"Old Money" BMS, Eager to Earn New Money

Bristol-Myers Squibb (BMS) finally has new hope.

On September 26, BMS's schizophrenia drug Kar-XT was approved by the FDA. This is the first drug with a completely new mechanism of action for treating schizophrenia in decades. Wall Street analysts have high expectations for its sales—forecasting $3.1 billion by 2030, with a peak possibly exceeding $10 billion.

In fact, prior to Kar-XT, many of BMS’s new drug pipelines fell short of expectations. Whether this time they can seize the fortune depends on the company’s follow-up clinical development and commercialization capabilities. However, the launch of Kar-XT may very well be the turning point for BMS to come out of its slump, as its stock price has already started to rise, seemingly confirming this trend.

The past year hasn’t been smooth for BMS. Amid mergers and restructuring, BMS has been laying off employees across the board: in 2024, about 2,200 positions will be cut, representing 6% of the total workforce, and the business development (BD) team has undergone significant changes.

Before this round, BMS had never seen layoffs on this scale. BMS used to be relatively relaxed among multinational corporations (MNCs). “You could maintain work-life balance at BMS, unlike some MNCs where the competition among employees is much more intense,” recalled a former BMS employee from the U.S.

This sense of relaxation was fueled by money. As the first MNC to profit from the era of cancer immunotherapy, BMS held three major immune checkpoint inhibitors: PD-1, CTLA-4, and LAG3. Its PD-1 inhibitor Opdivo (nivolumab) secured BMS’s wealth for ten years, with global sales exceeding $10 billion in 2023.

Two other flagship products, Revlimid (lenalidomide) and the anticoagulant Eliquis (apixaban), had 2023 sales of $6.097 billion and $12.206 billion, respectively. However, these three drugs are reaching the end of their sales growth, and the patent cliff crisis is imminent.

The new product lineup—including anemia treatment Reblozyl, BCMA CAR-T drug Abecma, CD19 CAR-T drug Breyanzi, multiple sclerosis drug Zeposia, heart treatment drug Camzyos, and the selective Tyk2 inhibitor Sotyktu—has not yet grown into major drugs, and the promotion time has taken longer than expected.

With the pipeline showing a clear gap, BMS's standing has sharply declined, dropping from sixth place in MNC market capitalization in 2019 to the bottom of the top 10 by the end of 2021. By the end of 2023, it ranked 13th, hovering around the $100 billion mark.

BMS has entered a chaotic adjustment period, constantly acquiring, introducing, and then discarding products, and still hasn’t figured out which direction to go in the post-IO (immuno-oncology) era.

MNCs are often built on one or two blockbuster drugs, and they face similar challenges: when the patent cliff arrives, how to cushion the blow and perhaps climb another peak. BMS may be in the most critical situation of them all. Analyst Geoffrey Porges predicts that by 2030, BMS could lose 47% of its estimated 2025 revenue to generic drugs, the highest percentage among major pharmaceutical companies.

"Old Money" Pride

The intense and long-lasting battle between the two major PD-1 inhibitors, Keytruda (K-drug) and Opdivo (O-drug), was one of the fiercest contests in the field of cancer immunotherapy. The styles of BMS and Merck, the companies behind O-drug and K-drug, are often compared to those of Pinduoduo and Tmall.

BMS took an elite approach in its clinical design. For monotherapy trials on NSCLC patients, instead of selecting the PD-L1 high-expression population, it included all expressors, leading to a failed trial. In the second attempt, when exploring combination therapies, BMS pushed the O-drug and Y-drug dual immunotherapy combination but again lost progress due to the significant challenge.

At that time, BMS already had CTLA-4 and wanted to focus on combination therapies, so it didn’t pair with traditional chemotherapy. In contrast, Merck did just that. Keytruda combined with chemotherapy became the world’s first immunotherapy plus chemotherapy regimen to receive FDA approval for first-line lung cancer treatment.

