The “transition period” that Bristol Myers Squibb CEO Chris Boerner promised was coming to the company appears to have arrived.
On Thursday, the pharma giant said it would undertake $1.5 billion in cost-cutting measures, including changes to the pipeline and the company’s workforce. Bristol Myers will reduce its workforce by 2,200 people by the end of the year, a company spokesperson said. BMS’ stock $BMY was down more than 8% in early Thursday trading.
“As a part of our continued evolution, we’re executing a strategic productivity initiative that will allow us to be more agile, drive efficiency across the company, and prioritize investing in opportunities where we see the greatest potential to get the most promising medicines to patients as quickly as possible,” Boerner said in a statement announcing first-quarter earnings.
The full scope of the cuts will be achieved by the end of next year, and some may already be taking place — over the last week, several people on LinkedIn who said they were Bristol Myers employees said their roles had been eliminated as part of changes at the company.
Boerner, who took over as CEO in November, talked earlier this year about an upcoming “transition period” at the company that would include cost discipline as well as a focus on the late-stage pipeline, before targeting better revenue growth toward the later part of the decade.
In Thursday’s update, the company said it would focus its resources on R&D programs “with the potential to deliver the greatest return on investment.” CMO Samit Hirawat said later on Thursday’s call that “about 12” programs are being cut from the pipeline, with the potential for more throughout the year.
In the near term, that also means an M&A strategy that’s based on smaller bolt-ons rather than big acquisitions, following a trio of large deals — a $14 billion buyout of Karuna, a $4.8 billion acquisition of Mirati and a $4.1 deal to buy RayzeBio, in addition to a handful of smaller buyouts and partnerships.
Last year in October, before Boerner took over, Bristol Myers pushed back peak sales estimates for its new product portfolio. Previously, BMS said it had projected between $10 billion and $13 billion by 2025 for medicines like Abecma, Reblozyl and others, but delayed that peak and now expects to achieve “at least $10 billion” in sales from these drugs in 2026.
On Thursday’s call, analysts asked BMS execs several questions to better understand the “transition period.” Among the highlights from BMS’ responses:
- The “majority” of the savings will come from “historical” and “legacy” BMS, rather than from the new acquisitions, Boerner said.
- About two-thirds of the cost-cutting will come from the R&D side, CFO David Elkins said, with the “vast majority” coming this year.
- There will be headwinds from the Inflation Reduction Act’s impact on Eliquis sales beginning in 2026. Execs did not comment on the IRA beyond that timeline.
- Data from a Phase 3 trial looking at Opdualag in lung cancer will come in the second half of this year. Another Phase 3 for Opdualag vs. standard-of-care will launch around the same time.
- BMS estimates that 70% of KarXT’s market will come from Medicaid and Medicare. Despite a September PDUFA, BMS views it as “effectively a 2025 launch,” chief commercialization officer Adam Lenkowsky said.
- BMS has a manufacturing facility in Indianapolis up and running to make the radiopharma drugs from the RayzeBio acquisition.
- Hirawat touted the advantages of CAR-T in lupus over a CD19-targeting bispecific. He noted future approaches might include non-lymphodepletion regimens, but BMS is not ready for that yet.
Bristol Myers is one of several drugmakers whose stocks have struggled over the last two years, in parallel with the broader biopharma sector. After a peak of about $81 in late 2022, the company’s shares closed at $48.86 on Wednesday evening, representing nearly a 40% decline.
Overall, BMS reported first-quarter revenues of $11.9 billion, up from $11.3 billion in the first quarter of 2023. But sales of its leading cancer drug, Opdivo, fell by 10% in the US.
Editor’s note: This story and headline have been updated with additional information about the number of job cuts, stock reaction and analyst notes, as well as information from Thursday morning’s investor call.