3 Things Investors Must Watch at Bristol-Myers Squibb Co.

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Bristol-Myers Squibb's (NYSE: BMY  ) end of year earnings report is coming up this Friday after the market opens. The company is going through a transformative phase, so we can expect the release and subsequent conference call to generate a great deal of noise. It's easy to get caught up in the ebb and flow created by analysts, but I think it's best to highlight some items to look out for so we can determine for ourselves whether the company is on the right path, or stumbling in the dark.

Eliquis' launch
The launch of Eliquis, marketed in partnership with Pfizer (NYSE: PFE  ) has been a disappointment so far. A slow US launch had to be expected, as it followed Boehringer Ingelheim's Pradaxa, and Xarelto from Johnson & Johnson (NYSE: JNJ  ) into the market. The analyst community was convinced that Eliquis' superior safety profile with respect to dangerous bleeding episodes would propel it past its competition. During the first nine months of 2013, sales of Eliquis in the US only reached $49 million, while Xarelto reached $246 million during Q3 2013 alone.

Bristol-Myers has stepped up its game, by sending physicians into the field to educate other physicians of Eliquis' safety profile. A supplemental new drug application that would extend the anticoagulant to treatment of hip or knee replacement patients post-surgery is also under review. Be sure to keep your eyes and ears open for any signs of improvement from what should already be a drug heading for blockbuster status.

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Bristol-Myers Squibb Co. Doubles Down On Immuno-oncology

Sorry about the blackjack references, I'll get some new ideas soon. I promise. See the full post here.

Bristol-Myers Squibb  (NYSE: BMY  )  has shown that it is serious about becoming a specialty biopharmaceutical company with an immuno-oncology focus. Although it has some promising compounds both on the market and in the pipeline, competition from Roche (NASDAQOTH: RHHBY  ) and Merck (NYSE: MRK  ) are likely to complicate matters.

The commitment

In November 2013, Bristol-Myers cut R&D staff, severing nearly all discovery work in diabetes, hepatitis C, and neuroscience. The cuts to the crowded and/or risky indications will largely benefit the company's immuno-oncology operations.

Late last year, Bristol-Myers furthered its commitment. Shortly before diabetes treatment Farxiga won approval by the FDA, Bristol-Myers essentially cut its ties to the therapy. On December 19, 2013, AstraZeneca (NYSE: AZN  ) announced that it would acquire Bristol-Myers' stake in their diabetes partnership . Clearly, Bristol-Myers isn't just paying lip-service to restructuring its operations around this promising field of cancer therapy.

Oncology bets aside, the early sale could prove positive for Bristol-Myers. It received $2.7 billion upfront and another $1.4 billion in milestones along with additional sales royalties. Farxiga will face some tough competition with Johnson & Johnson's Invokana. In the near term, it may also compete with Eli Lilly's empagliflozin, another SGLT2 drug currently under FDA review.

Reasons for the excitement

There is plenty of evidence that the immune system recognizes cancerous cells and is capable of eliminating them. In many types of cancer, malignant progression is coupled with severe immunosuppression. In other words, the growth and spreading of tumors usually occurs while the immune system is looking the other way. Investigators once believed tumor cells hid themselves. More recently, researchers understand that tumors effectively blind immune cells to their presence.

Traditional cancer therapies assault normal healthy cells as well cancerous ones. Antibody-drug conjugates, or ADCs, are a more effective way of precision-bombing cancer cells with chemotherapy payloads. Even ADCs inflict some collateral damage to normal tissues.

What makes drugs like Bristol-Myers's Yervoy and nivolumab so exciting, is that they lack toxic payloads. Although they represent no direct threat to cancer cells, they effectively suppress tumors by removing blindfolds, and allowing the immune system to do its job.

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