Bristol-Myers Squibb (BMS) showed consistent, double-digit top-line growth in the third quarter, which more than offset higher spending trends and a jump in its tax rate to deliver 3% non-GAAP earnings growth on a year-over-year (YoY) basis. This was 3-cents a share ahead of consensus expectations for the quarter, and excludes special items relating to restructuring, asset impairments, upfront licensing payments, and in-process R&D charges. The ongoing new product launches of Yervoy and Kombiglyze, along with the addition of Zymogenetic's operations were largely responsible for the increases in SG&A and R&D expenses, while the jump in the tax rate was due to a large tax benefit recorded in the third quarter of the prior year. Although the company has ratcheted down its promotional activity behind its aging Plavix and Avapro brands, its spending to maximize its new product launches has offset these savings. The top-line enjoyed lifts from both pricing (2 ppts) and currency (3 ppts) in the quarter, as well as strong momentum and double-digit growth from its Sprycel, Barraclude, Orencia and Abilify product lines. Its leading Plavix brand also showed solid 8% growth in the quarter, and its newer diabetes treatments Onglyza / Kombiglyze contributed $127 million in sales compared to $47 million a year ago. BMS also enjoyed another stronger-than expected contribution from its recently launched melanoma treatment, Yervoy, with $121 million in sales, +27% sequentially from $95 million recorded in the second quarter.

Overall, the company's strong sales performance in the quarter helped offset increased marketing spending and a higher effective tax rate, as good top-line leverage contributed to YoY improvements on both the gross and operating margin lines (excluding special items). In addition, management estimates that higher rebates and pharmacy fees resulting from US healthcare reform and ongoing austerity measures in Europe, reduced earnings by four-cents a share in the third quarter. As a result of its better-than expected earnings over the first 9-months of the year, management increased the lower-end of its full-year earnings guidance by 5-cents share to a range of $2.25 to $2.30 a share on an adjusted, non-GAAP basis. BMS continues to expects to grow sales at a high single-digit pace for the full-year.

BMS' recent product launches of Yervoy, Nulojix, and Eliquis (apixaban), along with brivanib, dapagliflozin and the young Onglyza product line are intended to help return the company's top-line to growth by 2014, following the downturn from the Plavix patent expiration. The outlook continues to look promising for Yervoy, following its early launch trajectory and Eliquis, with additional strong competitive data from the ARISTOTLE trial. Although dapagliflozin recently received a setback from an FDA advisory committee, BMS and its partner AstraZeneca have submitted additional data, which extends the timing of this FDA decision by another three months to late January 2012. In the meantime, BMS remains focused on the challenge to grow its business over the long-term, and continues to engage in business development activity. During the third quarter, BMS executed five new business development deals with Innate Pharma for IPH2102, Ono Pharmaceuticals for its anti-PD1 antibody, Ambrx for novel biologics in the diabetes and heart disease areas, and Gilead for a fixed-dose combination of BMS' Reyataz with Gilead's cobicistat in the HIV market, as well as closing its acquisition of Amira Pharmaceuticals.

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