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

All right. Good morning on a Friday. Happy Friday. My name is Mohit Bansal. I'm one of the biotech and pharma analysts here at Wells Fargo. I'm joined by my colleague, Cerena Chen, She wrote all the questions, so she might as well ask them. And we both are very happy to have with us Adam Lenkowsky, Bristol's Chief Commercialization Officer, perfect timing for us. Thank you very much for joining us today.

Thanks for having me here, Mohit, and Cerena.

So why don't we start with opening remarks, what the company is up to right now? And what are you excited about?

Happy to do that, I think it would be helpful to frame the conversation. So as you know, we're coming off a strong second quarter. We've got good momentum in our growth portfolio, particularly with products such as Breyanzi, Reblozyl, Opdualag and Camzyos. And so we feel very good about the momentum that we have there. We expect to see growth in the second half of the year that's consistent with what we delivered in the first half of the year. When we look at Q3, and if you remember, in Q2, we talked about $150 million inventory build. And so we talked about that burning in Q3. So Q2, we saw the build. Q3, we see a bit of a burn. So that's largely impacting products like Opdivo and to a lesser extent, products like Camzyos and Zeposia. But overall, the growth of the portfolio, we continue to see really good momentum. We also are making good progress on the pipeline and the regulatory front. As you probably know, we are 20 days away from our PDUFA date with KarXT, September 26 is the PDUFA, the opportunity to bring the first new mechanism to schizophrenia patients in multiple decades. And at the end of the year, we have a PDUFA date, at the end of December, for the nivolumab subcutaneous formulation. We have a number of key data readouts that are coming over the next few months. Next week at ESMO, we'll have our lung data for Opdualag, and we have a host of data readouts as we enter into this catalyst-rich period over the next, call it, 24 months. So again, taken together, we are making very good progress against commercial execution, our pipeline and delivering against our strategy which is really long-term, sustainable growth in the back end of the decade and beyond.

Great. So, I mean, you have your hands full right now with the launches and all. Cerena has done a lot of work on Karuna side or KarXT side, so I'll let her all those questions there. So Cerena, why don't you go ahead?

Yes. So let's start with the launch that everyone is looking forward to. Can you walk us through some of the puts and takes going into this market and just how we should think about uptake?

Yes. So for KarXT, as I said, this is the first new mechanism coming into this barren market in perhaps 70 years. And as you know, it brings a profile that has truly unrivaled efficacy, efficacy that is at least at par if not greater than Zyprexa, without the baggage of side effects that have plagued the D2s, which are now mostly generic, things like weight gain and akathisia, EPS and prolactin. So this is going to fill a significant unmet need for patients. So we're very excited about bringing this to market. In terms of how we're thinking about it, number one, the teams have been launch ready for some time. They've been out in the field, talking to thought leaders. We've been talking to payers, and we have gotten a lot of positive feedback on this really innovative profile. As far as how we would think about the launch. As the PDUFA is coming September 26, essentially, we see this as a '25 launch. Because we'll have product in the channel in the middle of October, and then we'll have sampling going on, we'll give about a month away for titration kit for patients, and that's why we see this really essentially as '25 launch. A key gating factor for KarXT is going to be access. And we talked about how this access environment looks very different than many other drugs that we have launched previously, because this is largely Medicare and Medicaid or 80% of the patients fall into Medicare and Medicaid. Medicare is a protected class. Medicaid, you look at state by state. So we would expect to have roughly 80% access by the first half of the year next year. And so we see the second half of next year really as the ramp for KarXT moving into 2026. But ultimately, we see this as a multibillion-dollar opportunity as we continue to add new indications to this product such as potentially a jump to schizophrenia, Alzheimer's psychosis, Alzheimer's agitation, bipolar, we announced an autism study and as well as Alzheimer's cognition. So we're very excited about the long-term potential of this novel product.

And in terms of the patient profile in which it will be used, we would expect the label to reflect the clinical trials, which were monotherapy, but as like Karuna in the past and in speaking with KOLs, they've described a lot of adjunctive use of drugs, even off-label. In terms of like the feedback that you've heard from doctors, do you guys have any kind of expectation on like how much monotherapy versus adjunctive utilization there will be?

