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

Last day, exciting stuff. London Healthcare Conference. My name is Akash Tewari. Can you even pronounce my name? I'm a pharma and biotech analyst here at Jefferies. I have the pleasure of hosting Tim Power, Head of Bristol IR, for a nice one-on-one fireside chat discussion today. Tim, let me hand it to you for some opening remarks, and then we'll get started.

Thanks very much, Akash, and thanks for the opportunity to be here this morning. I mean I suppose if I just take a step back, where we are right now. Clearly, the company is going through an important patent cycle at the moment, and the market is obviously focused on that understandably. I think that if we sort of put that in context, thinking about the fact that this isn't the first time Bristol has gone through a patent cycle. And frankly, we've seen some other companies more recently go through something similar and come out very strong on the other side, I think it's important to remember that we're going into this actually with some real advantages in some ways. If you think about relative to some of our competitors going into similar situations, we have a very strong balance sheet that enables us to sustain shareholder distributions to invest for growth through business development. We have a new product cycle, a growth portfolio that's coming along nicely. And have a really, really good pipeline. And we had an event in September to talk about R&D at Bristol. And what was very clear is that the potential of that pipeline is there, and that we can make it even more productive going from 6 to 12 registrational assets over the next 1.5 years and increasing the productivity of that portfolio. So you put that together with the fact that we have a new CEO who's come in, and I think you'll see real urgency from Chris with respect to financial execution, execution across the commercial portfolio and with respect to the pipeline, I think there's real optimism for the future for the company at this point.

Understood. So to that point, Tim, it's -- I feel like with some of these large cap pharma CEO transitions, this one's actually -- it's unusually normal, where Chris has been in the company for several years and he's kind of taking the reins from Giovanni. But the typical pattern we see is large cap pharma CEO comes in. In 1 or 2 years, a "big deal" happens" right? There's this idea that there is a mandate that is given with a new CEO to do something that really changes the trajectory of the company. I think Bristol -- the sense I get is investors want clarity, right? They don't want -- like it's the same thing with Pfizer, like they have 17 products that are launching, but everyone doesn't know how to model them. One major product, right, an Eliquis replacement, an Opdivo replacement is really what I think gives people clarity post '25. You guys have talked about there's no appetite to do another Celgene deal. But there have been these mega tuck-ins, right? You could argue Horizon or Alexion were these kind of like a tuck-in type of acquisitions. When you think about the mandate to do something, maybe not a Celgene size, but in that to $25 billion to $50 billion range. What is the appetite for that internally at Bristol right now?

Sure. So first thing I would say as a point here to, Akash, is we actually think we have a really important opportunity with the milvexian compound, think about sort of a next-generation antithrombotics since you brought up Eliquis. But if we move past that, to your question, the good news the company has, as I said, a very strong balance sheet, very good cash flow. So the firepower to do strategic acquisition is there. Ultimately, there's really 3 things that we think about when it comes to doing business development and M&A. It comes back to, is there a good strategic fit for what we're looking to bring in, are we convicted on the science and do we feel that there is a good financial rationale as well. And obviously, accretion and dilution is a component of that, but economic return is a particularly important focus us. With those lenses, sort of thinking across areas where we think we can add value, really, we're thinking about all of the options that make sense in that regard. And if you speak to our management team, you'll clearly hear them say that we're somewhat size-agnostic. And you're right, with the caveat being that clearly a mega deal the size of Celgene is not something that's on the cards right now.

Understood. Now you guys have done deals in kind of this precision oncology space. The turning point, obviously, the drug got approved, I think, today. Mirati just recently was announced as well. When I look at Merck, for example, some of your peers that have the same amount of expertise in oncology, it's all about I-O and ADCs, right, next-gen chemotherapy. And that's really where the field is kind of starting to head, in particular, for the treatment of solid tumors. When I look at kind of Bristol's oncology portfolio, that seems like it's glaringly not there. right, the ADC component. So do you feel like we've had a breakthrough with that technology, with the linkers, and this ability that you feel like this is a modality that could be worth integrating into Bristol's portfolio? And would that be something that's more early stage or something that could be more of a commercial later-stage type of compound?

