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

All right. Good morning, everyone. Thank you for joining us Day 2 of the Jefferies Healthcare Conference here in beautiful Times Square. I -- for those who don't know me, my name is Akash Tewari. I'm a pharma and biotech analyst here at Jefferies, and I have the pleasure of hosting Bristol and the new Chief Commercialization Officer, Adam Lenkowsky, who is going to join us for a fire-side chat.

I think, Adam, maybe just to start off as we get into Q&A, it's funny. If you always -- I always read pharma transcripts from 5 years ago or slide decks from companies and whatever seems to be the biggest debate that everyone's convinced is going to drive the stock over the next 5 years, never ends up actually because it was important. And you come into this role, this is a company where the new product launches are just so critical. And I feel like the way Wall Street looks at everything it's so binary, right? How will SOTYKTU do in UC or Crohn's or Carvykti's data versus Abecma, but you have multiple moving parts in the business that you're running. So when you think about how Wall Street talks about Bristol and the way that you see the business over the next 5 years, where do you feel like we're getting it most wrong right now?

Okay. Thanks, Akash. And it's great to see you, and thanks for having me here. So I've been with the company now for over 2 decades. And I can tell you, I think the strength of the company has been the ability to continue to adapt and grow as the environment changes. And I think over the last 5 years and even more, we've been very consistent in driving our strategy. I think there are a number of areas that I have been significantly focused on, particularly over the last several years. And that's really driving our 9 new launches. In over 2 decades, very few companies had the opportunity to launch 9 new products in 3 years. So we've got strong momentum in our business.

When I think about the disconnect potentially with the investment community versus how we see it. Number one, when look at the 9 launches, we feel very good about how these launches are progressing. We launched 3 first-in-class products last year, starting with Opdualag, then Camzyos and then SOTYKTU, all of which have the potential to deliver $4 billion plus in growth. I know we'll talk more about products like Reblozyl. You and I have just come back from ASCO as well as our cell therapy franchise. So we have said that this year, we're on -- and we are on to roughly double those sales to about $4 billion of these 9 products and more importantly, by 2025, these products will represent between $10 billion and $13 billion in sales. And at peak, they'll represent $25 billion plus. The second area, as CCO I'm focused on, is working closely with our R&D counterparts on how do we accelerate the pipeline. And the R&D organization has done a phenomenal job in really delivering strong execution against now what we call these next 6 assets. Another area where I think there may be a disconnect. So we've talked in the past about products like milvexian, which has significant potential, $5 billion-plus potential, and we've started all 3 of those trials. Products like LPA1, IPF and IPF and. So I think those are -- and 2 CELMoD, which are going to be first-in-class in multiple myeloma. And in my 20-plus years, I could say we have 40 products in our pipeline, I think, all undervalued. Products like our NEX-T CAR-T, where we're going to actually be putting that into lupus. So we believe with our CAR-T platform, not only do we have a leadership position today in hematologic malignancies, but we have a significant opportunity to expand that business into immunologic disorders. Products like AR-LDD in prostate cancer. And you'll see this weekend, we'll have our GPRC5D data which is our next cell therapy that's delivering 100% response rate in a pre-BCMA patient population and near 80%. So again, we're incredibly well positioned for future growth.

Understood. Now I think the other interesting thing about Bristol is you also have these mega blockbuster franchise that are going to go generic over the next, let's say, 3 to 4 years. And there is this kind of question of does Bristol have enough to really push through with these new commercial launches? And that is, a, from a monetary perspective, but, b, from kind of do you have the product mix to do that? So I guess the next question is, are there any areas you feel like you could benefit from getting another product via M&A in order to get better commercial scale when you look at the Bristol portfolio as a whole right now?

