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Bristol-Myers lung cancer delay slams shares, keeps Merck in lead

By Bill Berkrot

By Bill Berkrot

New YORK (Reuters) - Bristol-Myers Squibb Co <BMY.N> shares fell 11 percent on Friday following Thursday's announcement that it would not seek accelerated approval of its immunotherapy drug combination in first-line lung cancer, further solidifying Merck & Co Inc's <MRK.N> leading position in the burgeoning immuno-oncolgy field.

Lung cancer is by far the biggest oncology market and a handful of companies have been battling to become dominant in initial, or first-line, treatment, and to provide much-needed combination therapies.

Merck shares rose 3.6 percent to $62.53, while Bristol fell to $49.23.

Bristol-Myers earlier this month suggested it would seek a path to swift approval of an Opdivo/Yervoy combination in first-line non-small cell lung cancer (NSCLC) only to reverse course after reviewing available data. The company did not say whether the data was disappointing or merely insufficient to seek accelerated approval.

Cowen and Co analyst Steve Scala downgraded his rating on Bristol shares to "market perform" from "outperform" and lowered his price target on the stock to $65 from $85.

The quickly changing lung cancer market dynamics could hurt Bristol's earnings per share, Scala said.

The news followed Merck's surprise announcement last week that it had filed for a speedy U.S. approval of its Opdivo rival, Keytruda, in combination with chemotherapy in first-line lung cancer, and had received a May 10 regulatory decision date.

The Opdivo/Yervoy news "certainly kills any potential for commercial sales in front-line lung cancer for 2017" and could leave Bristol-Myers as the third or fourth entry instead of being first or a close second, Credit Suisse analyst Vamil Divan said. But it is by no means a death knell for Opdivo or the combination if the data is ultimately positive.

"This is lung cancer," Divan said. "If the combo ends up showing clearly superior efficacy in terms of overall survival, then doctors will switch to that."

Opdivo is approved for lung cancer in previously treated patients, as well as advanced melanoma, kidney and head and neck cancers and Hodgkin lymphoma.

Suntrust Robinson Humphrey analyst John Boris lowered his estimates for Opdivo sales in 2021 to $8.5 billion from $9.7 billion.

REVERSAL OF PECKING ORDER

Merck will not only likely be first with a first-line lung combination, but said it will be less expensive due to the lower cost of chemotherapy versus rivals' pairings of newer immuno-oncology drugs.

Bristol, which was first to market with potentially game-changing drugs that spur the immune system to fight cancer, was long perceived as the industry leader in immuno-oncology, with Merck hot on its heels and AstraZeneca Plc <AZN.L> and Roche Holding AG <ROG.S> playing catch-up.

That changed in August, when Bristol's Opdivo failed as a monotherapy against first-line lung cancer, where Merck's Keytruda succeeded, resetting the immuno-oncology pecking order.

Some analysts said the latest Opdivo setback was good news for AstraZeneca and Roche, allowing them to close the gap on Bristol-Myers.

However, Bernstein analyst Tim Anderson noted that Astra's combination includes a CTLA4 drug similar to Bristol's Yervoy.

"This could have negative implications for AstraZeneca, who similarly has CTLA4 combination at the heart of its IO platform," he wrote.

AstraZeneca shares fell 3.4 percent.

(Reporting by Bill Berkrot; Editing by Tom Brown and Lisa Shumaker)

 

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