Market Response to EMA Validation of Opdivo Application

As discussed earlier, the European Medicine Agency (or EMA) validated Bristol-Myers Squibb’s (BMY) application for Opdivo for treatment of patients with classical Hodgkin’s Lymphoma on March 30, 2016.

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The above graph shows changes in Bristol-Myers Squibb’s stock price after the EMA’s validation of Opdivo application. The stock prices were nearly flat, at around $63.40 after the announcements for EMA’s validation of the type II application for Opdivo.

Bristol-Myers Squibb received a neutral response from investors, following the EMA’s validation of application for Opdivo’s new indication. As discussed above, the stock price were nearly flat over last trading session. On an annualized basis, the stock has remained flat year-to-date.

Key developments of Opdivo include:

• The FDA approved the Opdivo-Yervoy combination for the treatment of BRAF v600 wild-type melanoma in January 2016
• The company has also stopped its phase 3 study for use of Opdivo in platinum-refractory squamous cell carcinoma of the head and neck in January 2016 due to advantage in overall survival
• Bristol-Myers Squibb and its partner Ono Pharmaceuticals received manufacturing and marketing approvals for Opdivo in Japan in December 2015, for the treatment of unresectable, advanced, or recurrent non-small cell lung cancer.
• The FDA approved Opdivo injection for the treatment of advanced renal cell carcinoma, and also for the treatment of patients with BRAF v600 wild type in November 2015

BMY has four key oncology products, including Erbitux, Opdivo, Sprycel, and Yervoy. Two of these contributed more than $1 billion in 2014. The company also has strong research and development, leading to a diverse pipeline. BMY is also focused on immuno-oncology. To learn more about the oncology segment, please refer to Bristol-Myers Squibb’s Oncology Franchise.

Opdivo competes with drugs like Pfizer’s (PFE) Inylta and Sutent, Bayer Pharma’s Nexavar, Merck’s (MRK) Keytruda, GlaxoSmithKline’s (GSK) Mekinist and Tafinlar, and Roche’s Zelboraf.

Investors can consider ETFs like the iShares US Healthcare ETF (IYH), which holds ~3.9% of its total assets in Bristol-Myers Squibb, or the Loncar Cancer Immunotherapy ETF (CNCR) which holds ~4.2% of its total assets in Bristol-Myers Squibb, in order to divest the risk.