Yes. So what the company has said and sort of provided a bit more context here is that it's, we believe, very important to continue to drive leadership in immuno-oncology, but also to diversify beyond immuno-oncology. And if you think about what we talked about again at our R&D Day in September, it's very clear that even with the portfolio that we have today, there's real opportunities to diversify beyond I-O. You think about the targeted protein degradation platform we have, where we may be able to bring some of these really innovative assets into solid tumors, like antigen-receptor degrader for prostate cancer, for example. When it comes to other modalities like ADCs, the fact is that we, as Bristol, don't have a lot of ADC exposure today. I think that's a fair observation. We have a few assets here and there. We also have a potential option to bring forward an ADC component of protein degradation in the future as well. But clearly, as we think about our portfolio, there may be opportunities for us to complement that with other modalities. And ADCs is a modality we want to pay attention to.

Understood. Now I remember when we hosted the team in New York -- and as much as people complain about Waldorf, the Sheraton in Times Square is [ worth it ]. So keep that in mind. You specifically talked about building out capacity in CNS and neurodegeneration. And surely thereafter, the tau with Prothena was discussed. Can you talk about additional appetite on the CNS side? And why the interest specifically in neurodegeneration? Do you feel like there's maybe been some breakthroughs in the biology that's obviously been very tough to treat some of those indications? Why the interest there specifically?

Yes. Good question. So I'd say Bristol as a company, clearly a legacy in neuroscience, particularly in the past in psychiatry. But to your point, the current portfolio that we have, the pipeline we have, is really more oriented in neurodegenerative disease. And the way that came to be was the team sort of viewed the biology is starting to advance and that the understanding -- biological understanding of some neurodegenerative diseases was get to a point where maybe there would be better ways to drug some of these conditions. And the model that was established was to create a small team of experts that could get very plugged into science, whether it's through academic collaborations or within the sort of biotech ecosystem, and source assets early enough that would be able to be sort of at the leading edge if that started to come to fruition. And what we're starting to see is that, that's beginning to happen now. If you look at the pipeline that we have today, assets like the tau that you mentioned that we got from Prothena, really interesting asset. We have some early assets in ALS and some others that we're looking at as well. Again, we talked about some of these at our event in September. So I think the point here is that we are starting to see a point where the biologic understanding is starting to enable us to develop more assets against diseases like ALS, as I said. When it comes to business development, I think, again, coming back to what I said a few minutes ago, if there's a strategic fit there, we're interested. So neuronscience clearly is a vertical that we're building, and so that's one that we'll continue to evaluate.

Understood. Now maybe going into your product-specific portfolio, and let's start with, I think, SOTYKTU. I feel like that's where -- if I made a Bristol ball, it's always I think SOTYKTU is an $8 billion to $10 billion type of opportunity. They always have a lot of confidence there. And I think to your credit, what you've said about how SOTYKTU biology is going to play out in terms of selectivity I think has started to play out. On the commercial launch, right, there was I think some commentary about continued levels of step edits. I mean you are taking 40% of the new patient starts on the oral side, so there is good execution. But it does seem like there's a bit of a tone shift in terms of the time to get full commercial coverage and the step editing that's kind of occurring here. Outside of what we know what's going on with Stelera, have there been any other changes kind of recently in the market that may have shifted your time lines here?

Sure. So I think, I mean, the fundamental point here I think is that this is a drug that has significant potential. We've been able to develop a medicine that's very innovative. It's shown superiority to the current oral standard of care in psoriasis, which is Otezla, that's in the label. What's really important here in the sort of near to medium term centers on access. And what we've been very clear about is that the strategy was to establish this product by effectively building as much volume as possible, knowing that we wouldn't have access and effectively sort of facilitating that through a free drug program. The expectation was that we would get to a much better reimbursement position next year. Now what's happened this year is actually we've had some good news. We were able to secure access with a CVS plan. It's a relatively small population, about 15% of the market, but we were able to get it at 0 to 1 step edit. And what that's enabling us to do now is to pull patients out of the free drug program, convert into commercial. And you can see that, if you look in an IQVIA script, you can actually see some of that coming out already. When it comes to next year, our hope was to be able to get to a point where we would have very broad access next year and high-quality access at that. So we were hoping to be able to take to step 0 to 1 step edits in 2024. So if stand -- look at where we are today, the bad news, I suppose, is that we have about 80% plus of patients who don't have access to SOTYKTU right now. We're going to be able to get, we believe, close to 100% of patients having SOTYKTU on their plan next year. The point though is getting to 0 to 1 step edit will probably take a little bit longer. And so there's going to be a tailwind behind this product going from 2023 to 2024. It may not be quite as strong as we were hoping a few months ago. But the good news is we expect continued momentum then going into 2025, both with respect to continued volume growth and then continued access expansion as well.

