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Bristol-Myers (BMY) Beats on Q3 Earnings, Raises EPS View

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Bristol-Myers Squibb Company’s (BMY - Free Report) third-quarter 2018 earnings of $1.09 per share exceeded the Zacks Consensus Estimate of 91 cents and the year-ago quarter earnings of 75 cents.

Total revenues of $5.69 billion were slightly lower than the Zacks Consensus Estimate of $5.72 billion but increased 8% from $5.3 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 1.1% in pre-market trading, presumably on strong Opdivo sales. However, Bristol-Myers’ shares have declined 20.3% so far this year against the industry’s increase of 5%.

Quarterly Details

Revenues were up 10% year over year when adjusted for foreign exchange impact. Revenues increased 13% to $3.2 billion in the United States and 3% outside the country. Ex-U.S. revenues were up 6% when adjusted for foreign exchange impact.

Opdivo, which is approved for multiple cancer indications, continued its impressive performance with sales up 42% year over year to $1.79 billion and became the top revenue generator for the company. Cardiovascular drug, Eliquis, also witnessed strong growth. Sales of the drug rose 28% to $1.58 billion. Sales of Opdivo and Eliquis rose 47% and 28%, respectively, in the United States.

Leukemia drug, Sprycel raked in sales of $491 million, down 4% year over year. U.S. sales of the drug were also down 4% to $267 million.

Sales of rheumatoid arthritis drug, Orencia, were up 7% in third-quarter 2018 to $675 million. Melanoma drug, Yervoy contributed $382 million to the top line during the reported quarter, up 18%. U.S. sales of the drug were up 16% to $278 million.

Multiple myeloma drug, Empliciti recorded sales of $59 million, down 2% year over year.

However, the performance of key drugs in the Virology unit continues to disappoint. Sales of Baraclude declined 34% to $175 million. The Sustiva and Reyataz franchises deteriorated 61% and 50% year over year to $72 million and $87 million, respectively.

Adjusted research and development (R&D) expenses in the quarter were up 6.3% to $1.26 billion. Adjusted marketing, selling and administrative expenses declined 5.1% to $1.1 billion.

Gross margin was 71% in the quarter compared with 69.9% in the year-ago quarter. The year-ago period results included an inventory charge.

Regulatory Update

Subsequent to the quarter, in October, the FDA extended the action date by three months for a 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. The Committee for Medicinal Products for Human Use also requested additional data to review a regulatory application for a similar indication. In July, Opdivo was approved for treating melanoma with involvement of lymph node in EU.

In August, the FDA accepted a sBLA seeking label expansion of Sprycel in pediatric patients with Philadelphia chromosome-positive acute lymphoblastic leukemia. Regulatory applications seeking approval of Empliciti combination therapy for treating relapsed/refractory multiple myeloma in third-line setting were accepted in the United States and EU during the quarter.

Collaborations

In October 2018, Bristol-Myers entered into a clinical study collaboration with privately-held Compugen to evaluate Opdivo in combination with the latter’s pipeline candidate, COM701, in patients with advanced solid tumors

Pipeline Update

In October, Bristol Myers announced new data from an arm of the phase II study, Checkmate-142, evaluating Opdivo – Yervoy combination in microsatellite instability-high (MSI-H) or DNA mismatch repair deficient (dMMR) metastatic colorectal cancer. Data showed that the combination demonstrated durable clinical benefit in the patient population.

Data from a long-term follow up phase III study – CheckMate -067 – showed that more than half of the advanced melanoma patients treated with Opdivo – Yervoy combination survived for four years with 21% patients achieving complete response.

Data from a long-term follow up phase III study – CheckMate -214 – showed that patients treated with Opdivo – Yervoy combination achieved treatment-free survival in significantly higher proportion of patients after a minimum two years of follow-up compared to Pfizer’s (PFE - Free Report) Sutent. The study evaluated the combination regimen in treatment-naive patients with advanced or metastatic renal cell carcinoma.

In September, the company announced results from a phase II study on BMS-986165 in patients with moderate-to-severe plaque psoriasis.Data showed that  efficacy endpoints including greater than or equal to 75% and 90% reduction in PASI 75, PASI 90 were achieved following 12 weeks of treatment with ≥3 mg daily of BMS-986165, with a favorable risk-benefit profile.

2018 Guidance Updated

Bristol-Myers increased its adjusted earnings expectations for 2018. The company now projects earnings in the range of $3.80 to $3.90 per share (previously $3.55 to $3.65). The Zacks Consensus Estimate for earnings is pegged at $3.64. The company raised its growth expectations for worldwide revenues to high-single digits from mid-single digits expected earlier.

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. 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. These, if approved, 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

Zacks Rank & Key Picks

Bristol-Myers currently carries a Zacks Rank #2 (Buy). A couple of other stocks to consider in the pharma/biotech sector are Gilead Sciences, Inc. (GILD - Free Report) and Amgen Inc. (AMGN - Free Report) . While Gilead sports a Zacks Rank #1 (Strong Buy), Amgen carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Gilead’s 2018 earnings per share estimates increased from $6.59 to $6.63 and from $6.48 to $6.58, for 2018 and 2019, respectively, in the last 30 days. The company delivered a positive earnings surprise in three of the trailing four quarters, with an average beat of 6.43%.

Amgen’s earnings per share estimates moved up from $13.95 to $14.02 for 2018 and remained stable at $14.10 for 2019 in the last 60 days. The company delivered a positive surprise in three of the trailing four quarters with an average beat of 4.29%. Share price of the company has increased 8% this year so far.

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