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

Okay. Good afternoon, everybody. Thanks for joining us for today's fireside chat discussion with Bristol-Myers Squibb. I'm Seamus Fernandez, Guggenheim's Global Biopharmaceuticals Analyst. We are here at our fifth annual oncology conference. And to my right is Chris Boerner, Chief Commercialization Officer of Bristol-Myers Squibb. I've asked Chris to share a few slides on where Bristol is in its transformation journey. And after that, we're going to jump right into Q&A.

Thanks, Seamus. It's great to be here with you, and great to see everybody. We did think it would be helpful to kick off this fireside by just reiterating how we think about the growth profile of the company and it really sort of starts on this slide. As we look at BMS today, BMS is in a very strong position. We are -- we've spent the last few years really transforming the company from one that is a business that is heavily concentrated in a handful of large but important products to a portfolio that is a younger portfolio. It's a much more diverse portfolio. And it's diversified across therapeutic areas, across modalities and of course, across payer types. And it's really that portfolio along with the continued strength that we have coming out of R&D as well as business development, which gives us the building blocks where we think, really good growth, not only in the early part of this decade, but really as we get into the latter half as well. And as we think about that in specifics, it's really outlined on this slide. We have now launched 9 new medicines, 3 first-in-class medicines were launched last year. And given the momentum we have with those products as well as the strength of our base business, we feel confident about our ability to deliver on our financial goals for the middle of the decade, and thus, the focus really does shift to the latter half of the decade. And there, we see multiple paths to growth, as you can see on the right-hand side of this slide. Specifically, you see additional growth from that new product portfolio that I just referenced. We also have an exciting next wave of assets coming from R&D and then continued optionality from research and development as well as our ability to continue to do targeted business development. So let's maybe just quickly jump through each of those specific areas, starting with the new product portfolio. As I mentioned, we launched 9 new medicines over the last 2.5 years or so, including the 3 I referenced last year. The momentum, even though those products are still very early in their life cycle, the momentum we see coming out of those gives us confidence in that midterm revenue estimate that you see on the left-hand side. But importantly, as you see in the middle of this slide, the long-term potential of these assets has been significantly de-risked. And as you can also see, we have continued near-term catalysts that will read out over the next 1 to 2 years. So we feel good about the ability of this new product portfolio to drive growth really throughout the decade. Buoying those products is a next wave of mid-stage assets. I had presented this slide last month, we decided to provide a bit more perspective on what we see as the revenue opportunity with these products. And what you can hopefully see on this slide is that in addition to potentially providing meaningful therapeutic benefit for patients across multiple disease areas, each of these products individually and certainly collectively have the potential to contribute significant growth to the company in the second half of the decade. And then finally, we have a very rich portfolio of Phase I and Phase II products. Many of those products have the potential to advance to late-stage development over the next 18 to 24 months. Included in this group of products are 2 exciting CELMoDs, one is targeting lymphoma, the other is in solid tumors, targeting prostate cancer, we have a BCMA targeted T cell engager in that mix that will likely move forward into late-stage development as well as our next-generation cell therapy asset, GPRC5D which had very interesting data presented at ASH last December. And then, of course, supplementing all of this is, I think, a very well-demonstrated ability to do business development. So if you add it all up, hopefully, you get a sense of how we're thinking about the growth trajectory of the company, not only in the midterm as well as the long term why we have so much confidence in that and it hopefully gives you a framework for how to think about it. With that, maybe I'll turn it back to you.

Great. Thanks, Chris. So I think one of the things is that 2023 -- 2022 has sort of started off as kind of a key execution year. Now I think 2023 all eyes are on Bristol-Myers in terms of the execution on the product launches. Can you just give us a sense of what you're most focused on and what you would encourage investors to think about as kind of the gauges of these various launches?

Yes, absolutely. 2023 is a critically important year from an execution standpoint. I'd say it's an important year to execute really across the board. From a commercial standpoint, the 9 products that I mentioned are critically important. I would say the things I would stay most focused on are, first and foremost, the success of those 3 products from last year. Those are very early on in their life cycle. But we're very focused, obviously, on continuing to drive the uptick of SOTYKTU in psoriasis. We're off to a great start coming out of the fourth quarter. Obviously, we've got to continue to build a strong foundation for Camzyos and obstructive HCM. And again, a product that's picked up momentum over the course of last year, and we anticipate continued growth with that product this year. Opdualag is off to a phenomenal start in first-line melanoma. There's additional opportunity to drive growth with that product this year. And the other 2 I would highlight would be the 2 cell therapy assets. Good growth for both assets in the fourth quarter. This year, it's all going to be about continuing to see an uptick in supply. The profiles for both of those drugs look very good. So I'd say, in general, our focus is on continuing to drive the base business. We have important drugs like Eliquis and Opdivo. We can't take the eye off the ball on and then it's those new products. And then, of course, we've got to continue to execute on the pipeline as well.

