As earnings season heats up, Big Pharma investors have been bracing for bad news about how the COVID-19 lockdowns might disrupt companies’ efforts to launch new drugs and to maintain sales momentum for existing blockbusters.
Today Bristol Myers Squibb addressed those concerns—and the news was both bad and good.
COVID-19 stocking of BMS and Pfizer's blood thinner Eliquis drove sales of that product up 37% to $2.6 billion. COVID stocking, in fact, added $500 million to the company’s revenues during the quarter, $350 million of which was attributed to Eliquis, which no doubt benefited from the mounting evidence that using blood thinners in COVID-19 patients may reduce the risk of death from clotting-related complications like strokes and heart attacks.
That, combined with the company’s acquisition of Celgene last year, contributed to first-quarter revenues of $10.8 billion, up 82% year over year and beating the average analyst estimate of $10 billion. The company reported earnings per share of $1.72, surpassing the consensus estimate of $1.49.
But BMS CEO Giovanni Caforio and his colleagues warned that the company expects to take a blow from COVID-19 in the second quarter, largely from physician-administered products like Opdivo, its blockbuster PD-1 inhibitor for cancer.
That’s because access to oncology clinics has tightened during the COVID-19 pandemic, “which could impact the volume of infused products in the second quarter,” BMS CFO David Elkins said during a conference call with analysts.
COVID-19 could exacerbate an already tough sales environment for Opdivo, which is locked in a battle for market share with Merck’s PD-1 blocker Keytruda. Sales of Opdivo fell 2% during the quarter to $1.8 billion in the wake of some notable 2019 setbacks, including a failure of a combination of the drug with chemotherapy to outperform chemo alone in non-squamous non-small cell lung cancer.
BMS is counting on Opdivo label expansions to fuel a market rebound. It’s waiting for an FDA verdict on Opdivo plus Yervoy and chemo in some patients with metastatic or recurrent non-small cell lung cancer (NSCLC). The company expects to hear by August 6 and has applied for the same approval in Europe. An Opdivo-Yervoy combination trial in mesothelioma also showed encouraging survival benefits over chemotherapy. Meanwhile, BMS has turned out impressive data from a trial combining Opdivo with Exelixis’ Cabometyx in renal cell carcinoma.
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COVID-19 isn’t just affecting established products like Opdivo; it’s also delaying the launch of one of the most highly anticipated products from BMS’ $74 billion purchase of Celgene: Zeposia, for the treatment of relapsing multiple sclerosis. The FDA approved the drug in March, but BMS delayed the launch due to the pandemic.
When executives were asked for an update on the Zeposia launch plans during the conference call, Christopher Boerner, the company’s chief commercial officer, said the pandemic has taken a toll on the company’s ability to communicate with physicians about the product. It doesn’t help that prescriptions of new branded MS products are down 25% overall, he added. “We frankly didn’t feel the conditions were appropriate to introduce a new medicine without having our commercial and medical teams to be able to effectively engage with customers,” Boerner said.
Another important Celgene asset, the CAR-T treatment liso-cel for large B-cell lymphoma, is facing a new challenge of its own. Wednesday, the FDA delayed its decision on the drug by three months, pushing the deadline to November 16. The company had hoped to launch the product this year, and its executives indicated no concerns with their ability to meet that goal—optimism that one analyst questioned during the call.
“We remain confident in the data we’ve submitted to the FDA,” replied BMS’s chief medical officer, Samit Hirawat. The FDA had granted the product a priority review, but it ultimately needed more time to review additional data BMS supplied to the agency at its request. “During the review process there may be many more questions that come to us, but that’s a very normal process,” Hirawat said.
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In the end, COVID-19 did not force BMS to change its earnings projections for either 2020 or 2021. It reaffirmed its earnings guidance of $6 to $6.20 per share for this year, though the company did lower its revenue projection for the full year to between $40 billion and $42.5 billion, versus the $40.5 billion to $42.5 billion it had been expecting.
During the conference call, one analyst brought up a topic that was top-of-mind for politicians and patients long before the COVID-19 pandemic hit: high drug prices. He wondered if the pandemic may limit BMS’ pricing power on its newest products.
“A lot depends on what happens to patients who are unemployed and potentially lose coverage,” Caforio said. Some will move to a spouse’s plan, he said, while others might be eligible for Medicare. But the only certainty in all of this pandemic disruption, he said, is that high unemployment will only increase the demand on drug companies to make their products more affordable.
“These are all the dynamics that we’re going to be working through,” Caforio said, “and of course a lot depends on the shape of the recovery and how long unemployment lasts.”