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

On to the next fireside chat. And again, thanks, everyone, for your attendance. Really do appreciate it. I know the firm appreciates it as well. We have the pleasure of hosting Bristol and its CFO, David Elkins. David, thanks so much for joining us. Why don't I hand it to you for some brief introductory remarks, and then we'll get started with one-on-one questions.

Yes. Great. So thank you all for having me here today. Look, this year is all about execution for our business, and I think we started off -- had 2 really good quarters and really seeing the transformation of the company, our growth portfolio which is really the future of the company and our legacy portfolio, which is an important cash generator for the business. Last quarter, our growth portfolio grew 20% constant currency, which now is representing close to 50% of the company. So you're really seeing what the future of the company is going to look like post our LOEs and we made some really important progress on a couple of other pipeline events. As you may know, with the acquisition of Karuna, we got the approval of Cobenfy, which we're really excited about and the feedback we're getting in the field on the excitement around this product and physicians trialing it and get it into the hands of physicians, off to a really great start there. A couple of other things I would highlight as well. We have another PDUFA date coming up, important one for us in December this year, which is subcutaneous, Opdivo, which we're really excited about getting that product out in the marketplace, and it's going to be something that's really going to help physicians free up infusion chairs and lower the overall cost of health care because as we know, those spaces and the amount of time that takes patients to go through those treatments is quite long and be able to get a simpler subcutaneous injection get out on with their life is going to be really important for patients battling cancer. The other thing I would say is, as I think about the performance of the company and execution, we really saw across our growth portfolio, strong growth. If you think about particularly Camzyos, which is our cardiovascular drug for obstructive HCM, doubling versus last year. If you think about Breyanzi, which is our cell therapy in large B-cell lymphoma, but as well as we had indications in follicular lymphoma and CLL and SSL (sic) [ SLL ], also very strong growth, close to doubling versus last year, now that we're unconstrained. And then Reblozyl, which is first-line MDS, also doubling versus last year in the most recent quarter. So we've got multiple brands now that are really showing the promise of the potential that they can be. And then you throw Cobenfy on top of that. We have some really good clinical data that's going to be coming out on Cobenfy. If you think about Cobenfy, it's-- we see it as a multibillion dollar product that has multiple indications that have come up. So between now and the end of the decade, every single year, we're going to have Phase III data coming out on important indications like it's approved for schizophrenia, but we got adjuvant schizophrenia coming out next year. After that, we have our first Alzheimer's disease indication Phase III readout that is also coming in 2026. And then after that, following year, we got Alzheimer's disease agitation. If you really think about Alzheimer's disease and the potential here, schizophrenia has got 1.6 million treated patients in the U.S. Alzheimer's disease is 6 million patients in the U.S., and there's really not many treatment options for these types of patients. So you're really filling the momentum, not only the existing launch products, but other products that are coming on. And I'm sure you have questions about milvexian, which we had some recent announcements about that, where we're expanding the patient population on that. But we get important Phase III studies coming out in ACS as well as secondary stroke prevention in '26 and AFib in '27. So where we are is we remain focused on driving growth. Hopefully, that comes through most of my conversation here. But also on the clinical pipeline, you can see we've got a lot of Phase III programs that are going to be adding to that growth portfolio over the next couple of years. And then lastly, we've been doing a lot on driving efficiencies and effectiveness in the business. We launched our savings initiative about a $1.5 billion savings initiative at the beginning of this year. Most of that will be achieved by the end of this year, but the full $1.5 billion will be achieved next year. And what we've been able to do is the deals that we've done late last year, like Mirati raised by radioligand, which we can talk about that as an important growth driver for the company. And then Karuna, building out the clinical program there, we're able to reinvest in those programs, increase the ROI profile of our portfolio overall, but also increase the growth profile of the company towards the end of the decade and as we go into the next decade. So a few things going on right now.

Yes, absolutely. And I want to touch on the pipeline in milvexian and Cobenfy, but you are the CFO, so I want to hit you on -- I feel like it's almost an overdone question about where is the trough EPS and blah, blah, blah. But I feel like when I talk to your team, I feel like Chris, as he's become CEO, the priority for the team is first the signal-to-noise ratio needs to improve. Credibility needs -- is paramount of importance. And when I look at the pipeline readouts you're going to have in 2026 and beyond, I feel like time is going to answer that question anyway, right? It's not -- like what's the urgency for you guys 3, 4, 5 years out to say when the trough EPS is. It's going to be evident because you're going to have pipeline success and you're going to have visibility on your launches. So I'm sure you get this question all the time. Is there urgency on your end to call your shot on trough EPS? Or is the point look at what we're actually doing from a business development perspective, look at what we're doing from a pipeline perspective, that's going to answer the question for you automatically.

