Bristol-Myers cancer ruling hits shares after strong earnings
By Michael Erman NEW YORK (Reuters) - Bristol-Myers Squibb Co on Thursday said European regulators plan to recommend against approving its immunotherapy combination as an initial treatment for kidney cancer, sending shares lower even after the U.S. drugmaker reported better-than-expected quarterly profit and raised its full-year forecast.
By Michael Erman
NEW YORK (Reuters) - Bristol-Myers Squibb Co on Thursday said European regulators plan to recommend against approving its immunotherapy combination as an initial treatment for kidney cancer, sending shares lower even after the U.S. drugmaker reported better-than-expected quarterly profit and raised its full-year forecast.
Bristol-Myers shares fell 3.2 percent to $57.14, reversing previous gains prior to revealing the regulatory setback.
The company said it was notified on Wednesday of the pending negative decision for the use of Opdivo and Yervoy as combination therapy for first-line kidney cancer by the Committee for Medicinal Products for Human Use (CHMP), part of the European Medicines Agency.
U.S. regulators in April approved the combination for kidney cancer based on the same data that was submitted to European counterparts.
"We strongly disagree with this opinion. And in the interest of patients, we will pursue a reexamination," Bristol-Myers Chief Executive Giovanni Caforio said on a conference call to discuss the company's second quarter results.
Opdivo is one of Bristol-Myers' top-selling drugs and most important growth drivers. It has been approved to treat numerous types of cancer alone and in combination with Yervoy.
While Bristol-Myers will work to reverse the CHMP decision, RBC Capital Markets analyst Kennen MacKay said in a note, "we anticipate a minimum of about 6 months delay with potential for significantly longer delays or a more restrictive ... label upon ultimate approval."
Opdivo sales rose 36 percent in the quarter, but investors and analysts remain concerned about competition from rival immunotherapies, particularly Merck & Co's Keytruda.
Bristol-Myers was a pioneer in drugs that spur the immune system to fight cancer, but Merck is expected to pull ahead given Keytruda's domination as an initial treatment for advanced lung cancer.
Bristol-Myers shares were hit hard earlier this year, when Merck presented promising survival data for Keytruda in non-small cell lung cancer, cementing its lead in the most lucrative oncology market. They are around 18 percent off 52-week highs hit in February.
Second quarter revenue totaled $5.7 billion, up 11 percent from the same period last year.
That was buoyed by sales of blood thinner Eliquis, which surged 40 percent to $1.65 billion, and Opdivo sales of $1.63 billion. Pfizer Inc is a partner on sales of Eliquis.
Analysts have predicted that Keytruda's sales will surpass Opdivo's in the recent quarter. Merck is expected to report its quarterly results on Friday.
Excluding one-time items, the drugmaker said it earned $1.01 a share in the quarter. Analysts, on average, were expecting earnings of 87 cents a share, according to Thomson Reuters I/B/E/S.
Net earnings fell to $373 million, or 23 cents a share, from $916 million, or 56 cents a share, last year. The net results were hurt by one-time payments to Nektar Therapeutics as part of the $1.85 billion development and profit-sharing deal struck earlier this year on a promising Nektar cancer drug.
Still, Bristol-Myers raised its full-year earnings forecast to $3.55 to $3.65 per share, taking up the top and bottom end of the range of its previous forecast by 20 cents a share. It now expects mid- to high-single-digit revenue growth, after previously predicting mid-single-digit growth.
(Reporting by Michael Erman, editing by G Crosse and Bill Berkrot)
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