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

To the afternoon session of the Bank of America Healthcare Conference. My name is Geoff Meacham, I'm the senior biopharma analyst here. And we're thrilled today on stage have Bristol-Myers and speaking up of Bristol is Adam Lenkowsky, who is Senior Vice President, General Manager, U.S. Commercial. Adam, welcome.

Thank you, Geoff, and thank you so much for having me here. It's a pleasure to be here. As Geoff said, I lead our U.S. commercial organization at BMS. I have responsibility for our oncology, immunology and cardiovascular portfolio. I've been with Bristol now for 25 years and had the great pleasure of those 25 years to have responsibility about half of the time for our oncology portfolio. So launching Yervoy in the U.S., launching Opdivo, and Opdivo and Yervoy worldwide. And I got to say in my 25 years, this is probably the most exciting time in the time I've been here, with the recent approval of Opdualag, our third I-O checkpoint inhibitor approved for metastatic melanoma. Just we're a little over a week removed from the Camzyos approval, which I think is really a historic approval, the first product ever approved for obstructive HCM. And we're very much looking forward to September, where we're expecting approval for deucravacitinib in PSO. And coupled with that, we also had this year, approval for CheckMate -816, which Opdivo marked the first ever I-O agent approved in the neoadjuvant lung cancer setting, which is very, very exciting and continues to demonstrated our scientific leadership. And we also have important data readouts, as you know, and I'm sure we'll talk about. We had a positive Phase II study in lupus with deucravacitinib. We're presenting that data at ULAR coming up in not-so-distant future. And then we'll be getting the results of Milvexian in secondary stroke prevention. So when you look at that in its totality, the velocity of launches, in fact, Camzyos represented the eighth approval in just around 2 years, coupled with the strong commercial performance with products like Eliquis, Opdivo, Orencia, Yervoy and a very young and diverse portfolio, launch portfolio, we're really set up well for growth through the back end of the decade. So I'm looking forward to really good discussion here.

Yes. Well, let's kick it off with Opdualag. So I know you guys obviously dominated the melanoma space with NIVO, IPI, Opdivo, Yervoy market share, and there are a lot of -- sort of a lot of commercial lessons to be learned of that. How can you roll that into the Opdualag launch? And how do you think about the product from a differentiation standpoint?

Yes. So very, very pleased, Geoff, with what we're seeing in just about 8 weeks post approval. The way we've described the melanoma market is really in 1/3. So 1/3 of the market is Opdivo, Yervoy as a standard of care. 1/3 are BRAF/MEK inhibitors. And the other 1/3 is PD-1 monotherapy. And so our strategy coming out of the launch is around taking that PD-1 monotherapy immediately. And the uptake we've seen has been very, very strong and encouraging. The feedback on the profile, particularly around the 10 months' PFS, the durability of response and the adverse event profile that's consistent or comparable to monotherapies have been very, very well received by oncologists. In terms of some of the learnings, I think, number one, we're looking at the durability of response and survival is something that oncologists feel are very important. It's an interesting marketplace because unlike where lung or RCC treated the majority in the community setting, about 80%, it's a little bit different in melanoma. You've got 60% part of the business is in the community, where 40% is treated in the institution. So we're able to bring our expertise and capabilities really since 2011 launch into a marketplace where we already have around a 45% share. And with Opdualag, we think we can grow that significantly further.

And how do you see it playing out with respect to sequencing some of the therapies, if you have Opdivo, Yervoy upfront and then follow-on and just trying to think of the commercial -- the pace of the rollout.

Well, as I said, I think the first opportunity for us really is around the PD-1 monotherapies. There was an interesting study that was done by Dr. Mike Atkins fairly recently called DREAMseq. And it was a study a long time in the making, and it looked at the sequencing of dual I-O therapy. So this was Opdivo-Yervoy versus BRAF/MEK and they looked at either what's the best sequences using do I-O first or using BRAF/MEK first and then going to the other therapy. And what he found was it was significantly improvement in survival when using an I-O-I-O combination. So I think, ultimately, is to really penetrate into that market as well. There are patients, too, who just can't tolerate Opdivo-Yervoy, the higher dose of Yervoy. So we also think those patients will be very good fits for Opdualag.