Yes. Well, let me start by saying, in the short term, from now until 2028, we're really focused on the 9 launches, bringing forward the pipeline, and products like Eliquis and Opdivo are also key growth drivers. Opdivo is growing in double digits in the first quarter versus same time last year. Eliquis continues to grow linearly as you see. The products that I've talked about, these next 6 products, will all hit in the second half of this decade and will start to really contribute meaningfully in the back end of the 2020s and into the 2030s. So we've talked about having multiple paths to growth and optionality there. So we feel with our own pipeline, we're well positioned, but we're also always looking for business development opportunities that may complement our current therapeutic areas and adjacent areas. And so a good example of that is the MyoKardia acquisition that complements Eliquis. And so that product is off to a very good start, tracking with our expectations, and we'll deliver $4 billion plus at peak. We are starting to build out our neuroscience or really our neurodegenerative early development team. So we're starting to advance those products and we think those are significant opportunities for growth. And so from a BD standpoint, we're largely size and scale agnostic and we will look for opportunities that complement our portfolio.

So fair to say you would be interested in CNS potentially from an M&A perspective to build out your commercial portfolio?

We wouldn't shut down anything, obviously. But as I said, for CNS, but in particular, in CNS, it's really looking at these neurodegenerative disease like Alzheimer's, which is a significant focus. We've got 3 assets that we're bringing forward quickly into the clinic. And so we'll see how those assets perform in patients. But those are areas that we are looking to grow and develop over the next several years.

Understood. Now maybe stepping to Camzyos, and there's a lot of -- and I'll admit, I am also, let's say, a Camzyos skeptic. The question that -- outside of the scientific question in Cytokinetics and all these moving parts, the one that I think most, if I say to a large-cap PM, they're going to say, Akash, when is this drug really going to start to take off? And there is this perception, maybe the Street is mis-modeling numbers and when really commercial scale will kick in, you'll get enough adherence and you're going to start seeing it really affect end-user sales. So is there an inflection in mind that you think we're going to see in Camzyos? Is it this year? Is it next year? And is that really how this market is actually going to work? Or is it more going to be just a slow grind?

Gosh, I remember where the same questions were being asked around Eliquis. And Eliquis was off to a sluggish launch. It was disappointing. But the truth is that CV products don't grow like oncology products, right? And they grow continuously linearly and that's what I look at for a product like Camzyos. Last year, we built the foundation for Camzyos. And what I look for is week after week, month after month, are we adding patients to the top of the funnel? Are we adding prescribers there? We talked about in the first quarter, we have 1,500 patients on commercial products, we had 2,700 patients in our hub. And so those patients, and obviously, we've added significantly more, and we'll report that out in our earnings, we are going to have those patients on treatment for many years to come, like a typical cardiovascular product. So this product is not going to inflect or it's continue to grow steadily because there's such a significant unmet need out there when you look at the number of patients that are in the market, and we're going to continue to grow the diagnosis rate which will also help over time. We do have an important catalyst, though, I think, in the Valor approval that we're up in this month in the middle of June. And what that will do is just continue to strengthen our profile and continue to build credibility and consistency with what we see in the EXPLORER data set.

Understood. Now maybe this is one thing that we're kind of thinking about. We've heard reports that the dose that patients get on Camzyos might even actually be lower than what we saw in the clinical trials. And this is where I feel like the -- the beauty of this drug would be to be an amazing alternative versus surgery being potent enough to actually do that. So -- but I think the question is if you can't get patients to a high enough dose, you might not be able to treat the patients who, let's say, have a baseline LEVF of 80. And then for the less severe patients, it's a little more difficult to diagnose and find them, right? So talk to me about those less severe patients. They're out there. This is going to be a much bigger market over time. How many of these less severe patients have gone on to Camzyos? And what are you doing from a commercial perspective to really identify them and get them on the drug?

Yes. So the first part of your question is exactly right. That's what the Valor study shows. It shows that by using Camzyos, we're able to avoid these invasive surgeries, like septal ablation, myectomies, et cetera. And so when we think about where the dose is today a year out, we have about 2/3 of patients on the 5-milligram dose and then about 25% of the patients are on the 2.5 milligram dose. We have a very small percent of patients that are on the 10 and 15 milligrams. I expect that to shift slightly over time. But -- and then when you look at the patients that we're treating, we're treating about 60% of patients who are NYHA Class III and 40% of the patients were NYHA Class II. So it's a pretty good balance of patients we're treating those NYHA Class II patients who are less severe patients. We think that the Valor data will continue to enhance the profile, get physicians more comfortable in treating less severe patients. But we feel good about the mix of patients that we're seeing treated. And again, I think most importantly, whether it's NYHA Class II or III patients, the feedback that we received from physicians and patients has been exceptional. At the 5-milligram dose, 3 weeks or 4 weeks into treatment, patients are feeling so much better. They're functioning better than they have in years. They're off oxygen. They're back to daily -- activities of daily living. So we're really pleased with what we see. And it's exactly what we would expect to see in terms of our dose mix.

