Wall Street Journal - June 23, 2003
Peter Landers, Staff Reporter of The Wall Street Journal

The AIDS drug, known by the brand name Reyataz, was approved Friday by the Food and Drug Administration and is one of a few bright spots for Bristol-Myers. The approval follows positive developments in recent months for new drugs to treat schizophrenia and cancer.

Amid hope by some investors that the company is on the road to recovery, the company's stock price has risen 36% since March 31. On Friday, Bristol-Myers's shares were at $28.69, up 44 cents, in 4 p.m. composite trading on the New York Stock Exchange.

But the New York-based pharmaceuticals company could get derailed again depending on the outcome of two government investigations into the accounting problems, one by the Securities and Exchange Commission and the other by the U.S. attorney in New Jersey. Earlier this year, the company acknowledged it had overstated revenue by $2.5 billion between 1999 and 2001. Bristol-Myers says it improperly recorded sales to wholesalers, generally toward the end of the quarter, in order to meet quarterly sales projections established by senior management.

Beyond the accounting problems, Bristol-Myers's underlying drug business was hard hit by expiration of U.S. patents on two of its biggest products, the cancer drug Taxol and diabetes drug Glucophage. Bristol-Myers's revenue was virtually flat in 2002 at $18.1 billion compared with 2001, and net income fell to $1.89 billion from $4.9 billion.

But some recent events are piercing, if ever so slightly, the gloom surrounding the company. Recent European data showed ImClone Systems Inc.'s cancer drug Erbitux, which Bristol-Myers plans to market with ImClone, shrank tumors in about half of colon-cancer patients. The drug was turned away by the FDA in December 2001, setting off the insider-trading scandal involving ImClone's former chief executive, Sam Waksal. Bristol-Myers has spent $1.4 billion so far in its partnership with ImClone. Bristol-Myers and ImClone say they plan to try again for FDA approval in the second half of this year.

Bristol-Myers is pushing hard to make its schizophrenia drug Abilify, which went on sale in the U.S. last November, into a blockbuster to challenge market leader Zyprexa, sold by Eli Lilly & Co., and Johnson & Johnson's Risperdal. Both of the established drugs are among the top 20 drugs in world-wide sales, and Zyprexa had revenue of $3.69 billion in 2002.

So far in 2003, Abilify is getting 4% of new prescriptions in the U.S. antipsychotic market, according to market researcher NDC Health. Bristol-Myers receives 65% of the revenue from Abilify; the rest goes to the drug's discoverer, Otsuka Pharmaceutical Co. of Japan, which also has a small U.S. sales force selling the drug. In the first quarter of 2003, Bristol-Myers's share of Abilify revenue amounted to $37 million.

The newly approved AIDS drug, Reyataz, is particularly heartening for Bristol-Myers's beleaguered research operations because the company had largely developed the drug in-house. Many of Bristol-Myers's major drugs originated from other companies' research including its top seller, Pravachol, a cholesterol drug that was invented by Sankyo Co. of Japan.

Although the Reyataz molecule was purchased from Ciba-Geigy, now part of Novartis AG, Bristol-Myers says it was responsible for almost all of the drug's development, including all of the clinical trials that showed a once-a-day dose of Reyataz is successful in fighting the AIDS virus without raising cholesterol levels significantly. Some other AIDS drugs can lead to higher cholesterol levels.

James Palmer, the head of research and development at Bristol-Myers, said the cholesterol data are important because of a "potential epidemic of coronary artery disease" among AIDS patients, who are increasingly living long enough to face diseases of middle and old age.

Bristol-Myers will face stiff competition from other drugs in Reyataz's class, known as protease inhibitors. Abbott Laboratories makes Kaletra, the top-selling protease inhibitor. John Leonard, Abbott's vice president of pharmaceutical development, said that although Kaletra does raise cholesterol levels, it will remain the first choice of doctors because it is better at killing the AIDS virus. "Once you develop a resistant bug, there's no turning back," Dr. Leonard said. "We're kind of worrying about stuff at the margin and losing track of what kills people."

Dr. Palmer declined to give a sales forecast for Reyataz. He said that despite the repeated scandals at Bristol-Myers, "the morale of the company is terrific."

Still, Bristol-Myers has a tough road ahead. It isn't clear how well the new drugs will sell since each has formidable competition. And the federal investigations hang darkly over the company and its chief executive, Peter Dolan. Bristol-Myers declined to make Mr. Dolan available for comment.

Write to Peter Landers at peter.landers@wsj.com

030623
WJ030606

Copyright © 2003 - The Wall Street Journal. Reproduction of this article (other than one copy for personal reference) must be cleared through the WSJ Permissions Desk.

Always watch for outdated information. This article first appeared in 2003. This material is designed to support, not replace, the relationship that exists between you and your doctor.

AEGiS presents published material, reprinted with permission and neither endorses nor opposes any material. All information contained on this website, including information relating to health conditions, products, and treatments, is for informational purposes only. It is often presented in summary or aggregate form. It is not meant to be a substitute for the advice provided by your own physician or other medical professionals. Always discuss treatment options with a doctor who specializes in treating HIV.

Copyright ©1980, 2003. AEGiS. All materials appearing on AEGiS are protected by copyright as a collective work or compilation under U.S. copyright and other laws and are the property of AEGiS, or the party credited as the provider of the content. .