Bristol-Myers Squibb Co. slumped the most in 14 years after saying its drug Opdivo failed in a lung cancer trial that would have been the basis for widely expanding use of the treatment.Getty Images/iStockphoto
Bristol-Myers Squibb Co. slumped the most in 14 years after saying its drug Opdivo failed in a lung cancer trial that would have been the basis for widely expanding use of the treatment.
The stock was down 16 per cent to $63.05 (U.S.) at 12:03 p.m. Friday in New York. Shares of Merck & Co., the maker of Opdivo's main competitor Keytruda, jumped 6.9 per cent to $61.83 after rising as much as 8.2 per cent, the most since 2009.
The drug failure as a first-line treatment is a blow to Bristol-Myers, which has pegged its growth on immune-based therapies such as Opdivo for cancers. Lung cancer is a significant opportunity for these treatments, which have thus far been largely approved for cancers that affect fewer patients. Opdivo is approved in lung cancer, though not as a first-line therapy, a large growth opportunity for cancer drugs.
"This is a major surprise – possibly the biggest clinical surprise of my career," Evercore ISI analyst Mark Schoenebaum, who recommends holding Bristol-Myers stock, wrote in a note. "Investors had high expectations for this trial."
The results reflected a risky but potentially lucrative bet by Bristol-Myers, highlighting a difference in strategy with Merck. By designing its study to include patients with lower levels of a key biomarker thought to predict response to the drug, Bristol-Myers was aiming at a far larger market for Opdivo.
Merck's Keytruda trial, meanwhile, focused on a smaller subset with high levels of the biomarker, called PD-L1 – fewer patients, but a better chance of success.
Opdivo didn't meet its primary goal of lengthening progression-free survival in patients with previously untreated advanced non-small cell lung cancer, compared with chemotherapy, Bristol-Myers said in a statement. The New York-based company is working on completing an evaluation of the late-stage trial's results.
Bristol-Myers chief executive officer Giovanni Caforio said the company is now focused on combination therapies, which could potentially create a better outcome for the group of patients that don't get results on drugs like Opdivo alone.
"We have a very broad development program in lung cancer and we are answering a number of very important questions," Mr. Caforio said in a phone interview Friday. "The role of monotherapy might be limited to a very small subset of patients in the first-line setting, which makes our program now ideally suited to address the next question, which is: 'What is the role of combination therapy?'" That will come from a study that analysts said would likely read out in 2018.
In June, Merck said that its related trial of patients with lung cancer had succeeded in lengthening the time it took for their tumours to progress. There was one key difference, though – Merck's trial tested Keytruda in patients whose tumors had the PD-L1 biomarker on at least 50 per cent of their cancer cells. The patients in Bristol-Myers's trial had to have the biomarker only on 5 per cent or more of their cells.
Shares of other competitors also rose. AstraZeneca PLC, which is behind Bristol-Myers in developing combinations of immune therapies, gained 1.2 per cent to 5,215 pence at 4:20 p.m. in London. Roche Holding AG, the maker of Tecentriq, increased 2.2 per cent to 251 Swiss francs in Zurich.
Seamus Fernandez, an analyst at Leerink Partners LLC who rates Bristol-Myers stock outperform, called the trial's outcome the "worst case scenario." In the long term, analysts including Mr. Schoenebaum and Tony Butler of Guggenheim Securities say all is not gloom for the drug maker, and investors are already looking forward to the combination-therapy trial.
"It's a setback for Bristol in the low-expression patients, but I'm not sure it is a long-term setback," said Mr. Butler, who recommends buying the stock. "The more important question is around combination therapy. They showed at some recent cancer meetings that combination therapy was incredibly, incredibly strong."
Before Friday, analysts estimated Bristol's immune therapies Yervoy and Opdivo will contribute more than half of the company's sales by 2020, and second-quarter results showed their importance: Sales of the drugs contributed to a 46 per cent increase in U.S. revenue. Opdivo's quarterly sales rose more than sixfold to $840-million. Total revenue for the drug last year was $942-million and it has been projected to rise to $7.7-billion by 2018.