdivo monotherapy in patients with small cell lung cancer in third- or later-line setting. A new dosing regimen for Opdivo, 480 mg every four weeks, was also approved for the majority of indications.
Collaborations
In April 2018, Bristol-Myers collaborated with Johnson & Johnson’s (JNJ - Free Report) subsidiary, Janssen, to develop and commercialize its Factor Xia inhibitor program, including BMS-986177, for treating major thrombotic conditions. In the same month, Bristol-Myers and privately-held Illumina, Inc. announced a collaboration to utilize the latter’s next-generation sequencing technology.
Pipeline Update
In June 2018, Bristol Myers announced updated data from part of the phase III study, Checkmate-227, evaluating Opdivo – Yervoy and Opdivo – chemotherapy combination in first-line NSCLC. Data showed that Opdivo – chemotherapy combination extended progression-free survival (“PFS”) compared to chemotherapy.
Data from a long-term follow up phase III study – CheckMate -214 – showed that patients treated with Opdivo – Yervoy combination achieved significant benefits in disease-related symptoms and improvements to their cancer-related quality of life and well-being after a minimum two years of follow-up compared to Pfizer’s (PFE - Free Report) Sutent. The study evaluated the combination regimen in intermediate- and poor-risk patients with advanced renal cell carcinoma.
Data announced from a phase II study evaluating Empliciti plus Pomalyst and dexamethasone in patients with relapsed/refractory multiple myeloma showed statistically significant and clinically meaningful improvement in PFS compared with only Pomalyst and dexamethasone
2018 Guidance Updated
Bristol-Myers increased its adjusted earnings expectations for 2018. The company now projects earnings in the range of $3.55 to $3.65 per share (previously $3.35 to $3.45). The Zacks Consensus Estimate for earnings is pegged at $3.43. 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 in 2018. Moreover, the company raised its guidance for adjusted earnings. 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. Potential approval will further boost the prospects of this blockbuster drug.
Bristol-Myers Squibb Company Price, Consensus and EPS Surprise
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Bristol-Myers (BMY) Beats on Q2 Earnings, Raises Outlook
Bristol-Myers Squibb Company’s (BMY - Free Report) second-quarter 2018 earnings of $1.01 per share exceeded the Zacks Consensus Estimate of 87 cents and the year-ago quarter earnings of 74 cents.
Total revenues of $5.7 billion were higher than the Zacks Consensus Estimate of $5.48 billion and increased 11% from $5.14 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.
Shares of the company were up almost 2% in pre-market trading, presumably on strong drug sales. However, Bristol-Myers’ shares have declined 3.6% so far this year against the industry’s increase of 1%.
Quarterly Details
Revenues were up 9% year over year when adjusted for foreign exchange impact. Revenues increased 13% to $3.2 billion in the United States and 9% outside the country. Ex-U.S. revenues were up 4% when adjusted for foreign exchange impact.
Opdivo, which is approved for multiple cancer indications, continued its impressive performance with sales up 36% year over year to $1.63 billion. Cardiovascular drug, Eliquis, also witnessed strong growth. Sales of the drug rose 40% to $1.65 billion, becoming the top revenue generator for the company. Sales of Opdivo and Eliquis rose 33% and 39%, respectively, in the U.S. market.
Leukemia drug Sprycel raked in sales of $535 million, up 6% year over year. U.S. sales of the drug were up 10% to $310 million.
Sales of rheumatoid arthritis drug, Orencia, were up 9% in second-quarter 2018 to $711 million. Melanoma drug, Yervoy contributed $315 million to the top line during the reported quarter, down 2%. U.S. sales of the drug were down 7% to $228 million. However, the drug’s performance improved from the disappointing first-quarter numbers.
Multiple myeloma drug, Empliciti recorded sales of $64 million, up 16% year over year.
However, the performance of key drugs in the Virology unit continues to disappoint. Sales of Baraclude declined 34% to $179 million. The Sustiva and Reyataz franchises deteriorated 61% and 38% year over year to $73 million and $117 million, respectively. The Hepatitis franchise declined 89% from the year-ago quarter and contributed a mere $12 million to revenues.
Research and development (R&D) expenses in the quarter surged 45% to $2.44 billion due to a $1.1 billion charge related to collaboration agreement with Nektar Therapeutics (NKTR - Free Report) closed in April. Marketing, selling and administrative expenses declined 4.7% to $1.13 billion.
Gross margin was 71.5% in the quarter compared with 69.5% in the year-ago quarter. The year-ago period results included an impairment charge.
Regulatory Update
Subsequent to the quarter in July, the FDA approved Opdivo+Yervoy combination regimen for treating microsatellite instability high or mismatch repair deficient metastatic colorectal cancer patients whose disease progressed following a chemotherapy regimen. Moreover, the European Commission also approved a label expansion of Sprycel to include pediatric patients (aged 1 year to 18 years) with Philadelphia chromosome-positive chronic myeloid leukemia in chronic phase. The regulatory body also approved a powder formulation of the drug.
In June, Opdivo received approval in China for the treatment of non-small cell lung cancer (“NSCLC”) without EGFR or ALK mutations in second-line setting. The CHMP also recommended approval of Opdivo as adjuvant treatment for melanoma patients with involvement of lymph nodes or metastatic disease who have undergone complete resection.
Regulatory applications seeking approval of Opdivo-Yervoy combination for treating first-line metastatic NSCLC were accepted in the United States and Europe.
In April, the FDA granted priority review to the sBLA seeking approval of Opdivo monotherapy in patients with small cell lung cancer in third- or later-line setting. A new dosing regimen for Opdivo, 480 mg every four weeks, was also approved for the majority of indications.
Collaborations
In April 2018, Bristol-Myers collaborated with Johnson & Johnson’s (JNJ - Free Report) subsidiary, Janssen, to develop and commercialize its Factor Xia inhibitor program, including BMS-986177, for treating major thrombotic conditions. In the same month, Bristol-Myers and privately-held Illumina, Inc. announced a collaboration to utilize the latter’s next-generation sequencing technology.
Pipeline Update
In June 2018, Bristol Myers announced updated data from part of the phase III study, Checkmate-227, evaluating Opdivo – Yervoy and Opdivo – chemotherapy combination in first-line NSCLC. Data showed that Opdivo – chemotherapy combination extended progression-free survival (“PFS”) compared to chemotherapy.
Data from a long-term follow up phase III study – CheckMate -214 – showed that patients treated with Opdivo – Yervoy combination achieved significant benefits in disease-related symptoms and improvements to their cancer-related quality of life and well-being after a minimum two years of follow-up compared to Pfizer’s (PFE - Free Report) Sutent. The study evaluated the combination regimen in intermediate- and poor-risk patients with advanced renal cell carcinoma.
Data announced from a phase II study evaluating Empliciti plus Pomalyst and dexamethasone in patients with relapsed/refractory multiple myeloma showed statistically significant and clinically meaningful improvement in PFS compared with only Pomalyst and dexamethasone
2018 Guidance Updated
Bristol-Myers increased its adjusted earnings expectations for 2018. The company now projects earnings in the range of $3.55 to $3.65 per share (previously $3.35 to $3.45). The Zacks Consensus Estimate for earnings is pegged at $3.43. 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 in 2018. Moreover, the company raised its guidance for adjusted earnings. 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. Potential approval will further boost the prospects of this blockbuster drug.
Bristol-Myers Squibb Company Price, Consensus and EPS Surprise
Bristol-Myers Squibb Company Price, Consensus and EPS Surprise | Bristol-Myers Squibb Company Quote
Bristol-Myers currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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