A Biopharma's Resurrection From Patent Purgatory

So, Bristol-Myers Squibb (BMY), that old stalwart of the biopharma world, is making a comeback, and not just any comeback.

After what seemed like an eternity in the doldrums, with sales taking a hit left and right thanks to the expiration of patents on blockbuster drugs like Revlimid, this giant is stirring again.

And let me tell you, it's about time. My take? Keep a keen eye on BMY because this phoenix is rising.

To put things in perspective (and explain why I’m excited about this), let's not forget this little nugget: in the past year, Bristol-Myers was practically the only biopharma not to get an invite to the price surge party, apart from Pfizer (PFE), which took a 33.4% nosedive. Ouch.

Now, for the important details. After five quarters of watching sales dip like a roller coaster on the downward run, Bristol-Myers is back with a bang — or at least, a firm step in the right direction.

Although the company reported a slight 2% dip in annual sales to $45 billion, the underlying story is one of renewal and optimism. For the first time in a while, there are tangible signs that the company is navigating its way out of the patent purgatory that had ensnared its revenue streams.

Diving into the deep end, their LOE drug revenue shrunk to $7.1 billion in 2023, with Revlimid sales plummeting 36% to a mere $1.45 billion in the fourth quarter alone.

Yet, there's a glimmer of hope with new bloods like Reblozyl and Breyanzi, racking up a cool $423 million in Q4 sales between them.

Meanwhile, the bread and butter of Bristol-Myers, their in-line product portfolio, pulled in $34.3 billion, managing a modest 3% growth last year.

But here’s where it gets interesting: their new product portfolio skyrocketed by 77%, touching $3.6 billion for the year. As we waved goodbye to Q4, these new products were nearly outselling the old guard.

Sure, they're still the newbies, but their slice of the revenue pie jumped from 4.4% in 2022 to about 8% in 2023.

Add to that the success of their cancer treatment Opdivo, which enjoyed a 9% revenue bump, and you've got reasons to be cheerful.

Plus, with the market whispering sweet nothings of a return to growth, with sales expected to hit $46 billion in 2024, it’s hard not to get a little enthusiastic.

Let’s also not forget where Bristol-Myers shines: they've got a knack for snapping up small biotechs, keeping R&D spending savvy while hunting for the next big breakthrough.

In 2023, they're sitting pretty with a $7.51 EPS and operating cash flows to the tune of $14.0 billion. Translation? They've got the war chest to fund their growth crusade starting in 2024.

More importantly, Bristol-Myers has an extremely diverse portfolio.

It's like they've got their fingers in every pie – or, in this case, a smorgasbord of drugs tackling everything from the nitty-gritty of Oncology and Hematology to the intricacies of Immunology/Fibrosis and Cardiovascular health.

This isn't your run-of-the-mill, all-eggs-in-one-basket kind of deal. While some pharma giants are playing a high-stakes game banking on a single blockbuster or a handful of hopefuls, Bristol-Myers’ playing it smart with a kaleidoscope of treatments across the board.

To date, they've got over 12 assets strutting towards the registrational phase with another 30 doing the early-stage clinical studies. If that doesn't scream "long-term growth and earnings potential," I don't know what does.

Looking ahead to 2024, the brass at Bristol-Myers is promising "low-single-digits" revenue growth, while eyeing an EPS somewhere in the neighborhood of $7.10 to $7.40.

Sure, that might look like a step back from 2023's $7.51, but let's not forget their bill for their shopping spree – snagging Mirati Therapeutics for $14 billion isn't exactly pocket change, and neither is giving their new product lineup the grand tour.

What happens next? Well, the market loves a comeback story, especially in biopharma, and Bristol-Myers is penning a gripping narrative.

After a year that tested its mettle, Bristol-Myers is on the upswing, promising more thrills for investors. Admittedly, there might be some bumps along the way as they fold in their latest acquisitions, but any dips could be golden opportunities for the savvy investor.

I suggest you keep Bristol-Myers Squibb on your radar. This biopharma phoenix is just getting its second wind, and the journey ahead looks as promising as ever.