Will Increased Expenses Affect Bristol Myers' Performance?

Last month, Bristol Myers Squibb BMY announced a strategic collaboration agreement with BioNTech BNTX for the global co-development and co-commercialization of the latter’s investigational bispecific antibody BNT327 across numerous solid tumor types.

While the collaboration strengthens BMY’s pipeline, the company will incur increased operating expenses.

BMY will make an upfront payment of $1.5 billion to BNTX and pay a total of $2 billion in non-contingent anniversary payments through 2028. These tax-deductible charges will be recorded as acquired IPR&D Expense when incurred. Of the total expenses related to the deal, approximately $1.5 billion has most likely been incurred in the second quarter.

This, in turn, will adversely impact the bottom line.

BMY is already facing top-line pressure as the legacy portfolio is under pressure due to continued generic impact on Revlimid, Pomalyst, Sprycel and Abraxane.

The sales of the blood thinner drug Eliquis are also affected due to the Medicare Part D redesign in the United States.

Competition in Dual Target Cancer Therapy Space Heats Up

Developing bispecific antibodies that target two proteins, namely PD-1 and VEGF, has lately been one of the lucrative areas in cancer treatment, attracting pharma giants Merck MRK and Pfizer PFE.

In November 2024, Merck received an exclusive global license to develop, manufacture and commercialize LM-299, a novel investigational PD-1/VEGF bispecific antibody from LaNova.  Merck’s oncology portfolio boasts a blockbuster PD-L1 inhibitor, Keytruda, and it is looking to build a diversified oncology pipeline spanning differentiated mechanisms and multiple modalities.

Last month, Pfizer inked a licensing agreement with 3SBio for the development, manufacturing and commercialization of SSGJ-707, a bispecific antibody targeting PD-1 and VEGF, outside China.

The candidate is already being evaluated in China for non-small cell lung cancer, metastatic colorectal cancer and gynecological tumors. Pfizer will also make an equity investment of $100 million in 3SBio upon the deal’s closure.

BMY’s Price Performance, Valuation and Estimates

Shares of Bristol Myers have lost 15% year to date against the industry’s growth of 1.3%.

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From a valuation standpoint, BMY is trading at a discount to the large-cap pharma industry.  Going by the price/earnings ratio, BMY’s shares currently trade at 7.40x forward earnings, lower than its mean of 8.53x and the large-cap pharma industry’s 14.79X.

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The bottom-line estimate for 2025 has moved down to $6.52 from $6.89 in the past 60 days and that for 2026 has declined 5 cents.

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BMY currently carries a Zacks Rank #3 (Hold).  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

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This article originally published on Zacks Investment Research (zacks.com).

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