Bristol-Myers' R&D revamp mirrors upheaval in Opdivo's lung cancer fortunes

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Bristol-Myers Squibb has named Thomas Lynch its new R&D chief.

Bristol-Myers Squibb has a new R&D chief. That’s not much of a surprise to those who’ve been following the company’s fall from grace, thanks to its unexpected and brutal failure in a cancer immunotherapy trial last fall, or the precipitous decline in its share price since.

With billions cut from peak sales estimates for its PD-1 checkpoint inhibitor Opdivo—which until the trial fiasco was seen as the natural market leader—and shares down to $57.40 Wednesday from more than $72 before the data went public, Chief Scientific Officer Francis Cuss made for the exit Wednesday. Board member and cancer doctor Thomas Lynch stepped into his place.

The switch puts Lynch in charge of Opdivo follow-up research, centered on combo trials with a variety of other treatments, from its own CTLA4 drug Yervoy to cancer vaccines from far smaller players, with a variety of Big Pharma and Big Biotech drugs in between. Bristol-Myers sees those Opdivo cocktails as a way to push the drug back into the spotlight in lung cancer and other cancers, too.

Credit Suisse analyst Vamil Divan said a change at the top of Bristol-Myers' R&D organization is natural at this point, given the Opdivo setbacks. But he doesn't expect that change to translate into a strategy revamp. "It's not a wholesale change," he said. "[A]t this point we're not envisioning a major change in strategy or in the execution of that strategy."

What's next?

That doesn't mean change isn't ahead for Opdivo, or for Bristol-Myers—and those shifts might not all be the company's choice. Cuss’ departure comes amid speculation that the company might sell itself to one of its Big Pharma or Big Biotech competitors. Though many analysts pooh-pooh the idea—including Divan, who cites a range of reasons—that speculation recently ratcheted upward because activist investors, including Carl Icahn, are targeting the company. Bristol-Myers took the threat seriously enough that it expanded its board to 14 from 11 last week.

RELATED: Icahn has snapped up a Bristol-Myers stake. Could megamerger pressure be far behind?

The management shake-up also leaves Bristol-Myers’ commercial team with some uncertainty about what comes next for Opdivo and its expansion into new markets; after all, new R&D leadership can come with strategic shifts and juggled priorities. And in the meantime, they have the big task of pumping up Opdivo sales in recently won indications and defending its share in lung cancer while they wait for those combo studies to wrap.

For Opdivo's fortunes, however, Lynch's arrival probably isn't as important as the data that will be coming out of those combo trials. And Divan figures that, if the data are strong enough, Opdivo could suddenly go back to looking like a $14 billion drug. "It's an unusual situation because you rarely see things change this quickly in this industry," Divan said of Opdivo's current woes. If details on a big Opdivo-plus-Yervoy trial in first-line lung cancer—Checkmate-027—show the combo delivering a big improvement in survival numbers, it's conceivable that the outlook "can change quickly in the other direction," he said.

The source of trouble

Opdivo's difficulties have certainly changed the immuno-oncology market, and a look at the source of those problems offers a hint to why Cuss left. When Opdivo fell short in a key trial in previously untreated lung cancer patients, the trial’s basic design took a chunk of the blame. In a bid for a big share of the non-small cell lung cancer market, Bristol-Myers pitted Opdivo against cancer in patients with PD-L1 expression of 5% or more, despite the fact that this type of checkpoint inhibitor works better in patients that test out with higher levels of the biomarker.

RELATED: BMS loses its lung cancer lead to Merck as Opdivo data come up short

It was a stretch: Merck & Co., by contrast, put its rival PD-1 med, Keytruda, through its paces in patients with a PD-L1 score of 50% or more. Keytruda succeeded; Opdivo didn’t. 

Bristol-Myers also raised eyebrows earlier this year when it said it wouldn't seek accelerated approval for that Opdivo-plus-Yervoy combo in lung cancer. Together, those two events created quite a turnabout for Bristol-Myers, which had been a furlong ahead in immuno-oncology. Opdivo sales growth last year handily outpaced Keytruda’s, and analysts had pegged its 2022 sales at $14 billion-plus, compared with $6 billion-odd for Keytruda.

Meanwhile, new rivals have either hit the PD-1/PD-L1 scene (Roche’s Tecentriq) or are moving closer (AstraZeneca’s durvalumab, Merck KGaA and Pfizer’s avelumab). Opdivo’s setbacks have opened up prospects for those latecomers—particularly durvalumab, analysts say, and particularly given avelumab’s recent delay in lung cancer.

Roche’s Tecentriq, which made its U.S. debut last year in bladder cancer and has since won a second-line lung cancer nod, has its own ambitions, but the third-to-market med wasn’t expected to hobble Opdivo’s progress much. Potential newcomers from AstraZeneca on one hand, and Pfizer and Merck on the other, seemed even less of a threat.

The new guy

That’s all changed, and now, the makeup of Bristol-Myers’ management team has, too. All eyes in the immuno-oncology world will be on what Lynch does next. Judging by CEO Giovanni Caforio’s comments in announcing the switch, Bristol-Myers doesn’t plan to back off in lung cancer. Indeed, that was the only type of cancer Caforio specifically mentioned.

“Tom is an internationally recognized oncologist known for his leadership in the treatment of lung cancer and has made significant contributions to the field of targeted therapies throughout his career,” Caforio said in a statement.

And Lynch emphasize that experience as well: “Throughout my career, I have been devoted to advancing oncology research, with a particular focus on lung cancer,” he said in the same statement, going on to add, “We have a number of significant opportunities and are uniquely positioned to transform cancer care.”

Lynch will step down from Bristol-Myers’ board to take the CSO job. Cuss, who’s officially retiring, will stick around for three months as an adviser to help Lynch with the transition.

Editor's note: This story was updated with analyst comments.