UPDATE 1-Bristol-Myers pulls U.S. application for combo lung cancer treatment

Bristol-Myers Squibb Co said on Thursday it withdrew its application seeking U.S. approval for a combination of its blockbuster cancer immunotherapy drugs Opdivo and Yervoy as an initial treatment for advanced lung cancer as it collects more data. The drugmaker's shares were down 2.6 percent at $48.66 in early trading.

The company, which announced a planned $74 billion acquisition of biotech Celgene Corp earlier this month, also posted a higher-than-expected fourth-quarter profit, and forecast 2019 earnings roughly in line with Wall Street expectations. Opdivo, Bristol's most important growth driver, has lost much of its luster as Merck & Co's rival drug Keytruda seized dominance in advanced lung cancer, the most lucrative oncology market. Wall Street tends to view any setback for Opdivo as positive news for Keytruda.

The withdrawal raises new questions about the company's overall strategy and approach in advanced lung cancer, Credit Suisse analyst Vamil Divan said in a client note, but added that he did not think an approval for that indication would have had much near-term impact. Opdivo, which is approved to treat several types of cancer, continues to do well however. Fourth-quarter sales of $1.8 billion easily exceeded the average analyst estimate of $1.47 billion, according to IBES data from Refinitiv.

Bristol said it was pulling the application for Opdivo and low-dose Yervoy in patients whose tumors have specific characteristics - in this case a biomarker called tumor mutational burden, or TMB - above a certain level. It made the decision after discussions with the U.S. Food and Drug Administration. Last October, the possible approval date for the closely-watched combination therapy was pushed back by three months to late May, after the company submitted data showing no difference in survival rates between patients whose tumors had high or low TMB levels.

Bristol said it is still pursuing a lung cancer approval for the combination in patients with a different biomarker called PD-L1 being tested in a separate part of the same study. Earlier this month, some analysts and investors suggested that one reason Bristol may have launched its bid for Celgene - the biggest pharmaceutical deal ever - was over concerns about Opdivo's ability to compete in the all-important lung cancer market.

New York-based Bristol reported net earnings of $1.19 billion, or 73 cents a share in the quarter, compared with a loss of $2.3 billion, or $1.42 a share, last year, when it took a large charge related to U.S. corporate tax reform. Excluding one-time items, Bristol-Myers said it earned 94 cents a share in the quarter. Analysts, on average, had expected 85 cents.

Bristol forecast adjusted earnings of $4.10 to $4.20 per share, excluding any impact from the Celgene deal. Revenue of $5.97 billion was in line with analyst estimates. (Reporting by Michael Erman; Additional reporting by Manas Mishra Editing by Bill Berkrot and Saumyadeb Chakrabarty)

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