Understood. And it's interesting because I feel like 5 years ago, it was kind of clear, like you had Stelara. You didn't get the efficacy of the biologics, but it was a nice bridge from steroid-type regimens. SOTYKTU kind of gets into that realm where you are having biological-like activity. So can you talk about really how do payers view it? Do they still view it as kind of like here's the orals, here's the biologics? Or is that line starting to get blurred? And you also have Humira biosimilar starting to enter as well, how is that kind of also affecting the step editing?

Yes, it's really not so much of a distinction between orals and biologics from a payer perspective, it's more about how they manage the disease or the category. And so if you have a plan today where there's a step edits, effectively it's not mandating a particular product has to be failed before you get access to your drug. It's that, a, another systemic has to being used, and then you can get access to SOTYKTU. But you're right, what we're starting to see is a dynamic now is that the availability of biosimilar Humira becoming a factor in the negotiation with patients. And so that's creating a little bit of the sort of delayed expansion to sort of preferred status that we were hoping to get next year and pushing it a little further out.

Understood. Now speaking of milvexian, I mean, Tim, you're absolutely right. I mean this could be a huge opportunity. Never comes up in investor discussions. And I think right now, everyone is dealing with what's happening in the next quarter. Even something that's coming out in the next 2 to 3 years seems like forever. But we were at AHA, and one of the -- hits the same target as milvexian, it's in the form of a mab. Look, I'll tell you, when I looked at that data set, I said why didn't Bristol use bleeding events as their endpoint instead of the composite stroke, non-CNS embolism endpoint that you guys are proceeding with? Certainly, I think you would have been able to show a benefit over -- maybe not Eliquis, but some of the prior drugs in that area. But twofold. One, from that data set that came out from that private company, is there any read across you have on milvexian and the importance of actually having less leading events, forget just your other end point? And then number two, actually from kind of a powering perspective, right, how is the lack of the less dropouts affect how is going to perform here? And I think to me that might be the more critical question.

So maybe just for a bit of background here. We believe milvexian has really significant potential. If you think about Bristol as a company, clearly, a very, very strong legacy of developing antithrombotics from Plavix on the antiplatelet side to Eliquis on the anticoagulant side, and now potentially sort of bringing those 2 together in some ways with milvexian with our partners now with Janssen. What we're trying to accomplish with this drug is to develop a medicine that has efficacy that's the same, if not better, than existing anticoagulants like Xas. But to your point, with a better bleeding profile. And if we're able to accomplish that, if you think about it, what it enables is an expansion of where anticoagulants get used. Because if you look at the way anticoagulation therapy works today in atrial fibrillation, we know that there's somewhere between 20% and 40% of patients who either get undertreated or not treated at all. And the reason for that is even though they're diagnosed and they're at risk of stroke, their physicians are concerned about bleeding. So the point that if we can have a better bleeding profile, there's a real opportunity in AFib. Beyond atrial fibrillation, you think about diseases like acute coronary syndrome, secondary stroke prevention, standard care today is antiplatelet treatment. And we know that when you add anti-coagulants on top of that, you can reduce events. But unfortunately, you're adding leading profile on top of a background bleeding profile and it becomes difficult to make that work. So again, a profile that has efficacy without significant increase in bleeding can enable an expansion of anticoagulation in that setting as well. What we've seen from our Phase II trials, actually, from our perspective, gives us conviction that we're starting to see a profile that looks like that. And to build on your point, we're seeing a growing body of evidence that Factor XI has that type of a profile. So the antibody data we saw over the weekend suggest a very different bleeding profile to Factor Xa. We even saw head-to-head data last year from a Factor XIa in AFib versus apixaban, which is the standard of care, where the bleeding profile looks better. And from our own Phase II data, as I said, we're seeing even in the secondary stroke trial that you referenced, good efficacy with respect to ischemic strokes, but no increase in major bleeding, no increase in intracranial bleeding or fatal bleeds. And that's not what you would see if you're looking at a Factor Xa in combination with antiplatelet treatment. So again, as the data continues to build, our confidence in this profile continues to increase.

