Bristol-Myers' new R&D chief lays out PhIII game plan

R&D chief Francis Cuss

Bristol-Myers Squibb ($BMY) may have found the perfect formula for surprising Wall Street with its weekend announcement that long-time R&D chief Elliott Sigal was stepping out and being replaced by a lieutenant, Francis Cuss. But in a Monday scramble aimed at convincing the Street that the company is pursuing the same largely successful course mapped out by Sigal and his team, a group of top executives including the newly appointed research chief vowed to keep a strong grasp on its widely lauded "string of pearls" approach to R&D--particularly when it comes to new cancer drugs that spur the immune system. And the new R&D chief offered some fresh insights on how he plans to calibrate that strategy for the next three years.

"Nothing has changed as far as our business development strategies are concerned," CEO Lamberto Andreotti told analysts in a call. "We are looking at the same type of opportunities we have looked at for a number of years… We continue to look at opportunities; there are not many of them." But if BMS can get them at the right price, he added, "we will go after them."

Francis Cuss, now EVP of R&D, will play a key role in that process.

"The string of pearls strategy is very good at driving value," Cuss told analysts on the call. And he'll be looking for a chance to add to the pearls selectively.

Bristol-Myers is an important player in biopharma R&D. The company falls just outside the top 10 spenders in the world, with a research budget of $3.9 billion last year, up just a bit from the $3.8 billion spent in 2011. During Sigal's tenure, the company racked up 14 new drug approvals at a time many industry leaders faltered badly in the clinic. And many of its best programs were acquired in some pricey buyouts, making BMS a big player in the M&A game.

Cuss says the key fields for BMS are immuno-oncology--where immune-spurring therapies can offer sustained responses--and cardiovascular disease, where the R&D team has been shifting its focus to heart failure. That's a tough field for cardio, he noted, but it's also one where you find the best unmet needs to target. Hepatitis C, where BMS has a late-stage program underway for the NS5A inhibitor daclatasvir, remains another key focus. Neuroscience targets, such as Alzheimer's will be important, he added, though new science that's now coming of age could help point the way to fresh advances. BMS killed its Phase II program for the Alzheimer's drug avagacestat late last year after noting poor efficacy, a setback that further blighted the company's 2012 track record.

Nivolumab (BMS-936558), a Phase III cancer drug acquired in the Medarex buyout, was clearly spotlighted as one of the company's most promising late-stage therapeutics. Last year at ASCO investigators said the anti-PD-1 drug spurred tumor shrinkage in three of five cancer groups studied, including 18% of 72 lung cancer patients, close to a third of 98 melanoma patients and 27% of 33 patients with kidney cancer. And continuing work on Yervoy, including a combination of Yervoy and its PD-1 program, are top priorities.

Curiously, none of the analysts on the call even mentioned the 600-pound gorilla in the room: BMS-094, which cost $2.5 billion. That hep C program blew up in the clinic last year, killing one patient and harming several more while also damaging the company's R&D rep. Sigal, though, says he's leaving on a high note.

"I feel it's important to go out when the R&D team is at the top of the game," he said, when there's "plenty left on the table" to drive new successes in the near future.

Sigal was keeping his focus squarely on the transition, but don't be surprised if you hear more of him at a later point. "This is a retirement," he noted, "and I envision an active retirement."

- access the webcast replay of the conference call here (reg. req.)