Yes. So just taking a step back and thinking about this market, this market is a switch market. And so 80% of the patients have already seen 1 or 2+ lines of therapy. The switching is pretty rapid due to kind of what we've seen with subpar efficacy for products and these unwanted side effects. So patients on olanzapine could gain 30, 40 pounds. And you can imagine patients just moving quickly off of that. So that's number one, we'd expect to see use for KarXT after generic Zyprexa, generic Risperdal or generic ABILIFY, for example. As far as the adjunctive use, there's about 20% to 30% of adjunctive use in this marketplace that's all off-label. They're using D2s on top of D2s, which mechanistically don't make sense. And so we have the ARISE study that we'll read out next year. I would expect to see some non-promoted sales in adjunctive treatment next year. We will be promoting on label, of course, which is our monotherapy indication, that's going to be foundational. And then as we see that data read out, we would expect to see more and more use in the adjunctive setting, coupled with making the monotherapy indication foundational in the treatment of schizophrenia.

Got it. And then by and large, doctors are really excited to have a new mechanism. They do raise concerns about tolerability issues, especially the higher rate of GI adverse events with their patient population? Are there specific things that the sales force is doing to help doctors get more comfortable around that?

I think when you bring a new mechanism into any market, but particularly this one, which has had nothing for many, many decades, it is important to ensure that patients and physicians have a positive first experience. And when you think about the profile of KarXT and what's important to physicians, #1 is efficacy. Efficacy is so critical because that is the unmet need. And it's one of the reasons why you see this rapid switching from one D2 to another D2. The second area really is around that safety profile I was describing; whether it's EPS movement disorders, tardive dyskinesia, diabetes, akathisia. That's another major reason for patients switching. But yes, we are going to have to manage in this new launch to set the appropriate expectations for patients and physicians. How do you manage the GI tolerability, adverse events that come with generally any psychotropic medication. And so when you look at whether it's the nausea or the kind of the vomiting that comes through, these are manageable side effects. In fact, when you look at what we see in our emerging studies, it's actually less than what you see with SSRIs and SNRIs, which are some of the most widely prescribed products in the world. And so we want to make sure that patients and physicians understand how to dose the product to mitigate some of the side effects. The adage of psychiatrists generally is start low and go slow, and that's one thing that they can do to mitigate it. We also know that physicians can utilize antiemetics. They can use products like Zofran to minimize some of the nausea and vomiting, help there. And then finally, when you look at our clinical trials, we had less than 5% discontinuation rate. And I think that largely speaks to the efficacy that we're seeing, but also the kind of the transient nature of the GI tolerability challenges that are there.

Great. In terms of -- so let's just move on to SOTYKTU. It seems like you've grown the paid scripts by a lot if I look at IQVIA as well. But it has not reflected in the sales growth there, just yet. So are there any dynamics that we need to be paying attention to? Are there pricing dynamics there? And it seems like you still think it is a big product. So just talk us through the -- walk us through the puts and takes there.

Yes. So with SOTYKTU, as I shared on the earnings call, we are not where we had hoped to be, particularly the turn as it speaks to access and reimbursement. So we came into the year at roughly 25% access, unrestricted access. As we move to July, we're now at 65%, and I fully expect come January 1, we will significantly improve the level of access for SOTYKTU. That has been a real significant barrier to prescribing the product. And we also have seen many, many patients drop off because they go directly to the specialty pharmacy. Most physicians prescribe the product. They go to the spec farm. They try to get the product filled. If you're not covered, they switch it to another product. And that has been a real challenge for SOTYKTU. So once we move into next year, we'll be in a much, much better place, like largely in parity with products like Otezla, and SKYRIZI and TREMFYA. That's the first. But with that comes a cost, right, Mohit? So we are paying incremental rebates in order to secure unrestricted access. And that's one of the reasons why you're not seeing that translating into the sales. So as we're moving patients off of bridge, you'll see an increase in paid prescriptions. As the volume increases, you'll see that start to overcompensate for the rebates that were necessary in order to gain access. And as you alluded to, we do have an important data readout coming this year in PSA. And so there's about 20% or 30% of patients who show up in a dermatology office with comorbid PSO and PSA. We're not getting any of those prescriptions because we don't have the data to substantiate nor do we have an indication. So that will help as we see that data read out. We'll have a 5-year long-term safety data coming early next year as well. So that will be another catalyst to help improve. And in the longer term, we will have readouts in SLE and Sjogren's, so we still are optimistic about the growth opportunity for SOTYKTU and our goal of becoming the oral standard of care in this market remains unchanged.

Got it. Super helpful. So moving to a product where you are doing well, Breyanzi. So now that supply is not an issue. So how should we think about this year, rest of the year? And long term, and I think your competitor, Gilead is trying to go into community setting as well. So like how do you think about this market share pick up?

