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Tickers in this Article: RDY, SNY, AZN, BMY, MYL, MRK
Recently, Bristol-Myers Squibb (BMY) and partner AstraZeneca (AZN) presented encouraging data from a phase III study (n=447) which compared the efficacy of their type II diabetes candidate, dapagliflozin (10 mg), to placebo. The study evaluated adults whose disease was inadequately controlled by Merck's (MRK) Januvia either as a monotherapy or in combination with metformin. Results from the multicenter, randomized, double-blind, placebo-controlled, parallel-group 48 week (including an extension period of 24 weeks) study were presented at the American Diabetes Association (ADA).

Results from the study revealed that patients treated with the dapagliflozin and Januvia (with or without metformin) combination experienced a significant reduction in blood sugar levels compared to those in the placebo plus Januvia (with or without metformin) arm at the end of 24 weeks. Similar results were obtained at the end of 48 weeks. Moreover, patients in the dapagliflozin arm also experienced a significant reduction in their body weight and the levels of fasting plasma glucose compared to those in the placebo cohort.

We note that dapagliflozin is one of the most interesting candidates in Bristol-Myers' pipeline. The regulatory paths for dapagliflozin have been quite diverse as far as approval in the US and EU is concerned. While the candidate received a complete response letter (CRL) in the US in January 2012, the Committee for Medicinal Products for Human Use of the European Medicines Agency (EMA) issued a positive opinion regarding the approval of dapagliflozin in the EU in April 2012. Dapagliflozin will target the highly lucrative type II diabetes market once approved.

Even though pleased with the positive data on dapagliflozin a, we believe that investor focus will remain on how Bristol-Myers fares following the US loss of exclusivity of its blockbuster blood thinner Plavix on May 17, 2012.

Bristol-Myers has co-developed Plavix with Sanofi (SNY). The loss of exclusivity is likely to result in substantial revenue losses for Bristol-Myers. Companies such as Mylan Inc. (MYL) and Dr. Reddy's Laboratories (RDY) have already launched their respective generic versions of the drug.

Bristol-Myers is looking to combat the generic threat through partnering deals and acquisitions. Apart from acquisitions and partnership deals, Bristol-Myers is looking to introduce new products to augment its product portfolio to combat the generic threat. Bristol-Myers has met with a fair amount of success towards achieving this objective. Many new products were launched/ approved in 2011. We expect Bristol-Myers to continue introducing new products throughout 2012.

Our Recommendation

We currently have a Neutral recommendation on Bristol-Myers. The stock carries a Zacks #3 Rank (Hold rating) in the short run.

 
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