Bristol-Myers Squibb, whose high-profile Opdivo immunotherapy failed an important lung-cancer trial last summer, sharply raised its 2016 profit forecast after strong quarterly sales of other leading medicines.
The U.S. drugmaker on Thursday predicted 2016 earnings of $2.80 to $2.90 a share, up from its previous forecast range of $2.55 to $2.65.
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Bristol-Myers, whose shares rose 5 percent in premarket trading, said it expects 2017 earnings of $2.85 to $3.05 per share.
Sales of Opdivo, which treats melanoma and lung cancer, tripled to $920 million in the third quarter, but trailed forecasts by $27 million.
Opdivo had been considered the leader among a new class of cancer drugs called PD-1 inhibitors until August, when researchers said it failed to slow progression of symptoms in previously untreated patients with advanced lung cancer.
Making matters worse for Opdivo, researchers earlier this month said Merck's rival Keytruda prolonged the life of similar patients, and on Monday, it became the first of new immunotherapy drugs approved in the United States for initial lung cancer treatment.
The company said it authorized a new $3 billion share repurchase program, in addition to the $1.1 billion remaining under an authorization in 2012. And it predicted flat operating expenses through 2020, which analysts said should help profit margins.
"We believe today's updates should begin to address Wall Street concerns on Bristol's near-term earnings outlook" in the wake of Opdivo's setbacks, JP Morgan analyst Chris Schott said in a research note.
Sales of Yervoy, an older melanoma treatment, jumped 19 percent to $285 million, $45 million above expectations, while sales of leukemia treatment Sprycel grew 15 percent to $472 million, $25 million above forecasts.
Eliquis, used to prevent blood clots and partnered with Pfizer, jumped 90 percent to $884 million, $71 million above expectations, helped by compelling clinical trial data.
It was not immediately clear how much of an impact price increases had on sales of Bristol-Myers drugs.
Bristol-Myers earned $1.2 billion, or 72 cents per share in the quarter, compared with $706 million, or 42 cents per share, a year ago. Revenue jumped 21 percent to $4.9 billion, about $200 million above forecasts.
Excluding special items, it earned 77 cents per share, well above expectations of 65 cents per share, according to Thomson Reuters I/B/E/S.
Despite Bristol-Myers' rally on Thursday, its shares have fallen 31 percent since the unfavorable Opdivo lung cancer data was reported on Aug. 5.