Right. And the recent guidance, I think, sort of surprised folks a little bit just because of the magnitude of the decline that is projected with Revlimid. Can you just explain what's happening with Revlimid because I think your guidance was more conservative or seem more conservative last year? You guys kind of crushed that number to some degree. So are we just talking about a very conservative view of Revlimid this year? Are we talking about well-reasoned sort of brackets for that product?

Yes, I think the guidance we've given is really the way we see this playing out. Last year, we had anticipated Revlimid sales of about $9.5 billion. We ended up with $10 billion. We fully expect that additional $500 million to flow out this year, and that really reflects the guidance that we gave for Revlimid this year, which was $6.5 billion, which would be roughly a $3.5 billion drop-down. We still believe, as you flash forward and think about '24 and '25, an average to think about is about $2.5 billion per annum in terms of the decline for Revlimid in each of those 2 years. Remember, we don't have really much of an optic on how wholesalers are going to manage their inventory of Revlimid. We certainly have no influence on it. And so it's something the erosion of this product is one we just have to stay focused on and we'll continue to provide updates as appropriate.

Okay. Great. And as we sort of look at the P&L, one of the questions that we get is on OpEx management to some degree. You guys are doing a phenomenal job there. But there's also the sort of follow-up question that we get, which is -- how are you doing it? And are you fully optimizing the spend behind the new product launches? And is there a point where you say, okay, maybe we do need to deploy more resources in that regard?

Well, let me start by saying that we're absolutely optimizing the investment across these launches. These launches are critical to the growth of the company, as I highlighted just a few minutes ago. So I feel very comfortable that we continue to not only put resources -- the appropriate resources against those launches today, but we are constantly looking for opportunities to either exceed our internal expectations or pull forward the opportunity we have with these products. So not concerned about investment in those launches. In terms of what we -- how we see the OpEx playing out, what we guided to was low single-digit decline in operating expense for this year. The way that gets executed, I think, is different across functions within the company. From an MS&A standpoint, we're pretty efficient already today, but that doesn't mean that we can't find additional opportunities to divert resources, particularly as we think about moving resources for more established products, later life cycle products, over to support these launches and also find opportunities to potentially reduce resources. I'll give you an example of that coming out of the pandemic, clearly, digitization is a much more important factor in terms of how we engage with physicians, that's given us an ability to optimize spend. So that's on the MS&A side. And then routinely as we go through the portfolio, we're looking at every single one of our investments on -- is there a scientific rationale to continue this, does it give us the right return on investment. So there are opportunities there as well. But that's how generally we think about optimizing spend.

Great. And then as we sort of move beyond that, we can probably just jump right into oncology because this is an oncology conference. So as we just sort of think about the opportunities, where in oncology are you seeing better-than-expected performance from the portfolio? And where would you actually like to see a little bit of a catch-up? I kind of feel like Opdivo has been doing well, but perhaps it was delayed by the pandemic or something along those lines, but I feel like Opdivo could be doing a little bit better.

Yes. I mean I think what we've seen with Opdivo is, we had promised that we would grow that business in 2022. We delivered double-digit growth with Opdivo last year. I would say there's continued opportunity to grow Opdivo. The areas that we think are probably most prime for growth this year are we've got continued opportunity in GI cancers. We've got the sort of broadest label of anyone in the metastatic space. We have about 45% to 50% share in the metastatic space depending upon the patient population, similar share actually in the adjuvant setting as well. But there's still room to grow that business. So we're heavily focused there. We've seen good uptake in 816 in the neoadjuvant lung space. I think there's additional opportunity to grow there. In first line, our business is in the mid-teens, but we're actually seeing a bit of momentum in the PD-1 negative. So that's going to be a continued area of focus for us. The big thing that we've been paying a lot of attention to in this IO business generally is the sort of flow of new patient starts into oncology post the pandemic. We saw a little bit of improvement in that at the end of last year. Obviously, we'd love to see that continue. But we feel good about the growth for Opdivo in 2023. And then as you think about the next few years, we've got a number of additional opportunities there with periadjuvant lung cancer data. We've got the opportunity in the early stage in unresected lung cancer with 73L, periadjuvant bladder cancer, adjuvant HCC, first-line HCC. So a number of studies that are going to read out over the next couple of years that give us opportunities to continue to grow that franchise. The last thing I would say is we still have ample opportunity to grow Opdualag in the first-line setting of melanoma. And so that's going to be a clear area of focus for us as well.

