Bristol-Myers Squibb Company
) first quarter 2014 earnings (excluding special items) of 46
cents per share beat the Zacks Consensus Estimate by 2 cents.
Adjusted earnings in the first quarter of 2014 were 12% above the
year-ago figure due to lower costs.
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Including one-time items, Bristol-Myers' first quarter 2014
earnings came in at 56 cents, up 51%. Reported earnings were
boosted by the gain pertaining to the sale of most of its
diabetes business to
). The divesture, excluding China, was completed in Feb 2014.
Net sales in the first quarter of 2014 (excluding revenues from
the divested diabetes business) climbed 5% to $3.6 billion,
driven by strong sales of drugs targeting the oncology market.
Strong sales of rheumatoid arthritis drug, Orencia and hepatitis
B virus treatment, Baraclude, also boosted the top line in the
first quarter of 2014. Revenues (inclusive of the divested
business) slipped 1% to $3.8 billion. Revenues were short of the
Zacks Consensus Estimate of $3.9 billion. The revenue miss was
attributable to disappointing sales in the U.S., where net sales
declined 10% to $1.8 billion. Sales in international markets
increased 10% to $2.0 billion.
The First Quarter in Details
The key cancer drugs at Bristol-Myers performed very well in the
first quarter of 2014. Leukemia drug, Sprycel, registered sales
of $342 million, up 19%. Skin-cancer drug Yervoy, approved in the
U.S. and EU in 2011, contributed $271 million to total revenue
during the first quarter of 2014, up 18% from the year-ago
period. Sales of another oncology drug at Bristol-Myers, Erbitux,
also improved during the first quarter of 2014. Sales climbed 4%
to $169 million in the reported quarter.
The performance of the key drugs in the virology unit was mixed.
While sales of Baraclude climbed 11% to $406 million, sales of
HIV treatments Reyataz and Sustiva declined 5% and 18% to $344
million and $319 million, respectively. Generic competition was
primarily responsible for the steep decline in Sustiva sales.
Global sales of Abilify, approved for the treatment of
schizophrenia and depression, improved 3% to $540 million due to
strong sales in international markets. The drug performed
disappointingly in the U.S. with sales declining 1%. Sales of
Orencia stood at $363 million, up 13%. Sales of anti clotting
drug Eliquis were $106 million during the reported quarter, up
49% sequentially. In Mar 2014, Eliquis was approved in the
U.S. for an additional indication - to bring down the risk
of blood clots in patients who have undergone hip or knee
replacement surgery. The successful label expansion will boost
the sales potential of the drug. Bristol-Myers has a partnership
) on Eliquis.
Adjusted gross margin as a percentage of net sales (excluding the
diabetes business) stood at 80% in the reported quarter as
against 74.9% in the comparable quarter of 2013. Adjusted
marketing, selling and administrative expenses in the reported
quarter were 3.9% below the year-ago figure of $993 million.
Adjusted research and development expenses for the quarter fell
3.4% to $898 million.
2014 Earnings Outlook Adjusted
Bristol-Myers now expects adjusted earnings in 2014 in the range
of $1.70-$1.80 per share (old guidance: $1.65-$1.80 per share).
The current Zacks Consensus Estimate of $1.76 per share is within
the company's guidance range. Revenues are projected in the range
of $15.2 billion-$15.8 billion. The Zacks Consensus Estimate for
2014 currently stands at $15.6 billion.
We are impressed by the strong sales of key drugs like Baraclude,
Yervoy, Sprycel and Orencia in the first quarter of 2014. Eliquis
sales continue to be disappointing. The first quarter results
were also aided by lower costs.
Bristol-Myers has been trying to offset the declining sales of
some of its important products by bringing in new products
through in-licensing deals. We are also impressed by the
company's efforts to develop its pipeline. Earlier in the month,
the company announced the filing of new drug applications (NDAs)
with the FDA for hepatitis C virus (HCV) candidates, daclatasvir
(DCV) and asunaprevir (ASV). While daclatasvir belongs to a new
class of drugs, NS5A inhibitors, asunaprevir is a NS3 protease
Bristol-Myers is looking to get the combination of DCV and ASV
(an all-oral, interferon and ribavirin-free regimen) approved in
the U.S. for treating patients with genotype 1b HCV on the basis
of data submitted in the applications. Furthermore, the biopharma
major is looking to get DCV approved in combination with other
agents for multiple genotypes of the virus on the basis of data
submitted in the DCV NDA. Bristol-Myers is highly optimistic of
the potential of the combination therapy.
Bristol-Myers carries a Zacks Rank # 3 (Hold). A
better-ranked stock in the biopharma space is
) with a Zacks Rank #1 (Strong Buy).