The FINANCIAL — Bristol-Myers Squibb Company on October 26 reported results for the third quarter of 2017, which were highlighted by strong sales for key products Opdivo and Eliquis and multiple regulatory approvals for Opdivo.
“We had a good quarter, demand for Eliquis and Opdivo was strong and we advanced our portfolio with important clinical and regulatory milestones, including exciting data for kidney cancer patients with Opdivo + Yervoy,” said Giovanni Caforio, M.D., chairman and chief executive officer, Bristol-Myers Squibb. “Looking forward, our focus is on continuing to deliver strong commercial performance, advance our pipeline and ensure our resources are applied to priority areas of our portfolio for sustainable, long-term growth.”
THIRD QUARTER FINANCIAL RESULTS
Bristol-Myers Squibb posted third quarter 2017 revenues of $5.3 billion, an increase of 7% compared to the same period a year ago. Revenues increased 6% when adjusted for foreign exchange impact.
U.S. revenues increased 3% to $2.9 billion in the quarter compared to the same period a year ago. International revenues increased 12%. When adjusted for foreign exchange impact, international revenues increased 11%.
Gross margin as a percentage of revenue decreased from 73.5% to 70.1% in the quarter primarily due to product mix and an inventory charge.
Marketing, selling and administrative expenses remained flat at $1.1 billion in the quarter.
Research and development expenses increased 36% to $1.5 billion in the quarter primarily due to the IFM Therapeutics (IFM) acquisition charge of $310 million in the current period.
The effective tax rate was 27.6% in the quarter, compared to 22.1% in the third quarter last year. The IFM acquisition charge was not deductible for tax purposes.
The company reported net earnings attributable to Bristol-Myers Squibb of $845 million, or $0.51 per share, in the third quarter compared to net earnings of $1.2 billion, or $0.72 per share, for the same period in 2016.
The company reported non-GAAP net earnings attributable to Bristol-Myers Squibb of $1.2 billion, or $0.75 per share, in the third quarter, compared to $1.3 billion, or $0.77 per share, for the same period in 2016. An overview of specified items is discussed under the “Use of Non-GAAP Financial Information” section.
Cash, cash equivalents and marketable securities were $9.6 billion, with a net cash position of $1.2 billion, as of September 30, 2017.
Opdivo
Regulatory
In October, the company announced the FDA accepted for priority review a sBLA for Opdivo to treat patients with melanoma who are at high risk of disease recurrence following complete surgical resection.
In September, the company announced the FDA approval of Opdivo for the treatment of hepatocellular carcinoma patients previously treated with sorafenib. Opdivo is the first and only Immuno-Oncology (I-O) agent to receive FDA approval in this population.
In September, the company announced the Japan Ministry of Health, Labor and Welfare approved Opdivo for the treatment of patients with unresectable advanced or recurrent gastric cancer which has progressed after chemotherapy. Opdivo is the first and only I-O treatment to demonstrate survival benefit in patients who underwent two or more prior treatments.
In August, the company announced the FDA approval for Opdivo for the treatment of adult and pediatric (12 years and older) patients with microsatellite instability-high or mismatch repair deficient metastatic colorectal cancer that has progressed following treatment with a fluoropyrimidine, oxaliplatin, and irinotecan, according to Bristol-Myers Squibb Company.
Clinical
In October, at the World Conference on Lung Cancer in Yokohama, Japan, the company presented numerous studies for Opdivo and Opdivo-based combinations across types of thoracic cancers including exploratory data evaluating Opdivo and the Opdivo + Yervoy regimen in patients with previously treated small cell lung cancer (SCLC) whose tumors were evaluable for tumor mutation burden (TMB), a subgroup of the Phase 1/2 open-label CheckMate -032 study.
In September, at the European Society for Medical Oncology (ESMO) 2017 Congress in Madrid, Spain, the company presented numerous studies for Opdivo, the Opdivo + Yervoy regimen, Opdivo in combination with other assets and analyses providing insights into the potential role of biomarkers to predict patients’ treatment responses. The company announced results from the following studies:
CheckMate -238: Interim data from the Phase 3 study evaluating Opdivo versus Yervoy in patients with resected high-risk melanoma. Opdivo is the first anti-PD-1 to improve recurrence-free survival and only I-O therapy to demonstrate superiority versus an active control in this patient population.
CheckMate -214: First presentation of efficacy data from the Phase 3 study of the Opdivo + Yervoy combination vs. sunitinib in patients with previously untreated advanced or metastatic renal cell carcinoma (RCC). The topline results were announced in August. In September, this trial was stopped early for demonstrating overall survival benefit to patients with previously untreated advanced or metastatic RCC.
