The FDA delivered a huge boost to Bristol-Myers Squibb Company (BMY) by approving its cancer candidate Yervoy (ipilimumab).
The drug has been cleared for treating patients suffering from metastatic melanoma, the severest form of skin-cancer. Ipilimumab has been cleared to help treatment-naïve and experienced patients.
Ipilimumab has been approved on the basis of a late-stage study, which showed that treatment with the drug extended overall survival of patients suffering from advanced skin cancer. The current therapies for the indication do not prolong the lives of the patients.
We note that the label of ipilimumab includes a boxed warning for immune-mediated side effects. Bristol-Myers has developed a risk evaluation strategy (REMS) so that the drug can be used safely. The REMS also aims to inform patients about the risks associated with the usage of ipilimumab.
The Food and Drug Administration’s nod for ipilimumab is a big positive for Bristol-Myers since the market for metastatic melanoma has a huge unmet need. Consequently, the clearance of the skin-cancer drug will boost Bristol-Myers’ top line significantly. Ipilimumab, which is expected to hit the US markets within the next few weeks, is the first FDA-approved therapy for the indication in more than a decade.
We remind investors that FDA accepted the Biologics License Application (BLA) for ipilimumab for the indication in August 2010 and assigned a target date of December 25, 2010. However, the review period was extended by three months in December 2010. The candidate is under review in Europe and many other countries for the same indication. Approval in additional territories will boost Bristol-Myers’ oncology portfolio further.
Our Take & Recommendation
We currently have a ‘Neutral’ recommendation on Bristol-Myers, which is supported by a Zacks #3 Rank (short-term ‘Hold’ rating). Our biggest concern for the company is the high exposure to generic risk on many of its leading franchises including the block-buster Plavix, which has been co-developed with Sanofi-Aventis (SNY).
However, Bristol-Myers has already taken measures like the extension of the Abilify agreement with Otsuka, the acquisition of ZymoGenetics and Medarex to combat the threat of generics hanging over it.
The approval of ipilimumab is a big boost to the company and will bolster its top line. Bristol-Myers intends to launch four more compounds – apixaban, belatacept, brivanib and dapagliflozin – by 2012. The new launches are expected to drive growth in 2013 and beyond. We also expect Bristol-Myers to look to grow revenue through partnering deals and acquisitions.
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