I think the question I was thinking and I was debating with my team is, let's say, you show noninferiority to your primary endpoint, but you have a 50%, 70% reduction in major bleeds. I mean that is a big improvement versus the standard of care. I feel like that's a drug that should be on the market. Have you had any communication with the FDA about potentially filing -- because that is one of your major secondary endpoints. I think it's your first major secondary endpoint. Is that potentially a fileable endpoint? Because it seems like I think that mab competitor is looking at that as they're primary for Phase III studies?

Yes. So absolutely. Our plan is to be able to -- again, if you think about the profile I said, if it's about efficacy, that's as good if not better than the existing, but with a better bleeding profile. To the extent that that's what we show in the registrational program, that's absolutely what we want to talk to the health authorities about.

Okay. Interesting. All right. That's a big deal. Got it. Got it. Got it. Now maybe stepping back and looking at Camzyos, we were at the AHA and it's obviously all about [ select ] and everyone knows about this. But there were data sets with Camzyos. And we hosted a KOL calling -- this doctor mentioned something that I don't think I really appreciated, which is the cost of these echos is a problem, right? Like a, you have an expensive drug that you're giving out of pocket, you'll have out-of-pocket costs associated with it. But then also these echos cost like $1,000 a pop. They're seeing their doctors every 6 months or probably more likely every year. And so they have to kind of change their regular pattern of treatment once they get on Camzyos. And that seems like, a, a pretty significant financial burden, but also relatively inconvenient. You've alluded to the possibility of maybe working with the FDA to change the REMS. I mean to me, the quarterly seems overly burdensome. Any sense on is there a possibility we can even -- we can -- at least go from quarterly to 6 months? And is there any time line we can think about with your discussions on the FDA on this topic?

Sure. So I mean, just again for a bit of a context, Camzyos is a product that's really been transformational for these patients. What we've seen is that people have been incredibly symptomatic, unable to sort of perform daily -- activities of daily living, seeing that they're able to actually be active. And so the point is that once patients get on this drug, see very significant symptom relief, they want to stay on treatment. The point around the REMS program, Akash, clearly, it's been something that we've had to navigate. I think physicians have gotten better at managing it. There is always the potential to have a REMS change over time. It's a very long process. It's not easy to do. We've seen it in the past. It's something we'll continue to look at, but it's probably not something that would change in the near term.

Understood. Got it. Now speaking of your R&D Day, I mean, one of the programs that I feel like your commentary was quite bullish on was MYK-224. This is your backup myosin inhibitor to mavacamten, it came with the MyoKardia acquisition. I know you're going to have data for that compound in obstructive HCM in Q1 '24. But with the IRA, it seems like you're not going to pursue it in that indication. But HFpEF in that opportunity, I mean, that's a huge potential opportunity for this class. Can you explain a bit about your excitement in that indication, where it could kind of fit in the treatment paradigm and the early signals you might be seeing there?

Sure. Yes. So what I would say is what we've done so far is a Phase I/II study for mavacamten, our marketed myosin inhibitor in HFpEF. It's a small trial. But we've started to see some evidence that the drug is active in HFpEF. Again, small patient numbers. But the fact that we're seeing activity is telling us that it's worth exploring what a myosin inhibitor can do in HFpEF. So with that being the case, to your point, what we've decided to do is take a second myosin inhibitor, 224, and at this point, what we plan to do is put that into a full Phase II proof of concept in HFpEF. And on the basis of what that tells us, then we'll be able to see how we move forward. And to the extent that we can really bring something to the table here, I think, to your point, HFpEF, an area of continuing unmet need and could be really important for patients as well.

Understood. Now maybe kind of stepping back and thinking about your -- you have co-formulations and then obviously subcu. It kind of struck me on the Q3 call you're mentioning, in terms of the current Opdivo patients who would be receptive to going to a subcu formulation, 65% to 75% of the total. I mean that's I think bigger than -- Merck said it's about half that would be receptive. And then of that group, half of those patients would be able to maybe switch to a subcu. I mean that's talking about like 1/3 of your Opdivo revenue. So a, this drug might get on the market, let's say, in 2025. Can we talk about how that -- the cadence of that switch would play out? And then number two, obviously, the IRA -- the way the IRAs currently written, it sounds like you're going to avoid getting negotiated under subcus, because those are 2 different ingredients. But you mentioned exclusivity or protection to the early 2030s, but not the full 13 years. Can you expand a bit about why you guys have been that color versus the full 13?

