Editor’s Note: This article was updated on Sept. 13, 2022 to clarify that Sotyktu is not a Janus Kinase (JAK) inhibitor.
Bristol-Myers Squibb (NYSE:BMY) stock rose 8% over the weekend after the Food and Drug Administration (FDA) approved Sotyktu, its oral treatment for moderate-to-severe psoriasis. For the year BMY stock is up over 21% while the average S&P 500 stock is down by over 23%.
Sotyktu could go on sale as early as next month. It is an alternative to Otezla from Amgen (NASDAQ:AMGN). Amgen was down 4% over the weekend after the approval was announced but is still up 10% for 2022.
Bristol-Myers Squibb was due to open on Sept. 12 at about $75/share, a market capitalization of over $150 billion. At the close of trading Friday its 54 cent/share dividend was yielding 3.21%.
Sotyktu is a TYK2 inhibitor with a unique mechanism of action. When TYK2 is overexpressed, it leads to psoriasis’s hallmark symptoms of skin rashes and itching.
Sotyktu is different from Janus Kinase (JAK) inhibitors like Xeljanx from Pfizer (NYSE:PFE) or RinVoq from Abbvie (NASDAQ:ABBV) due to its safety profile. Unlike those competitors, Sotyktu was approved without a warning to first try other biologic drugs. Many JAK inhibitors carry a “black box” warning about possible links to heart disease and cancer. But Bristol Myers’ chief medical officer, Samit Hirawat, said cardiac events haven’t happened in the testing of Sotyktu, making it a new class of drug. It’s also simple to administer, a once-daily pill.
It won’t be cheap, however. Bristol Myers Squibb has priced Sotyktu at $6,164 for a 30-day treatment, against $4,344 for Otezla. The Phase 3 study of the drug covered 1,684 patients. Sotyktu was found more effective than either a placebo or Otezla in treating the condition.
BMY Stock: What Happens Now?
Otezla has been a $2 billion/year franchise for Amgen, which says it will now market that drug for less severe cases. Amgen paid Celgene, a subsidiary of Bristol-Myers Squibb, $13.4 billion for rights to Otezla in 2019.
Yet Otezla’s financial history should be a cautionary tale for Bristol Myers’ bulls. New drugs can slow a franchise before its patent protections run out. For now, however, optimism for Sotyktu is high.
On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.