Bristol Myers Squibb is the IBD Stock Of The Day as BMY stock bounds off its 50-day line, presenting investors with an early entry.
The company recently lined up a series of cancer deals. It announced a $4.1 billion plan to buy Turning Point Therapeutics, a precision cancer medicines company. Further, Bristol Myers expanded its deal with Immatics to develop next-generation cell therapies.
SVB Securities analyst Andrew Berens expects the Turning Point buyout to close in the third quarter without any hiccups. Before that, Turning Point will meet with the Food and Drug Administration to discuss requesting approval for its first drug, a lung cancer treatment.
"While we are not privy to the specifics of the deal or Bristol Myers' expectations for this meeting, we think it is unlikely to derail the deal given that the drug has three breakthrough therapy designations, suggesting that the agency views the compound as significantly differentiated," he said in a note to clients.
On the stock market today, BMY stock inched up fractionally to 76.55. Turning Point shares remain rangebound near the buyout price of $76 per share.
BMY Stock: Focusing On Cancer Drugs
Bristol Myers is well known for its cancer treatments, the biggest being Opdivo, Pomalyst and Yervoy. Opdivo and Yervoy are immuno-oncology drugs, meaning they "teach" the immune system to find and destroy cancer. Pomalyst was acquired with Celgene, one of the biggest biotech companies.
During the first quarter, Opdivo sales ratcheted up 12% to $1.92 billion. Yervoy sales jumped 13% to $515 million. Pomalyst generated $826 million in sales, advancing 7% year over year.
The acquisition of Turning Point and alliance with Immatics could help further bolster Bristol Myers' efforts in cancer. But BMY stock rose just a fraction on June 3, the day it announced the Turning Point takeover. Turning Point shares soared more than 118% higher.
In an emailed statement, Bristol Myers noted Turning Point brings a late-stage asset in oncology and a potential best-in-class treatment for patients with lung cancer due to a specific genetic mutation. Bristol also expects the expanded deal with Immatics to launch it to the forefront in allogeneic cell therapy.
"From our perspective, our business development strategy remains focused on assets that are a good strategic fit, accelerate breakthrough science and are financially sound," the company said. "Our acquisition of MyoKardia, planned acquisition of Turning Point Therapeutics and expanded relationship with Immatics further underscore and reflect our approach."
Genetically Driven Cancer
Turning Point's leading drug is repotrectinib. It treats cancers tied to specific genetic mutations. The company is currently testing repotrectinib in patients with non-small cell lung cancer, a common form of lung cancer. It's also in testing for solid tumors in children.
"While Bristol Myers contains multiple approved and developing assets in non-small cell lung cancer, none that we are aware of target specific (mutations in genes) ROS1, MET, RET or ALK," SVB Securities' Berens said.
He noted new evidence suggests using immuno-oncology drugs like Opdivo and Yervoy might not be the best option for previously untreated patients with cancer driven by genetic mutations. This buyout could help Bristol Myers target those patients.
Berens doesn't have a rating on BMY stock.
Shares Retake 50-Day Line
Also this month, Bristol Myers expanded a collaboration deal with Immatics. The companies hope to make allogeneic cell therapies. Traditional cell therapies use a patient's own gene-edited cells. But the approach takes time and it's expensive. Allogeneic cell therapies would use donor cells.
Bristol Myers will pay $60 million up front and up to $700 million in milestones per program. It will also pay Immatics a low double-digit percentage royalty on sales of new drugs.
Though BMY stock didn't move much on the Immatics deal — up a fraction on June 2 — shares just broke above their 50-day moving average, according to MarketSmith.com. This could give investors an early buying opportunity. Shares have also been forming a flat base since early April.
Bullishly, Bristol Myers shares have a strong ratings across IBD Digital. Both Composite and Relative Strength ratings are 95. This puts shares in the leading 5% of all stocks in terms of fundamental and technical measures as well as 12-month performance.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