And for Opdualag and non-melanoma indications, just kind of remind us of where you are with the development?

Sure. Sure. So first, I'll close out in melanoma because we have started our Phase III study in adjuvant melanoma there, and then we look beyond melanoma. We've also started a Phase III in microsatellite-stable CRC, which is a significant opportunity. This is a second-line plus. And we have a Phase II data looking at proof-of-concept in frontline lung as well as first-line and second-line HCC. So those are opportunities to expand beyond the melanoma market.

So Adam, let's stick with the launches here before we go to the core I-O business towards the end. But when you look at Camzyos, so you have a cardiovascular franchise existing, although this is somewhat of a rare more orphan indication, so how do you sort of maximize the return early in the launch? Is it more of a niche strategy? Or do you -- is it just easy to deploy an Eliquis person, for example, on the brand?

Yes. So let me tell you how I think about the strategy for Camzyos. So we're very excited about this approval. The first product ever to treat this disease state and really treat the disease, not just the symptoms like a beta blocker or a calcium channel blocker. We have a long history, as you know, in cardiovascular disease with launching products like Plavix and Eliquis. So our footprint is -- covers the entire universe of accounts. Now for HCM patients, there is a high concentration of diagnosed patients today, and they are in -- about 50% of them are in about 100 accounts. The remaining, another 400 accounts. So it's a highly concentrated market of diagnosed patients today. But the market opportunity is very, very significant. In fact, 1 in every 200 to 1 in every 500 people have HCM, but it's an incredibly underdiagnosed disease state. In fact, the diagnosis today is around 25%. And so ultimately, our goal is to really drive that diagnosis rate. So let me talk a little bit about how I see the launch. Number one is making sure that we are educating physicians on the profile on the disease state and on the REMS program. That's what our teams are doing. In fact, just we're not even a week out, we haven't deployed our teams, we have about 150 physicians who have already been REMS certified. And so they are ready to treat patients. And we think that's remarkable. It's a great testament to the intent to prescribe, the intent to use on those diagnosed patients. And those patients are -- those physicians are in those centers of excellence. Now those patients are not going to show up all on day 1, we know that. So there are some things that we have to do as well. Number one is secure access and reimbursement. That will take time, but we don't see that as a big barrier. Next, we have to make sure that we are capturing that bolus of patients. And that's where the short-term -- mid-term opportunity is. So really, we understand what those patients are, they're looking for a treatment. And we think Camzyos is the perfect opportunity for them, if they are NYHA Class II and III, to really help them with their symptoms. And so going after that bolus of patients is a clear priority over the next several months. Next is really expanding the diagnosis rates, and that's critical. And that's how we build this category. From 25%, we think we can more than double that opportunity to 50% over time. And then finally, the opportunity is to now go beyond -- longer term, go beyond just these 500 centers of excellence and move that into community cardiology. And that's going to take some time, but we feel really good about our ability to do that. And the feedback that we're receiving from physicians, and I would talk to many of these cardiologists in these centers of excellence, they're incredibly excited, enthusiastic about this treatment option for patients.

On the diagnosis rate, where is there the most -- where is the best return? Is it to build awareness among docs about what's currently the technology today to diagnose? Is there an opportunity to develop other diagnostics or biomarkers that would be more helpful?

I think it's a mix. I think it's -- one is just driving just overall education for physicians and patients. I think looking at patient-finding capabilities, which exist today. So there are millions of echos that are done on an annual basis. So be really thoughtful technologies that can help make it easier to diagnose oHCM, number one. And I also think there's an opportunity potentially longer term to identify which patients would best respond to therapy.

