Bloomberg News

Bristol-Myers Revamping Sales Plan as Top New Drugs Sputter (1)

July 25, 2013

Bristol-Myers Squibb Co. (BMY:US) plans a new marketing and advertising push for its prized new drugs for blood clots and diabetes that are selling slower than company expectations and analysts’ estimates.

Eliquis, a blood thinner approved at the end of 2012, and Bydureon, a diabetes treatment gained in the $6.49 billion acquisition of Amylin Pharmaceuticals last year, have disappointed, the New York-based company said today after cutting its 2013 profit forecast. Second-quarter revenue declined 9 percent to $4.05 billion, reflecting generic competition to two former top drugs.

“In some areas we did not get the results we wanted,” Chief Executive Officer Lamberto Andreotti said on a conference call. Andreotti and Chief Financial Officer Charles Bancroft said doctors aren’t prescribing Eliquis at the rate initially expected, and the diabetes market had grown more competitive.

Disappointing sales of the new drugs hasn’t hurt Bristol-Myers’s stock yet. Eliquis sales last quarter were below analyst expectations as well, and despite only beating their estimates of adjusted earnings once in the last seven quarters, the shares have gained 34 percent (BMY:US) since January 2012.

Bristol-Myers fell 1.5 percent to $43.93 at 4 p.m. New York time.

Reduced Forecasts

Bristol-Myers forecast (BMY:US) full-year earnings, excluding one-time items, of $1.70 to $1.78 a share from the previous outlook of $1.78 to $1.88. The company also reduced its full-year sales forecast (BMY:US) to $16 billion to $16.5 billion, from $16.2 billion to $17 billion.

For Eliquis, Andreotti and his executive team said the company will be spending more on doctor education, paying physicians to give lectures to peers about the treatment’s benefits and using a direct-to-consumer ad campaign.

“We are convinced the new supportive actions will deliver results,” Andreotti said. “I continue to believe that Eliquis will be the leading new agent over time.”

Cardiologists are prescribing the drug at good rates, the company said. Primary care doctors, though, are still relying on warfarin, an older, generic medicine that Eliquis was designed to replace.

While Eliquis, which the company sells with New York-based Pfizer Inc. (PFE:US), is projected to generate at least $1 billion a year, sales in the second quarter headed in the wrong direction. The pill generated $12 million for Bristol-Myers compared with $22 million (BMY:US) during the first quarter, and below the $48.3 million average of seven analysts’ estimates compiled by Bloomberg. The drug competes with Boehringer Ingelheim GmbH’s Pradaxa and Johnson & Johnson and Bayer AG (BAYN)’s Xarelto.

Bydureon Sales

Bydureon, acquired in the Amylin deal, also came in below estimates. Analysts had projected $84 million in sales. The drug’s revenue was $66 million, Bristol-Myers said.

“Clearly, the diabetes market has become increasingly competitive,” Bancroft said. “We, along with our partner AstraZeneca, recognize the need for adequate resources in this business and to execute better to drive growth. Therefore, we plan to increase our commercial investment in the second half of the year.” London-based AstraZeneca Plc (AZN) splits promotion of some of Bristol-Myers’s diabetes products.

Second-quarter earnings (BMY:US) of 44 cents matched the average of 17 analysts’ estimates (BMY:US) compiled by Bloomberg. Net income fell 17 percent to $536 million, or 32 cents, from $645 million, or 38 cents, a year earlier, the company said in a statement.

Long-Term View

The slow quarter wasn’t a huge surprise, said Mark Schoenebaum, an analyst with International Strategy & Investment Group in New York. “Investor expectations for the quarter and guidance were low -- and most shareholders presumably hold Bristol-Myers not for 2013 numbers, but for the longer-term upside,” he said in a note to clients today.

Investors are focused on the company’s pipeline and its leading position in developing new cancer therapies that use the body’s own immune system to fight the disease, Schoenebaum said.

The experimental cancer drug nivolomab, being studied in melanoma and lung cancer, is driving investors’ interest in the company, which “dominates the paradigm-changing immuno-oncology opportunity,” said Jami Rubin, an analyst with Goldman Sachs Group Inc.

The immune-oncology effort is part of a strategy to move the company past Plavix, once its best-selling (BMY:US) anti-stroke medication that lost patent protection in May 2012. Spending on research and development is projected to increase “in the low-single digit percentage range” this year, the company said.

Higher Expectations

That long-term focus by investors has given Bristol-Myers has the highest price-to-earnings ratio of any major U.S. drugmaker. “Bristol-Myers is and has been a higher-expectation name,” said Tim Anderson, an analyst with Sanford C. Bernstein & Co. who has a “market perform” rating on the stock.

Yervoy, Bristol-Myers’ immune-based cancer drug approved in 2011, sold $233 million, a 44 percent increase from a year earlier and $5 million more than estimates. Sprycel, a chronic myeloid leukemia treatment, grew 28 percent to $312 million.

Forxiga, a diabetes treatment rejected by the U.S. Food and Drug Administration in 2011, was resubmitted to the agency for approval. The company said it added new studies and long-term data on the drug’s use to its application. Before it was rejected, a panel of advisers to the agency questioned whether its risks of cancer outweighed benefits.

To contact the reporter on this story: Drew Armstrong in New York at darmstrong17@bloomberg.net;

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net


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Companies Mentioned

  • BMY
    (Bristol-Myers Squibb Co)
    • $53.63 USD
    • 1.13
    • 2.11%
  • PFE
    (Pfizer Inc)
    • $29.11 USD
    • 0.51
    • 1.75%
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