In early March, Bristol Myers Squibb (BMY -8.51%) and Johnson & Johnson (JNJ -1.15%) announced that the first patient had been enrolled in a phase 3 clinical trial for milvexian, a potential antithrombotic medicine they have been co-developing. With the drug candidate advancing to this step, it's not hard to imagine that the prior clinical results were promising. Let's look at milvexian's phase 2 clinical trial results and what level of sales the drug could generate for the two companies.
A potent, life-saving medicine
A stroke happens when blood flow to the brain is partially or completely blocked, which leads to the death of brain cells in just minutes. If the event isn't treated in time, it can result in death. The symptoms of stroke include difficulty speaking or comprehending speech, unexpected numbness or weakness of the leg, face, or arm, blurred vision, and poor balance.
Unfortunately, strokes are currently one of the leading causes of death in the U.S. And one of the biggest risk factors for stroke is cardiovascular disease. This is because plaque accumulates in the arteries, which can impede the flow of blood to the brain. Even when a patient survives a stroke, there is still a 23% chance that they will eventually experience another stroke.
One medication that could eventually be prescribed upon regulatory approval to many patients at risk of another stroke is milvexian, the drug candidate from Bristol Myers and Johnson & Johnson. Patients with a prior stroke or mini stroke were randomized to receive either a placebo or a 25-, 50-, or 100-milligram dose of milvexian twice a day. The treatment group experienced strokes at a 30% lower rate compared to the placebo group over the duration of the clinical trial, demonstrating the efficacy of milvexian.
Image source: Getty Images.
The drug could be a smash hit
Milvexian could save numerous patients from possibly deadly strokes. And based on the broad reach it could have, the chances of it becoming a multi-billion-dollar drug are arguably high.
This is because aside from secondary stroke prevention, milvexian is also targeting indications for atrial fibrillation and acute coronary syndrome. With the medicine's strong efficacy, Bristol Myers believes that the drug could generate more than $5 billion in annual revenue to be split evenly with J&J. That hardly seems to be an unreasonable peak sales estimate for a medicine that could take market share in three different indications.
Bristol Myers' $2.5 billion cut of this revenue would be meaningful. For instance, it would be 5.3% greater than the $47 billion in total revenue that analysts are predicting the company will record in 2023. And milvexian is just one of more than 50 compounds Bristol Myers has in clinical development. It has plenty of other growth catalysts in its portfolio, like the immunology drug Sotyktu.
J&J would derive a 2.6% boost from this drug compared to the $97.8 billion in revenue that analysts are expecting for 2023. With 109 projects currently in clinical development, the company also looks to have a bright future ahead of itself.
Both could be great fits for dividend investors
As investors await to see the prospects for milvexian and other candidates in Bristol Myers' pipeline, they can enjoy a hearty dividend, yielding 3.4% -- or double the S&P 500 index's 1.7% yield. And since the dividend payout ratio will clock in at approximately 28% for this year, the dividend is well-covered. J&J's 3% dividend yield is also sustainable, with the payout ratio set to be around 45% for 2023.
Bristol Myers stock also trades at a very reasonable valuation. Its forward price-to-earnings (P/E) ratio of 8.2 is significantly less than the drug manufacturers industry average of 13. This makes the stock a convincing buy for investors seeking both income and value. Like Bristol Myers, J&J seems to be a buy given its forward P/E ratio of 14.
