Bristol-Myers Earnings: Mixed Results; Shortfall in Revlimid Sales Partly Offset by New Drug Sales

Bristol-Myers BMY reported mixed second-quarter results below our projections largely due to lower-than-expected sales of cancer drug Revlimid. Since Revlimid has a short period of exclusivity left, ending in 2025, the shortfall in sales doesn’t have a major impact on our fair value estimate. Also, the shortfall in Revlimid sales appears to impact only 2023 due to patient assistance programs needing to accelerate support. The agreement with generic producers of Revlimid looks intact, with 2024 and 2025 sales of branded Revlimid not significantly impacted by the recent pressures.

In the quarter, total sales fell 5% as strong new product gains continue to mitigate generic pressures. We expect this trend of flat to slightly down sales growth annually to continue over the next five years. Continued generic pressures to Revlimid will likely limit the company’s growth over the next two years. Longer term, the 2028 patent losses on cardiovascular drug Eliquis and cancer drug Opdivo will weigh on the growth outlook.

Despite the significant generic pressures, Bristol is launching an industry-leading number of new drugs that should help limit the overall sales decline over the next five years and support the firm’s wide moat. We remain most bullish on rare disease drug Camzyos, cancer drug Opdualag, immunology drug Sotyktu, and blood disorder drug Reblozyl. However, to drive long-term growth, we believe Bristol will need to launch another round of blockbuster drugs. Phase 3 data expected over the next three years for cardiovascular drug milvixian, cancer drug iberdomide, and pulmonary drug LPA1 could support Bristol returning to growth in the later part of the next decade. Additionally, we expect Bristol to return to the acquisition front in a more aggressive way, as the majority of the debt needed to purchase Celgene will be repaid by 2025.