Bristol Outperforms In Q3, But Will Dapagliflozin, Apixaban See It Past Plavix?

The big pharma beats analysts' estimates for the third quarter, but all eyes are turned toward its pipeline as the Plavix patent expiry becomes a near-term reality.

Bristol-Myers Squibb Co. pleased the Street with a third quarter earnings report that beat expectations, but questions linger about the company's near-term pipeline opportunities now that its diabetes drug has been delayed.

On Oct. 26, the day before its earnings announcement, Bristol and partner AstraZeneca PLC announced that FDA was extending the user fee goal date for their type 2 diabetes drug dapagliflozin by three months, from Oct. 28 to Jan. 28. Bristol confirmed on its earnings call that it has submitted further data to support the drug's approval application.

"We're working closely with the FDA to answer questions that arose in the advisory committee," Bristol Chief Scientific Officer Elliott Sigal said on the Oct. 27 call. "The advisory committee gave some clear direction in their discussion, and raised points that hopefully can be answered by the new clinical data that we submitted."

The new data come from two Phase III studies in about 1,800 patients with type 2 diabetes who were at high risk of cardiovascular events, which concluded late in the review period. "They afforded the opportunity to describe, not just the efficacy, but the safety, and we believe this additional information will help the FDA make a decision," Sigal said. With the data in hand, the companies were able to submit it as a major amendment that reset the clock 90 days - as opposed to having to collect data in response to a "complete response" letter.

Analysts don't see the delay as a problem, arguing that the negative advisory committee vote that the drug received in July - mostly due to questions about an increased risk of breast and bladder cancer - could have earned the drug an outright rejection instead (Also see "Dapagliflozin Cancer Signal Weighs Heavily In FDA Panel's Negative Vote" - Pink Sheet, 19 Jul, 2011.).

"There has been some hope that the drug might still receive full FDA approval on time, but most [investors] seem to believe that a delay is inevitable," wrote Sanford Bernstein's Tim Anderson in a note to clients. "This is presumed to be the case because of past problems with approved diabetes drugs where safety issues were later found (e.g. GSK's Avandia) which - in the context of having a negative FDA panel vote in hand - will give FDA cover to take a more conservative route."

Dapagliflozin, a first-in-class SGLT2 inhibitor, has been watched closely by investors but has not received the same sort of enthusiasm from the scientific world, which views the class with less confidence, according to Anderson (Also see "New Data Help Size Up Novel Class Of SGLT-2 Inhibitors In Diabetes" - Pink Sheet, 5 Jul, 2010.). Yet diabetes is a large category that has plenty of space for multiple types of drugs, allowing for most analysts to expect the drug to become a blockbuster within three years of approval. Since the companies will be splitting revenues for dapagliflozin down the middle, Bristol - being the smaller company - "is more levered to whatever ultimately happens with the product," wrote Anderson.

Preparing For The Loss Of Plavix

Bristol investors are paying close attention to the new revenue-drivers the company could have in the next few years now that the patent expiration for the world's second best-selling drug, Bristol and Sanofi SA's blood thinner Plavix (clopidogrel), will be coming up in May.

Plavix earns the companies about $7 billion annually and continues to produce strong sales. It tallied sales of $1.79 billion in the third quarter; significantly outpacing Bristol's other drugs. Bristol's second-best earner, the schizophrenia drug Abilify (aripiprazole), posted sales of $619 million in the quarter, up 14%, while sales of the hepatitis B drug Baraclude (entecavir) rose 36% to $311 million and the leukemia drug Sprycel (dasatinib) jumped 47% to $211 million.

The HIV drug Reyataz (atazanavir) brought in $391 million. Bristol announced earlier in the week that it has signed a licensing agreement with Gilead Sciences Inc., as part of its "string of pearls" business development strategy, to combine Reyataz into a single, daily-dose pill with the biotech's boosting agent cobicistat (Also see "Gilead Hedges Against Eventual Generic Competition For Atripla With Bristol HIV Pact" - Pink Sheet, 26 Oct, 2011.). The agreement will help Bristol prepare for revenue losses for the Sustiva (efavirenz) franchise when the HIV drug loses patent protection in 2013. The franchise, which includes Sustiva and sales of the three-in-one pill Atripla (Sustiva/emtricitabine/tenofovir), brought in revenues of $359 million for Bristol in the third quarter.

The quarter was sweetened by the unanticipated strength of Yervoy (ipilimumab), a treatment for melanoma that Bristol launched in May (Also see "With The Launch Of Yervoy, Early Signs Of R&D Success For Bristol" - In Vivo, 1 May, 2011.). Sales of the drug reached $121 million in the quarter, up from $95 million in the second quarter. Yervoy was the first drug to show evidence of extending survival for patients. While Bristol has pledged that it won't conduct any major acquisitions or that it isn't chasing blockbusters to sustain long-term growth, it might have one in Yervoy - Leerink Swann analyst Seamus Fernandez estimates that it could yield sales of $1.14 billion in 2017.

"During the second quarter, we launched Yervoy in Europe, with a few countries that have already started recording sales while others initiated their pricing reimbursement discussions," Bristol CEO Lamberto Andreotti said on the call. "In the U.S., brand awareness of Yervoy is at virtually 100%, and the number of accounts ordering the product continues to increase month to month. And most importantly, uptake for Yervoy remains strong both in hospitals and community-based treatment centers."

One of the most closely watched drugs in Bristol's pipeline may finally be making its way to market. The company said on its earnings call that it would inform investors when FDA has issued a PDUFA date for the blood thinner Eliquis (apixaban), implying that the company and its partner, Pfizer Inc., already have filed for approval. The drug, which would be the third warfarin alternative to hit the market in recent years, behind Boehringer Ingelheim's Pradaxa (dabigatran) and Bayer/Johnson & Johnson's Xarelto (rivaroxaban), has shown impressive safety and efficacy results in late-stage trials that could position it as best-in-class. Fernandez predicted peak sales of $4.2 billion in 2017 (Also see "Bristol/Pfizer's Apixaban: Third To Market But Best-In-Class?" - Pink Sheet, 23 Jun, 2011.).

Andreotti cited the positive data in stroke prevention in patients with atrial fibrillation as propitious for the product's performance, and that Eliquis could be a key product for the company. "The results of that Phase III study were very positive and demonstrated Eliquis' statistical superiority to warfarin with respect to reducing the risk of stroke and reducing the risk of bleeding in patients with atrial fibrillation. This is [a] very important, very important development, one that underscores the strength and promise of our pipeline," Andreotti said.

Bristol reported earnings of $969 million, or 56 cents per share, in the third quarter, up from $949 million, or 55 cents per share, in the year-earlier period. Excluding one-time charges, it earned 61 cents per share, beating analysts' average estimate of 58 cents per share. (Analysts typically exclude one-time charges.) Sales rose 11% to $5.35 billion, slightly besting Wall Street expectations of $5.3 billion.

-Lisa LaMotta ([email protected])