Yes. So let me decouple some of that. We're very pleased with what we saw with Breyanzi in the second quarter, and we expect that to continue through the remainder of the year and into next year. There are a number of things that have catalyzed the product. As we said coming into the year that we would become capacity unconstrained in Q2. And that's what has happened. Our global product supply team has done a really nice job in enabling us to have a really good supply position now, and that's first format that helped that. Number 2 is we've had 3 new indications this year for Breyanzi. The first was the end of Q1 in third line CLL. And then in Q2, we had 2 new indications in follicular lymphoma and mantle cell lymphoma. We've seen strong commercial execution. And by and large, the majority of physicians are now seeing Breyanzi as the best-in-class CD19-directed CAR T. So that's a positive. We're also now looking to expand our footprint, as you said, Mohit, both into different countries, outside of the United States, also help accelerate growth. We're in countries like Japan and Germany and a host of other countries, but we will expand the footprint more broadly over the next year and into the following years. And then finally, our focus is to continue to move this product out into the community. And unlike some of our competitors, because of the safety profile of this product, we're seeing a lot of interest from these large community practices who want to utilize CAR T in their practice in the outpatient setting. And so we would expect to see that grow in the back end of this year and over time. And so we're very confident in continuing to grow this important and best-in-class cell therapy agent.

All right. And working our way through the growth portfolio. So starting with Camzyos, this looks like that really started to pick up in 2Q. I was wondering if you could talk about maybe some of the initial challenges that you saw in the marketplace and how you've been able to overcome that and what you think that means for the momentum perhaps through the rest of this year?

Yes. So when we launched Camzyos, remember, this is the first new product ever approved, cardiac myosin inhibitor, to actually treat the disease of obstructive hypertrophic cardiomyopathy. It came with a REMS program, which unlike Oncology, it's fairly new to the Cardiology community. And so we had to educate around the REMS program, educate physicians in these centers of excellence around the echo requirements, and it took some time for these centers of excellence to organize in how to best operationalize their institutions to manage Camzyos. That was about a quarter or 2. And what we've seen so far that we have 150 to 200 centers of excellence in the United States. Virtually, all of them now have written Camzyos. And what we've seen is steady and consistent growth really since then. You see that in the uptake curve. We have shared how that curve compares to some of the most successfully launched products, products like Entresto and Plavix in the cardiovascular space and Camzyos is very consistent with those uptake curves. And so we continue to add new patients on quarter after quarter. So we would continue to expect steady and consistent growth for this product. And these patients are going to be on therapy for many, many years. In fact, we just came back from ESC presenting our 3.5-year data, which was very consistent from a safety and efficacy standpoint. And then we also saw that 2/3 of patients who were on Camzyos moved from NYHA Class II, III to NYHA Class I, which means they couldn't get off their couch, they couldn't go to work, they couldn't walk their dogs and now they're just like you and me. They're out there. They're going to work. So we're hearing just incredible successes from physicians. We have a data readout next year coming for the non-obstructive HCM, which is about 25% of the market. So that's that. If that's positive, that will also help catalyze growth there. And we've now unleashed our retail team, that's the Eliquis team against the community cardiologists. And so we would expect them to start adopting and using Camzyos over the coming year or 2 years, getting more comfortable with the profile, how to manage, how to operationalize similar to what we went through with the centers of excellence. So we would expect continued growth for this important product.

Got it. And in terms of any gating factors currently, would you say the more challenging aspects are still guiding doctors through the REMS program or helping them identify patients or anything else?

I think the biggest gating factor for Camzyos has really been after the first 2 quarters or so of launch, where we were helping doctors kind of get comfortable with the REMS program and the echo requirements, really has been just if you're a patient, you're going into these centers of excellence, whether it be UPenn, for example, or Cleveland Clinic, you may see -- a doctor may see one of these patients once or twice a year. And they're showing up at their community cardiology office and lot of times, they're traveling to the centers of excellence. That's why, we're really deploying the community team out to cardiology offices to help get them more comfortable and [indiscernible] comfortable in prescribing the product versus referring patients out to the centers of excellence. It's really that's the gating factor, and we've largely mitigated the challenges operationally with the REMs.

Great. So maybe let's just talk -- so again, your potential competitor for Camzyos also showed some data at ESC as well. How do you see that as a challenge in the market place?

