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Bristol-Myers' (BMY) Q1 Earnings & Sales Beat Estimates

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Bristol-Myers Squibb Company (BMY - Free Report) reported better-than-expected results for the first quarter of 2020 on the stellar performance of its blood thinner drug, Eliquis, and addition of sales from Celgene’s drugs (acquired in November 2019). The company maintained its earnings guidance for 2020, even when the coronavirus pandemic is wreaking havoc worldwide. However, the company trimmed its revenue forecast.

Shares were up in pre-market trading following the earnings release. Bristol-Myers’ shares have lost 4.8% in the year so far compared with the industry’s decline of 1.8%.

 

First-quarter 2020 earnings of $1.72 per share easily beat the Zacks Consensus Estimate of $1.48 and increased from the year-ago quarter’s $1.10.

Total revenues of $10.8 billion comprehensively beat the Zacks Consensus Estimate of $9.9 billion and surged 82% from $5.9 billion in the year-ago period. Strong growth was mainly driven by the addition of Celgene’s products, which contributed 71%.

Quarterly Details

Revenues were up 83% year over year when adjusted for foreign exchange impact. The quarter benefited by approximately $500 million due to COVID-19-related buying patterns.

Revenues increased 96% to $6.8 billion in the United States and 62% outside the country. Ex-U.S. revenues were up 65% when adjusted for foreign exchange impact.

Eliquis witnessed strong growth, rising 37% to $2.6 billion. We note that Bristol-Myers has a collaboration agreement with Pfizer (PFE - Free Report) for Eliquis. However, sales of Opdivo, which is approved for multiple cancer indications, were down 2% year over year to $1.76 billion.

Leukemia drug, Sprycel, raked in sales of $521 million, up 14% year over year. Sales of rheumatoid arthritis drug, Orencia, grew 12% to $714 million. Melanoma drug, Yervoy, contributed $396 million to the top line, up 3% year over year.

Multiple myeloma drug, Empliciti, recorded sales of $97 million, up 17% year over year.

The performance of key drugs in the Virology unit was disappointing. Sales of Baraclude declined 13% to $122 million. Sales of other brands (including Sustiva, Reyataz, Daklinza and all other products that have lost exclusivity in major markets) fell 14% year over year to $418 million.

Myeloma drug, Revlimid, added with Celgene’s acquisition, contributed $2.9 billion to the top line and was the top-revenue generator for Bristol-Myers. Other key drugs from Celgene — Pomalyst and Abraxane — generated sales of $713 million and $300 million, respectively.

Adjusted research and development (R&D) expenses in the quarter increased to $2.2 billion from $1.3 billion. Adjusted marketing, selling and administrative expenses grew to $1.6 billion from $1.0 billion.

Gross margin was 69.2% in the quarter compared with 66% in the year-ago quarter.

Pipeline Update

In March 2020, the FDA approved Opdivo plus Yervoy to treat hepatocellular carcinoma (HCC) in patients who have been previously treated with Nexavar.

The FDA accepted its supplemental Biologics License Application (sBLA) for Opdivo plus Yervoy, administered concomitantly with a limited course of chemotherapy, for the first-line treatment of patients with metastatic or recurrent non-small cell lung cancer (NSCLC) with no EGFR or ALK genomic tumor aberrations (CheckMate -9LA). The agency granted this application Priority Review with a target action date of Aug 6, 2020.

In April 2020, Bristol-Myers and partner and Exelixis (EXEL - Free Report) announced that the phase III study CheckMate -9ER, which evaluated Opdivo plus Cabometyx versus Sutent in previously untreated advanced or metastatic renal cell carcinoma (RCC), met its primary and secondary endpoints.

Last month, the FDA approved Zeposia (ozanimod) for the treatment of adults with relapsing forms of multiple sclerosis (RMS).  However, the agency extended the action date by three months for the BLA for lisocabtagene maraleucel (liso-cel) and the new action date is Nov 16, 2020.

2020 Guidance

Bristol-Myers continued to project earnings of $6.00-$6.20 per share. The company now expects revenues for 2020 in the range of $40-$42 billion (previous guidance: $40.5-$42.5 billion). The Zacks Consensus Estimate for revenues and earnings is pegged at $41.3 billion and $6.10 per share, respectively.

The company expects the peak impact of the current COVID-19 crisis in the second quarter of 2020, with a return to a more stable business environment in the third quarter and minimal impact fourth-quarter 2020 onward.

Our Take

Bristol-Myers’ performance in the first quarter was encouraging. Earnings and sales beat estimates primarily on the addition of Celgene’s drugs to its portfolio. However, weak growth in Opdivo sales is a concern.  The drug faces stiff competition from Merck’s (MRK - Free Report) Keytruda and Roche’s Tecentriq.

BristolMyers Squibb Company Price, Consensus and EPS Surprise

 

BristolMyers Squibb Company Price, Consensus and EPS Surprise

BristolMyers Squibb Company price-consensus-eps-surprise-chart | BristolMyers Squibb Company Quote

Nevertheless, the label expansion of Opdivo into RCC should boost sales. The acquisition of Celgene holds promise as it boosted Bristol-Myers’ oncology franchise. Moreover, Bristol-Myers continues to expect to realize cost synergies of approximately $2.5 billion by 2022.

Bristol-Myers currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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