This actually reminds me of something. This is something I don't think a lot of people appreciate it. I remember looking at your label. And a lot of the benefit was actually in the subset of patients who were not on beta blockers. And I know Cytokinetics is running a study where they're getting patients off of beta blockers and they're trying to build out that data set. But I think there is -- that is an aspect of your data set that's not well appreciated because you still had a symptomatic benefit on your secondary endpoints. So can you talk about how your Phase III data set versus your real-world use might actually differ? Because I'm suspecting a lot of the patients who actually get on to Camzyos actually are eventually getting off beta blockers and they're probably seeing a bigger functional benefit as well?

Yes. It's been a mix so far in the year. I mean, we see patients continuing on Camzyos plus a calcium channel blocker or a beta blocker, but there are patients who are now just on Camzyos alone and really feeling great. So again, it's a mix. The majority of patients there's probably still remaining on their beta blockers. And so until, let's say, a year or 2 years out, they'll then likely continue if they're feeling great. Remember, they also have the option to go back on calcium channel blocker or beta blocker if they...

Understood. Now just lastly on the REMS. Is there any chance that the FDA may allow you to modify the REMS? Because right now, there's almost this kind of indefinite monitoring that's occurring that doesn't seem tenable over time. So what is the process to go to the FDA and modify REMS? And is there any timelines we can put on something like that happening?

So certainly, there's precedent there, and I can give -- I launched Yervoy many years ago in the U.S., and we did see the REMS removed for that product after several years. And so we are in constant dialogue with the FDA. We've actually made some modifications to make it more patient-friendly already. I can't speculate on Camzyos specifically if the REMS will be removed. But what I can say is that the REMS program has not been a deterrent to prescribing once physicians have used the REMS program, and we've got 3,500 physicians now that have already been REM certified which is significant in these roughly 500 accounts. And so they're feeling much more comfortable. So once they put a patient on, they're much more likely to continue to prescribe more patients on Camzyos.

Understood. Now moving on to SOTYKTU. Obviously, the Crohn's study was disappointing. And I think there is a fair amount of skepticism on UC. But there is something that you guys repeat it a lot of times. That $4 billion number didn't really have a big IBD component, if at all. So, a, if you were to say now that -- let's assume IBD is not a part of your SOTYKTU arsenal. How -- if you were to say the components of the $4 billion number you gave, how much of that would be psoriasis, psoriatic arthritis and then things like lupus and some of these other indications that you're exploring? Is there a breakdown you can give us?

We haven't given a breakdown of the $4 billion-plus potential for SOTYKTU. But you are right. And when you look at the $4 billion guidance that we provided, that does not include either Crohn's or UC in that. So the composition of the $4 billion is, one, that's derisked and that's our moderate-to-severe psoriasis label today that will bring significant opportunity, as you can imagine. Lupus being really the second largest opportunity there, and the PSA being the third opportunity that we have. And both lupus and PSA are already in Phase III studies.

Understood. And then maybe last, I wanted to hit on this. You have next-gen tick tubes, which are in the clinic right now. If you were to just generally give us -- I think you do have patents on this, but if you were to say what those next-gen tick tubes would be best suited to pursue versus what subject already does well, any color you can give us there?

Yes. I think it's very common for companies to have backup molecules. We have our MYK-224 for example, which we got from our MyoKardia acquisition, it's a backup to Camzyos. And so we're exploring it today in a Phase II study in psoriasis. It doesn't mean that's where we will develop it, but we want to understand how does it perform in patients? Is it different? What's the profile look like? And then we'll make decisions later. It's looking encouraging, but it's still very early there.

