Bristol-Myers Squibb Company (BMY) Earnings Call Transcript & Summary

Hi, everybody, and thank you for joining us today for the virtual SDC. We've got our meeting today this hour with Giovanni Caforio, the CEO of Bristol; and Nina Goworek from the IR team. So thank you both for joining us today. Before we start, I want to remind the folks that they can send us questions via this pidgeon hole. You've got a button on screen that allows you to go ahead and ask questions, and I'll make sure I'll leave some time at the end to ask some of yours. And with that, I want to thank the Bristol team for being with us today.

Thanks for having us, Ronny. Thank you. Good to be here.

And the first question will probably be just be a little bit of setting the stage. I mean I guess the main controversy on Bristol is your ability to offset the LOE at kind of a healthy bluff of 2025 to 2030. Can you frame it to us how much of the current revenue will be lost over the second half of this decade and what are the main offsetting franchises that will grow to replace that?

Well, thanks, Ronny. Let me say, first of all, that our objective is to create a company that has a sustained roll of new medicines to market and is well positioned to navigate through losses of exclusivity. We recognize the importance of that in our industry. And obviously, for us, in the second half of the decade with the losses of exclusivity of Opdivo and Eliquis. I think it's important in order to frame the issue that we look at the profile of the company that I've communicated in 2025. By 2025, we do expect that our continuing business, which excludes Revlimid and Pomalyst, would represent 90% of our revenues. And of that 90% of revenues, 1/3 will already be represented by our launch portfolio. So that gives me confidence that as we think about 2025 and begin to really focus on the second half of the decade, we will have a company with a young portfolio and with a number of catalysts for growth. So what are the catalysts for growth? I think there are many. We've identified 8 launch medicines, and our perspective is that the combined peak sales value for those medicines nonrisk adjusted in 2029 is in the $20 billion to $25 billion range. That doesn't include relatlimab, for which we had Phase III data positive recently, and I'm sure we'll discuss that data during our chat. So I'd like to point to some of the assets that are most important for us in terms of growth. And starting with hematology, there is clearly a lot of enthusiasm for Reblozyl, starting with MDS and beta thalassemia, potentially expanding into myelofibrosis. That's an important asset for us. We've already launched it and pleased with where we are so far. We are launching 2 really exciting cell therapy assets, Breyanzi and Abecma. These are very important drivers of growth in the future as we expand their indications. So there is a lot in our launch portfolio in hematology. In cardiovascular, we're actually looking forward to the launch of mavacamten for hypertrophic cardiomyopathy at the beginning of next year. It's an area of significant high unmet medical need. We have a very differentiated medicine there. Moving to immunology, that's probably the area where most things are happening. Zeposia was approved last week actually in ulcerative colitis. That was a major milestone for us. We're very pleased about that. And as you know, we're planning on filing deucravacitinib, our T2 inhibitor in psoriasis with a potential launch next year. So our immunology presence is growing very rapidly. And finally, relatlimab in metastatic melanoma, a new addition to our launch portfolio, which is very promising as well. It doesn't really stop with the launch portfolio. I'd like to highlight just a couple of the most important mid-stage assets that we have. One is our Factor XIa inhibitor. We'll have data later this year. That's a really important program. The second one is iberdomide in multiple myeloma, our CELMoD. And finally, cendakimab still in our immunology portfolio. So when you combine the strength of our launch portfolio, the mid-stage pipeline, the very deep early-stage pipeline and the financial flexibility we have for business development, I'm actually very confident in our ability to accelerate the renewal of the portfolio and manage successfully through the losses of exclusivity of the second half of the decade. And the progress we've made in the last 12 months is remarkable already.

You have. You've done quite a bit of progress there. My guess is, somebody has just asked me that today, I didn't know the answer. I wonder if you've done this analysis before, if you've looked -- like you just said, you got 1/3 -- 90% of the franchise will be there, is there already for 2025. And then there's a fairly large gap between '25 and 2030, and you have the launch portfolio to offset it. Is there any -- anybody ever did the analysis of looking historically and say how big of a cliff pharma companies can grow through? I mean the inherent in the business model is that pharma companies have patents for a certain amount of time, and then they have to come up with new medicine. Is there anybody who did -- ever did this analysis of look, if you look back 20 years through the 2012 patent cliff or something and say, how big of a cliff can a pharma company offset and still grow through? I don't know if you guys have ever done this.

