Pharmaceutical giant Bristol Myers Squibb's (BMY 1.86%) purchase of Celgene turned it into a dominant player in oncology and hematology, and this year, the company has aggressively strengthened this position. Following a string of successful deals and regulatory approvals, the company needs to move past some negative news to keep its momentum going.
Mixed news on the Celgene front
Bristol Myers acquired Celgene for $74 billion at the end of 2019, gaining its current bestseller Revlimid, three late-stage drug candidates, and a strong early-stage pipeline. All three late-stage candidates have since gotten a green light from the Food and Drug Administration (FDA) and are showing early success in the market.
Most recently, blood cancer therapy Breyanzi won a second approval that allows it to be administered at an earlier stage of treatment. Approved in early 2021 for use after two or more lines of therapy in large B-cell lymphoma, the FDA in June expanded the label to allow Breyanzi to be used as a second-line treatment.
The treatment may promote long-term remission, more than doubling the amount of time before the disease starts to progress, or even as a cure for relapsed patients. In fact, 66% of patients experienced a complete response with no evidence of disease after receiving Breyanzi, compared to 39% in the standard-of-care group.
Unfortunately, Breyanzi also finds itself at the core of a lawsuit filed by Celgene investors against Bristol Myers. As part of the buyout, Bristol Myers granted Celgene shareholders a Contingent Value Right, or CVR, valued at $9 per share if Bristol Myers gained approval for all three late-stage drug candidates by pre-specified deadlines. Multiple sclerosis treatment Zeposia and multiple myeloma immunotherapy Abecma met their respective deadlines, but Breyanzi's first approval in February 2021 missed the December 2020 deadline.
Last year, investors filed a $6.4 billion lawsuit against Bristol Myers claiming that the drugmaker failed to apply diligent efforts to meet the CVR deadline. The judge recently denied Bristol Myers' motion to dismiss, allowing the lawsuit to proceed. The dispute may take several years to resolve, and Bristol Myers may opt to settle, but all of this puts a damper on Breyanzi's otherwise promising early performance.
Overall, the four Celgene treatments have generated a combined $28 billion in sales since 2020. Breyanzi generated sales of $44 million in the first quarter of 2022, but its label expansion should boost sales in the future. These should help offset a potentially large payout in the Celgene lawsuit.
Another deal on the table
In June, Bristol Myers announced the acquisition of clinical-stage oncology company Turning Point Therapeutics for $4.1 billion, which is set to close during the third quarter of 2022. Turning Point has a pipeline of precision treatments that target solid tumors, and key among them is repotrectinib for lung cancer.
Lung cancer was the leading cause of cancer-related deaths in 2020, and many patients are treated with tyrosine kinase inhibitors but become resistant over time. The company believes that repotrectinib will continue to be effective for a longer period of time because its chemical structure means that a patient is less prone to developing resistance. Bristol Myers expects repotrectinib to become a first-line treatment for patients with non-small cell lung cancer and other advanced solid tumors, and aims for FDA approval in the second half of 2023.
Turning Point has four other candidates in early-stage trials, including one that the company believes has the potential to address an unmet need in gastrointestinal cancer.
Impressive and growing pipeline
Earlier this year, Bristol Myers partnered with Century Therapeutics to add several more cell therapy treatments for cancer. Through the partnership, Bristol Myers gains access to up to four candidates through a $150 million cash payment and subsequent milestone payments of up to $3 billion. This approach provides a low-risk route for Bristol Myers to expand an already robust pipeline.
Bristol Myers now ties with Pfizer as having the fourth-largest pharma pipeline in the world, with 168 drug candidates under development at the beginning of this year. The partnership with Century earlier this year added four new oncology cell therapies, while the acquisition of Turning Point adds another five clinical-stage candidates. And the company still has $15 billion in cash on the balance sheet, so more deals could be on the way.
The stock price has already increased 18% this year, and the company now has a price-to-earnings ratio of 26, which is no longer at the bargain level of last year. Bristol Myers will need regulatory approvals and strong market performance from its late-stage pipeline to offset the gradually declining revenue from hematology-blockbuster Revlimid, as its loss of patent exclusivity allows biosimilars to enter the market. Still, the company remains a good long-term choice if you can tolerate this uncertainty.