Like most of its Big Pharma peers, Bristol-Myers Squibb (NYSE:BMY) is undergoing major changes due to the patent cliff. Per its latest earnings report, for instance, the company saw third-quarter revenue drop by 4% to $3.92 billion, year over year, mostly due to the loss of exclusivity for Plavix and other former best-sellers and the divestiture of its diabetes franchise.
Even a close look at the quarterly numbers, though, won't paint the full picture of ongoing change at this top healthcare company. For that, we need to dig into Bristol's third-quarter conference call. Here are five things Bristol's management wants investors to know moving forward (quotes courtesy of our friends at S&P Capital IQ).
Newer products are performing well
Unlike many rivals struggling with their own patent issues, Bristol's newer pharma products are making significant progress in shoring up the company's top and bottom lines. Bristol CEO Lamberto Andreotti highlighted this point via the strong performance of the company's relatively new skin cancer drug, stating, "Yervoy had [its] best quarter ever with $350 million in sales, a significant increase over last year and continues to be a key treatment for patients with metastatic melanoma."
Yervoy's U.S. sales rose an astonishing 47% year over year, to $191 million, for the three-month period. Bristol CFO Charles Bancroft shed some light on the drug's stellar performance: "We continue to make significant gains in first-line use among immuno-oncologists as they become more comfortable treating patients with Yervoy."
Perhaps what's most impressive is that newer products such as Yervoy, Sprycel, and Eliquis generated 7% in annual growth last quarter when excluding revenue from the former diabetes joint venture with AstraZeneca (NYSE:AZN).
Good news on the mature products front
This strong growth in the new product line is certainly welcome news given that revenue from mature products is expected to drop by a whopping $400 million next year. Bancroft, though, did soften the blow of this bad news a bit: "We had previously expected loss of exclusivity on Sustiva in the U.S. in March of next year. With the resolution of patent litigation, we now expect that we will have exclusivity in the U.S. through 2017."
The extension of this key HIV medicine's patent in the U.S. should more than offset the expected losses in the mature products segment, and give the company some much-needed time to transition to high-profile experimental products such as its PD-1 inhibitor Opdivo.
The future is nigh
A consistent theme throughout the call was Bristol's exciting clinical pipeline that is bringing major new drugs into the commercial fold. Andreotti noted early in the call that Bristol "made significant progress in delivering our pipeline, with important clinical and regulatory milestones."
The CEO was referring to the closely watched Opdivo, as well as Bristol's dual hepatitis C regimen of Daklinza and Sunvepra. Opdivo is under regulatory review in the U.S. for advanced melanoma treatment, and its rolling submission for non-small cell lung cancer is progressing nicely as well.
Bristol's dual hepatitis C regimen also recently launched in Japan, and in key countries in Europe including Germany. Although Bristol pulled its application for the dual regimen in the U.S., the company plans on seeking approval for Daklinza for underserved patient populations, perhaps allowing the drug to play an important role in treating select HCV patients in combination with other drugs like Gilead Sciences' Sovaldi.
Don't forget about future opportunities in immuno-oncology
Bristol has make major strides recently toward its goal of becoming a leader in the field of immuno-oncology. As Bancroft stated on the call, "And with respect to our immuno-oncology platform, we made important, commercial, clinical and regulatory advances in the quarter."
Specifically, Bristol signed research and development agreements with the likes of Janssen, Novartis, Celgene, and the University of Texas MD Anderson Cancer Center to further this platform. While these collaborations are probably years from making a significant impact on Bristol's top line, it's evident that immuno-oncology will play a major role in the company's future.
Bristol has positioned itself better than most to withstand the impact of generic competition on former best-selling drugs. That said, it's still early days for the company's immuno-oncology platform that is expected to be the main value driver in the years to come, keeping me firmly rooted on the sidelines with this top dividend stock.
George Budwell has no position in any stocks mentioned. The Motley Fool recommends Celgene and Gilead Sciences. The Motley Fool owns shares of Gilead Sciences. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.