Staring at a down quarter for Opdivo, Bristol Myers keeps its eyes on price competition potential in packed PD-1 market
Despite its standing as one of the bestselling anti-PD-1s, Bristol Myers Squibb can ill afford a down quarter for its leading I/O amid a packed — and growing — class. With Covid-19 already nipping at sales, the drugmaker is also keeping close watch for a potential discounted disrupter in the PD-1 class, which could come sooner rather than later.
Bristol Myers’ anti-PD-1 Opdivo posted disappointing sales for Opdivo in the first quarter, down 3% from the same time period last year at $1.72 billion, according to earnings released Thursday.
The drugmaker tied that dip to Covid-19 disruptions at infusion centers and believes the drug will turn it around for the rest of the year, executives told analysts on a Thursday call. However, Opdivo’s poor performance stands in contrast to Merck’s market-leading Keytruda, which posted 19% growth on the quarter to a whopping $3.9 billion.
Opdivo’s stumble comes as the anti-PD-1 market welcomes its seventh entrant — GlaxoSmithKline’s Jemperli — and casts into stark relief a lack of price competition in that class. Earlier this month, Bernstein analyst Ronny Gal issued an open letter to Regeneron CEO Len Schleifer calling on the drugmaker to be the first drug in the class to jumpstart a discounting strategy for Libtayo. His argument goes like this:
While some of your peers may not be too happy with your strategy at first, you will be doing the industry a favor. The strongest argument in favor of government intervention in drug pricing is that market forces are failing. There are now six approved PD-1s [seven with Jemperli], none have done a head-to-head trial, and they are all raising prices every year. The best thing you can do for the industry is to demonstrate that market forces work. This is an opportunity for Regeneron to truly lead in pharma as the company has historically led biotech.
Analysts quizzed Bristol Myers CCO Chris Boerner on the possibility of any one of Opdivo’s anti-PD-(L)1 competitors — and even more are on the way — taking a discounting path, which if Gal is correct could steal some market share away from the bigger competitors. His response? We’re going to keep churning out data and approvals and see what happens.
“While we’re always a bit paranoid about new entrants, we have a good position to manage competition,” Boerner said. “In terms of risk, we absolutely think it’s something we need to stay on top of. The areas where we see the greatest risk don’t overlap with our biggest markets, at least today … (but) this is an area that’s very dynamic, and we’re paying very close attention to it.”
With hopes that Opdivo will make a turnaround, Bristol Myers spent much of the call fielding questions on relatlimab, the drugmaker’s LAG-3 molecule being tested alongside Opdivo in first-line melanoma. You’ll remember the drugmaker read out topline data from that combo in March showing significant benefit over Opdivo alone in the Phase III RELATIVITY-047 trial.
Bristol Myers is gearing up to reveal more data from that study at this year’s ASCO, and it clearly has high hopes for the drug, mostly as a combo therapy with Opdivo. The drugmaker will need it, too, as a series of patent cliffs in 2025 puts a big burden on the strength of the drugmaker’s pipeline.
Facing those cliffs, CEO Giovanni Caforio hinted that M&A will be a big part of Bristol Myers’ strategy moving forward, despite some unknowns around a suddenly steely FTC.
“It’s really difficult to speculate at this point what the evolving position of the FTC will be,” Caforio told analysts. “I feel there are plenty of opportunities to strengthen our portfolio across all of the areas in our portfolio where we have expertise.”
Bristol Myers posted $11.1 billion in sales on the quarter, a 3% increase from the same time period last year.