A Look at Bristol-Myers Squibb’s Oncology Segment
Taking Bristol-Myers Squibb's Pulse: What Drives Its Valuation?
The oncology segment
Bristol-Myers Squibb’s (BMY) oncology segment contributed ~25% of the company’s total revenues in 2015. Investors can refer to the article Bristol-Myers Squibb’s Oncology Franchise for further details on the past performance of this segment. The key products for the oncology segment include Erbitux, Yervoy, Sprycel, and Opdivo.
Erbitux
Erbitux sales declined by 30% in 2015 from 2Q14. The company entered into an agreement with Eli Lilly and Company (LLY) to transfer the rights for the manufacturing and marketing of Erbitux in North America to Lilly’s wholly owned subsidiary ImClone Systems, which was completed in October 2015. Bristol-Myers Squibb reported revenues of $501 million from Erbitux sales for the first three quarters of 2015, and the company will receive tiered royalties through September 2018 for the net sales of Erbitux in North America.
Sprycel
Sprycel, an oral inhibitor drug, reported an increase of ~8.5% in 2015 revenues from 2014, due to an increased demand for the drug.
Yervoy
Yervoy is a monoclonal antibody drug used to treat melanoma. Yervoy revenues declined by ~14% in 2015 from 2014 due to the approval of competitive drugs in US markets. Some recovery from the impact of this is expected in 2016, following the approval of the Opdivo-Yervoy drug combination by the FDA for the treatment of BRAF V600 wild-type unresectable or metastatic melanoma in January 2016.
Merck and Co.’s (MRK) Keytruda (pembrolizumab), a PD-1 (programmed cell death receptor-1) blocker, received FDA approval in 2014 for the treatment of melanoma. Keytruda is a better first-line therapy than Yervoy, which has impacted Yervoy sales.
Opdivo
Opdivo (nivolumab), is a PD-1 blocking antibody, used in lung cancer and melanoma treatments. Opdivo is part of BMY’s alliance with Ono Pharmaceutical. Opdivo is the seventh drug to get FDA approval for the treatment of melanoma since 2011. Opdivo reported sales of $942 million in 2015. What does Bristol-Myers Squibb expect from Opdivo? You’ll find out in the next article.
To divest risk, investors could consider the iShares US Healthcare ETF (IHE), which holds 6.8% of its total investments in Bristol-Myers Squibb, 10.7% in Johnson & Johnson (JNJ), 6.2% in Eli Lilly and Company (LLY), and 8.7% in Pfizer (PFE).
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