Well, obviously, as you said, this is a dynamic that is inherent in our industry, right? The only thing we know for sure when we launched our one medicine is the day in which it will lose exclusivity. And so we have a lot of experience at BMS, in fact, and we've done it before. As I think about the past of the company, the losses of exclusivity of Plavix and ABILIFY were major events for Bristol-Myers Squibb, and we were able to successfully navigate through the renewal of that portfolio and emerge as a stronger company. When I look at where we are today, we have the deepest, the broadest pipeline we've ever had as a company, a young portfolio across multiple therapeutic areas, clearly, the most attractive pipeline in the industry from my perspective in the therapeutic areas in which we compete. And we have tremendous financial flexibility. So we're focused on renewing our portfolio again. I'm confident we will be able to do it in the second half of the decade. We're off to a very strong start, and we definitely have looked at how successfully we've done it in the past, and I think we've been very thoughtful in articulating a strategy that will enable us to do it again as we think about the second half of the decade.

Okay. So you kind of touched on the idea of having financial flexibility, so which is leading up to the issue of acquisition. You've made a larger position with Celgene. You said that going forward, you have a preference for a smaller deal. And can you -- could that be sufficient, one? And two, can you discuss a little bit about the competitiveness of the recent transaction? One of the concerns we have with it seems to be several companies that play similar duration LOEs and thus, we'll all be competing for assets in the marketplace.

Well, let me say, first of all, that it starts from having a really strong internal pipeline, and we have a tremendous opportunity with our own internal program. That enables us to be really choiceful in terms of what we look at externally. I've always said our strategy in business development is really focused on 3 pillars: it's assets that are strategically aligned with areas that we know well; the second is science that can be transformational; and third is financial discipline and the opportunity to generate value for shareholders. The reason why I'm mentioning this is because with that in mind, we're really size agnostic. It is true that it is more often that we have opportunities to do smaller deals and bolt-on deals versus larger acquisitions. And so the MyoKardia example is a really good example. You do -- you did mention the issue of deals being competitive. That's always been the case. I think from my perspective, there are always opportunities. And particularly in areas that a company like Bristol-Myers Squibb knows very well, we do have the ability to recognize promising science early, follow assets and programs as they develop and get derisked and at the right time, establish a relationship with the company for partnering the asset or potentially acquiring that asset. So that was the story of MyoKardia. If you think about it, we actually contributed to funding some of that research 20 years ago, continued to follow that space. And at the right time, we decided to go ahead with an acquisition. This is a very competitive space, but I think given the right expertise and the right focus, I'm pretty sure we can continue to be successful.

I hear you. I guess my question around things always being competitive. I mean things are always competitive, certainly for good assets. But it seems that there is a kind of ebbs and flows of that depending on how much companies are in need to renew their pipelines. Just looking at the industry pipeline, it seems that we're going through a period where there are several companies that would have a hard time growing without contribution from outside asset. Is this your impression as well? I mean are we not looking at a more competitive landscape in the next 2 or 3 years versus, call it, the last 2 or 3 years? Or is it roughly about the same?

Well, I think it's a combination of factors, right? It is the speed at which science is progressing, and there are multiple areas in which there has been tremendous progress made and more programs are available. And obviously, every company has their own portfolio situation and their own strategy. As I've said in our case, we have tremendous opportunity for our internal pipeline, but we want to continue to complement it through external development. It depends on the therapeutic areas. Of course, there are areas like oncology that are uniquely competitive. There are areas in which there are fewer players. It's difficult for me to compare it to other times. There have been different cycles in the industry all the time. I think what's important is to continue to be focused on things that have the potential to be really transformational. Be disciplined in execution, but also have the internal capabilities to then execute and maximize the value of the asset.

So let's just go down and touch on a few of your franchises. Let's start with the I-O franchise, ipi and nivo, about 20% of your $46 million of revenue for this year. You have been quite successful with this. You have clearly a near same potential for success with the recent approval in kidney, in esophageal, lung adjuvant or [ epithelial ] cancer. You had a few near-term potentials. I guess the question is around more of the kind of '23, '24 or '25 period. Can Opdivo actually significantly grow from here? Does this product still have the possibility of doubling, of doing more than that? Or the core markets are taken from now on, we're going to have additional assets, but we should expect Opdivo after this near-term spread to slow down?