Right, right. And when you think about the REMS program, I think it was somewhat late in the review cycle or that sort of was -- became an expectation. But just help me with kind of what the -- what challenges does that present to a patient or a physician in the context of their disease?

Yes. So as I said, we're excited about just -- even before we have our teams out there, the 150 physicians that have already signed up in the REMS program. So the REMS program really are 2 components. And we feel it's very straightforward, particularly for these centers of excellence because, number one, they have to -- it's an echo-guided dosing like we saw in the EXPLORER trial as well as the VALOR study. So patients are getting echo at baseline at week 4, 8, 12 and really is around making sure that they are finding the right dose. Most patients are going to be on the starting dose at 5 milligrams, some at 10 milligrams. But it's really simple for physicians to do this echo. The echo is a simple echo versus a complex echo so it could take about 20 minutes or so to get 2 reads. They really need 2 numbers. Number one, they need LVEF, which is a safety measure. Number two, they need LVOT, which is the efficacy measure. And we use an analogy of getting treated for hypertension. If you're on a blood pressure medicine, they want 2 numbers, who want systolic and diastolic and you come back with roughly the same frequency in order to check your blood pressure, how you're feeling, do you titrate up or down the dose. So that, we think, is very straightforward. And it's really easily into the workflow of these centers of excellence. Number two is around drug-drug interactions. That's the second piece because when you look at the label, there are contraindications for those products that are moderate to high inducers of the cytochrome P450, 3A4 and 2C1 -- 2C19 isoenzyme. And so we have a list of products that are contraindicated in that, and that's why we have a network of specialty pharmacies as well because that's what they're averse in doing. And when we look at the most commonly used prescriptions that would be -- commonly use that are in our contraindications, the #1 product that comes up is omeprazole or Prilosec. And so there are so many different either over-the-counter or prescription medicines that are easily replaceable for that. And so again, just with having our pharmacy, make sure that a patient is not changing medicines that might be a drug-drug interaction, they're able to capture that and then dispense Camzyos. So we also think it's very straightforward. It could take some time for those who are less familiar in treating patients. That's why I said in the community cardiology offices, this is something that they're not that used to and it will take a little bit more time to get there. But in the 500 accounts that represent the majority of diagnosed business, that we think that is not going to be a barrier to prescribing at all.

Good long run as well, you may have enhanced compliance from the program.

Yes. So we'll be capturing data on these patients, so we'll be able to cut the data and look at different measures. And we do think the compliance could be improved as well with the specialty pharmacy network. And patients are going to feel great, and that's what we're hearing from them and from our customers when either they were on the EXPLORER trial or if they were on placebo and crossed over to long-term extension, it's amazing to hear the successes that we've seen just patients feeling better within less than 4 weeks.

Right. Perfect. And then last question is just when you think about the longer term, the investments you're making in the R&D side of things to kind of expand the indication beyond what you're talking about you just raising awareness in the diagnosis query.

Yes. Yes, clearly. So just with the -- in obstructive HCM, the opportunity is around the expansion beyond COEs. But on the R&D front and development front, we're getting ready to start a nonobstructive HCM study, which represents about 1/3 of the HCM patients. And then we have a Phase II study in HFpEF, which is looking at heart failure with preserved ejection fraction. So it will see that as well. And if that's a potential indication-seeking program if the study reads out positive. So again, could have additional indications in the longer term for Camzyos.

Yes. And then coming up this is fall, deucravacitinib, your TYK2 inhibitor. There's been a lot of back-and-forth discussions among investors about the potential for a black box warning. What is your -- what feedback have you guys gotten thus far from regulators? And when you think about if there is a black box, like how does that inform you're sort of -- your pace of commercial investments?

