Bernstein Analyst has Doubts About Potential 'Compendia Listing' for Bristol-Myers' (BMY) Opdivo

September 2, 2016 11:39 AM EDT
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Bristol-Myers Squibb Co. (NYSE: BMY) declined Friday morning following comments in a research note from Bernstein analyst Tim Anderson. Until recently, he thought the company's Opdivo had a good chance of getting an off label listing for pending subgroup analyses of its failed Checkmate-026 trial. However, Anderson said his "view on this has changed."

The analyst explained, "In our recent prior reports, we have claimed that BMY would still likely get a 'compendia listing' for Opdivo based on the pending subgroup analysis from the failed Checkmate-026 trial, under the assumption that 'high expressers' of the PDL1 biomarker would still show efficacy (matchingwhat MRK showed in Keynote-024). This is important because compendia listings help gate reimbursement in the US. By law, Medicare has to follow compendia recommendations (and most lung cancer patients are Medicare patientsgiven their age at diagnosis). Private payers often do the same (although they are not required to by law),"

Anderson added, "However, our updated view on this has shifted based on our due diligence and our discussion with BMY. Specifically, we are less certain BMY will get a compendia listing, even if subgroup analyses are positive. We are unable to identify many precedent cases where a phase 3 trial failed, yet compendia listing was granted. Further, because BMY's analysis of high expressers is “exploratory” (vs. "pre-specified") the robustness of the analysis will be less. Also, because MRK’s Keytruda will be labeled for high expressers of PDL1, it is difficult to say an unmet medical need in this patient segment exists that would encouragea compendia listingon exploratory analyses(but this is not an explicit criterion when such decisions are made)."

Anderson concluded, "The bottom line is that even if efficacy is seen in high expressers (which is still what we expect; if this is not the case, investors and experts alike will be baffled), it may not lead to much. Without compendia listing, most payers will likely hesitate to reimburse for Opdivo’s usage as monotherapy in 1L lung. Another item to note: compendia listings are really only a US phenomenon, and outside of the USthere is no similar process that is common."

Bernstein has a Market Perform rating om Bristol-Myers Squibb Co. with a price target of $65.00

For an analyst ratings summary and ratings history on Bristol-Myers Squibb Co. click here. For more ratings news on Bristol-Myers Squibb Co. click here.

Shares of Bristol-Myers Squibb Co. closed at $56.76 yesterday.

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