Bristol-Myers Squibb's Summertime Blues

The sun was shining, savory scents were floating out from the grill, the lemonade was mixed and the table was set. But then dark clouds blew in and settled overhead. Bristol-Myers Squibb’s (BMS) picnic got rained out this summer.

One element of the rain out was forecasted long ago; Plavix, the multibillion dollar blood-thinner, second only to Lipitor in sales for the last several years, was due to face generic competition. Two other products, Avapro and Avalide, also saw profits wrested away by generic copies beginning last year. For the first six months of 2011, Plavix, Avapro and Avalide generated combined net sales of $4.7 billion for BMS. For the first six months of 2012, that number fell by 40% to $2.8 billion. (For a pdf list of BMS key product sales for 2011 and the first six months of 2012, click here.)

Patent expiry losses were expected, and analysts have been positive about BMS’s pipeline and newer drugs, as a way to fill the gap. Yervoy, a melanoma drug approved by FDA in March of 2011, had a strong launch with sales at $316 million for the first six months of 2012. Tim Anderson, senior analyst at Sanford C. Bernstein, predicts that Sprycel, a leukemia drug, and Yervoy will both be blockbusters by the end of 2013 and the end of 2014, respectively. Two early stage monoclonal antibodies aimed at boosting the immune system to fight cancer have generated some excitement in the investment community, too. But other pipeline drugs destined for big success have met with setbacks this summer.

Eliquis, a heart drug for the prevention of stroke and embolism in development with Pfizer has been called a potential blockbuster by just about everyone who makes predictions about blockbuster drugs. It will need to be approved first, of course, and FDA hesitated in June, saying it needed more data. BMS announced a safety problem on August 1 with its nucleotide polymerase inhibitor (BMS-986094), an oral hepatitis C candidate brought in through the $2.5 billion acquisition of Inhibitex last January. The company suspended dosing on BMS-986094 after one patient suffered from heart failure. “With the new hepatitis C news, [BMS] shares may lose some of their luster,” wrote Anderson in a note to investors.

Regulators raised other fusses and hollers this summer. In an

dated June 29, the Office of Prescription Drug Promotion (OPDP) took issue with a sales aid for the breast cancer drug Ixempra. The problem, according to OPDP – and this speaks to the critical importance of endpoint selection and clinical trial design in cancer drugs – was that BMS made claims based on “stable disease” and “progressive disease.” The clinical studies, however, tested for progression-free survival as a primary endpoint in combination therapy, and overall response rate in monotherapy. “We note that stable disease, stable disease [greater than or equal to] six months, and progressive disease were not pre-specified endpoints in the pivotal studies for Ixempra’s monotherapy and combination therapy indications,” scolds OPDP in the letter.

Finally, Robert Ramnarine, most recently assistant treasurer for capital markets at BMS, was arrested for insider trading on August 2. Ramnarine allegedly made illegal trades based on information concerning three BMS acquisition targets, according to an FBI statement.

BMS’s summertime blues could begin to lift in the fall. If everything goes right, the company’s Corporate Integrity Agreement (CIA) will expire on September 26, and BMS will once again be out from under government’s magnifying glass. It’s also possible that BMS’s diabetes dealmaking will start to pay off: profits on the diabetes drugs Byetta  and Bydureon will be shared, as well as any new Amylin drugs coming into the market. (UPDATE 8/9: Deal Done) Byetta earned $120.6 million in 1Q 2012, and Bydureon earned $6.9 million during the same period, after its approval on January 27, according to company statements. Last April, Amylin completed its Biologics License Application (BLA) for metreleptin, an FDA-designated orphan drug for the treatment of high triglycerides and/or diabetes in patients with a rare form of lipodystrophy, and has received fast-track designation. The condition affects just a few thousand patients worldwide, but the price-tag will likely take this factor into consideration. FDA could make a decision about metreleptin as early as this autumn.

Fall is just around the corner, but unfortunately for BMS, there is still no cure – to date – for the summertime blues.