Yes. So as you know, firstly, we take comments on -- the discussions we're having with the regulators. But what I have said and our team has said is that we will be prepared for multiple scenarios. Now we reflect what has come out of the 2 POETYK studies. And coming from the American Academy of Dermatology meeting just about a little over a month ago, the feedback that I personally received from dermatology TLs, as well as community derms, is extremely positive on -- certainly on the efficacy profile where we've demonstrated superiority versus OTEZLA in multiple trials. The tolerability profile, which we know is limiting in -- for [indiscernible] and the potential for not just to take the OTEZLA business but also to potentially push back biologics is an opportunity. So the feedback that we're getting from our customers really is around a very high-efficacy oral product, which meets a significant need with a very favorable safety profile and my team will certainly be ready for any scenario that comes its way.

So it kind of doesn't sound like it matters really to you. You're going to make the same level of investment, but you may have incremental issues to have to, from a promotion standpoint, right, with the black box.

We're planning for our base case scenario as not having a JAK-like label because we believe that the adverse events that have been seen with JAKs are not what you see with deucravacitinib. But as I said, I don't want to speculate where what the FDA might do or not do, but we also see this product as a pipeline in a product. Because after PSO, I was alluding to really exciting opportunities will soon start. By the end of the year, we'll start multiple Phase III studies in SLE or lupus, which is a significant opportunity for deucravacitinib in PSA as well and other immunologic diseases, including IBD. So really significant opportunities for growth both in the short term and in the long term.

And let's talk a little bit about the GI indication. So ulcerative colitis. You guys had a setback in a mid-stage study. So how do you think that kind of informs the opportunities across the board for deucravacitinib?

Well, it doesn't change the commercial projection at all in terms of that. That study was an exploratory study around UC. And I think like many agents that are looking in the IBD market. It's just trying to understand what's the right dose, and typically, you need a higher dose. And although we had a higher dose than the PSO studies, the teams commissioned multiple studies to look at what is the optimal dose in UC and IBD, and we'll see that read out sometime next year. But as I said, we have a host of other indications coming for deucravacitinib, hopefully, in the longer term, some of them I mentioned, and of course, we have Zeposia approved in UC as well, which we think is also a significant opportunity.

Yes. And just with respect to the studies that were head-to-head for deucravacitinib versus OTEZLA, is the idea to the sequence to be the first oral sort of after methotrexate? Is that kind of your ideal positioning?

It is. We believe that we could be the oral of choice in this market and certainly for moderate-to-severe psoriasis, and that's what our customers are telling us. And I said also the potential because patients are sometimes phobic. They're sometimes hesitant to go on a biologic. So we think we have a real opportunity with patients as well to potentially push back the use of biologics.

And then PSA, same thing, just help -- maybe help frame the opportunity there versus psoriasis.

PSA is an interesting opportunity. When you look at the number of patients annually, it's about 1/3 of the patients that you see with PSO. So PSO is by far, the bigger opportunity. We think it will be complementary to what I said, multiple indications across multiple immunologic diseases.

And so you mentioned Zeposia and you guys had talked about on the 1Q call about expanding access and more work to do with respect to pricing reimbursement access. So just help us with kind of where you are with that today and how you think about this over the course of the year.

Yes. Sure, Geoff. Thanks for the question. The -- we focus on 2 areas for Zeposia and we're going to talk about UC here because that's what we're referring to on the call. The first is driving demand and the second is improving our access position. As it relates to #1, driving demand really at the top of the funnel, we're pleased with what we're seeing. In fact, when you look at Q1 versus Q4, we showed about a 30% increase in number of patients on Zeposia. So where are those patients going? Those patients are going into our hub right now and on our BRIDGE program until we're able to secure adequate access to reimbursement. So we have good coverage broadly for Zeposia, meaning we've removed new-to-market blocks. But when we look at our access position, we are either one step at it with -- in approximately 25% of the business and 2 step at it in about 75%. So our approach, we've been negotiating with payers, and we're confident and optimistic that come January 1, we will see stronger access position. So you get to see those patients who -- and there are several thousands of them who are in our hub today move out to commercial products but also continue to build demand based on an improved access position.