Well, thank you. Thanks, Ronny. First of all, let me say, I agree with you. The last 12 months have been extremely positive for Opdivo with a number of data readouts that have been positive and are really important. And I do expect Opdivo to return to growth this year and have significant opportunity for growth in the future. I would say there are a number of pillars to that growth. The first one is continued opportunity of growth in existing indications that have launched recently. And good examples would be first-line lung cancer and first-line renal where we have continued opportunity for growth. The second area for growth is new indications and particularly those where we have come first and have an opportunity to establish a leadership position. One example is the GI space where Opdivo has emerged as a leading agent in this space through the approval in metastatic gastric, the positive results in esophageal, the adjuvant readout in esophageal cancer, and data that may come in the future from a study in first-line hepatocellular carcinoma. So that's shaping up to be an area where Opdivo is a real leader, and there is significant opportunity for growth. And the third area is the early space or the metastatic space that will continue to grow over time in the medium term. And there, we have one of the largest programs in the industry. As you know, we already have data in 4 tumor types with melanoma, esophageal, bladder and lung. And the programs will continue to read out over time. As an example, we do have PCR data on our neoadjuvant trial in lung, and we're expecting survival data. We've seen the results of the bladder and esophageal studies, but there is a broader program coming in lung cancer across neoadjuvant, adjuvant, periadjuvant and early stage. And so I see that as the next sort of platform for growth for immuno-oncology in general. And within that opportunity, Opdivo is very well positioned. And the last thing I would say is the combination with new agents and the opportunity that just came that was just presented at ASCO -- that will be presented at ASCO. The data was released at -- for relatlimab in melanoma. I think that's an opportunity to combine Opdivo with new agents, which further expands the franchise.

So let's just start on each one of those, and then I want to touch a little bit on the issue of pricing. So how big is the entire early adjuvant area, neoadjuvant space versus the frank oncology, the French tumor space? If we just have to draw a big picture across the entire field, if we say that treating frank tumors is $40 billion, $50 billion, $60 billion, how big is the space for treating early cancers?

Yes. I think that's a really important question. I believe the opportunity is significant. There is a wide range of forecasts have been generated. I think what's important, though, and I think it is somewhat different depending on the tumor, I think what's important is the experience that we have. What we have seen consistently in the adjuvant setting is that when a new agent generates compelling data and it is approved, it was clearly our case in melanoma, treatment rates increased very rapidly. And so the opportunity should be looked at not in terms of the number of patients that are treated today, but actually the opportunity that exists to treat a significant higher number of patients. And I don't -- I think that's true across multiple tumors. It's clearly more impactful in large areas like lung cancer. And that's the reason why we have such a broad program and multiple approaches to early-stage lung cancer because the unmet medical need there is particularly high, and the patient population is particularly large. So I would say it's a very meaningful contributor potential to future sales. It's a little bit different by tumor. And it will come primarily from an expansion of treatment rates.

So obviously, there is a range there. But if you have to like take a midpoint, is it a 50% increase to the size of the market, 20%, a doubling of the market? And you must have at least in your mind and you're not representing what the truth will be 10 years from now, but in your mind, roughly, just give me a ballpark figure there.

Yes. I think it's a meaningful opportunity for growth. I'm not sure that we've ever gone into sizing that opportunity specifically, but I think it's a meaningful next wave of growth for this segment. Of course, some of the data in lung cancer, as an example, is already out there. Some of the data is developing. I believe that the neoadjuvant -- the periadjuvant approaches, the treatment of that disease will have significant opportunity. But I don't have exactly one figure that I'm going to share with you on -- to all of the adjuvant.

Move on. Relatlimab. Okay, it's coming. So we looked at the melanoma data and you kind of position it versus Yervoy. And you go, huh, it's basically the same efficacy of Yervoy, much better safety profile. So we got here a drug to replace Yervoy. Understood. But it could be much more than that. So in your mind, what will make this drug a step better than Yervoy beyond the safety that you're seeing in a similar efficacy? Is there a particular tumor type, particular situation, particular patient type where you go, you know Yervoy could not do that, but relatlimab might be just the right drug for this.

Yes. I think it is important. I do agree with you, I think it is important to look beyond a comparison to Yervoy. Let me just start from the data. The data is compelling and progression-free survival doubled compared to Opdivo monotherapy. And we know that PD-1 monotherapy is still used in metastatic melanoma. Of course, we do have PFS data. We're still blinded to response rates and overall survival data. That will develop over time, and I think it will be important to see that data as it develops. I think that looking at metastatic melanoma, it's indicative of the type of opportunity. So when you look at that, Opdivo in combination with Yervoy is clearly the standard of care there. It is used in approximately 30% of patients. And it is used based on deep and durable responses, long-term survival. We have over 6 years follow-up for our trial, and survival continues to be long term, very, very impressive. At the same time, 2/3 of the market are still using PD-1 monotherapy or TKIs. And when we look at the relatlimab data, what's interesting is that it's very consistent across subtypes and patient groups. And so there is a real opportunity as a first step to actually replace monotherapy in melanoma with a regimen that is much more effective and has tolerability that is comparable actually to PD-1 monotherapy. So that's the reason why I feel that thinking about relatlimab is really thinking about broadening the franchise. It's not really thinking about replacing Yervoy. Of course, we have the melanoma data. We will be investigating the role of relatlimab across a number of different tumor types. The data is more sort of early data there, but it is a very promising mechanism of action. I'll remind you, this is for us going to be the first fixed-dose combination with 2 checkpoint inhibitors in the same vial, and that clearly has significant convenience implications for patients and physicians. It offers all the flexibility, so we're very excited about this.

