This morning, Bristol-Myers Squibb Co (NYSE:BMY) announced that the CheckMate-238 trial in adjuvant melanoma achieved its primary endpoint at a planned interim analysis, showing an improvement in recurrence-free survival (RFS) for Opdivo (nivolumab; anti-PD-1) compared to Yervoy (ipilimumab; anti-CTLA-4). This comes as a surprise, as top-line data were not expected until the final readout in 2H:18. While there were no details in the press release regarding the magnitude of benefit for Opdivo, Leerink would expect it to become the standard of care in high-risk patients following surgical resection given its superior safety and tolerability profile relative to Yervoy. The firm estimates the adjuvant melanoma market will expand PD1 sales by approximately $3B globally. Although this likely will cannibalize sales of Yervoy in the setting (the firm estimates current adjuvant Yervoy sales at $300-400M), the expansion of the market should add approximately $1B to BMY's net immuno-oncology (IO) sales despite assumed competition from MRK's (MP) Keytruda (pembrolizumab; anti-PD-1).
CM-238 compared a 3 mg/kg dose of Opdivo to the currently approved 10 mg/kg dose of Yervoy. Opdivo was dosed every two weeks, while Yervoy was given every 3 weeks for 4 doses, followed by every 12 weeks for up to 3 years. Given the high rates of toxicity with Yervoy, many patients in clinical practice do not complete a full course. In Yervoy’s pivotal trial, the drug showed a median 26-month RFS (versus 17 months with placebo; hazard ratio=0.75; p
<0.002); however="">Leerink’s DCF-based price target of $66/share forecasts cash flow to 2026 using its large pharma discount rate of 8.25% with a 2% terminal growth rate.