Last month, Bristol Myers Squibb (BMY 0.34%) shared that its locally advanced or metastatic non-small cell lung cancer (NSCLC) drug candidate repotrectinib was accepted for priority review by the U.S. Food and Drug Administration (FDA).
Since the FDA expects to reach a decision on repotrectinib by late November of this year, now would be an appropriate time to determine its sales potential. To do so, let's dig into its phase 1/2 clinical trial results and the non-small cell lung cancer drug market.
A potent treatment for a challenging condition
Lung cancer is the leading cause of cancer death in the United States. It's estimated that 127,000 patients succumb to the disease each year. The vast majority (up to 84%) of these cancer cases are the type known as non-small cell lung cancer (NSCLC). The symptoms of lung cancer can include chest pain, a persistent cough, fatigue, and unintentional weight loss.
As is the case with any type of cancer, early detection is key to an optimal health outcome. Unfortunately, the disease is often diagnosed once it has already spread to some extent and has become more difficult to treat. Because lung cancer typically flies under the radar, just 23% of all patients diagnosed with lung cancer survive five years or longer.
When a cancer has spread to nearby tissue or lymph nodes, this is referred to as a locally advanced cancer. And when cancer has reached vital organs like the brain or liver, this is called metastatic cancer.
It's hard to find a silver lining in such a difficult-to-treat disease like locally advanced or metastatic NSCLC. But if there is any good news for patients, it is that treatments are progressing. Acquired in Bristol Myers' deal for Turning Point Therapeutics that was closed last August, repotrectinib is one therapy that could soon find itself in the arsenal of oncologists and patients.
More than 400 patients with a type of genetic rearrangement in their tumor cells called ROS1 positive were enrolled in a phase 1/2 clinical trial to receive repotrectrinib. It was observed that among patients who had not previously been treated with a drug in the same class as repotrectrinib, the objective response rate was 79%. That means an overwhelming majority of ROS1 positive patients with NSCLC had at least a 30% reduction in the size of their tumor after treatment.
Even patients who had been treated with a drug from the same class and chemotherapy or two different drugs in the same class achieved objective response rates ranging from 28% to 42%. For such a tricky condition to treat, these are particularly encouraging results.
Image source: Getty Images.
The sales potential is incremental
Repotrectrinib could be a lifesaving treatment for countless patients. So what could that mean for Bristol Myers' from a financial perspective?
It is estimated that approximately 238,000 Americans are diagnosed with lung cancer each year. Taking the five-year survival rate into consideration, this could conservatively mean twice as many patients (roughly 500,000) who potentially need treatment. And 1% to 2% of locally advanced or metastatic NSCLC cases fit into the ROS1 positive category. That means the addressable patient share of repotrectinib is 5,000 to 10,000 annually, so we'll split that down the middle at 7,500.
Since Pfizer's xalkori and Roche's rozlytrek are already approved by the FDA, repotrectinib will face plenty of competition. But because no one drug is completely effective for all patients, I anticipate that repotrectinib can still carve out a 25% patient share -- or nearly 2,000 patients. Assuming a $100,000 annual net price per patient, this equates to $200 million in annual sales potential for Bristol Myers.
This isn't a huge revenue boost compared to the $46.7 billion in revenue that analysts are expecting from the pharmaceutical giant in 2023. But alongside the dozens of other compounds that Bristol Myers has in its pipeline, the drugmaker's future is bright.
A deeply underappreciated stock
Having dipped 9% so far in 2023, Bristol Myers' stock has gone from cheap to even cheaper. Its forward price-to-earnings ratio of 8 is well below the drug manufacturers' industry average of 13.2. Given that Bristol Myers' pipeline looks sufficient to withstand eventual patent expirations of key drugs like Eliquis and Opdivo, shares of the stock could be a buy for value investors.
