BMS Has A Lot Of Ground To Make Up Ahead Of Patent Expiries
Opdivo Has Another Down Quarter
Executive Summary
Bristol Myers Squibb is struggling to restore Opdivo’s growth and COVID-19 sales impacts didn’t help in Q1. New indications are coming but new products, like Zeposia, are slow to add significant revenue.
The wait for major revenue growth in Bristol Myers Squibb Company’s portfolio requires a lot of patience since new indications for Opdivo (nivolumab) and newly approved drugs are slow to add significantly to the company’s top line. COVID-19 is also impacting product sales, BMS reported on 29 April, with Opdivo down 3% year-over-year in the first quarter, resulting in just 3% growth overall in BMS’s Q1 revenue to $11.07bn, which was slightly below analyst consensus of $11.15bn.
The company has a lot of ground to make up in the next few years as its top-selling product, the multiple myeloma drug Revlimid (lenalidomide), will begin to face generic competition in 2022. BMS has said its new drug launches will generate $20bn-$25bn in annual revenue by 2029 to replace sales lost as its three biggest products lose patent exclusivity, but the contribution from new medicines launched to date – like the S1P receptor modulator Zeposia (ozanimod) – has been small, so far.
The pandemic was cited as a major factor in Opdivo’s decline from $1.77bn in first quarter 2020 sales to $1.72bn in Q1 of this year (below consensus expectations of $1.89bn) as patients continue to put off doctor office visits out of fear of COVID-19 – even visits to infusions centers for cancer treatment. The PD-1 inhibitor has fallen behind its key competitor Keytruda (pembrolizumab) for several quarters due to the Merck & Co., Inc. therapy’s dominance in first-line lung cancer, but while Keytruda saw Q1 sales increase 19% year-over-year to $3.9bn, it fell below consensus of $4.08bn due to the pandemic. (Also see "Merck & Co.'s Transitional Year Is Off To A Sluggish Start" - Scrip, 29 Apr, 2021.)
“We note that Keytruda and Opdivo both experienced slight quarter-over-quarter revenue declines, suggesting broader COVID-19 impact as opposed to poor performance by just Opdivo,” William Blair analyst Matt Phipps said in a 29 April note. “With the significant number of new market indications recently approved or expected for Opdivo, we believe Opdivo is on the path to becoming an important growth driver for the company again, but the positive clinical results need to translate into sales growth given sales have been stagnant for two years.”
BMS has been scrambling to catch up with Keytruda or at least return Opdivo to consistent growth, betting big on combinations with chemotherapy and with the company’s CTLA-4 inhibitor Yervoy (ipilimumab) in first-line non-small cell lung cancer (NSCLC) based on the CheckMate-227 and CheckMate-9LA studies. (Also see "Bristol’s Opdivo Continues Slide, But First-Line Lung Offers Optimism" - Scrip, 6 Aug, 2020.)
Even with uptake of these combinations, chief financial officer David Elkins reported during BMS’s same-day earnings call that “first-line lung shares remained in the low double digits within the [immuno-oncology (IO)]-eligible population.” Lung cancer, across all lines of treatment, accounts for 24% of Opdivo sales in the US with another 24% in renal cancer, 30% in melanoma and 22% in other cancers; ratios are similar outside the US.
However, BMS anticipates returning to Opdivo sales growth this year with additional new indications. The PD-1 inhibitor was approved in the US in combination with Exelixis, Inc.’s tyrosine kinase inhibitor Cabometyx (cabozantinib) in first-line renal cell carcinoma (RCC) in January and the combination was approved in the EU in April. (Also see "Exelixis Has Renewed Momentum Heading Into 2021" - Scrip, 11 Feb, 2021.)
The US Food and Drug Administration also approved Opdivo plus chemotherapy in April for advanced or metastatic gastric cancer, gastroesophageal junction cancer and esophageal adenocarcinoma. Other approvals expected in 2021 are in the adjuvant setting for esophageal cancer and muscle-invasive bladder cancer. (Also see "Nearly One Year Post-Celgene: BMS CMO On Pipeline Progress, Clinical Trial Diversity" - Scrip, 24 Sep, 2020.)
IO Beyond Opdivo/Yervoy: LAG3 And CAR-T
Even with Keytruda’s dominance in the PD-1 space, BMS is the clear leader in immuno-oncology with four approved IO drugs – Opdivo and Yervoy as well as the newly approved chimeric antigen receptor T-cell (CAR-T) therapies Breyanzi (lisocabtagene maraleucel) for large B-cell lymphoma and Abecma (idecabtagene vicleucel) for multiple myeloma. (Also see "Breyanzi Is Third To Market, But BMS’s First CAR-T Therapy Priced Above Competitors" - Scrip, 8 Feb, 2021.)
And now, with positive Phase II/III results in first-line melanoma with the LAG3 inhibitor relatlimab in combination with Opdivo, BMS is getting closer to adding a fifth IO asset to its commercial portfolio. Detailed data from that study will be presented at the American Society of Clinical Oncology meeting in June. (Also see "BMS Jumps Ahead With LAG-3 Melanoma Data" - Scrip, 25 Mar, 2021.)
