Last month, Bristol Myers Squibb's (BMY +2.05%) chimeric antigen receptor (CAR) T cell therapy, known as Breyanzi, was given the green light to be marketed in Japan as a the second-line treatment for relapsed or refractory large B-cell lymphoma.
This regulatory decision raises two key questions. What is the data behind Japan's approval of Breyanzi? And how much revenue could the therapy produce for the pharmaceutical company? Let's dive into Breyanzi's phase 3 clinical trial results and the Japanese lymphoma market to answer these questions.
NYSE: BMY
Key Data Points
A tremendously effective treatment
Lymphoma is a cancer that affects the lymphatic system. This system is responsible for guarding the body against infections, eliminating cellular waste, and maintaining body fluid levels. The symptoms of lymphoma include itchy skin, fatigue, shortness of breath, and unintentional weight loss.
Approximately 30% to 45% of lymphoma cases are B-cell lymphoma. This lymphoma originates in the type of white blood cell that produces antibodies for the immune system.
First-line chemo-immunotherapy helps roughly 60% of patients attain long-term remission. But the prognosis is poor for patients who don't respond to the therapy or for patients whose disease relapses or returns after a short period of response. This explains why there is such a great unmet medical need for second-line therapies, which is a role that Breyanzi will now fill in the Japanese market.
Patients in Breyanzi's phase 3 clinical trial were randomized to receive either standard therapy of a combination of chemo-immunotherapy, high-dose chemotherapy, and stem-cell transplantation, or Breyanzi. The clinical outcome was far better for Breyanzi patients than the standard therapy patient group as measured by the median progression-free survival (PFS) rate. PFS is the amount of time that patients had no worsening of their condition.
Patients taking Breyanzi achieved a median PFS rate of 14.8 months versus just 5.7 months for the standard therapy arm of the study. This demonstrates that Breyanzi could be a much-needed treatment for relapsed or refractory B-cell lymphoma patients.
Image source: Getty Images.
The sales bump will be incremental
Breyanzi will be a great treatment for countless patients in Japan. But how much of a lift could the drug have on Bristol Myers' revenue?
It is estimated that 36,000 patients are diagnosed with lymphoma annually in Japan. Considering that about 15% of patients would be eligible to receive Breyanzi, this is a potential pool of 5,400 patients.
Because of the significant need for treatments like Breyanzi, I will assume that the company can capture 35% patient share. This is nearly 1,900 patients.
The annual list price for Breyanzi is around $410,000 in the U.S. Adjusting for the fact that drugs cost not quite half as much in Japan, the annual list price would be $180,000. And with health insurance adjustments and patient financial assistance programs, I will use a net annual price of $105,000.
That equates to a $200 million increase in Bristol Myers' annual revenue. Compared to the $45.9 billion in revenue that analysts expect for 2022 from the drugmaker, this is a modest 0.4% lift to the company's revenue base.
But given that Bristol Myers' drug pipeline consists of more than 50 compounds currently in development, even small indications add up after a while. This is why analysts are anticipating 4.2% annual earnings growth from the company over the next five years.
A cheaply valued stock
Bristol Myers is a fundamentally sound business. And the stock price appears to be a good value for investors. The stock's forward price-to-earnings ratio of 9 is considerably lower than the drug manufacturer industry average of about 15. This is arguably an unreasonably large discount to the industry.
Yes, Bristol Myers has its share of patent expirations on the horizon. But new-product sales should compensate for this concern moving forward.