The initial strategic direction still has a lingering impact. After the PD-1 + ADC combination gained popularity, K-drug again moved ahead of O-drug. ADC drugs are essentially an upgraded form of targeted chemotherapy, and since K-drug had plenty of clinical data on combination with chemotherapy, many pharmaceutical companies sought to develop combinations with it.

In China, the competition between O-drug and K-drug isn't as noticeable, since O-drug has a relatively low presence in the domestic market. BMS entered China in 1982, making it one of the earliest MNCs to do so, but it never established an R&D center there, and its market presence has remained small.

“In the past, all of BMS’s China leaders were Americans. Later, Chinese executives were added to focus mainly on commercialization, but the group's internal influence on commercialization decisions has always been limited,” an industry insider revealed.

Even though neither O-drug nor K-drug has been included in the national insurance catalog, their approaches in the self-pay market have been different. After both O-drug and K-drug failed in the 2020 insurance negotiations, K-drug quickly updated its patient assistance program, allowing patients to pay for 4 cycles at a cost of 140,000 RMB, after which they could receive two years of assistance medication. O-drug, however, didn’t update its assistance program for stomach and esophageal cancer to a similar 2-year, 140,000 RMB offer until November 2023.

In China, O-drug has been squeezed by both K-drug and domestic PD-1 inhibitors, with its market share reduced to single digits, while K-drug maintains about 20% market share.

The reason BMS has been able to maintain its distinguished position is because O-drug’s backstop ability remains strong. If BMS has done anything right, it’s that the company transitioned from small molecule inhibitors to immunotherapies early, recognizing the right direction. In 2014, BMS acquired Medarex for $2.4 billion, securing the CTLA-4 inhibitor Yervoy, the PD-1 inhibitor Opdivo, and Medarex’s antibody development platform.

“This might be the best deal in BMS’s history.” Most of BMS’s current biologics pipeline stems from this acquisition. Additionally, other drugs developed using Medarex’s antibody platform pay royalties to BMS annually.

BMS’s accumulation in the IO (immuno-oncology) field is among the top in the MNCs. The IO era is nearly over, and BMS’s future direction remains unclear. It will be difficult to replicate the game-changing acquisition of 2014.

The Lost 5 Years

Many people were not optimistic about BMS’s 2019 acquisition of Celgene. The $74 billion deal brought a pipeline that has mostly shown little potential.

Lenalidomide (Revlimid) exited the "billion-dollar club" in 2022, and its successor, Pomalyst, did not continue the legacy. In 2023, Pomalyst’s global sales reached $3.441 billion, with a slight year-over-year decline.

As for the two most highly anticipated CAR-T therapies, the first is Abecma (BCMA CAR-T), which has been overshadowed by Carvykti from Legend Biotech. Johnson & Johnson’s BCMA-targeted bispecific antibody, Teclistamab, also poses a challenge. While Abecma’s overall response rate (ORR: 72%) is slightly higher than Teclistamab's (ORR: 63%) in treating multiple myeloma (MM), Abecma’s cytokine release syndrome (CRS) rate is much higher than Teclistamab’s. Combined with the cost advantage of bispecific antibodies, Abecma finds itself in an awkward position.

Even BMS seems to have lost confidence in Abecma’s potential. On September 24, they announced they would focus on Abecma’s current indications and stop developing it for newly diagnosed multiple myeloma (NDMM) in clinical trials.

The other CAR-T from Celgene, Breyanzi (CD19 CAR-T), has fared better. In May 2023, it added a fourth indication, leading to a sales surge. In 2023, Breyanzi’s sales jumped 100% year-over-year to $364 million.

One dramatic point following the Celgene acquisition was that, due to antitrust regulations, BMS had to sell Celgene’s autoimmune drug Otezla (Apremilast) to Amgen. At the time, BMS had a better psoriasis treatment, the Tyk2 selective inhibitor Sotyktu.

