Drugmaker Bristol-Myers Squibb Co., which recently got approval of an important new skin cancer drug but is facing a sharp revenue drop next year, will report first-quarter results before the stock market opens Thursday.
WHAT TO WATCH FOR: Executives at Bristol-Myers, which sells blockbuster blood thinner Plavix and drugs for diabetes and HIV, likely will tout last month's U.S. approval of a "breakthrough" drug for melanoma, the deadliest type of skin cancer. Researchers say the injectable biologic drug Yervoy, known chemically as ipilimumab, is the first drug shown to prolong the lives of patients with melanoma that can't be surgically removed or has spread from skin to internal organs.
The Food and Drug Administration previously approved only two other drugs for advanced melanoma, both more than a decade ago, and neither significantly boosted survival. Yervoy is now under review by European Union regulators, and results of a study testing it in patients not yet treated with other medicines are to be presented in early June.
In January, the FDA granted a six-month extension of the patent for Plavix, the world's second best-selling medication, until May 17, 2012. Bristol-Myers Co. markets the drug with partner Sanofi-Aventis SA. The extension, granted because they tested the drug in children, was anticipated and means the companies should share several billion dollars from additional sales before generic competition hits.
That's an important short-term gain, but Bristol faces a probable revenue plunge in 2012 as the patents on Plavix and other big sellers expire.
Company executives likely will tout the prospects for Yervoy and a new Type 2 diabetes pill called Kombiglyze XR launched in January, and may give updates on some experimental drugs in late-stage testing and others awaiting approval. Bristol-Myers expects up to four more approvals between this year and next, including anticlotting drug apixaban, organ transplant drug belatacept and Type 2 diabetes pill dapaglifozin.
The diabetes treatment market is growing quickly along with the global epidemics of obesity and related Type 2 diabetes, with close to 25 million Americans alone now affected by Type 2 diabetes. Despite that, the Bristol-Myers diabetes pill Onglyza, launched with big expectations in July 2009, has had disappointing sales, far lower than rival Merck & Co.'s popular Januvia. The latter is in the same DPP-4 inhibitor class of diabetes drugs but hit the market well before Onglyza.
Meanwhile, in February Bristol-Myers and partner Eli Lilly and Co. stopped enrolling patients in one of two late-stage studies of the potential cancer treatment necitumumab, for advanced non-small cell lung cancer, due to worries about blood clots. Patients in that study will continue receiving the drug, and the companies will continue a separate late-stage study that combines it with Lilly's Gemzar and cisplatin to treat another form of lung cancer.
CEO Lamberto Andreotti, who's wrapping up his first year in the job, may give updates on layoffs and other cost-cutting, and efforts to resolve product sterility issues at Bristol's factory in Manati, Puerto Rico. Those problems led the FDA to hold up approval of belatacept and a new form of rheumatoid arthritis drug Orencia that patients could inject under the skin themselves, because they would be made or packaged there.
Last September, the New York company said it planned to cut about 840 jobs out of 28,000 worldwide, following rounds of layoffs in 2008 and in 2007, when the company had about 41,000 employees globally.
WHY IT MATTERS: Rivals have been diversifying into consumer, animal and generic drugs to stabilize their revenue against big drops when patented prescription drugs lose protection. Bristol-Myers instead has been transforming itself into a biopharmaceutical company, specializing in pricey biologic drugs, "manufactured" in living cells, for conditions including cancer and viral illnesses.
It could lose close to half its revenue over the next four years due to one of the industry's worst "patent cliffs." Plavix, bipolar disorder treatment Abilify, HIV treatment Sustiva and blood pressure drug Avapro _ with combined annual sales of nearly $12 billion out of Bristol's nearly $20 billion total _ will face low-cost generic rivals as their patents expire over that span.
Barclay's Capital analyst Tony Butler has estimated the key new Bristol-Myers drugs awaiting regulatory approval could produce total sales of $7 billion in 2015, which won't make up for all the losses to generic competition.
Given that urgency, Citigroup Global Markets analyst John Boris is looking for an update on Bristol's experimental drug pipeline and the impact of its alliance with Eli Lilly on diabetes drugs, as well as plans for the launch of Yervoy. He's particularly interested in whether managed care insurers will cover Yervoy, which is expected to cost $30,000 for each of four treatment cycles.
WHAT'S EXPECTED: Analysts surveyed by FactSet, on average, expect earnings per share of 53 cents and revenue of $4.98 billion.
LAST YEAR'S QUARTER: A year ago, Bristol-Myers reported net income of 43 cents per share _ or 56 cents, excluding one-time charges _ on revenue of $4.81 billion.