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Earnings Preview: Bristol-Myers reports 3Q results

By Linda A. Johnson
AP Business Writer / October 25, 2011

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TRENTON, N.J.—Drugmaker Bristol-Myers Squibb Co., which will report third-quarter results before the stock market opens Thursday, likely will focus on early sales of three recently approved drugs, trends for top seller Plavix as generic competition looms and an update of its research.

WHAT TO WATCH FOR: New York-based Bristol-Myers, which sells the blockbusters Avapro for high blood pressure and Plavix for preventing heart attacks and strokes, will discuss sales trends for its three newest products. Those are Yervoy for advanced skin cancer, Nulojix for preventing rejection of transplanted kidneys and Eliquis, an anticlotting drug approved in Europe for preventing dangerous blood clots after joint replacement surgery.

Bristol and partner Pfizer Inc. have said they plan to apply for U.S. approval of Eliquis later this year. Executives will note strong results from a huge international study, called ARISTOTLE, on stroke prevention in patients with an irregular heartbeat called atrial fibrillation. Ultimately, they aim for approval to market the drug for the millions in that group.

Yervoy, the first drug to lengthen the lives of patients with often-deadly melanoma, suffered a setback this month. Britain's independent medical watchdog said it's too expensive for the UK's health care system to cover, at roughly $50,000 to gain an extra year of healthy life. Analysts are sure to ask how the company will respond.

Bristol executives are expected to discuss sales trends for Plavix, the world's second-best-selling drug. They've been hurt by generic competition in some countries in Europe, where Bristol partner Sanofi SA markets it. The drug gets U.S. generic competition next May, which will wipe out much of the $8.8 billion in sales it posted last year. In addition, a new brand-name competing drug, AstraZeneca's Brilinta, got approved in July for patients with clogged heart arteries.

Analysts likely will ask about Bristol's highly touted experimental drug dapagliflozin, a once-a-day pill to help diabetics eliminate excess sugar via their urine. It's been developed with Bristol partner AstraZeneca PLC. In July, a panel of Food and Drug Administration advisers recommended against approval because of significant risks, including cancer, infections and possible liver damage. The agency is scheduled to rule on Friday.

The diabetes market is seen as a big growth area, due to the global epidemic of obesity. It's an important area for Bristol-Myers, which got approval for its Onglyza in China in the second quarter. The drug has had disappointing sales since its 2009 launch, at only $112 million in the second quarter.

Analysts may ask how sales of leukemia drug Sprycel will be affected by a new warning required this month by the FDA that it can raise blood pressure in lung arteries, causing shortness of breath and limb swelling.

The company likely will briefly review drugs in its pipeline, including three antiviral pills to fight hepatitis C, acquired with last year's $735 million purchase of ZymoGenetics.

Bristol executives will discuss four deals during the third quarter, including $475 million to buy Amira Pharmaceuticals, which is developing drugs to treat the fatal lung disease pulmonary fibrosis, the chronic autoimmune disease scleroderma and other disorders.

The executives should note they've just replaced the head of commercial operations, Anthony Hooper, who jumped to biotech company Amgen Inc.

WHY IT MATTERS: With Plavix sales set to plunge in barely six months, investors are watching to see how Bristol-Myers will maintain revenue.

Deutsche Bank analyst Barbara Ryan anticipates strong sales growth for Onglyza, Sprycel and hepatitis B drug Baraclude. She expects the FDA to delay its decision on dapagliflozin, the diabetes drug, but writes that Bristol "continues to execute on its growth strategy." It centers on buying biotech companies and promising biologic drugs.

Credit Suisse analyst Catherine Arnold writes to investors that she wants to see trends for sales of injected rheumatoid arthritis medicine Orencia, recently approved in a form patients can inject themselves, and the company's newer drugs. She also wants to know when key experimental drugs will advance in testing, and how the weak U.S. economy and price cuts by European government health programs are impacting Bristol's revenue.

WHAT'S EXPECTED: Analysts surveyed by FactSet, on average, expect earnings per share of 58 cents and sales of $5.29 billion.

LAST YEAR'S QUARTER: A year ago, Bristol-Myers reported net income of $949 million, or 55 cents per share, down nearly 2 percent. Revenue was $4.8 billion, slightly below the consensus of analysts.