And when you think about the long-term potential, just help frame the UC opportunity versus MS. How do you think that ultimately shakes out on a peak or near-peak basis?

Yes. So we always said that IBD is a bigger commercial opportunity, and it's going to -- it would take time. We look at the UC indication and then, ultimately, I think in the '24, '25 time frame, we should have a Crohn's indication as well to complement UC if that study is successful as Phase III study. So I think IBD is the long-term opportunity for Zeposia. Now MS in the short term is a bigger opportunity, but that market has changed a bit. I mean when you look at the dynamics in that market, our share is strong at about 15% to 20% of orals. So we're either the #2 or #3 oral behind Vumerity or Aubagio depending on the report that we see. However, what has happened over the last year is the market has shifted. The S1P market has declined anywhere between 30% and 40%. And we -- our volume has been flat in a significantly declining market. The oral market has also declined close to 10%, so the market has shifted more so towards the B-cell agents, OCREVUS and Kesimpta. So we still believe there's room to grow in MS, particularly in the oral space, but that's why I said I think that the longer-term opportunity will certainly IBD.

And just in MS, you have a number of generics, S1P but also Tecfidera as well. Is that -- is the pricing dynamic a little more uncertain in the MS market for you?

It hasn't changed at all really. But what has changed, and we tried to share these dynamics in our earnings when we look at to get and secure the new-to-market blocks and remove them as well as the one step at it, we had to reduce our price and provide greater discounts to the PBMs late last year in order to be competitive in the UC market, so which is a lot less than we see in MS. So we have not seen generic Tecfidera had any impact on real access and reimbursement dynamics in the MS marketplace.

Okay. That's interesting. Okay. So let's switch gears to the core I-O business with Opdivo. So when you look at this year, you guys have had a lot -- we get the brand impact data. It shows a very good demand in esophageal and other tumor types. Just help us through, over the course of this year, what do you think would be the bigger driver and then looking to next year as well?

Yes. So we're very pleased with the Opdivo performance. Last year, we said we were going to return Opdivo to growth, and we did that. This year, in the first quarter, we recorded a 16% increase first quarter versus the prior year, and we expect to see similar double-digit increases over the next several quarters. The drivers of that growth really are threefold. Number one, it's frontline lung. And so we continue to make nice inroads in frontline lung, where our share is around 13% to 15%. We're very excited for this upcoming ASCO, where we'll present our 5-year data for CheckMate -227 and our 3-year data in CheckMate -9LA. We're making good inroads in the non-expressers, which is the highest unmet need, in that marketplace. Number two is around GI and our gastric indication. We also have a first-line esophageal indication, as you alluded to, coming over the next several weeks. But GI is also a very significant opportunity in the U.S. as well as in other markets around the world. And in the U.S., our share is around 40% to 45% already of that marketplace. And then we look at RCC, where we have 2 approvals, Opdivo + Yervoy, as well as Opdivo + cabozatinib where our share is also 40% to 45%. And so we see that an adjuvant bladder being a growth -- another growth opportunity for the near term.

Near term meaning this year...

This year and into '23.

Yes. Okay. Perfect. Then it was mentioned for a couple of your competitors over the course of this conference, we still see some lingering effects from COVID. So if you -- are you still seeing sort of lumpiness and physician office visits and the like? And is there an indication that you think is probably more affected than others?

Yes. So certainly, in the first quarter -- and the dynamics differ in the 3 therapeutic areas that I have responsibility for. So I think in oncology, the COVID has the greatest impact. In fact, last year, the market was down about 5% to 10%, started to come back and then, we're here with the Omicron variant in January. So the market went down about 10% to 15%. It's starting to come back, thankfully. And unfortunately, as patients who are just not going into to either get screened, diagnosed or even just skipping treatment altogether. But contrast that to the, let's say, Eliquis market and the OAC market where the market has been much more stable. We haven't seen any real significant volume impact due to COVID. But when you look at the access to physicians, there's nothing better than having new launches, and what we've seen just over this year alone, our access to customers is coming back almost to pre-COVID levels. And in some areas, back to pre-COVID levels. So when you're launching a product like Opdualag and certainly Camzyos, where in the COVID period it's so hard to get into these institutions where they had the highest restrictions, our calls are back to where they were in a number of these disease states because there's such excitement and enthusiasm around new launches. Hopefully, the worst is behind us with COVID.

