Bristol-Myers Stock Collapses After Disastrous Cancer Study Failure (BMY)
Shares of Bristol-Myers Squibb Co. (ticker: BMY) fell more than 16 percent Friday after the company announced that its Opdivo drug failed a study that would have expanded its use to lung cancer patients.
BMY stock dropped more than $12 a share, or 16 percent, in early trading as the company announced the failure of the Checkmate -026 study.
"Opdivo has become a foundational treatment that is transforming cancer care across multiple tumor types," says CEO Giovanni Caforio. "While we are disappointed CheckMate -026 did not meet its primary endpoint in this broad patient population, we remain committed to improving patient outcomes through our comprehensive development program."
The drug's failure comes as a surprise, and is challenging assumptions about BMY's position as a leader in lung cancer research and treatment, according to The Wall Street Journal. Bristol Myers was the first company to bring to market immunotherapy drugs such as Opdivo as a treatment for cancer. Opvido was brought to market in 2014 as a treatment for skin cancer, and is also approved for use for patents with melanoma, metastatic non-small cell lung cancer, advanced renal cell carcinoma and relapsed classical Hodgkin lymphoma.
Despite the study results, BMY stock is still considered a good value on Wall Street, according to some analysts. Zacks Investment Research changed its rating on Bristol-Myers from a "buy" to a "hold" and noted that the company has good upside potential.
"The company raised its 2016 earnings guidance once again buoyed by strong trends across the business, primarily Opdivo and Eliquis, which is encouraging," Zacks says in the research note. "Meanwhile, we are positive on Bristol-Myers' efforts to develop its pipeline. It has been working on strengthening its product portfolio as well as pipeline through acquisitions and deals. The company recently announced a couple of clinical trial collaborations with Johnson & Johnson (JNJ) and AbbVie (ABBV) for lung cancer. However, generic competition for several of the company's key products is concerning."
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Patrick Sanders is U.S. News & World Report's senior investing editor. He is a former news editor for The Associated Press and managing editor of the New York Times Editing Center, and he previously edited for InvestorPlace.com. He is on the board of the Society of American Business Editors and Writers. Follow him on Twitter at @1patricksanders.
