UPDATE: BMO Capital Downgrades Bristol-Myers Squibb Co. (BMY) to Market Perform

(Updated - May 15, 2014 10:37 AM EDT)

BMO Capital downgraded Bristol-Myers Squibb Co. (NYSE: BMY) from Outperform to Market Perform with a price target of $55.00 (from $60.00). The change follows ASCO abstracts. Analyst Alex Arfaei views IO combos as disappointing.

"We were wrong to extrapolate the strong efficacy seen with Bristol’s Nivo+Yervoy combo in melanoma to lung (NSCLC) and kidney (RCC) cancer. In NSCLC, the focus was on the Nivo+Yervoy data (-012 trial), which showed a modest 22% response (ORR) and a poor adverse event (AE) profile: 48% G3/4 AEs, most leading to discontinuation, and 6.5% drug-related deaths. Although BMS still plans to move the combo to phase-3, according to the abstract the doses have not been decided. The future of this combo is uncertain, in our view," said Arfaei.

"Similarly, the addition of Tarceva to Nivo doesn’t seem to add much, and the additional benefit of combining Nivo with chemo does not seem worth the added toxicity. Nivo on its own demonstrated solid durable responses in Rx naïve patients with 50-67% ORR in L1+ve patients. Merck’s (MRK) MK-3475 has somewhat less clear efficacy data in Rx naïve patients, but we have no reason to think it is worse and safety looks good. As for RCC, again the data does not suggest Nivo+Yervoy to be meaningfully better than Nivo+Sutent or Votrient. Moreover, Nivo’s monotherapy OS seems better than current Rx option in RCC, but the numbers are small and the 95% CIs overlap. We recognize that Bristol has a number of other IOs in its pipeline (e.g., anti-LAG-3) that it can combine with Nivo; however, given this experience with Yervoy+Nivo, we are now more cautious about other combinations. Overall, we are lowering our peak IO sales from $15.3Bn to $12.9Bn in 2023," he added.

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 $52.12 yesterday.

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