Yes, yes, yes. So in the first-line lung market, obviously, one of the bigger and more dynamic markets in I-O. Where do you think you guys could end up on a peak basis? You have lots of different segments of the market but there's still plenty of runway, I think.

Yes. I think there's definitely room for growth for sure. And that's what the team is focused on continuing to drive growth in the front-line lung business. We know it's a highly penetrated business, very competitive with KEYTRUDA having indications for several years ahead of Opdivo + Yervoy chemo. But I think as the data matures, as I'm alluding to, I think 5 years is a very important mark for survival in oncology and certainly for I-O agents. I think when we get that data out there over the next couple of weeks at ASCO. And then we look at the Opdivo + Yervoy chemo, we think that there is room for growth, particularly in the non-expressers because that's an area that is underpenetrated by KEYTRUDA and KEYTRUDA plus chemo, and we're making nice inroads there. So that's where I see the majority of growth coming from front-line lung.

Okay. And then looking longer term, I know you guys and a lot of your competitors are thinking about you see more and more adjuvant indications, successful studies, but that hasn't fully played out commercially. So what are some of the bigger drivers long term? I'm assuming adjuvant is going to be a big part of that.

Yes. At neoadjuvant first with 816. We think that could be a nice longer-term opportunity as we treatment rates in the early stages of the disease. Certainly, in Stage I and II, they are pretty low treatment rates even with chemotherapy. And when we look at just over the next couple of years, you're exactly right. When we look at the -- an adjuvant indication in lung cancer, potentially adjuvant HCC, adjuvant RCC indications, those will be drivers of growth really through '23 to '25 and beyond.

Perfect. And lastly, I know we talked a lot about all the commercial businesses, but if you go in earlier in the pipeline, you have Factor XIa. So just give us a sense for where you are in terms of, is stroke prevention, I think, more of a priority to you and with respect to commercial? But are there other indications that you guys are thinking about?

Well, as we said on the call, getting the secondary stroke prevention data midyear is going to be really important for us. We already have the TKR data already. And just looking at the SSP data that we'll receive midyear will help us really look at the profile, and we're hopeful the profile continues to hold up like we saw in the TKR, and we're confident that it will. And then we're able to best inform the dose and then look at what's the right and the best development strategy moving forward. So we do think opportunities -- there are significant unmet needs in the cardiovascular market for Milvexian. So it could be in AFib. There's still about 20% of patients who are undiagnosed. We're looking at combinations with Plavix or anti-platelets could be another opportunity. So this could be a very robust development plan moving forward. But we look forward to sharing that data once we get it, you'll see it shortly thereafter. And then we'll be able to really declare what the development program looks like with our partners, J&J, for that asset.

Right. And then just following on the recent data from one of your competitors. Just give us a sense for the -- how you see the competitive landscape in the next several years could play out?

In this one, you're referring to Bayer? Yes. So it's hard to do a read-through. What I would say is -- and really to see the totality of the Bayer data, but I think Bayer is similar to BMS. We really have a strong conviction and belief in the Factor XIa mechanism and the potential that it has to be an advancement over the Factor Xs. And so we want to get the SSP data and share that. And again, our belief is that this product can be was really significant in the back end of the decade into the 2030s. And when you look at what we've been able to do with a product like Eliquis, one of the most widely prescribed products in the world, and a product like Plavix, we think that Milvexian can have similar commercial viability.

Perfect. With that, we're out of time. So Adam, thank you very much.

Thanks, Geoff. Thanks for these questions.