Analysts to Bristol Myers Squibb: Can I-O hit Opdivo really return to growth?

Bristol Myers Squibb CEO Giovanni Caforio debuts new brand
Bristol Myers CEO Giovanni Caforio told analysts that new data releases could help Opdivo regain strong sales growth in 2021. (Robert Bruschini/Bristol Myers Squibb)

Analysts and investors have questions about Opdivo's future, and they're not just limited to the COVID-19 slowdown.

Opdivo, a PD-1 inhibitor, has struggled to compete with Merck’s rival Keytruda. And the two newest FDA approvals—both for Opdivo in combination with BMS’ Yervoy in first-line metastatic non-small cell lung cancer (NSCLC), where Keytruda dominates—didn’t do much to assuage analysts demanding details about how, exactly, Opdivo could grow in the future.

The concerns expressed after BMS released its second-quarter earnings report ranged from COVID shutdowns interrupting Opdivo sales efforts in the short term to whether there are enough opportunities beyond lung cancer for BMS to continue to grow the drug’s market.

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“We are off to a very good start with Opdivo plus Yervoy in first-line lung, with encouraging initial feedback from physicians and good indications of early adoption,” BMS CEO Giovanni Caforio, M.D., said during a conference call with analysts. “They support our expectation that Opdivo will return to annual sales growth in 2021.”

Chris Boerner, Ph.D., BMS’ chief commercialization officer, said market share for Opdivo in first-line lung cancer is in the mid-single digits. COVID has been a challenge in that most conversations between salespeople and customers “remain virtual,” Boerner said. “But we’re seeing very good engagement between the sales force even in a remote environment with key customers,” he added.

Perhaps, but analysts are already hungry for details about how Opdivo might perform in other studies, including those designed to test whether the drug can lessen the chance of relapse in some cancers. Chief medical officer Samit Hirawat, M.D., cited upcoming data releases in melanoma, muscle-invasive bladder cancer and NSCLC. “Then others come in 2022 and beyond,” he said.

Sales of Opdivo did drop 9% from the same quarter a year ago to $1.7 billion, but investors may not need to fret so much over the drug if BMS can take advantage of its long-term opportunities, Wolfe Pharma analyst Tim Anderson wrote in a note to investors.

The company’s volatile results in recent years have been “tied to mishaps in the immuno-oncology space and there is continued uncertainty over the long-term trajectory of Opdivo,” Anderson said “but the product will continue to remain one of the market-leading PD-1 therapies over the long-term and its importance to the story is much less than it used to be.”

That's in part because of blood cancer drug Revlimid—the crown jewel of BMS’ $47 billion acquisition of Celgene—which rose 6% to $2.9 billion in Q2. Eliquis also continued to churn out sales thanks to COVID-19 stocking, which drove sales of the product up 6% to $2.2 billion, beating analysts’ expectations of $2 billion.

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One other potential near-term sales driver for BMS is its multiple sclerosis drug Zeposia, which it launched in the U.S. in June. The company also won approval for the product in Europe, and it released positive top-line results from a phase 3 trial of Zeposia in adults with moderate to severe ulcerative colitis.

But Zeposia is entering a crowded market for S1P modulators, dominated by the likes of Novartis’ Mayzent. So BMS is playing up the drug’s advantages, namely that it’s the only S1P modulator that doesn’t require genetic testing or heart monitoring after the first dose.

Ulcerative colitis could be a major expansion opportunity for Zeposia “because of the need for additional treatments and a therapy that is safe, effective and actually can be delivered orally,” Hirawat said during the conference call. The trial increased remissions over placebo at 10 weeks. Hirawat said there were also improvements in endoscopy findings among the trial participants who were taking Zeposia. Full data from the trial will be released at an upcoming meeting.

BMS also disclosed that it has moved its experimental psoriasis drug, TYK2 inhibitor BMS-986165, into a phase 3 trial in psoriatic arthritis, following positive results from a phase 2 trial. There is competition there, namely from Pfizer, but BMS is considered the frontrunner, and “the upside with TYK2 is that it is a ‘platform drug’ beyond just psoriasis,” Anderson wrote.

Overall, Bristol's revenues for the quarter came in slightly above estimates at $10.13 billion. Earnings per share of $1.63 beat estimates of $1.48. The company said that COVID-19 had a $600 million negative impact on sales, due to workdowns of inventory that had been stocked in the first quarter. Still, BMS raised its guidance for full-year earnings to a range of $6.10 to $6.25 from $6 to $6.20.