Understood. Now on SOTYKTU. This is -- the question we get a lot -- I think the commentary out of Bristol when that launch we're seeing is we're going to Otezla's lunch, right? This is the big oral psoriasis market. You're going to see switches. But it was almost like the 2 drugs can't coexist as much as there's a binary nature to it. Now early on, if you look at IMS, there, you see Otezla numbers go down, you see SOTYKTU numbers going up, and that is even branded scripts not even the ones you're sampling. But lately, we've seen Otezla has actually kind of settled out and it kind of -- I'd like to revisit that framework. If in the next year or 2 years, we don't see Otezla scripts continue to go down, but flatten, does that have any read across on how SOTYKTU is performing in this market? Are we seeing the oral psoriasis market actually just net increase right now?

Yes. So we're very, very pleased with what we're seeing with SOTYKTU in the market today. Again, we're not even a year on the market. And as you know we have 2 superiority head-to-head studies versus Otezla and showing superior efficacy and a superior safety profile. What we see in our data set, which we look at new-to-brand Rx because that's all we can -- we track right now. And so a new-to-brand Rx share is around 40% of orals where Otezla represent approximately 60%. When we look at that basket, there are some conventionals in there like methotrexate, cyclosporin, but the majority are comprised of Otezla and SOTYKTU. So we're poised to pass Otezla certainly by the end of this year, if not sooner, on new-to-brand prescriptions.

On new-to-brand.

Obviously, the TRx is, it will take many years for that to catch up to the new-to-brand. And those patients are going to our bridge program today. That's where we're housing those patients. We're focused on driving demand and pulling forward potentially some market access wins. We're hopeful to bring in at least one large PBM by the middle of this year. We also help to accelerate the product uptake. But we think about the total market on new-to-brand, when you look at all the products, whether it's orals, IL-23s, IL-17s, we're actually already the #3 prescribed product behind only Skyrizi and Otezla. I think that's pretty impressive just for how early we are in the launch. So we feel very good about a long-term growth opportunities. And we're still in the first or second inning of the launch right now.

Now help us out in terms of the size of the new brand market because I'll tell you, you go to your ADA 2020 presentation. Okay. About 1 million patients are on oral psoriasis drugs. You take 30% of that, you're already -- if you take 30% and you actually annualize that, that's a $5 billion run rate in just that indication alone. And obviously, that's very different than -- I think the last time you said 30%, now it's 40% in terms of NBRx. What is the size of the new-to-brand market per year, right?

There's about 10% of patients in the total market who are kind of we call it that dynamic pool of patients. These are the patients who are up for grabs. And what we see right now is the source of business for SOTYKTU coming really in threefold. And it almost breaks up in 1/3, but slightly more in naive. So we're seeing a little more than 1/3 of patients who are naive to any systemic therapy, whether that's Otezla or a biologic. A 1/3 are coming from Otezla switches and 1/3 are coming from biologic switches. So the beauty of SOTYKTU and what gives us much confidence is not only our ability to really erode that Otezla business but also to push back biologic use over time. And so that's our key focus is number -- priority #1, eroding Otezla, priority #2 is displacing biologics earlier in treatment.

Understood. Understood. And just maybe lastly, is there a -- so if that's the new-to-brand market. In terms of absolute switches from Otezla are there agents, do we have any idea of the component of switch versus new to brand that we're seeing for SOTYKTU right now?

Yes. So it's -- I think it's about 40%, which is new 60% switch at this point.

60% switch?

And you'd expect that because we think where we are today in our payer position, we're generally behind Otezla, we're behind biologics from an access standpoint. Although with our bridge program, we allow physicians to use any new product or a switch product. So when you have a new product entry in the market, you expect that to come a little bit later. But we'll certainly make our way upstream as we move into a much better access position midyear and then into early part of next year.

Understood. Now you mentioned ASCO. And I actually wanted to start with multiple myeloma. I think maybe I'm the fraction of people. But I look at the CARTITUDE-4 study, and I think why it wasn't Kyprolis in the treatment arm [indiscernible] M-protein cutoff, the PFS curves are touching. You look at the real word data that was presented there. And I always get skeptical when we think about markets in such a binary way when there's a lot of nuances for example on how we think about DLBCL and bispecifics and different treatments. I just feel like that the nuance is completely lacking when we think about these BCMA data sets and yet we see more and more data sets coming in. So, a, talk to me about the importance of the real-world data that is starting to get developed at these treatment centers of excellence? And will that become over time, something that physicians are going to use more than some of these carefully curated Phase III studies?

