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Very bullish on BMY & have invested in it. The 52 week range is $56.99 – $69.75. Dividend payout and cash on hand for acquisitions at 11.02 billion. BMY price is at one of its lowest points and some great news out on the cancer clinical trial at the end of September, despite the interpretations of the bean counters.
Please understand that these are my musings, blistering barnacles, and I am not a financial advisor, and this should not be taken as financial advice, period. Please be sure to consult a financial analyst to double check everything I am stating in this post. Full disclosure, I used to work in pharma and have been keeping an ear to the ground regarding what the new therapies are and I think that BMY (Bristol Myers Squibb) is about to start trending upwards because of some incredibly good news for its existing monoclonal antibody treatments for cancer and I thought I would share my thoughts (and some data) with all of you.
A little background – chemotherapeutics are prescribed cell killing drugs. They willy-nilly kill cells and are extremely toxic – so much so, that when handling a chemo drug in the lab I wore 2 layers of gloves to avoid any contact with the therapeutic – because of how toxic they are. Think of the hair loss in patients that ingest these drugs!
The alternative are antibodies, monoclonal antibodies, almost like a heat seeking missile, that recognize friend or foe flags on cell surfaces and attack only the cells displaying enemy insignias. This type of therapy is the future of cancer treatments – they are precise and have amazing results. Obviously the first step is to figure out what types of flags cancer cells display and how to go about generating antibodies. Cancer cells are notorious for also disabling the body’s own scanning system. The biology is complex but there is a specific flag that is of great interest to pharma that is the PD-1 flag – Merck’s (MRK) Keytruda targets this specific flag. In addition, there have been recent trials using a combination of 2 different antibodies from Bristol Myers Squibb (BMY). These trials were conducted by the Institute of Cancer Research in London, their equivalent of the National Cancer Institute. The two antibodies are nivolumab (7.899 billion - 2020) and ipilimumab (1.682 billion - 2020).
Note that the ending mab in these unpronounceable names is short for monoclonal antibody. This mix of two drugs has produced some amazing results for the 1000 patients in the clinical trial. Keep in mind these are dying patients. Survival rates in these folks who had relapsed with metastatic head and neck cancer, with this specific PD-1 (also called PD-L1) flag on their cells, were the highest ever reported. While the endpoints were not met for this study, it is interesting to note they thought it clinically significant enough to report it. So just to be clear, if you set an endpoint that you think must be met, that DOES NOT mean that the trial did not work. This is an important distinction to make. In this instance the pool of patients were very ill and this was the last resort.
The interesting thing, that the analysts seem to miss, is the disappearance of neck and throat tumors in individuals expressing the PD-1 flag. Here the use of biomarkers for their exact type of cancer comes in. This is super important. For the non- science person reading this (and apologies to all the SAS jocks out there) imagine you said I am going to run a clinical trial on a brand of a dishwasher. You run 50 different machines (same brand) and your endpoint is that 90% of all the dishes must not have a speck on it. You run it and 80% of the dishwashers with their contents are speck free – you have still not met your endpoint and so the trial failed. The problem is the dishes that you found in my dishwasher had been sitting for three weeks with pasta caked in it! So, simply saying, endpoint not met---downgrade--- is nuts! There are case studies of patients in this trial whose cancer in the neck and head disappeared. AWESOMENESS!! On a sidenote for those of you chemists reading this may remember a company called Kodak…and their chemistry division up in Albany N.Y.– Sterling. Kodak produced a molecule called clopidogrel and a whole library that did not meet analysts expectations and Kodak ended up having a fire sale and got rid of Sterling. BTW, clopidogrel went on to become Plavix (blood thinner) and if I recollect correctly, 8 billion per year in sales for Aventis-Sanofi & BMY!
Bristol Myers bought Celgene and has been acquiring Cancer immunology companies because they have developed a laser like focus on certain therapeutic areas (TAs). They had a long running Alzheimer’s program (AD) that they shut down and got rid of their satellite site in Wallingford CT to consolidate around the New Jersey facility. They have about 10% of their market cap in cash for further oncology based acquisitions. Management has also done a good job of honing all the chemistry around very tractable targets and partnering with behemoth Pfizer for apixaban (Eliquis is the brand name and is used for afib) is good strategic thinking with sales at $11.116 billion – yup you read that right and I think we are going to see this reflected in the earnings report on October 27th. Here is the deal with the cancer drug cocktail that they are finding tremendous efficacy in patients with neck and throat cancer - I anticipate the BMY molecules are going to send it into the same orbit as Merck’s Keytruda which had sales of $14.38 billion last year.
So, based on the European Cancer Societies meeting and the clinical trials in England, I think that the combo treatment with nivolumab and ipilimumab is going to end up getting BMY (Bristol Myers Squibb) another drug combo in the $15 billion per year range. Regardless of what the hedgefu***ry leads to in terms of pricing there is no doubt in my mind that use of biologics (not small molecules) makes this a very, very valuable set of monoclonal antibodies. Small molecules, with their very defined chemical structures, like the afib drug I just mentioned, apixaban (Eliquis) are easier to copy and make knock offs by generic makers, when the intellectual property patent sunsets in 2028. Different ball game with monoclonal antibodies. I see this making the price spike past the 52 week high with the earning report hitting a home run based on their data. The 52 week range is $56.66 – $69.75 as I write this. The analysts expect growth at about 7% but I think realistically their growth is going to be closer to 9% for the year.