Immuno-Oncology: Sweet Spot in a Biotech Bear Market

We will continue to track large cap biopharma Q1 earnings looking for value+growth ideas. The financial metrics will be tracked as we did in our original post, “Large Cap Winners and Losers” on February 16 near the 2016 bottom for the sector. We put in a buy signal at the time and added three picks: ABBV, BMY, GILD and later RHHBY. For now we think large cap biopharmas that pay dividends are the place to be for safety and modest growth until the technicals improve with small and mid-caps in the sector. Use XBI as the momentum indicator.

Today we have two earnings reports on Abbvie (ABBV) and Bristol Myers Squibb (BMY) both on our buy list. Both companies made small acquisitions to support their portfolios.  Biogen (BIIB) already reported. Tonite four large cap biopharmas report: ALXN, AMGN, CELG and GILD. Of these only GILD is on our buy list.

Abbvie (ABBV) reported Q1 GAAP diluted EPS of $0.83 on Net Revenues of  $5.96B an increase of 18.2%. Global Humira sales increased 14.9%, Q1 Imbruvica sales were $381M, Q1 Viekira sales were $414M.Diluted 2016 EPS guidance was $4.62-$4.82 or $3.87-$.07 for GAAP including impact of Stemcentrx acquisition. Abbvie will buy Stemcentrx, a Company with five clinical stage drugs for cancer subtypes, for more than $5.8B in cash and stock.  Stemcentrx with a “stem cell centric” approach to targeted therapy, has a potential lung cancer treatment called ROVA-T, a toxic chemical loaded in a biomarker specific antibody, in late stage development to boost its long term cancer drug portfolio.

Bristol-Myers Squibb (BMY) reported Q1 GAAP EPS of $0.71 and increased Revenues 9% to $4.4B. GAPP EPS guidance was increased to $2.37-2.47. Opdivo, Eliquis and Hepatitis products drove sales growth. New indications for squamous cell carcinoma, Hodgkin Lymphoma and non-small cell cancer (NSCLC) and others are coming for Opdivo a PD-1 checkpoint inhibitor.

Both ABBV and BMY stocks are up over 2% on earnings today.The IBB is up 1.2%.

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