Bristol-Myers Squibb Loses $4.3 Billion in Market Value After ASCO Update

June 7, 2017
By Mark Terry, BioSpace.com Breaking News Staff

In the eyes of investors, Bristol-Myers Squibb has never really recovered from bad news in August 2016 of its clinical trial of Opdivo (nivolumab) as monotherapy in non-small cell lung cancer (NSCLC). Although the company had quite a bit of good news at the ASCO meeting this weekend, investors still seem leery.

Yesterday, Bristol-Myers dropped to a current price of $51.66, a loss of about $4.3 billion in market value. Seeking Alpha notes, “Underwhelming two-year survival data from Opdivo plus Yervoy in a Phase I lung cancer study probably did the most damage; the stakes are incredibly high here ahead of a crucial pivotal readout early next year. Even Bristol’s announcement that it would be fast-tracking its in-house IDO inhibitor into pivotal studies could not lift spirits.”

And in many ways, it’s puzzling. EP Vantage recently released a report in conjunction with ASCO that evaluated the status of PD-1/PD-L1 combination therapies. The report notes that there are currently 268 combination trials ongoing that involve Merck ’s Keytruda and 242 with Opdivo, and 86 of those combine Opdivo with Bristol-Myers’ Yervoy.

But that may also explain the investors’ nerves—Bristol-Myers Squibb is running a close second to Merck.

Not everyone agrees, however. Barclay’s Geoff Meacham recently wrote after a Bristol-Myers investor meeting, “CSO Tom Lynch emphasized the three key points for the go forward R&D strategy previously articulated on the 1Q17 call: see how Opdivo, Yervoy, and other next-gen agents can potentially be applied to both native and acquired resistant populations by enhancing translational medicine, investing in cancer biology, and investing more in robust data analytics.”

Meacham goes on to say, “We think it’s clear that Bristol is doing some genuinely interesting science and taking worthwhile risks with next gen agents like LAG3, IDO, and GITR that could meaningfully pay off down the road. However, we remain somewhat uncomfortable with the ambiguous stance on how the CheckMate-012 two-year data serves as a potential predictor for CheckMate-227, which remains foremost on investors’ minds. Without question, there is more to Bristol’s investment case than just front-line lung, but the lack of clarity on how it will get to participate in this important market segment over the intermediate term outweighs the otherwise impressive discovery and translational efforts.”

Which seems to be where Seeking Alpha falls as well, noting, “The strong response rates seen in non-small cell lung cancer patients in the Keytruda-epacadostat study ECHO-202 were likely interpreted as a further threat to Bristol-Myers’ Opdivo-Yervoy combo strategy in this tumor type. The data are far too early to make an informed call on this; however, Bristol’s announcement on BMS-986205 is telling of the potential seen in the IDO mechanism.”

This compound, it was announced at ASCO, was developed in-house, inhibits IDO, and will be launched into several registrational studies, including in NSCLC. It’s collaboration with Incyte will continue as well. Seeking Alpha writes, “Having already learnt a painful lesson in lung cancer, with the IDO combination Bristol is clearly making sure every base is covered.”

Barron’s writes, “Both the WSJ and Barron’s see Bristol-Myers as a value stock. We weighed in on the shares back in February, arguing that the selloff was overdone given the prospects for Opdivo sales and the company’s pipeline.”

And with more than 240 clinical trials underway that uses Opdivo, only a complete disaster would keep the drug from a broader market, although investors are clearly concerned that it will remain a combo drug instead of a frontline treatment.

Seeking Alpha writes, “Concerns that Bristol-Myers has conceded much ground in first-line lung are well founded, but there are wider issues here. At ASCO, Merck left the impression it had more to say about near-market combinations, which will not satisfy Bristol-Myers investors looking for a quick return to form.”