Bristol-Myers Squibb (NYSE:BMY) is no small player in the oncology space. With blockbuster drugs like dasatinib (Sprycel) and cetuximab (Erbitux) bringing in over $3 billion of revenue worldwide in 2015, it has contributed a great deal to the outlook of patients and investors alike.
But the major players in this space have limited potential. As a direct antagonist of EGFR, Erbitux affects a specific subset of tumors, specifically gastrointestinal and head-and-neck cancers. Here, Erbitux plays an important role, especially in first-line therapy, but only for patients who are so-called "Ras wildtype," meaning they don't harbor mutations that turn on this pathway.
Dasatinib is similarly limited in its potential, mainly to chronic myeloid leukemia (CML). It has promise in other tumor types, but its impact is definitely strongest for CML patients, especially with recent results showing dasatinib is superior to imatinib in first-line therapy. Second-generation tyrosine kinase inhibitors in general might become the standard of care for CML.
Still, the big players BMY has developed have been around for quite a while; dasatinib has been available for nearly a decade. The big blockbuster for BMY is most likely to come from the immunotherapy space, a treatment modality that this company has been an important pioneer in. BMY is, after all, the company that developed ipilimumab (Yervoy), the first immune checkpoint inhibitor approved for metastatic melanoma.
But ipilimumab has largely been supplanted by nivolumab (Opdivo), because it yields better response rates and leads to improved survival in patients in tumors beyond melanoma. Unsurprisingly, in its first full year of approval, the revenue brought in worldwide by this drug has been explosive: $942 million worldwide. With relatively little sales growth, revenue from Opdivo could tower over its targeted therapy counterparts.
Where will that sales growth come from? Let's explore the future directions of nivolumab for a bit. In my opinion, the use of this drug will expand in several ways: 1) New disease types, and 2) New indications for earlier approvals.
1) New disease approvals for nivolumab incoming
There is a laundry list of ongoing trials for nivolumab in the relapsed disease setting. Diseases include acute myeloid leukemia (AML), advanced liver cancer, chronic lymphocytic leukemia (CLL), sarcoma, multiple myeloma, and glioblastoma, and preliminary findings are expected soon. This is a remarkably diverse group of tumors, and it speaks well of the promise of immunotherapy as a whole. So many tumors evade the immune system in similar ways that addition of nivolumab could have an impact that is wide ranging.
But in terms of near-term catalysts, one should look to recent findings of nivolumab in relapsed Hodgkin lymphoma. In this small study, 23 patients with heavily pretreated disease were given nivolumab. In general, Hodgkin disease is very treatable, with many patients achieving total remission with standard first-line therapy. However, the subset of patients who do relapse have a pretty rough time ahead. Recent approvals like brentuximab vedotin have expanded the treatment options in this population, but more options continue to be explored. Most of the patients in the nivolumab study had failed both prior stem cell transplantation and brentuximab treatment, leaving them with no further options.
How did these patients do? 87% responded to therapy, including a 17% complete remission rate. Everybody else had stable disease. Overall, 86% of all the patients treated remained disease free after 24 weeks, and many were able to proceed to stem cell transplantation to consolidate the benefit. A more recent update of this trial at ASH 2015 showed that the responses were durable in 10 out of 23 patients. A pivotal trial, CheckMate 205, is ongoing in patients who failed prior stem cell transplant, and top-line results are expected in 2016. Another Phase 1/2 trial combining nivolumab and brentuximab was initiated last October. With breakthrough designation in the US and the recent announcement of orphan drug designation in Japan, regulatory bodies may be clearing the way for nivolumab in Hodgkin lymphoma.
And what would that mean for the bottom line? Consider brentuximab, whose revenue worldwide has exceeded 200 million since its approval in 2013. This market could represent a significant boost for nivolumab revenue.
2) Expansion of approved indications
Nivolumab has been approved in three challenging solid tumor types already: metastatic melanoma, renal cell carcinoma, and squamous cell lung cancer. However, in each of these approvals, nivolumab is indicated for relapsed disease. Ongoing studies are testing different combinations in an effort to determine where this drug might fit in the first-line settings, as well.
For example, in early studies, nivolumab has shown promise for untreated advanced lung cancer, as reported at ASCO 2015. The ongoing CheckMate 026 study is assessing nivolumab versus chemotherapy in advanced, PD-L1-positive lung tumors. Top line data are expected later this year.
Two separate studies in first-line therapy, CheckMate 066 and 067, are testing nivolumab in comparison with chemotherapy and ipilimumab, respectively. In CheckMate 067, adding nivolumab to ipilimumab, or even using nivolumab alone, was superior to ipilimumab in first-line therapy both in terms of response rates and progression-free survival. This was even true in patients who did not have robust tumor expression of PD-L1. In CheckMate 066, nivolumab nearly doubled the median progression-free survival and 1-year overall survival rate compared with dacarbazine. Recently, nivolumab was approved for use as a monotherapy in metastatic melanoma, as long as patients do not have a BRAF mutation.
To wrap up, nivolumab promises to be a major part of the future growth of BMY. I expect that the revenue will grow to be at least comparable with its other major targeted therapies like cetuximab and dasatinib. Moreover, I think with the ever-expanding range of diseases it can treat, nivolumab may dwarf the other products BMY has on tap.
So does that mean I think you should invest? This is, as always, a tricky question. Nivolumab has a long life ahead of it as it transforms the standard of care for a variety of tumor types. However, other key components of its oncology pipeline are a bit long in the tooth, and future growth may need to come from other sources to see sustained returns on the whole. Still, with nivolumab, BMY has already been a major blockbuster, and I don't see that stopping any time soon. I hope you find writeups such as these useful in your overall due diligence.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.