So it's clear that you're going to get share in melanoma. I assume a lot of patients were afraid of the side effects of combining Yervoy with nivo and have chosen to go with monotherapy. Now you -- they have the choice of getting an addition to the PD-1 without side effects. Okay, I got that. But is there something about the biology of this drug that you go, look, a CTLA-4 is limited in that way, and the LAG-3 gives me an opportunity to do things that biologically could not be before. And therefore, beyond what we already know from the data to date, I have an opportunity to go for -- is there something you can point to that says, look, this is where I think this could potentially be useful, a group of patients or indication where we are not able to get a lot of out of CTLA-4, but we could out of [ relatli ].

Yes. I mean, definitely, we are seeing an agent that in the melanoma trial in combination with Opdivo had strong efficacy and really good tolerability. And as a result of that, it is clear that there is an opportunity for us to investigate its use in the early stages of disease as well. We also are designing a program that looks at the activity of relatlimab in combination with Opdivo across a number of other tumors. And as we make decisions about that development program, we'll definitely discuss that externally. But I think this is the beginning of the story for relatlimab, and we definitely see applicability across other lines of therapy and multiple tumors.

Okay. Going on to TIGIT. You have just went out there and spent $200 million on an anti-TIGIT. And you've had an anti-TIGIT in your pipeline for quite a while, playing around in early-stage trials. What is so special about this TIGIT that you're willing to spend that much money on a preclinical asset? If you can just give us a feel for what the drug is and what impressed your team so much they're willing to go out there and make a big investment in this.

Yes, absolutely. So first of all, you're right that we know TIGIT. We have an internal research program there, and we understand that potential, that approach. There is emerging clinical data, as you know, in lung cancer that points to the value of that target and the promise of that target. And what we were particularly excited about here was the ability to have a bispecific approach with TIGIT and a second target and a monoclonal antibody that was engineered to have increased potency against tumors. And so that enables us to think about a potential best-in-class and first-in-class approach, but also the ability to bring the development program once we get into the clinic, not only into lung cancer, but also into other tumor types that would broaden the opportunity. So when we learned more about the Agenus program, given the knowledge we had internally, we were very excited about it, and this is the reason why we decided to acquire the asset. So obviously, it's early days, but it's a very promising program. It's a very exciting program.

What trial should we look at to know if you guys were right making this investment? I mean what is the kind of the proof of concept for you that this is better than other TIGITs by being bispecific and having an engineered Fc?

Yes. I think that it's early days, as you said. As we go into the clinic and develop the clinical development program, we'll provide more visibility into what our strategy is. I'm not going to say more at this point. This is a very early program, but it's one where we are clearly very focused on.

Okay. We'll stay tuned. So the next one I have for you and the last one on the oncology, we did some work on oncology drugs pricing by hospitals. And one thing we noticed is that your drugs are being priced at 3x for administration on an outpatient basis versus the price you charge for them. So if you just take the ASP and see where the hospitals charge for it, it's 3x. This is an obvious problem for pharma, but those are actually your clients too, and that creates a bit of a touchy situation for the industry. What's your take on this? Is this something the industry should address, not address? Is this something that is kind of beyond your scope, some thoughts there?

Yes. I mean, first of all, you are right on some of the figures. And when you look at the U.S., it's only about 50% of the cost of medicines that go to innovators, and the rest is really distributed among a number of other players. I think that we refer to incentives being misaligned very often. And there are very complex reasons why things like hospital markups happen. And I think what's important for me is that we focus on the fact that this structure should never prevent a patient from having access to one of our medicines and should actually not increase the financial burden that is placed on individual patients. So I think from my perspective, what that data points to is that this solution to the issue of affordability to medicines is a solution that needs to be developed together by different actors in the field with payers, providers and pharmaceutical companies to be looking at a model that is more sustainable, where savings, for example, that are extracted from rebates are actually going to benefit patients and reduce out-of-pocket costs. And the system overall is redesigned in a way that is much more focused on patient access and the affordability of medicines for patients. If we do that, I think it's possible to do it by, at the same time, on our side, continuing to reward innovation and for other stakeholders, continue to sustain their business models. But it does require that we all work together because it's not just an issue of drug in terms of the pricing of medicines, it's really an issue of the incentives not being aligned and what happens at the end with the affordability of medicines for patients.

Okay. But it does not seem -- I hear you about this, everybody needs to come together and look for a system or design. But it does not look like there is a particular pharma position or position pharmas should take on this, in your mind, at least.