First of all, we're so pleased coming out of ASCO this year. When you think -- we talk specifically about cell therapy, whether it be the TRANSCEND data for Breyanzi or the KarMMa-3 data for Abecma. And you're right. I think the real-world data is absolutely critical. We've been sharing this over time. We saw the CARTITUDE real-world data. And what are we seeing? We're seeing now these -- the CARTITUDE data really come back in line with Abecma. And so there are really minimal differences between the efficacy profile, including response rates that are really around the 80% mark. The CR rates, which are roughly the 40% to 50% for both products and the safety profile. And so it's the reliability of Abecma that patients are really gravitating to, not to mention, the supply because supply right now is so critical in CAR-T with both [indiscernible] and Abecma because the demand for these products in multiple myeloma far outstrips the supply. So we all working furiously to continue to increase the supply for these products. But you're exactly right. The real-world data is important for physicians because when you're showing them data that actually validates what they're seeing in their practice versus if you're showing data that is completely outside of the norm. If you're showing here's a 100% response rate, but they're actually only seeing 50% response rate, 70% response rates, then you're only going to let down physicians. So I feel like real-world data is becoming more and more important, and that is what we're sharing with our customers today. And they are very pleased with what we're seeing around the reliability that Abecma provides in the marketplace.

Yes. Now I feel like this position with Juno and Kite and they were taken off. And this whole thing with hospitals that don't actually make money giving CAR-T. And it's funny. I think it -- you can make an argument the CAR-T should actually be much more expensive than they are, but how has that changed, right? Because these were real issues from a payer perspective on government pay that the bundled discount where it seems like the hospitals were losing $200,000 to $300,000 managing the toxicities and actually administering these drugs. That seems to have changed recently. Can you talk about, from a commercial perspective, what has changed economically for hospitals that are giving CAR-T now versus, let's say, 5 years ago?

So I think it was really important back in late 2019, there was a national coverage determination that was out there, CMS. And so what came out of that in 2020 was a CAR-T-specific DRG, okay? And so that allowed for CAR-T reimbursement in the hospital. So they went from losing money on CAR-T therapy to making money and significant money on CAR-T treatment. So the economics now are very favorable for institutions who do treat patients with, whether it's CD19s or BCMA CAR-T at this point. So the -- really, the access and the reimbursement have not been a significant issue at this point post the 2020 national coverage determination and the DRG that came out of that.

Now maybe just last question because I know we're out of time. CLL, I mean that's a massive market for the BTKs. You guys have shown very, very encouraging data there, but it doesn't seem like there's a lot baked into numbers right now for that -- on the CD19 side. Can you talk about the size of what you think the CLL market will be for CAR-Ts and where they're really going to get positioned over what is really extremely good standard of care as well?

Yes. I mean we're so pleased with the data from TRANSCEND in CLL. We also showed data in mantle cell lymphoma as well as follicular lymphoma. So when you look at this was in a patient population that was exposed to a BTKI that was exposed to venetoclax, and we still were able to show 18% complete response rate. So this is going to continue to add to the breadth of indications for Breyanzi and we had share that this product, we believe, can certainly deliver $3 billion in peak sales. I talked about the importance of cell therapy because beyond the Abecma and Breyanzi, this market is right for significant growth. And there's projections out there that says the cell therapy market can grow to close to $30 billion by the end of the decade. It's not going to get there only through hematologic malignancies, but we have other products in our pipeline right now. So our Nex-T CAR-T agent, which you'll see data coming soon, we're putting that into lupus as well. And so that's another CD19-directed CAR-T. Talked about GPRC5D. It has broad applicability in multiple myeloma. So this is a significant area of leadership for Bristol-Myers Squibb. And it's not an area I think that many companies. They're not going to see 10 companies buying for leadership, even though you have hundreds of biotech companies trying to get into cell therapy. It's too complex. The manufacturing is too difficult. The support is too difficult. And I think there would just be a few companies that are going to emerge as the leaders. And I think we're poised to be one of the leaders in CAR-T in the near term and into the future.

Understood. Thank you so much. And I apologize for being a little over, but I think it was worth it. Thank you, and we appreciate it.

Thanks, everyone.