Bristol-Myers Beats Earnings in Q1, Misses on Sales - Analyst Blog


Bristol-Myers Squibb Company 's ( BMY ) 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.

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 AstraZeneca ( AZN ). 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 with Pfizer ( PFE ) 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.

Our Take

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 inhibitor.

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 Alexion Pharmaceuticals ( ALXN ) with a Zacks Rank #1 (Strong Buy).

ALEXION PHARMA (ALXN): Free Stock Analysis Report

ASTRAZENECA PLC (AZN): Free Stock Analysis Report

BRISTOL-MYERS (BMY): Free Stock Analysis Report

PFIZER INC (PFE): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: ALXN , AZN , BMY , PFE

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