Bristol-Myers Shares Plunge up to 20% as Cancer Drug Opdivo Fails Lung Cancer Trial

biotech-dnaDrugmaker Bristol-Myers Squibb Co (NYSE:BMY) this morning announced that its cancer immunotherapy treatment dubbed Opdivo has failed its trial study, sending the stock off a cliff.

From the press release:

Opdivo has become a foundational treatment that is transforming cancer care across multiple tumor types. 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, including the ongoing Phase 3 CheckMate -227 study exploring the potential of the combination of Opdivo plus Yervoy for PD-L1 positive patients, and Opdivo plus Yervoy, or Opdivo plus chemotherapy in PD-L1 negative patients.

Competitor Merck is surging on the news, up nearly 8%. Merck makes a competitor drug to BMY’s called Keytruda, so the company stands to benefit greatly from Opdivo’s failure. Opdivo is already used to treat other forms of cancer, but this latest study had hoped to prove effectiveness specifically in lung cancer. Opdivo generated $840 million in sales in Q2 alone for BMY, so a lot of potential money was riding on this lung cancer study.

In response to the news, analysts at SunTrust reportedly cut their rating on Bristol-Myers to Neutral. Investors can expect many other firms to follow suit with downgrades, price target cuts, and lower earnings estimates.

BMY shares fell $13.02 (-17.29%) to $62.30 in Friday morning trading. The stock is now down about 9% on the year, compared with a 6.7% gain in the benchmark S&P 500 index.

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