Bristol Myers Squibb Pivots to RNA Medicines with Orbital Therapeutics Acquisition

Bristol Myers Squibb Acquires Orbital Therapeutics Amidst Strategic Pivot

U.S. pharmaceutical giant Bristol Myers Squibb (NYSE: BMY) announced on October 10, 2025, a definitive agreement to acquire privately held biotechnology firm Orbital Therapeutics for $1.5 billion in cash. This strategic move underscores Bristol Myers Squibb's commitment to diversifying its portfolio by expanding into RNA medicines and cell therapy, particularly in the rapidly evolving landscape of autoimmune disease treatment. Following the announcement, BMY shares experienced a modest decline, falling 1.12%, or 50 cents, to $44.18 in early trading.

The Strategic Expansion into RNA Medicines and Cell Therapy

The acquisition of Orbital Therapeutics is centered around its innovative approach to RNA medicines, which are designed to reprogram the immune system in vivo. Key to this deal is Orbital's lead preclinical candidate, OTX-201, an optimized circular RNA encoding a CD19-targeted CAR for in vivo expression, delivered via targeted lipid nanoparticles (LNPs). This in vivo CAR T-cell therapy aims to offer a less burdensome and more accessible treatment for autoimmune diseases compared to traditional ex vivo methods. Bristol Myers Squibb will also gain access to Orbital's proprietary RNA platform, which integrates circular and linear RNA engineering, advanced LNP delivery, and AI-driven design capabilities, holding potential applications across oncology, next-generation RNA vaccines, and protein therapeutics.

This strategic pivot is further bolstered by Bristol Myers Squibb's collaboration with Prime Medicine (Nasdaq: PRME), initiated on September 30, 2024, focusing on next-generation ex vivo T-cell therapies. These concerted efforts signal BMY's intent to move beyond its established small-molecule drug portfolio, including blockbuster treatments like the blood thinner Eliquis and cancer drug Revlimid.

Market Reception and Underlying Pressures

The initial dip in BMY's stock price after the acquisition announcement suggests a degree of investor caution regarding the immediate implications of such a significant strategic shift. While the long-term potential of RNA medicines and in vivo CAR T-cell therapies is considerable, the market appears to be weighing this against the near-term challenges.

The primary driver for Bristol Myers Squibb's aggressive pipeline expansion and strategic acquisitions is the impending "patent cliff." The company faces significant patent expirations for key drugs, including Eliquis and Opdivo by 2028, and Revlimid, Pomalyst, and Sprycel in 2025. These expirations are projected to result in a substantial revenue decline of $10 billion to $13 billion between 2025 and 2028. For instance, Eliquis, which generated approximately $10.5 billion in U.S. revenue in 2025, is expected to see a reduction to around $8 billion by 2027. This industry-wide phenomenon, where up to $400 billion in global sales are at risk between 2025 and 2030, necessitates robust strategic responses from pharmaceutical giants.

Financial Health and Valuation Context

Despite these patent expiration headwinds, Bristol Myers Squibb maintains a strong financial foundation. The company reported revenues of $47.70 billion, with a healthy 3-year growth rate of 4.9%. Operational efficiency is evident in an operating margin of 20.86%, a net margin of 10.58%, and a gross margin of 70.29%. BMY also demonstrates robust cash flow, reporting $15.19 billion in 2024, which provides the capital for such strategic investments and ongoing dividends.

From a valuation perspective, BMY stock appears to be trading at a discount. Its Price-to-Earnings (P/E) ratio stands at 18.02, notably below its historical median of 23.49. The Price-to-Sales (P/S) ratio of 1.91 is near its 10-year low, and the Price-to-Book (P/B) ratio of 5.21 is close to its 1-year low. These metrics, alongside a strong earnings yield and a dividend yield exceeding 5%, suggest the stock is undervalued, ranking highly on value screens like Seeking Alpha's Magic Formula. Institutional ownership is significant at 80.78%, reflecting sustained interest from large investors. The company is also implementing an expanded plan to cut an additional $2 billion in annual expenses by the end of 2027 through operational efficiencies.

Expert Perspectives and Future Outlook

Industry experts view Bristol Myers Squibb's pivot as a critical and forward-thinking maneuver. Robert Plenge, EVP and Chief Research Officer at BMS, emphasized the transformative potential:

"In vivo CAR T represents a novel treatment approach that could redefine how we treat autoimmune diseases."

Lynelle Hoch, president of BMS's cell therapy organization, echoed this sentiment, highlighting the "incredible opportunity to make CAR T-cell therapy more efficient and accessible to more patients."

This strategic direction aligns with the broader industry trend of robust pipelines and strategic mergers and acquisitions being crucial for enhancing returns, as exemplified by companies like Pfizer leveraging its mRNA platform. While the patent cliff presents an undeniable challenge, Bristol Myers Squibb's proactive investments in cutting-edge technologies like RNA medicines and in vivo CAR T-cell therapies are designed to secure future revenue streams and maintain its market position in the evolving pharmaceutical landscape.

Moving forward, investors will closely monitor the successful integration of Orbital Therapeutics, the progression of OTX-201 through clinical trials, and the broader efficacy of BMY's strategic diversification. The company's ability to effectively manage the decline from expiring patents while simultaneously fostering growth from its new pipeline assets will be paramount in determining its long-term financial performance and stock trajectory. The healthcare sector, despite facing political headwinds, remains attractive for deep value and R&D-driven growth potential, positioning BMY as a key player to watch.