When a company beats revenue expectations by a wide margin, $4.2 billion actual versus a $3.7 billion consensus, as Bristol-Myers Squibb (NYSE:BMY)did, you'd expect shares to skyrocket. Instead the pharma is sitting down 1% today.
Of course, it's where that outsized result came from that matters. And for Bristol-Myers Squibb, much of the beat came from places where future growth is questionable.
Take the company's hepatitis C drugs, for instance, which produced sales of $479 million in the second quarter, compared to $264 million in the first quarter and nothing in the year-ago quarter. That ramp sounds great, but $170 million of that came from deferred revenue from sales in France. Back that out and we're looking at 17% quarter-over-quarter growth, although it's likely lower than that as some unknown amount of the $170 million should be added back into the first quarter.
And that growth is going to get hit in the second half of the year because a lot of the hepatitis C drug sales are coming from Japan, where Gilead Sciences (NASDAQ:GILD) gained FDA approval for Harvoni this month. We may get an idea of Gilead Sciences' timing for a launch when the biotech reports earnings next week, but it seems likely that Harvoni, a once daily pill, should be able to sell better than Bristol's Daklinza/Sunpreva combination regimen.
Ironically, later in the year, Bristol-Myers Squibb may end up boosting its hepatitis C franchise while helping the company that's taking its sales in Japan. Bristol is waiting on the FDA to make a decision about its combination of Daklinza and Gilead Sciences' Sovaldi in patients infected with the genotype 3 virus, which make up about 9% to 12% of hepatitis C patients in the U.S. The FDA is scheduled to make a decision about the combination treatment on or before August 13. Sovaldi is already approved to treat patients with genotype 3 infections, but requires 24 weeks of treatment. The Daklinza/Sovaldi combination will only require 12 weeks of treatment, potentially driving sales for both Gilead and Bristol.
For a large part, Bristol-Myers Squibb has become an Opdivo and Eliquis story. The pharma has plenty of other drugs, but the growth trajectories of those two are going to set the overall pace in the future.
Opdivo is still early in its launch and hasn't begun to reach its full potential, but it's off to a good start with sales of $122 million during the second quarter. Just this week another clinical trial -- this one in kidney cancer -- was stopped early because it was clear Opdivo was helping patients more than the current standard of care.
Sales of Opdivo are also important because the drug is being tested in combination with one of Bristol's other drugs, Yervoy, giving the pharma a double revenue boost. U.S. sales of Yervoy slipped 21% year over year in the second quarter as the drug faced competition for melanoma patients from Merck's Keytruda and Opdivo. But Bristol thinks the Opdivo/Yervoy combination regimen, which is expected to be approved on or before September 3, can help regain those Yervoy sales. Both drugs are already approved to treat melanoma, but the combination produced a better objective response rate compared to Yervoy alone.
The launch of Eliquis, the company's anticoagulant to prevent blood clots, continues on its wonderful trajectory. Sales increased 23% quarter over quarter and 155% year over year in the second quarter. The approval of andexanet alfa, an antidote for excessive bleeding in patients taking Eliquis and other Factor Xa inhibitor drugs, should help boost sales further. Bristol's partner, Portola Pharmaceuticals, expects to submit a marketing application to the FDA by the end of the year.
A beat in future quarters on sales of Opdivo and Eliquis will likely have a much different result than today's beat.