Bristol-Myers Squibb Company BMY along with Japan’s Ono Pharmaceutical and Bayer AG BAYRY has entered into a collaboration agreement to evaluate the combination of Bristol-Myers’ PD-L1 inhibitor Opdivo (nivolumab) plus Bayer’s Stivarga (regorafenib) for treating patients with microsatellite-stable metastatic colorectal cancer (MSS mCRC), the most common type of CRC.

With this deal, the three companies are looking to evaluate the combination of Opdivo + Stivarga compared to Stivarga alone for treating the given indication. The financial terms of the deal have been kept under wraps.

Stivarga as a monotherapy demonstrated an overall survival benefit compared to placebo in the pivotal phase III CORRECT study. However, despite progress in the treatment and current approvals for the drug, MSS mCRC remains difficult to treat. As a result, combination treatment options become imperative. The combination of Opdivo + Stivarga has shown promising preliminary efficacy results in a phase Ib REGONIVO study conducted in Japan. Data from the study was recently presented at the annual meeting of American Society of Clinical Oncology.

Shares of Bristol-Myers have lost 15.3% so far this year, underperforming the industry’s decrease of 1.2%.

We remind investors that in 2011, Bayer had entered into a collaboration agreement with Onyx Pharmaceuticals, a subsidiary of Amgen, under which Onyx receives royalty on global net sales of Stivarga. The drug is already approved in more than 90 countries including the United States, China and Japan and in Europe for metastatic colorectal cancer, metastatic gastrointestinal stromal tumors and hepatocellular carcinoma.

Notably, in 2014, Bristol-Myers and Ono signed a strategic collaboration agreement to jointly develop/commercialize Opdivo and Yervoy (ipilimumab) for the treatment of different tumor types, both as single agents and in combination regimens to treat several cancer indications in Japan, South Korea and Taiwan.

Opdivo is a blockbuster immuno-oncology drug in Bristol-Myers' portfolio. It is currently approved in the United States, EU, Japan and in other countries for several cancer indications. In the first quarter of 2019, Opdivo generated sales of $1.8 billion, reflecting a rise of 19% year over year.

However, Opdivo faces stiff competition from Merck’s MRK PD-L1 inhibitor Keytruda. Additionally, competition is rising in this category with the presence of Roche’s RHHBY Tecentriq. Both Keytruda and Tecentriq are approved for first-line non-small cell lung cancer, which has the largest patient population among all cancer indications.

As a result, Bristol-Myers is working on expanding the label of Opdivo further. Label expansion into additional indications would give the product access to a higher patient population and increase its commercial potential significantly.

Zacks Rank

Bristol-Myers currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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