“The results are very encouraging, and I think seeing an enhanced activity on top of Opdivo in melanoma, that's a pretty high bar,” BMS chief commercial officer Christopher Boerner told the call. In terms of where Opdivo plus relatlimab fits in the melanoma market, where Opdivo in combination with Yervoy is the leading treatment regimen, Boerner said the Opdivo/Yervoy combo is used to treat about 35% to 40% of first-line melanoma.
“Approximately 30% of this market is still single-agent IO, and you've got another 30% that is non-IO, so we think there's a real clear opportunity here for us to drive the benefit of relatlimab plus Opdivo into that population,” he said. “There's clearly a continued unmet need with physicians looking for additional options that have a dual IO-like effect.”
BMS did not provide a lot insight about the initial launches of its CAR-T therapies Breyanzi and Abecma, and reported no consequential sales to date, but the ramp up of those products will be slow given their complexity and requirements to certify treatment sites before the therapies can be administered.
To date, about 55 sites are certified to administer Breyanzi and more than 40 are certified to infuse Abecma, Elkins noted. He said some lymphoma patients already have gone through apheresis to withdraw T-cells that BMS will reengineer as Breyanzi and some of those individuals have been infused with the boosted T-cells.
Outside Of IO: Zeposia, Reblozyl, Onureg And More
BMS is planning for low- to mid-single-digit revenue growth between 2020 and 2025, and it expects new launch products to generate $20bn-$25bn in annual revenue by 2029, with Breyanzi and Abecma sales of $4bn combined, $3bn from Zeposia, $4bn from the anemia drug Reblozyl (luspatercept) in beta-thalassemia and myelodysplastic syndromes (MDS), $1bn from the acute myeloid leukemia (AML) drug Onureg (azacitidine), sub-$1bn for the myelofibrosis drug Inrebic (fedratinib), and $4bn from the TYK2 inhibitor deucravacitinib in psoriasis and other immunology indications.
Deucravacitinib has generated positive Phase III results in psoriasis and BMS plans to report Phase II proof-of-concept results in ulcerative colitis this year as well. The oral drug will be filed in psoriasis with the US FDA later this year with approvals in the US and EU expected in 2022/2023 along with Phase II data in Crohn’s disease and lupus. (Also see "Bristol Lays Groundwork For First Dermatology Launch, Ahead Of TYK2 Inhibitor" - Scrip, 26 Apr, 2021.)
Zeposia was approved for relapsing multiple sclerosis in March 2020 and launched on 1 June; first quarter 2021 sales totaled $18m – still a very long way off from BMS’s blockbuster hopes but double the $9m total in the fourth quarter of last year. (Also see "Bristol Launches Zeposia For MS, Sees Advantages In The COVID-19 Environment" - Scrip, 1 Jun, 2020.) It is one of many S1P receptor modulators approved in MS, but it could be the first approved in ulcerative colitis; the FDA action date is 30 May. A Phase III clinical trial of Zeposia in Crohn’s disease is under way. (Also see "BMS's Zeposia Shines in Ulcerative Colitis Phase III Study" - Scrip, 3 Jun, 2020.)
Other anticipated blockbusters also have a long way to go to reach their billion-dollar-plus potential. First quarter sales of Onureg – an oral version of the AML standard Vidaza approved in the maintenance setting – came in at $15m versus $14m in Q4.
“We continue to be encouraged by the [Onureg] launch where our teams remain focused on establishing the profile as the first and only oral treatment to demonstrate an overall survival benefit in the first-line maintenance setting of AML,” Elkins said. “Physician feedback and awareness have been positive, and our focus remains on shaping and establishing Onureg in a new maintenance segment of the AML treatment paradigm, which we know will take some time.”
Inrebic sales grew 33% year-over-year but from a small base, reaching $16m in the first quarter. Reblozyl sold just $8m in the year-ago period and brought in $112m in Q1 of 2021, down from $115m in Q4 of last year. Results from an ongoing Phase III trial in first-line treatment of anemia in MDS patients could give Reblozyl sales a big boost, but those data are not expected this year.
“The Bristol debate is heavily focused on the company’s next-generation products replacing its existing set as they lose IP,” Bernstein analyst Ronny Gal said in a 29 April note. “There are no issues with the pipeline … however, the recent launches (Onureg, Reblozyl, Zeposia, Inrebic) all had a ‘pause’ quarter and thus the thesis is essentially frozen.”
Faster uptake of new launches is crucial as the end of Revlimid’s patent-protected life approaches next year. Generics will hit the market gradually under settlements with generics manufacturers, but given the drug’s use as a backbone therapy in most multiple myeloma treatment regimens there likely will be strong demand for cheaper versions of Revlimid.
“We expect accelerating growth for Revlimid until generics launch in March 2022, but the staggered market volumes agreed on by generic firms likely mean more modest but increasing pressure through early 2026, when restrictions are lifted,” Morningstar analyst Damien Conover said in a 29 April note.
While Zeposia, Reblozyl and other new launch products add indications over the next eight years to reach their $20bn-$25bn potential, BMS’s other two top-sellers – Eliquis (apixaban) and Opdivo – also will lose their market exclusivity.
Eliquis, which goes off patent in 2026, generated $2.89bn in first quarter sales – up 9% year-over-year. The anticoagulant and Revlimid combined account for more than 50% of BMS’s current revenue.