Wall Street analysts are pressuring Bristol-Myers Squibb Co. (BMY, Financial) to provide more specifics on next-steps in the development of a breakthrough lung cancer drug.
Early Monday, the New York-based biopharmaceutical giant announced it had hit an important milestone in the clinical and regulatory development of an oncology drug used to treat lung cancer patients with high tumor mutation burden (TMB). (TMB refers to number of cancer cells, tumor size or the amount of cancer in the body.)
Company officials described their work as “highly statistically significant and clinically meaningful.” But they provided few hints about regulatory progress or important clinical deadlines, while analysts hammered away with questions about the uncertainties of the developing drug.
The drug treatment, which is known as Opdivo plus Yervoy, has so far not gained the approval of the Food and Drug Administration.
Rise and Fall
In Monday afternoon trading, Bristol-Myers fell 3% to under $62 a share, reversing its course after surging in premarket trading. In the early hours, it was one of the few stocks in the green on a day when the Dow Jones Industrial dropped over 1,400 points to 24,300 by early afternoon. The S&P 500 had dropped over 90 points to around 2,600.
Over the last year, shares of Bristol-Myers have increased in value by 21%.
Stock tumble
Industry watchers say much of the stock surge was an immediate reaction to the company’s robust earnings. By the afternoon, there was speculation that there are unknowns associated with the developing drug.
In the earnings call, the company emphasized a glowing fourth-quarter that beat Wall Street’s revenue estimates. For the quarter, Bristol-Myers posted non-GAAP earnings per share of 68 cents on revenue of $5.4 billion. Over the same period in 2016, the company reported earnings per share of 63 cents on revenue of $5.245 billion.
For the year, the company reported revenues of $20.8 billion, up 7%, it said.
Like other corporations, Bristol-Myers is facing a tax charge as a result of the tax reform bill. Including the charge, the company reported an earnings loss of $1.42 per share compared to a gain of 53 cents per share in the prior-year quarter.
It also disclosed to investors 2018 GAAP guidance in the range of $3 to $3.15 and non-GAAP guidance in the range of $3.15 to $3.30.
The company reported $5.4 billion in cash and cash equivalents, compared to $4.6 billion in the prior-year quarter. It also reported a loss of $6.975 billion in long-term debt, compared to $6.982 billion in the prior-year quarter.
Cash, cash equivalents and marketable securities were at $9.292 billion the fourth quarter of 2017 compared to $9.648 in the prior-quarter.
Product brands
The company reported growth increases in prioritized brands like Eloquis, which is used to lower the risk of stroke; and Orencia, used to treat rheumatoid arthritis.
It also reported significant drops in established brands, among them drugs that are used to treat hepatitis B, such as Baraclude.
GuruFocus indicators
Bristol-Myers has a financial strength rating of 7 out of 10 and a profitability and growth rating of 6 of 10. It has a market cap of $101 billion and a price-earnings (P/E) ratio of 24.24 that is higher than 56% of its peers. It has a dividend yield of 2.54%.
Gurus who own shares of the stock include Dodge & Cox, Ken Fisher (Trades, Portfolio), Mario Gabelli (Trades, Portfolio), Ronald Muhlenkamp (Trades, Portfolio) and Joel Greenblatt (Trades, Portfolio). Institutional investors include the Vanguard Health Care Fund (Trades, Portfolio).
The Peter Lynch chart suggests the stock is overvalued with a median of $55.40.