Sure. Yes, so there's a lot of new question there. Maybe just sort of taking a sort of a step back on this one. We think this is a really important option for patients. If you think about what happens in a physician's office today with an IV of Opdivo patients, obviously, it's a half hour of an infusion, they have to be prepped for that. It takes up resources within the physician center. Sometimes their infusion capacity is limited. So having the ability to have the physician's office administer a 5-minute injection instead, we think, is really important for patients and for their providers. With that being the case, we expect, based on the data we've just gotten, to be file this and potentially get an approval to launch, as you say, maybe in 2025 in indications that constitute roughly 65% to 75% on of today's Opdivo business in the United States. We don't expect to convert all of that. To your point, we think we can convert about half of it. What I would say is if you think about it between 2025 and when Opdivo loses exclusivity in 2028, we have 3 or 4 years to be able to make that conversion happen. Our view is that we'll be able to maintain this part of the franchise through the early 2030s. There's obviously an IP component to that. And when it comes to IRA, clearly, there's a lot that we don't know. But our current thing is based on sort of the guidance we've seen so far with respect to how IRA will be implemented, that because this contains 2 active moieties, it should be independent of Opdivo free form when to price setting.

Understood. Understood. Maybe just to hit -- I mean, I feel like one of the products that you guys, I think, are outperforming on is Reblozyl and you have the COMMANDS first-line study. I mean this seems like -- if there's any product that, wow, this could definitely exceed expectations, it does seem like it would be that compound. It seems to be getting broad use in MDS in general as well. Can you talk about how getting COMMANDS on the label has started to help with uptick, you get RS positive and RS negative? And then number two, as we think about the cadence of growth in the back half of the decade, right, I mean, is this something that could really start to accelerate as we get into 2027, 2028, et cetera?

Sure. Yes. Again, another or product, if you think about chronic anemias in the setting of a disease like MDS, to this point, it's really been ESAs is the only option, which would be used, frankly, off-label. And so having a branded product that's shown superiority to ESA is something that's really important for patients and their doctors. And so at this point, what I can tell you is the launch is going well. We did get a broad label, both RS positive and RS negative patients in the label. What we found is that, in particular, community physicians really value the fact that there's no need for to test RS status anymore. They can use this in any of their patients' academics. Obviously, we'll continue to test. They may use it a little bit differently on RS positive versus RS negatives. But yes, it's going very well. And about 60% of patients are treated in the community setting. So again, that population getting well served. There are more indications potentially even to come beyond COMMANDS. If we think about sort of the independence trial which is testing this product in myelofibrosis. So we're going to go way to expand this product and bring sort of the new anemia treatment to as much as we can.

Understood. And then maybe finally wrap up on Abecma. Obviously, I think disappointing kind of midyear performance for that product, a, with the manufacturing issues. But b, I think the comments on the Q3 call were kind of fascinating. Because to me, it doesn't seem like it's just the legend product, right? It's not just simply a Carvykti versus Abecma dynamic. There certainly seems to be a component of that. But you also mentioned broader competition going on in kind of the multiple myeloma space. Can you talk about how maybe some of these BCMA-CD3s and Legend have impacted the demand on Abema. And when do you think that product can maybe start returning to growth here?

Yes, good question. I mean, again, this is the sort of the first BCMA product for patients with multiple myeloma. And when it launched, if you remember, we saw incredibly strong demand for this product to the point we couldn't supply enough product. The same happens even when the second BCMA CAR-T became available. And so really what started to change was when the bispecifics became available, we saw that market shift from being kind of a warehouse bolus type market to more of an incidence-based market. And so you're starting to see very intense competition for new patients coming into treatment. What's also happened more recently is, as we've seen more capacity for CAR-T in the BCMA space, it's become even more competitive and so we're working through how we compete in that context. I think what's really important for us now is to expand our site footprint, make sure physicians understand the best way to sequence bispecific versus CAR-T, and also making sure that the fundamental profile of Abecma, vis-a-vis the other CAR-T, is really well understood, especially when you think about differences in trial design and how sort of correcting for those might impact how people think about what this drug could be. So those are the things we'll be focused on moving forward.

Understood. I know we're out of time. But Tim, as always, I really do enjoy talking to you. I really appreciate it. Thank you for joining us as well.

My pleasure.