Bristol Myers Squibb (BMY) is preparing to defend its blockbuster drug Opdivo in liver cancer patients — but BMY stock has ticked up this year.
Later this month, a Food and Drug Administration panel will discuss the merits of cancer drugs from Bristol, Merck (MRK) and Roche (RHHBY). The approvals for these drugs in some uses were contingent upon further testing. The tests didn’t confirm the drugs’ benefits.
The result could put Opdivo on the chopping block as a second option for liver cancer patients.
Meanwhile, Opdivo still shows promise in other uses. Earlier this month, European officials recommended approving Opdivo plus another cancer drug, Yervoy, in patients with a form of lung cancer. The FDA also recently approved Opdivo plus chemo in stomach cancer treatment.
Bristol also recently wrapped the $13.1 billion takeover of MyoKardia, a heart-disease biotech.
So, is now the right time to buy BMY stock?
Bristol Myers Expands Its Drugs Wheelhouse
After buying Celgene, the pharmaceutical company’s biggest products are cancer treatments known as Revlimid and Opdivo, and a blood thinner called Eliquis.
In the fourth quarter, worldwide Opdivo sales edged up 2%. U.S. sales of the cancer drug fell 2%, however. And, in 2020, Opdivo sales dipped 3%. Meanwhile, Merck’s rival cancer medicine, Keytruda, grew 28% in the fourth quarter and 30% in 2020.
Keytruda sales aren’t just outpacing Opdivo in growth. They’re also much bigger. In 2020, Opdivo brought in $6.99 billion. Over the same period, Keytruda generated $14.38 billion in sales.
However, total revenue for Bristol Myers popped 39% to $11.07 billion. Adjusted earnings of $1.46 per share grew 20%. Both measures beat expectations. Bristol Myers noted the strong sales growth was primarily due to the Celgene buyout, which completed in November 2019.
It will be key to watch earnings results over time to see if Bristol Myers can retain the strong growth post Celgene takeover. CAN SLIM rules for investing advise investors to seek companies with recent quarterly sales and earnings growth of 20%-25%.
For the first quarter, analysts polled by FactSet expect Bristol Myers earnings to rise 5% to $1.81 a share. They predict $11.16 billion in sales, up 3%.
What Do Annual Metrics Say About BMY Stock?
BMY stock ended 2020 with a 3.4% decline. As of midday trading on April 23, BMY stock had risen 6.9% this year.
Last year, sales soared 63% to $42.52 billion, benefitting from a year of Celgene drug sales.
For 2021, analysts call for Bristol Myers to earn $7.48 per share, up 16%, on $46.3 billion in sales, up 9%. In the future, however, analysts are watching for generic versions of cancer drug Revlimid. Teva Pharmaceutical (TEVA) is set to launch a generic in 2022.
BMY Stock Technical Analysis: Shares Consolidate
The CR measures a stock’s key technical and fundamental metrics. That CR puts BMY stock in the top half of all stocks. The RS Rating tracks the stock’s 12-month performance vs. all other stocks on a 1-99 scale. Market-leading stocks have an RS Rating of 80 or higher.
BMY stock ranks second among the 35 pharmaceutical companies in the Medical-Ethical Drugs industry group based on CR. The group itself is lowly ranked. It ranks No. 174 out of 197 industry groups tracked by Investor’s Business Daily.
Recent News From The Pharma Company
As part of the Celgene buyout, Bristol Myers promised to pay $9 per Contingent Value Right owned by former Celgene shareholders. However, the FDA failed to approve cancer drug liso-cel by a year-end 2020 deadline. That killed the payout for Celgene shareholders.
But Bristol Myers remains sunny on other opportunities.
On March 26, the FDA approved a multiple myeloma drug from Bristol Myers and Bluebird Bio (BLUE) called Abecma. Formerly known as ide-cel, Abecma is the first CAR-T treatment to go after the B-cell maturation antigen, or BCMA.
This quarter, the company plans to ask for FDA approval of MyoKardia’s heart drug mavacamten. Bristol calls it a potential first-in-class cardiovascular medicine for the treatment of obstructive hypertrophic cardiomyopathy, a chronic and potentially fatal heart disease.
Soon, the FDA will run a three-day meeting to discuss the benefits of some cancer drugs that gained approvals and later failed to show the same benefit in confirmation studies. That includes Bristol Myers’ Opdivo and Merck’s Keytruda as second options in liver cancer treatment.
On March 11, Bristol Myers issued a written statement in support of Opdivo in liver cancer patients.
“Despite evolution of the treatment landscape over the past few years, we believe Opdivo continues to address an unmet medical need for patients in the post-sorafenib setting, and we appreciate the opportunity to discuss this in more depth with the committee,” Bristol Myers said.
Liver cancer patients can receive Opdivo if they’ve first tried — and worsened — on the chemotherapy known as sorafenib.
So, Is BMY Stock A Buy Right Now?
No, BMY stock is not a buy right now.
The pharmaceutical company has yet to top a buy point out of a long-term consolidation. It’s best to add shares after a stock has surpassed a buy point and is within the 5% chase zone.
Although sales and earnings grew in the fourth quarter, the addition of Celgene is largely to credit. It will be key to watch for an apples-to-apples comparison in early 2021.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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