Bristol Myers Squibb Co. (BMY): This Pharma Is Trading Like a Biotech

Bristol Myers Squibb Co. (NYSE:BMY) looks like it has the quickest path to approval, but that probably doesn’t matter all that much; in the long run, doctors are going to use whichever drug produces the best overall survival.

Bristol might have an advantage since it has Yervoy, and even if nivolumab doesn’t work as well as the other drugs targeting the PD-1 mechanism, Bristol Myers Squibb Co. (NYSE:BMY) will still see revenue from Yervoy increase if doctors use Bristol’s competitors in combination with Yervoy.

Something more going on
As impressive as the data is, it’s hard to say nivolumab’s ASCO data makes Bristol Myers Squibb Co. (NYSE:BMY)worth $8.8 billion more than it did before they was revealed. Put another way, would you buy a biotech with an $8.8 billion market cap if it had only one drug that had just completed phase 1 development? There are biotech companies with drugs on the market that aren’t valued that high.

Clearly this run up, which actually started months ago — Bristol is up 40% for the year — has more to do with investors’ having confidence that Bristol Myers Squibb Co. (NYSE:BMY) can get growing again after losing Plavix than the addition of the risk-adjusted value of nivolumab. We’ve seen a similar run recently in Johnson & Johnson stock.

Fool contributor Brian Orelli has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Johnson & Johnson.

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