And remind us where the share is today on Opdualag and what the sort of next opportunity in melanoma is, I guess, one of the areas that I've always been excited about is to see that move into the adjuvant setting. But there's also the lung cancer and liver cancer opportunity. So I just love to see how you see this brand, I guess, combination brand evolving going forward?

Yes. Well, I mean, obviously, the first thing we're focused on is the opportunity sitting [indiscernible] in front of us, and that's in first-line melanoma shares in the upper teens today. The way we thought about the growth for this product has been the lowest hanging fruit is PD-1 monotherapy. That's where the data are strongest for this asset. That's where we've been targeting our commercial efforts. About 50% to 60% of the use today is in that population. And remember, there's still about 15% to 20% share of PD-1 monotherapy, roughly even [ loose split ] between Opdivo and KEYTRUDA in first-line still to be taken. So we think that's the lowest-hanging fruit for this product. We are seeing about 40% to 50% of use coming from Opdivo Yervoy. Frankly, from a financial standpoint, we're ambivalent as to whether it comes from Opdivo Yervoy or Opdualag. The reason we haven't targeted that population initially at launch is just the strength of Opdivo Yervoy survival data in first-line melanoma. But we are seeing a number of physicians choose to use Opdualag in lieu of that combination. But certainly, there's opportunity there as well. And then as you mentioned, I think the next space you would look at from a proof-of-concept standpoint would be the adjuvant space. That trial is going to take a bit longer to play out. So we would expect that in the next couple of years. We'll have lung cancer proof-of-concept data, hopefully, later this year. That will inform next steps with that program. And then we'll have additional data readout over the next couple of years in HCC as well as in CRC. So we think this is a product that has a lot of legs not only in its existing indications, but potentially in other tumors as well.

Great. And I think we've probably now moved past the depth of skepticism that the market had about cell therapy. I think we're pretty comfortably beyond that. What -- where do you see cell therapy really going, whether it be in the multiple myeloma setting or with the CD19 setting for Breyanzi and Abecma and obviously, very competitive areas. But what are you learning about the landscape and the interest from physicians today?

Yes. Well, having been in cell therapy for a long time, even going back before Bristol, I can tell you, I think you're right with your first comment that the skepticism generally about this class of medicines has decreased significantly. When we acquired Celgene, most of the conversations we were having was, can you get access for this product? How -- what will be the uptake? And I think what we've seen certainly with Abecma and Breyanzi but I think in general, with this class is that physicians are getting comfortable with utilizing these products. In some cases, they're utilizing a product like Breyanzi in the outpatient setting. Certainly, the market access environment has improved for these products. And as you continue to see studies play out, you see additional opportunities to use these products not only in different patients in the later line setting, but we're starting to now see those products move into earlier lines of therapy. So as we look at our 2 products, a few things. First, from a competitive standpoint, we are very happy with the profile of these 2 drugs. In -- For Abecma in multiple myeloma. Obviously, it's a competitive space with J&J, but what we're seeing physicians play back to us is they like the profile in terms of its efficacy and in particular, safety. They like the fact that they're seeing real-world data that mimics what they saw in the clinical setting and actually in a more advanced and sicker patient population. So that real-world data is absolutely being played back to us. And then on Breyanzi, we still are perceived to have the best-in-class profile relative to competitive products. That's based on the strength of efficacy and safety. And there, I think the opportunities are to continue to advance that product into earlier lines of therapy and potentially into a broader set of patients. But overall, we're happy with what we're seeing with cell therapy. The key constraint obviously, has been manufacturing, and we're working diligently to improve upon that. We were able to move forward some of the capacity for Breyanzi that we had anticipated not being able to deliver until this year into Q4 of last year. And we see steady growth in capacity for both of those products over the course of the year.