We have talked to literally hundreds of thought leaders after the data was initially presented at [indiscernible] in Portugal. And then again, just last week at ESC in London. And the feedback has been very consistent, that what they are seeing is what they would expect to see from cardiac myosin inhibitor. And they don't see any real differences between the 2 products. And I think we now have long-term data demonstrate that we have thousands of patients now with real-world data that we've been able to share. So the differentiation of 2 products is minimal, if any differentiation. I think we feel very good about our position in the marketplace having this head start, feel good about the leading cardiovascular sales force that we have that has been able to deliver strong results for Camzyos and of course, for Eliquis. And I think we're going to have to see what the label looks like for [indiscernible] because their dosing, as you know, is every 2 weeks, which becomes much more challenging for these large centers of excellence. They've set up their operations to accommodate a 4-week regimen, every 4 weeks for Camzyos, and to come in every 2 weeks could be a challenge for them. But obviously, what the label looks like and at the end of the day, we feel very good about where we are and our position with Camzyos and the long-term growth potential of this asset.

Got it. I mean I want to touch upon Part D redesign as well. I mean you had talked about the impact being largely neutral across the entire portfolio. I think Eliquis is probably the big portion of that. So -- can you walk us through, I mean, why -- because there are some other companies which have come out and said that there has been bigger impact. So why you are not expecting that to be a bit?

Yes. As it relates to Part D redesign, as we know, that starts in January of 2025. And so what you see today is the majority of Eliquis patients, who are Medicare patients, and that's about 60% of the Eliquis mix. They move into the donut hole where industry is responsible for paying 70% when patients are in that coverage gap. Next year, the coverage gap goes away. And so that is a significant favorability for a product like Eliquis, and we expect to see that next year. Now offsetting that, though, our products like Revlimid and Pomalyst. Revlimid will decline next year just because we'll see increased generics coming in the market. But the reason for the offset is that we would now see about 20% responsibility for manufacturers in the catastrophic phase, so that will increase our contribution there. I think net-net, it will be more favorable than neutral because of the opportunity and the size of Eliquis, but that will be offset by products like Revlimid and Pomalyst next year.

Got it. Got it. That makes sense. I mean, I'm amazed that we have no IRA question. So it turned out to be more manageable. I mean, if I were to ask you in one word for the IRA.

I think what we have said before the price was made public, and we still believe this. Number one, that IRA, just in general, is bad public policy. It is not good for patients. It is not good pharmaceutical innovation. And now going through this for the first time as a pioneer, I can say that definitively. I don't think that this is a true negotiation and kind of the unconstitutionality that we're challenging, we continue to believe that's the case. That said, when you look at the Eliquis' negotiated price, as Chris has shared, we have said before, and we have now shared what we are projecting Eliquis to deliver in '26 and '27 and largely on the conservative side. Hopefully, you now see that this is manageable around the MFP price for Eliquis. We're going to have to manage dynamics around that. But at the end of the day, we have clearly taken the bare case off the table and we will be able to manage the impact of IRA for Eliquis through LOE.

Got it. And then in terms of the base business with Opdivo, I wanted to get a sense of how you are thinking about the long-term tale of this franchise, especially with the subcu formulation coming on board soon.

Yes. So maybe I'll start in the short term, and then I'll go to the longer term. So number one, as we said, we expect to see mid-single-digit growth this year for Opdivo. IO, in general are the catalysts for [indiscernible] IO growth, Opdivo growth are new indications. And so, we look forward to our 77T indication at the fourth quarter of this year. We have a host of new indications coming next year in CRC, in HCC with technique 90W as well as in first-line CHL. That will really continue to drive growth for Opdivo. Our focus next year largely is going to be around converting patients from the IV to the subcu. And as we said before, I've said this, that we believe that we can convert at least 30% to 40% of that business from IV to subcu, and we have time to do it. That's the good news, because we won't see LOE until the very end of 2028. And by doing that, looking at the subcu, we believe that we have an opportunity to sustain our IO franchise with Opdivo subcu as well as Opdualag well into the 2030s. So again, it's important for us to maintain that business, which is today about a $10 billion business, and opportunities to continue to drive and grow our business with Opdualag. We expect IO to continue to be a meaningful contributor to sales in the 2030s.

And as part of that 30% to 40% conversion, is there any kind of pricing strategy to drive that? Is that baked in?

