The immuno-oncology drug Opdivo from Bristol-Myers Squibb ($BMY) continued on its charmed path today when the drugmaker cut short another trial for lung cancer because it had nailed its goal for overall survival. This comes after accelerated FDA approval of Opdivo for melanoma and then lung cancer, which has led analysts to keep jacking up earnings forecast, now to $7 billion in annual sales in 5 years.
"The results of CheckMate -057 mark the second time Opdivo has demonstrated a survival advantage in lung cancer," Michael Giordano, who heads oncology development for BMS said in the announcement of the decision.
The CheckMate -057 trial was a randomized Phase III study that put Opdivo (nivolumab) up against docetaxel in previously treated patients with advanced nonsquamous non-small cell lung cancer (NSCLC). It is already approved for squamous NSCLC that has advanced despite chemotherapy.
Within minutes of the announcement analysts were dispatching notes to clients about the importance of the data and the move, not just for Bristol-Myers Squibb, but for competitors like Merck ($MRK), Roche ($RHHBY) and AstraZeneca ($AZN), all of which have PD-1 candidates in trials. Investors are clearly highly excited because it is a category that analysts have said could generate sales of $22 billion to $33 billion by 2020.
Bernstein analyst Tim Anderson said that investors were expecting today's announcement, so its financial upside was pretty much cooked into estimates. He and Evercore ISI analyst Mark Schoenebaum, agreed that it was more about "de-risking" the potential upside for Opdivo.
The bigger question than what today's news means for BMS, is what does it mean for competitors. Merck is expected to file it NDA midyear and get an approval yet this year. It is possible, Bernstein said, for Roche to get its application before the FDA this year but more likely that it and AstraZeneca will do that in 2016.
He said investors seem to believe there has to be "winners and losers" in this category, and BMS has been anointed the crown prince of the bunch by virtue of its first to market position and the subsequent data and approval. Anderson pointed out that consensus is for Opdivo to hit $7 billion in sales by 2020, about twice what the market is expecting out of a PD-1 from Merck and Roche and four times the sales projections for a drug from AstraZeneca.
But he cautions there remain a lot of unknowns. One of the other contenders might surprise with a third generation product. Also, given how close Merck is expected to be with its drug, and perhaps Roche, he is not sure what the double earnings forecast for Opdivo is born from.
"Because of the size of the immuno-oncology opportunity," Anderson says, "… there will be more than one way to win."
- here's the announcement