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Bristol-Myers Squibb Disappoints

publication date: Jun 14, 2017
author/source: Alexander J. Poulos

Shares of Bristol-Myers Squibb have come under intense selling pressure off the heels of disappointing performance at ASCO. Let’s examine the situation.

By Alexander J. Poulos

What is ASCO?

ASCO is an acronym for the American Society of Clinical Oncology, the premier organization for oncologists. ASCO typically holds its annual meeting in early June, which holds particular appeal for biotech (IBB) investors. Biotech outfits will often use the annual meeting for a full disclosure of study data, which can have an outsized impact on equity prices.

The ASCO effect on Bristol-Myers

Bristol-Myers Squibb (BMY) was the darling of the 2013 ASCO event, revealing stunning data for its flagship compound Opdivo. The equity took off leading into and well after the conference, beginning 2013 at roughly $33 per share. The shares zoomed higher as Bristol started to realize the potential of Opdivo. Bristol’s share price peaked north of $75 per share in July of 2016 for a stellar return well in excess of the overall market. Even though Bristol is often lumped together as a traditional pharma company, the equity returns were more biotechesque.

This year’s ASCO results are a far cry from the halcyon days of 2013. The bloom is off the rose as Opdivo recently failed to live up to the hype associated with it. The initial hit manifested itself last summer where Bristol revealed that Opdivo failed to hit its primary endpoint for the treatment of Non-Small Cell Lung Cancer (NSCLC). The share price reacted violently, gapping down sharply. The share price has failed to recover from the drop, a surprise in the current bull run with a new high hit seemingly on a daily basis.

The failure of Opdivo to garner the first-line status in NSCLC severely crimps the upside potential for the product. The result is particularly painful for Bristol shareholders as label expansion is crucial to offset the coming patent cliff for some of Bristol’s older products. Bristol’s best hope is a combination therapy ideally with in-house compound Yervoy in an attempt to expand mitigate the impact of the miss in NSCLC.

ASCO 2016 Is Not Kind to Bristol

The first data point Bristol presented is the combination of Opdivo (Nivolumab) and Yervoy (Ipilimumab) for the treatment of Refractory or Relapsing Malignant Pleural Mesothelioma Patients. The results are not encouraging as the toxicity of Yervoy reared its ugly head:

The 12-week disease control rate, the primary endpoint of the study, was 44.4% [95% CI: 31.2-57.7%] with nivolumab, and 50% [36.7-63.3%] with Nivolumab plus ipilimumab, as assessed by an independent panel of radiologists. The objective response rate was 18.5% [8.2%-28.9%] with nivolumab, and 25.9% [14.2-37.6%] with Nivolumab plus ipilimumab. The median overall survival was 10.4 months with nivolumab and not reached for the combined-treatment group. The progression-free survival was 4.0 months for monotherapy and 5.6 months for the combined-treatment group. The numbers of all Grade and Grade 3-4 toxicities were 86.9% and 18% in the combined-treatment group versus 77.8% and 9.5% with nivolumab alone.

In our opinion, the 1.6-month increase in progression-free survival will limit the commercial potential of the combination. Also, the virtual doubling of grade 4 side effects does not help the case for combination therapy.

Toxicity Grade


Grades - Toxicities (or side-effects) are graded from one to five. The higher the number, the more toxic were the side-effects for the treatment. There are a number of different toxicity scales (i.e. National Cancer Institute Common Toxicity Criteria version 2.0, World Health Organization) and they are all similar in respect to their grades and definitions. The scale is generally:

1 = Mild side-effects
2 = Moderate side-effects
3 = Severe side-effects
4 = Life Threatening or Disabling side-effects
5 = Fatal

          Image Source: Cancer Monthly

The combination of Opdivo and Yervoy did post some impressive phase II results for the treatment of patients with DNA mismatch repair deficient (dMMR) or microsatellite instability-high (MSI-H) metastatic colorectal cancer (CRC). The side effect profile is far more favorable with 28.6% of patients with Grade 3/4 treatment-related adverse events versus 86.9% in the Mesothelioma trial. The lumpiness of Bristol’s results underscores the difficulty in bringing forth new treatments.

Path Forward

Bristol continues to press forward with label expansion for its formidable oncology franchise. Unfortunately for shareholders of Bristol-Myers, we feel the hype associated with Opdivo has led to a proverbial letdown for those who have recently acquired an equity stake. Opdivo is a blockbuster product that will continue to aid many afflicted with various forms of cancer.

As is often the case in such an innovative field where creative destruction is the norm, a more innovative/effective molecule may have emerged. That molecule is Keytruda, which is manufactured by Merck (MRK). Bristol will need to continue to press forth with Opdivo by testing it with additional agents such as Epacadostat an IDO1 Inhibitor to produce a more robust response in patients afflicted with various forms of cancer. A full review of the Epacadostat with Keytruda in addition to Opdivo will be examined in an upcoming post on Incyte (INCY). Stay tuned. 

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