CheckMate -017 and -057: Three-year survival data from two Phase 3 studies of Opdivo vs. docetaxel in patients with previously treated advanced non-small cell lung cancer (NSCLC).
In September, the company announced the FDA placed a partial clinical hold on CheckMate -602, CheckMate -039 and CA204142, three studies investigating Opdivo-based combinations in patients with relapsed or refractory multiple myeloma, based on risks identified in trials studying another anti-PD-1 agent, pembrolizumab, in patients with multiple myeloma.
Yervoy
Today the company is announcing the FDA added five-year overall survival data from the Phase 3 CA184-029 trial, to the prescribing information for Yervoy for the adjuvant treatment of fully resected cutaneous melanoma with pathologic involvement of regional lymph nodes of more than 1 mm. Yervoy is the first immune checkpoint inhibitor to demonstrate a statistically significant improvement in overall survival in this patient population.
Eliquis
In August, at the 17th European Society of Cardiology Congress in Barcelona, Spain, the company and Pfizer Inc. presented findings from three studies evaluating Eliquis (apixaban):
EMANATE, a Phase 4 clinical trial, evaluating Eliquis for patients with non-valvular atrial fibrillation undergoing cardioversion.
Real-world data analysis of the U.S. Humana database of treatment with Eliquis compared to warfarin in patients aged 65 years and older with non-valvular atrial fibrillation.
Real-world data analysis pooled from four large U.S. insurance claims databases on the effectiveness and safety of Eliquis compared to warfarin in the overall patient population, as well as select high-risk patients, with non-valvular atrial fibrillation.
THIRD QUARTER BUSINESS DEVELOPMENT UPDATE
In September, the company completed the acquisition of all outstanding capital stock of IFM, a venture-backed biotech company focused on developing therapies that modulate novel targets in the innate immune system to treat cancer, autoimmunity and inflammatory disorders. The acquisition gives the company full rights to IFM’s preclinical STING (stimulator of interferon genes) and NLRP3 agonist programs focused on enhancing the innate immune response for treating cancer.
In September, the company and AbbVie announced a clinical trial collaboration to evaluate the combination of Opdivo and AbbVie’s investigational antibody drug conjugate ABBV-399 in c-Met overexpressing NSCLC, with the possible expansion into additional solid tumors.
In September, the company and Halozyme Therapeutics, Inc. announced a global collaboration and license agreement to develop subcutaneous presentations of its immuno-oncology medicines using Halozyme’s ENHANZE drug-delivery technology.
In August, the company and Daiichi Sankyo Company, Limited announced a collaborative clinical trial to evaluate the combination of Opdivo and Daiichi Sankyo’s investigational antibody drug conjugate DS-8201 in HER2-expressing metastatic breast and urothelial (bladder) cancers.
In July, the company and Clovis Oncology, Inc. announced a clinical collaboration to evaluate the combination of Opdivo and Clovis Oncology’s poly (ADP-ribose) polymerase (PARP) inhibitor Rubraca (rucaparib) in Phase 3 clinical trials in advanced ovarian and advanced triple-negative breast cancers. The agreement also includes a Phase 2 study to evaluate the safety and efficacy of Opdivo + Rubraca combination in patients with metastatic castration-resistant prostate cancer.
In July, the company and Exelixis, Inc. announced the initiation of the Phase 3 CheckMate 9ER trial to evaluate Opdivo in combination with CABOMETYX (cabozantinib) tablets, a small molecule inhibitor of receptor tyrosine kinases, or the Opdivo + Yervoy combination with CABOMETYX versus sunitinib in patients with previously untreated, advanced or metastatic RCC.
2017 FINANCIAL GUIDANCE
Bristol-Myers Squibb is decreasing its 2017 GAAP EPS guidance range from $2.66 – $2.76 to $2.36 – $2.46 and is increasing its non-GAAP EPS guidance range from $2.90 – $3.00 to $2.95 – $3.05. Both GAAP and non-GAAP guidance assume current exchange rates. Key revised 2017 GAAP and non-GAAP line-item guidance assumptions include:
Gross margin as a percentage of revenue to be approximately 71.5% for GAAP.
Research and development expenses are increasing approximately 25% – 30% compared to 2016 for GAAP.
An effective tax rate of approximately 25% – 26% for GAAP and approximately 22% for non-GAAP.
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