Well, I think it's premature to talk about the pricing strategy there. But we will make sure that both physicians and patients can get access to this important new formulation. This formulation is really important. Because for patients, it's a 5-minute in-office subcutaneous injection. And for physicians, the advantage there is it allows them to free up chair time to put other patients in and doesn't change their practice economics. So ultimately, it's a benefit, win-win for patients and for physicians.

I mean [indiscernible] I think about '25, obviously, KarXT launch is important. But when you move into '26, you have a few important catalysts out there, right? I mean you have the investment data reading out, your CEL MoD is reading out. So as a commercial organization leader at Bristol, what are you looking forward to? What is most excited about -- which one is more excited -- and yes, [indiscernible]?

It's sometimes like picking your favorite child, Mohit. But I think, as I said, we're entering into a real data catalyst-rich period starting as I talked about some of the readouts at the end of this year, KarXT being really important for us, and we should see data readouts for KarXT in Alzheimer's psychosis in 2026, which could be a significant contributor of growth. Milvexian is very exciting -- we see that data readout in 2026. LPA1 is an area of really high unmet need. We'll see that data read out as well during the time frame. So very exciting opportunities for growth. You mentioned the CEL MoDs, I think, also bringing a novel mechanism into treat patients with multiple myeloma. GPRC5D could read out around that time as well. We think we've got a best-in-class GPRC5D that will be used in a post-BCMA setting. So adding to our already robust cell therapy franchise. And keep an eye out for NEX-T CD19, which we're really excited about bringing that cell therapy into autoimmune diseases, and we're looking to see real durable responses in areas like lupus, like myositis, like multiple sclerosis. And so great opportunities with these new mechanisms to help so many more patients.

Got it. So I mean, the one question I have is that, I mean, I know Chris actually used the analogy last -- earlier this year. The plane is landing at LaGuardia Airport is never taking off kind of thing, right? So he's talked about people are modeling the decline, but they are not modeling the growth after that. So I mean if you have to think about a few products which could actually facilitate that growth after the LOE period, which ones would that be?

Yes. Well, our focus as a company is clearly delivering long-term sustainable growth in the back end of the decade and beyond. And so I talked about just in the near term, some of those catalysts are baked into our already approved growth portfolio. So I talked about the Breyanzi life cycle management, Camzyos' non-obstructive HCM, SOTYKTU life cycle management in lupus, for example. Those are areas that we see really strong growth. Myelofibrosis, for example, in [indiscernible]. So that's kind of in the current portfolio. You just talked about some real opportunity for growth with KarXT, which could be very significant product as we look at areas of the highest unmet need in Alzheimer's psychosis, agitation, bipolar disorder, autism, Alzheimer's cognition. This could be one of the largest products potentially in the Bristol-Myers Squibb portfolio. Milvexine, we're incredibly excited about. We're now the only -- could be the only player in atrial fibrillation. But I remember the days of Plavix very well. So the opportunity in ACS and FSP can also be significant. And then I do think that areas like autoimmune disease, particularly with products like NEX-T CD19 could be considered a moon chart for the company. And I think, those are some of the catalysts that we see that perhaps are underappreciated externally that we believe will drive this long-term growth in the back end of the decade, and feel very good about the portfolio that we have, the pipeline that we have, and in my over 2 decades with the company, is by far the best pipeline that I've seen in the company.

Great. So one last question I ask every company. Fast forward 1 year, I really hope you are here as well. Like I hope you show here again -- that is the message for Tim, by the way.

No, it's a message for Chris.

Okay. But what would make you look back at the year and say it was a good year for us?

I think we're having a good year. What I do, I think Chris has brought to the organization, internally and externally, we call it the say-to-do ratio. And prior to this, I think we probably lost some external confidence because we were saying we're going to do, and we didn't deliver on what we said we were going to do. And this year, what did we say we were going to do? I said we were going to accelerate the growth portfolio, and we're doing that. You saw that in Q2. As I said, we expect to see similar growth in the back end of the year. Our say-to-do ratio around our pipeline. We are rapidly bringing forward pipeline. We have a critically important PDUFAs coming in KarXT and subcu [indiscernible], and we were likely going to deliver that over the course of really the next quarter. So that's say-to-do. We're looking at what we said at the beginning of the year, what we expected to see growth in 2024, and we're delivering against those expectations, both internally and externally. So again, the year is not over, and I remind my team that on a daily basis. But I think taken together this year has been a strong year for Bristol-Myers Squibb that sets us up for good momentum in the future and we are making very good progress against the company's strategy.

On that high note, thank you very much for joining us.

Thank you, Mohit. Thank you so much.

Thank you.