On April 26, 2023, an unexpected announcement pushed Bristol-Myers Squibb into the spotlight. The announcement revealed the leadership transition of Bristol-Myers Squibb: its CEO Dr. Giovanni Caforio, after eight years in charge of the company, announced that he would step down and pass the leadership baton to Chief Commercialization Officer Chris Boerner. This marks the curtain call of Giovanni Caforio, and at the same time, it also brings unprecedented challenges to Chris Boerner. For Bristol-Myers Squibb, the severe test of the patent cliff is hanging over its head. In order to ensure a smooth transition, Caforio's resignation is not effective immediately. After a carefully arranged transition period, Caforio will not officially hand over the baton until November 1, 2023, and a new chapter for Bristol-Myers Squibb will begin. This change of leadership is not only of great significance to Bristol-Myers Squibb itself, but also affects the fate of many biotechnology companies that work closely with it.

Recently, Bristol-Myers Squibb announced that it had terminated its cell therapy cooperation agreement with two biotechnology companies, Century Therapeutics and Immatics. This is not the first time that Chris Boerner has cut off the old covenant after taking office, and it will not be the last time.

Behind the change of power
For Giovanni Caforio, although it is not flawless, his leadership is still considered an achievement. In Bristol-Myers Squibb's official statement, Giovanni Caforio was highly praised: during his eight-year term, he led the epoch-making merger with Celgene and launched 12 new drugs, covering 5 innovative therapies in 5 therapeutic areas. The company's revenue has nearly doubled under his leadership.

His leadership is also reflected at the micro level, such as cultivating a high-performance corporate culture and a dedicated workforce. However, Giovanni Caforio's achievements are both an incentive and a pressure for his successor, Chris Boerner. In the field of innovative drugs, the patent cliff is an inevitable challenge, and Bristol-Myers Squibb is also facing this test. The company's three major revenue pillars - Revlimid, Eliquis, and Opdivo - brought the company $26 billion in sales in 2023, accounting for nearly 60% of the company's total revenue.

However, the patents of these three drugs will expire in 2025, 2027, and 2028, respectively, which undoubtedly brings a sense of urgency to the company. Therefore, in 2023, Bristol-Myers Squibb became one of the most active players in the M&A market. The company acquired Karuna for $14 billion, Mirati for $4.8 billion, and RayzeBio for $4.1 billion... At the same time, Bristol-Myers Squibb's efforts in introducing innovative drugs should not be underestimated. For example, on December 12 last year, BL-B01D1, a dual-antibody ADC drug developed by Baili Tianheng, was licensed to Bristol-Myers Squibb with a total transaction amount of $8.3 billion. For the new leader Chris Boerner, these large-scale mergers and acquisitions and introductions are undoubtedly a huge challenge, which requires time to integrate and digest.

The key to successful transformation
At the earnings conference on February 2, 2024, Chris Boerner made his debut and showed the market his careful consideration of the company's future. In his view, Bristol-Myers Squibb's development roadmap is clear and clear. Despite a series of challenges such as the patent cliff and IRA (US Inflation Reduction Act), the company's core products Revlimid, Eliquis, and Opdivo, the three major revenue pillars, will continue to generate cash flow and support the company's innovative R&D pipeline.

Of course, the process of replacing the old with the new pipeline is not achieved overnight. Chris Boerner believes that 2026 will be the period when the company faces the greatest challenges, and he regards it as a key node where "risk exposure is the most serious." The core reason for this judgment is that the impact of IRA will begin to appear in 2026.

In Chris Boerner's strategic planning, the top priority at the current stage is to "shorten the transition period as much as possible." To achieve this goal, the company needs to accelerate the pace of research and development while maintaining strict cost control. His core strategy is to concentrate resources, accelerate progress and improve productivity. In short, this means a careful review of the R&D pipeline, giving priority to projects with higher return potential, while shelving those with lower priority.

Taking the acquisition of Karuna as an example, Chris Boerner believes that this is not only an acquisition of assets, but also means the integration of its operating expenses. The company needs to centrally manage operating expenses, improve efficiency and productivity, and make room for the integration and development of these new assets. In fact, at the beginning of his tenure, Chris Boerner had made it clear that for underperforming products such as Abecma and Zeporia, Bristol-Myers Squibb is "repositioning" and ensuring that they get the "right resources" to focus on "successfully launching these products." In a conference call in February, Chris Boerner announced that relevant execution measures have begun and will gradually show results in the next few quarters. At present, it seems that Bristol-Myers Squibb is launching a large-scale optimization plan for the R&D pipeline.

Continued turbulence in the cooperative pipeline
"Accidents" began to appear frequently among Bristol-Myers Squibb's partners. On July 1, 2024, Eisai is such an example. On the same day, Eisai announced that its FRα ADC drug MORAb-202 was returned by Bristol-Myers Squibb, and the BD cooperation worth $3.1 billion reached by the two parties was suddenly terminated. Indeed, this was a surprise to Eisai.

On the one hand, Bristol-Myers Squibb has invested a lot in this project. Eisai's cooperation with BMS on MORAb-202 began in June 2021. According to the agreement at the time, BMS paid Eisai $650 million, of which $200 million was Eisai's research and development expenses.

On the other hand, MORAb-202 has performed well in hot fields. Since the second half of 2022, good news in the field of FRα ADC has come one after another, making this market the focus. Eisai has always believed that MORAb-202 does not have the shortcomings of FIC drugs. On the one hand, MORAb-202 is also effective for patients with FRα expression below 50%, and on the other hand, there is no problem of ocular toxicity.

For this reason, after the return, Eisai stated that it will continue to promote research and development with high priority. However, for Bristol-Myers Squibb, it may be excusable. According to the data released by ASCO, interstitial lung disease/pneumonia is still the most common treatment-related adverse event of MORAb-202. Even if it is launched in the future, it may still have limited competitiveness, and it may not be worth the loss. Under the principle of "maintaining profit and loss discipline", MORAb-202 has become an asset that can stop losses in time. Then, in August, Bristol-Myers Squibb returned Agenus's TIGIT/CD96 dual antibody pipeline, and $200 million was wasted.

With the latest return, Bristol-Myers Squibb still suffered a lot of losses. For example, its cooperation with cell therapy company Immatics, although it only invested a down payment of $75 million at the beginning, the total investment in subsequent rounds of additional investment has reached $300 million. For Bristol-Myers Squibb, in the face of the demand of "shortening the transition period as much as possible", the core is to focus on the future: the requirements for pipelines and subsequent investment considerations will increase, and stopping losses may become less important, after all, they are all in the past.
So, who will be the next one to be returned?

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