The Cliff Hanger

I’ve owned Bristol-Myers Squibb (BMY) through two CEO changes, one near-catastrophic acquisition, and more patent cliff panic attacks than I care to count. The dividend alone has paid for my annual fishing trip to Alaska three times over.

So when the street spent the better part of two years treating BMY like a condemned man, I didn’t sell. I watched. And when Q4 earnings landed earlier this month, I was reminded why patience in this business is worth more than cleverness.

The numbers deserve a moment of quiet appreciation.

Revenue came in at $12.5 billion for the quarter, beating consensus by $220 million. Non-GAAP EPS hit $1.26, a six-cent beat.

Management raised 2026 revenue guidance to between $46 billion and $47.5 billion, blowing past the analyst consensus of $44.2 billion by nearly $3 billion.

For a company supposedly in terminal decline, BMY has a funny way of showing it.

The real story inside those numbers is the growth portfolio, which expanded 17% year over year to reach $26.4 billion, now accounting for nearly 60% of total revenue.

This matters because the entire bear case on BMY rests on patent expirations destroying the revenue base faster than new drugs can replace it. That thesis is getting harder to defend by the quarter.

Oncology remains the backbone. Opdivo delivered $10 billion in annual sales, with continued share gains in first-line non-small cell lung cancer.

Opdualag, the fixed-dose nivolumab and relatlimab combination, crossed $1 billion in annual sales and now commands nearly 30% of the first-line metastatic melanoma market in the US. These are no longer just speculative pipeline assets but actual cash machines with expanding indications.

Hematology is where it gets interesting. Reblozyl generated $666 million in Q4 alone, up 22% year over year, driven by first-line treatment of anemia in MDS patients.

Breyanzi, the CAR-T cell therapy, also crossed $1 billion in annual sales after FDA approvals for follicular and marginal zone lymphoma.

The CELMoD program, featuring iberdomide and mezigdomide, may be the most underappreciated asset in the entire portfolio.

These oral protein degraders are designed to be more potent and better tolerated than Revlimid, the very drug whose patent expiration has the market in a cold sweat.

The FDA granted priority review for iberdomide with a PDUFA date of August 17. Peak sales for the combination could reach $3.6 billion by 2033.

The $14 billion Karuna Therapeutics acquisition looked expensive when it closed. It looks smarter every quarter.

Cobenfy, the first muscarinic antipsychotic, surpassed 100,000 total prescriptions during the year.

The real prize is Alzheimer’s disease psychosis – 3.2 million diagnosed cases across G7 markets, with peak annual sales potentially reaching $8 billion.

Now for the part I won’t sugarcoat.

Revlimid sales dropped 55% in Q4, and that pain accelerates in 2026 as generic volume limits come off entirely.

Eliquis, still generating $3.5 billion per quarter, faces a US patent cliff in April 2028, with management already flagging a $1.5 to $2 billion revenue step-down in 2027.

Loss of exclusivity events could affect roughly 64% of the estimated 2025 revenue by the end of the decade.

The IRA’s Medicare price negotiations on Eliquis begin in 2026, and BMY quietly agreed to provide Eliquis free to Medicaid in exchange for tariff relief – an arrangement that reads better in a press release than it does on the income statement.

The market knows all of this, which is precisely why BMY trades at a non-GAAP P/E of 9.88 and an EV/EBITDA of 8.36, the lowest multiples in its peer group outside of Pfizer (PFE).

The free cash flow yield sits at 10.4%. The dividend yield is 4.13%.

Meanwhile, management knocked out $10 billion in debt reduction ahead of schedule and pulled $1 billion in cost savings from its productivity initiative in 2025, with another billion targeted through 2027. Return on equity sits at 40%.

But these numbers don’t mean the company’s in structural decline. These are indicators of a company in transition, which is a very different thing, and one the market has repeatedly mispriced throughout my career.

The trough of this patent cliff is shallower than consensus feared, and the growth portfolio has achieved sufficient velocity to absorb the erosion.

BMY at these levels is the investment equivalent of buying a first-class ticket at a standby price because someone convinced the gate agent the plane might be late.

At this rate, the fishing trips are going to pay for themselves.