The patent cliff has forced most Big Pharmas to make major transformations in their businesses over the past few years. Bristol-Myers Squibb (NYSE:BMY) in particular has been ravaged by the loss of patent protection for blood thinner Plavix and a host of other former top products.

Despite slumping sales for key drugs, Bristol-Myers had generated strong top-line growth through its lucrative diabetes collaboration with AstraZeneca (NYSE:AZN), which culminated in the co-purchase of Amylin Pharmaceuticals in 2012. Nevertheless, Bristol-Myers in December 2013 exited the diabetes market by selling its portion of the collaboration to AstraZeneca lock, stock, and barrel. 

The negative consequences of this business decision showed up in black and white on the company's recent second-quarter earnings report, which showed a 4% year-over-year drop in revenue. Bristol-Myers' share price has also fallen nearly 6% so far in 2014.

BMY Chart

BMY data by YCharts.

It's not all doom and gloom at Bristol-Myers, however. I believe there are three good reasons the company's stock is worth considering at current levels. But before diving into them, it's important to note that no one has a crystal ball -- we can't know what will happen to a stock's price due to all the unforeseen outside events that could occur.

Reason No. 1
Bristol-Myers should soon gain regulatory approvals for its experimental hepatitis C therapies in Europe and the U.S. While the hepatitis C market was widely expected to be strong heading into the approvals of new therapies from Gilead Sciences (NASDAQ:GILD) and Johnson & Johnson (NYSE:JNJ), their commercial performance has blown away even the most optimistic projections. Gilead's Sovaldi posted $3.48 billion in second-quarter sales and J&J's Olysio soared into blockbuster status in the same time period with $725 million in sales.

Bristol-Myers' dual regimen of Daklinza and Sunvepra, indicated for hepatitis C genotype 1b patients, is scheduled for Food and Drug Administration review by Nov. 30. Daklinza, a potent NS5A inhibitor, is also under review with the FDA as a potential pan-genotype treatment when used in conjunction with other therapeutic agents. 

In June, the European Medicines Agency's Committee for Medicinal Products for Human Use recommended Daklinza, meaning the drug could before year's end receive approval to be sold on the continent. Put simply, Bristol-Myers could become an important new player in the growing hepatitis C market in the near future.  

Reason No. 2
Bristol-Myers has made a concerted effort to become a major player in the field of oncology, especially immuno-oncology. Within the next 12 months, we should see the company gain two regulatory approvals for Opdivo, its much-heralded PD-1 immune checkpoint inhibitor.

Specifically, the company is filing regulatory applications for Opdivo as a potential treatment for advanced melanoma and non-small cell lung cancer. In another noteworthy move, Bristol-Myers also recently signed a research collaboration with Ono Pharmaceutical to bolster its roster of experimental immuno-oncology products. This is a huge potential market, and one investors should be watching keenly.

Reason No. 3
Although Bristol-Myers has been going through a tumultuous transformation over the past couple years, it has maintained a strong balance sheet and fundamental outlook. Per second-quarter earnings, the company reported having cash, cash equivalents, and marketable securities of $11.1 billion and a net cash position of $3.3 billion.

At present levels, Bristol-Myers' shares are therefore trading near a reasonable five times book value. Moreover, its strong balance sheet would allow the company to pursue potential acquisitions that could accelerate the transformation process. 

Foolish wrap-up
Bristol-Myers is such a large and diverse company that it's perhaps impossible to summarize all the reasons to be optimistic in a brief article. For instance, t
he recent label expansion of its blood thinner Eliquis, co-developed with Pfizer (NYSE:PFE), is yet another reason among many to believe that shares are presently undervalued. 

The Street has nonetheless maintained a neutral to bearish outlook on Bristol-Myers moving forward, projecting a comparatively high forward price-to-earnings ratio that tops 28.

My belief is that the Street isn't optimistic that Bristol-Myers will gain significant market share in the increasingly competitive hepatitis C market, and suspects Opdivo may have a tough time gaining approval because of its side effect profile. While these risks shouldn't be ignored, I think this top name in healthcare is close to breaking through into the next phase of its product life cycle, giving investors ample reason to dig deeper.