Bristol-Myers Squibb Company
) second quarter 2014 earnings (excluding special items and the
diabetes business divested earlier in the year) of 46 cents per
share beat the Zacks Consensus Estimate by 2 cents. Adjusted
earnings in the second quarter of 2014 were 12% above the year-ago
figure due to lower costs.
Bristol-Myers Squibb Company - Earnings
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Including one-time items, Bristol-Myers' second quarter 2014
earnings came in at 18 cents, down 37.5%. Reported earnings
declined primarily due to the sale of most of its diabetes business
). The divesture, excluding China, was completed in Feb 2014.
Net sales in the second quarter of 2014 (excluding revenues from
the divested diabetes business) climbed 7% to $3.9 billion, driven
by strong sales of drugs targeting the oncology market. Strong
sales of rheumatoid arthritis drug, Orencia, also boosted the top
line in the reported quarter. Revenues (including the divested
business) slipped 4% to $3.9 billion. Revenues were in line with
the Zacks Consensus Estimate.
The Second Quarter in Details
The company posted disappointing sales in the U.S. and
international markets, where net sales declined 7% to $1.9 billion
and 1% to $2.0 billion respectively.
Key cancer drugs at Bristol-Myers however performed very well in
the second quarter of 2014. Leukemia drug, Sprycel, registered
sales of $368 million, up 18%. Skin-cancer drug Yervoy, approved in
the U.S. and EU in 2011, contributed $321 million to total revenues
during the reported quarter, up 38%. Sales of another oncology
drug, Erbitux, also improved during the quarter. Erbitux sales
climbed 9% to $186 million in the reported quarter.
The performance of key drugs in the virology unit was
disappointing. Sales of Baraclude declined 1% to $369 million.
Sales of HIV treatments Reyataz and Sustiva also dropped 16% and
12% to $362 million and $361 million, respectively.
Global sales of Abilify, approved for the treatment of
schizophrenia and depression, declined 1% to $555 million. The drug
however performed encouragingly in the U.S. with sales climbing
10%. Sales of Orencia stood at $402 million, up 14%.
Sales of anti-clotting drug Eliquis were $171 million during the
reported quarter, up 61.3% 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 drug also received a positive opinion from
the EU advisory committee for the treatment of deep vein thrombosis
(DVT) and pulmonary embolism (PE) and the prevention of recurrent
DVT and PE in adults. Successful label expansion will boost the
sales potential of the drug. Bristol-Myers has a partnership with
) on Eliquis.
Adjusted gross margin, as a percentage of net sales (excluding the
diabetes business) stood at 76% in the reported quarter as against
83.4% in the comparable quarter of 2013. Adjusted marketing,
selling and administrative expenses in the reported quarter were
8.9% below the year-ago figure of $1 billion. Adjusted research and
development expenses for the quarter remained flat at $958 million.
2014 Earnings Outlook Maintained
Bristol-Myers continues to expect 2014 adjusted earnings in the
range of $1.70-$1.80 per share. The current Zacks Consensus
Estimate of $1.77 is within the company's guidance range. The
company's 2014 revenue guidance is also maintained in the range of
$15.2-$15.8 billion. The Zacks Consensus Estimate for 2014
currently stands at $15.5 billion.
Bristol-Myers announced that it has entered into a strategic
collaboration agreement with Ono Pharmaceutical to jointly develop
and commercialize several immunotherapies to help address the unmet
medical needs of patients suffering from cancer in Japan, South
Korea and Taiwan. The companies will also jointly develop and
commercialize Opdivo and Yervoy across a broad range of tumor
We are impressed by the strong sales of key drugs like Yervoy,
Sprycel, Erbitux and Orencia in the second quarter of 2014. 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. The company announced that it intends to
file Biologics License Application for Opdivo for the previously
treated advanced melanoma indication in the U.S. by Sep 30, 2014.
Bristol-Myers also achieved an important regulatory milestone when
the company's Daklinza and Sunvepra dual regimen was approved in
Japan for hepatitis C.
Bristol-Myers carries a Zacks Rank # 3 (Hold). A better-ranked
stock in the healthcare space is
) with a Zacks Rank #2 (Buy).
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