By Barry S. Cohen
In the past year, the share price of Bristol-Myers Squibb (NYSE:BMY) has risen less than 1 percent, well below both the DJIA and the NYSE Arca Pharmaceutical Index (NYSE:DRG), a market-capitalization index designed to represent a cross section of widely held, high capitalized companies engaged in various phases of the pharmaceutical industry. For example, DRG is up nearly 15 percent in the past year.
Bristol is banking on a strategy that combines the best of biotech and pharma to develop products that will help patients in their fight against serious diseases. If that strategy works, perhaps it will help lift the company's lagging share price.
Trading at about $53, Bristol reported third quarter results on Friday, October 24. The company's sales and earnings dropped, although Bristol beat analysts' expectations. In its news release, the company adjusted its 2014 GAAP EPS guidance range to $1.15 - $1.25 from $1.50 - $1.60 and confirmed its non-GAAP EPS guidance range of $1.70 - $1.80. Last year, Bristol made $1.82 a share on $16.4 billion in sales.
Among the disease areas Bristol is focusing on are oncology, immunoscience and cardiovascular, John Elicker, SVP, of public affairs and investor relations, told the audience at September's Bank of America Merrill LynchGlobal Healthcare Conference. He said the company is committed to driving brand performance, focus on prioritized markets and accelerate innovation.
Bristol's leading products include Eliquis, used to reduce the risk of stroke and blood clots in people who have atrial fibrillation. In the third quarter, sales of Eliquis were $216 million -- about $18 million ahead of consensus and up from just $41 million in Q3 2013. Sales of Arencia, which reduces signs and symptoms in adults with moderate to severe rheumatoid arthritis and those not helped enough by other medicines, were up 18 percent in Q3 to $444 million. Another key Bristol product is Yervoy, which is used to treat melanoma that has spread (metastatic) or cannot be removed by surgery. Sales of Yervoy grew to $350 million in Q3, a gain of nearly 50 percent from the same period a year earlier.
Bristol did suffer what some say is a relatively minor setback earlier this month when it withdrew its U.S. marketing application for a drug combination to treat hepatitis C. Expectations for the combo's U.S. sales had been low because the two-drug combo has shown lower effectiveness than Gilead Sciences ' (NASDAQ:GILD) Harvoni, which was approved last week, and AbbVie's (NYSE:ABBV)) three-drug combo expected to launch in December.
At the same time, the company pointed out that the combination of daclatasvir and asunaprevir was approved in Japan in July. That country has an especially high rate of the genotype 1b hepatitis C virus
The drugmaker said it will continue to pursue marketing approval of daclatasvir, one part of the combination. The company plans to submit additional data on the compound from an ongoing study to the U.S. Food and Drug Administration.
Bristol has taken some punches to the gut over the past year, most notably the company's loss of patent protection for its blood thinner Plavix and a host of other products. So you could say Bristol is in a transformation period. But there does appear to be a light at the end of the tunnel.
Within the next year, the company's oncology business should get a boost from regulatory approvals for Opdivo. It is filing regulatory applications for the drug as a potential treatment for advanced melanoma and non-small cell lung cancer. Bristol has also inked a research collaboration pact with Ono Pharmaceutical to add to its basket of experimental immuno-oncology products.
Investors can also be heartened that the company has maintained a strong balance sheet and fundamental outlook. As reported in third quarter earnings, the company had cash, cash equivalents, and marketable securities of more than $11 billion and a net cash position of $3.8 billion.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Business relationship disclosure: By Barry Cohen for Stock Traders Daily and neither receives compensation from the publicly traded companies listed herein for writing this article.