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Bristol-Myers Squibb Rallies as FDA's Approval of Sotyktu is a 'Best-case Scenario'

Stock Markets Sep 12, 2022 07:28
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By Senad Karaahmetovic

Shares of Bristol-Myers Squibb (NYSE:BMY) are up about 7% in premarket Monday after the U.S. FDA approved Deucravacitinib, now known as Sotyktu, for the treatment of psoriasis.

The company said that the Phase 3 results showed superior efficacy of once-daily Sotyktu over placebo and twice-daily Otezla (apremilast) in improving skin clearance.”

“Sotyktu has the potential to become the new standard of care oral treatment for people with moderate-to-severe plaque psoriasis, given its profile in helping patients achieve clearer skin as demonstrated in the POETYK PSO clinical program,” said April Armstrong, MD, MPH, clinical investigator in the POETYK PSO-1 trial and Associate Dean and Professor of Dermatology at the University of Southern California.

The company expects to immediately start shipping Sotyktu to patients in the U.S.

While BMY is up in premarket, Amgen (NASDAQ:AMGN) shares are down 2% as analysts expect Sotyktu to take market share from the company’s Otezla.

Here’s what analysts have to say about the FDA approval.

A Morgan Stanley analyst said: “The lack of a black box warning and no limitation on line of therapy is a positive in our view, as it should allow Deucrava to compete more effectively in the psoriasis market. Hence, we expect BMY shares to trade up >5%. BMY has guided to 2029 Deucrava non-risk adjusted sales of $4bn+.”

A Wells Fargo analyst added: “We see this label as better than consensus expectations and in line with our 50:50 probability of class label. We are maintaining our Deucrava numbers at $2.8B peak and think it would be a nice option for patients needing better efficacy vs. Otezla but who do not want injections.”

A Truist analyst noted: “This removes a key overhang as there were concerns around a potential black box warning for the drug which could potentially have capped the peak opportunity of the drug. While the label mentions potential risks related to JAK inhibition (in the warnings and precautions section), Sotyktu does not have the black box warning that has been broadly issued to JAK inhibitors in the I&I space.”

A BMO analyst said (Raising PT to $94 from $92): “We and investors can breathe a sigh of relief following late Friday's approval of deucravacitinib. While the commercial story will take time to play out with widespread contracted access unlikely in 2023, we see this as a very important aspect of Bristol's P&L over the next few years. Approval bolster's our outperform thesis, adding >$4B in peak sales in psoriasis (likely taking share from Amgen's Otezla).”

Bristol-Myers Squibb Rallies as FDA's Approval of Sotyktu is a 'Best-case Scenario'
 

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