Berenberg Downgrades Bristol-Myers Squibb, Says Competitors Better Exposed For Near-Term Upside

Bristol-Myers Squibb Co’s BMY CheckMate 026 trial to evaluate IO drug Opdivo for monotherapy in first-line NSCLC in PD-Li positive patients has ended in failure.

Berenberg’s Laura Sutcliffe downgraded the rating on the company from Buy to Hold, while lowering the price target from $80 to $70.

Failed Trial

“While a lack of success in this particular trial has no impact on about half of Bristol’s IO opportunity, it affects the NSCLC space as a whole, and places Bristol on the back foot in a market where it has, up until now, dominated.,” Sutcliffe explained.

The analyst pointed out that despite Opdivo not having an indication as monotherapy in first-line NSCLC, Bristol-Myers Squibb has reported some off-label use, which is likely to cease following the failure of the trial.

Related Link: Argus: Bristol-Myers Selloff Is Overdone, Reiterating $90 Target

Lagging The Competition

The next major trial for Opdivo will focus on combination therapy, with the company’s CheckMate 227 trial focusing on IO-IO and IO-chemo combinations.

However, Sutcliffe noted that Bristol-Myers Squibb was behind the competition on this, with some of its major competitors scheduled to report IO-chemo data in 2017.

The analyst now expects Opdivo to account for 30 percent of the company’s sales in 2020, down from the earlier 35 percent.

The EPS estimate for FY16 has been lowered from $2.65 to $2.58.

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