BMS initially believed Sotyktu would offset the losses from selling Otezla. While Sotyktu did outperform Otezla in several metrics, there were almost no signs of market share movement after its launch. Otezla has maintained its leading position in the first-line psoriasis market, with 2023 sales likely exceeding $3 billion. Since its launch in 2022, Sotyktu has underperformed, with total sales in the first half of 2024 amounting to less than $100 million. Dermatologists have suggested that Sotyktu’s safety and tolerability may be issues holding it back.

Many shareholders were skeptical about BMS’s decision to acquire Celgene, but at the time, BMS was at its peak, and its market value surged after the acquisition.

The crisis, however, was already brewing. After the Celgene acquisition, BMS should have immediately focused on business integration, including layoffs, but the pandemic delayed these efforts, causing a drag on the company. BMS’s ability to digest large acquisitions has raised concerns.

After Celgene, BMS continued to make high-priced acquisitions of various pipelines, such as the 2022 $4.1 billion acquisition of Turning Point to obtain the ROS1 TKI (Augtyro), and the 2023 $4.8 billion acquisition of Mirati to secure the KRAS G12C inhibitor (Krazati). However, both drugs have had lackluster sales compared to expectations, with Krazati and Augtyro posting sales of just $53 million and $13 million, respectively, in the first half of 2024.

BMS has also abandoned many pipelines, including the IL-12 oncology candidate DF6002, the TIGIT/CD96 bispecific antibody, the CD3/BCMA bispecific antibody Alnuctamab, the FRα ADC drug MORAb-202, the CTLA-4 antibody project, the SIRPα antagonist, and the BET inhibitor, among others.

After five tumultuous years, BMS still relies on its three old drugs: Opdivo, Revlimid, and the anticoagulant Eliquis, to hold the fort.

Where Will the New Money Come From?

Old money remains old money, but with the support of Kar-XT, BMS’s market value has already rebounded from its lows.

Another potential revenue stream that may materialize this year is the subcutaneous formulation of Opdivo (O drug). Its Biologics License Application (BLA) PDUFA date, originally announced for February 28, 2025, has been moved up to December 29, 2024.

The subcutaneous formulation of Opdivo includes recombinant human hyaluronidase PH20 (rHuPH20), which helps promote the rapid absorption of high-concentration and large-dose drugs in the human body. This is not just a change in the drug’s form but also involves patent technology that could extend Opdivo’s patent life.

Nobody understands BMS’s situation better than the company itself.

In 2023, BMS underwent a leadership change, with former Chief Commercial Officer Christopher Boerner taking over as the new CEO from Giovanni Caforio. It is foreseeable that BMS’s future focus will still be on commercialization.

Commercialization has always been a weak point for BMS. "In the U.S., a company’s scale is almost synonymous with its sales capability. Among multinational corporations (MNCs), BMS is not the strongest in commercialization. BMS’s best-selling anticoagulant, Eliquis, is co-developed and sold in partnership with Pfizer."

In the Chinese market, BMS began partnering with Zai Lab last year for commercial cooperation. BMS has authorized Zai Lab to sell Opdivo in 10 provinces in China and granted them the rights to develop, manufacture, and commercialize Kar-XT in Greater China. In August 2024, Zai Lab completed patient enrollment for the Phase III registration bridge trial for schizophrenia in China, and a Phase III trial for Alzheimer’s-related psychosis is also underway.

Boerner has another important task: finding BMS’s new direction.

BMS’s latest assets include the nuclear medicine SSTR RDC acquired from the rising star RayzeBio, an IL13 monoclonal antibody in the autoimmune field, two ADC drugs: an EGFRxHER3 bispecific ADC and Orum Therapeutics’ CD33 ADC, and the small molecule cardiac myosin inhibitor Mavacamten. "From the series of mergers and acquisitions Boerner has carried out over the past year, there doesn’t seem to be a clear strategic direction. It feels like they’re grabbing at everything, and the deal amounts are enormous."

The path is made by walking, though it takes time. At least from the layout of Kar-XT, it seems BMS is determined not to repeat the mistakes made with Opdivo.