Yes. It really comes down to what we're going to be judged upon is not what we say we're going to do, but what have we actually done? And that's what we're focused on. That say-to-do ratio of, if we say we're going to do it, let's do it. And I think the last 2 quarters, you guys have probably hopefully have seen that, that's what we're really focused on. It's really executing in the near term both on the growth portfolio, but as well as executing on the pipeline. And I think we've had a tremendous track record of success of getting Phase III products approved, based upon that. And we had a lot of Phase III programs, as I said, they're going to be reading out, which I can go through both this year as well as next year and into '26. So there's a lot of derisking events that are really coming for the company in the next 18 to 24 months. So we're focused on making sure that they go as well. Some of those programs feel really good about that actually some of the enrollments are accelerating. So we'll see how that plays out here. But to your point on any kind of trough guidance, it's us performing with the growth portfolio, and that continues to deliver quarter-on-quarter. We had 2 really strong quarters, but we've got to continue to deliver throughout 2025, I think all of you are going to be looking to us, what do we deliver with Cobenfy and how that, that does in its first year. We're very much focused on that launch as well, which will go into the growth portfolio. And then I think the data readouts are all going to be derisking events and you guys model our portfolio and the pipeline, the same we do, you risk adjust that until you get the data readouts. But we got a lot of data readouts. Like just this year, you saw we had ACR this weekend. We had -- even though it's very early, but CD19 in immunosuppressive diseases, this is an opportunity to really reset these like lupus diseases where your patients are having organ failure. And we talk a bit about that, but we have cirrhotic arthritis for Sotyktu coming out this year. We got the approval of Opdivo subcutaneous happening in December. And as we think about next year, we've got important indications that we'll get non-obstructive HCM for Camzyos. We also have the approval of first-line myelofibrosis for Reblozyl, which is an important continued growth driver for Reblozyl. And then I've even talked about iber and mezigdomide, which are the protein degradations that are in multiple myeloma that could be the next follow-on Revlimid and Pomalyst products that we've those Phase III readouts coming in '26 as well. So -- and then lastly, I'll say one more because we do have a lot of good programs coming, LPA1 in pulmonary fibrosis. So we can talk about that as well, but we have IPF and PPF, but the first of those Phase III programs is in '26. So when you take the entire growth portfolio and then you take those additional 6 products plus these additional indications, you're really going to see, by the time you're in that '26 time period, what the longer-term growth profile of the company is.

Understood. Quickly just on BD, you've done almost $30 billion of business development over the last few years. So it's not like Bristol hasn't been active on that front. But it's -- now I think -- I feel like you're almost in a period where you need to consolidate the acquisitions you've had. Where is the BD strategy in the near term? And is there a leverage target? Is that maybe paying down that $10 billion in debt by '26, where you can start becoming a bit more aggressive from the BD front on a go-forward basis?

Great question. So look, on BD, we did do a significant number of programs. But if you look at where we do business development, we're focused. We do business development in the therapeutic areas where we have sales and marketing capabilities, where we have drug development capabilities and scientific expertise. So going all the way back to MyoKardia, that was Camzyos, that was in cardiovascular. We had high level of conviction on that product. We were able to move very quickly to bring that product in. We are able to drop that rate into the Eliquis sales force and just reallocate the resources over to Camzyos. We got that product approved quickly, and we moved quickly to continue to non-obstructive HCM, which is going to add another 20% to 30% of the patient population to that, which gives you more long term. But then also think about the other programs that we did like RayzeBio. We're really excited about the opportunity of radioligand. We haven't spent a lot of time talking about that, but we'll probably be 1 of 3 companies that are in there. We think about this as a massive opportunity. Chemotherapy is a $50 billion market in the U.S. and being able to be one of the leading players in this, which is a very complex manufacturing environment, but you're able to go after very difficult tumor types. So we stay very much focused in those therapeutic areas that we know. And then obviously, Karuna is a new area that we're reentering, but there's a high unmet need. We had conviction in the science on this asset. We looked at many assets before making the decision to go into Karuna. And what we said at the beginning of this year is we need to fully fund these programs, and that's why we put our savings initiatives in place to build out the clinical programs and invest the needs because we're focused on the long-term health of this company, the long-term growth trajectory of this company. What we also said this year is about execution. Let's execute on these deals, let's get them integrated. They are now integrated into the organization. And then let's also focus on Cobenfy's launch because we know everybody's watching whether or not we do well and make the most of Cobenfy, so we don't want the organization to be distracted. So we're paying down the debt. We made that commitment about $10 billion of debt to strengthen the balance sheet over this period, focus on the integration. You should expect us to do more smaller bolt-on acquisitions and collaborations. But then as we get through integrating these, that will give us the opportunity to pivot to other acquisitions.

Understood. And just maybe lastly on BD. I remember your team -- when your team was at our New York conference, you explicitly said we could really use a neuro product to kind of amplify our commercial. We have this sales force. We have the scale. We don't have the product and then lo and behold, the Karuna acquisition happened. When you think about your business units and where you think, hey, I could really use a new pipeline asset. Is it solid tumors? Like where do you feel like you can really reload with a new asset?

Yes. I mean again, we stay focused on the therapeutic areas that we're in. So I think we all believe in this room that there's still a lot of opportunity in unmet medical need in solid tumor oncology. And that's an area that we're going to continue. Systimmune was a great example of that, where we did that, radiopharmaceuticals was with RayzeBio was another example of that. Look, we believe in cardiovascular with milvexian, continue to progress that one, and follow on with milvexian after Camzyos. So we feel really good about where we are with cardiovascular franchise. Neuro, look, there's so much opportunity with Cobenfy. If you think through not just from adjunctive going into Alzheimer's disease, psychosis and going into agitation, but also cognition. There's really nothing out there in cognition. And we've already announced that we're going to go into bipolar as well as autism. We're going to start studies there as well, so that's a lot of substrate. And for Cobenfy, we see each one of those indications could be multibillion-dollar, indications in and of themselves. So we had a lot to build out and deliver. We have plenty -- what I want to leave you with is we've got plenty of substrate with both our growth portfolio but as well as with the pipeline that's coming through over the next 18 to 24 months, we're just going to complement that with business development on top of that. But you should look to us to do what we've historically done, which is to focus in the therapeutic areas that we're currently in. As I said, we start the conversation, where is the unmet medical need? What's the most interesting science to address that unmet medical need? And then where do we have the capabilities, both from a sales and marketing, but as well as from a research and development perspective as well as manufacturing to bring those to market because that's where we add value over and above the biotech company.

Understood. You talked about Cobenfy and obviously, I mean, we track the launch, nice Friday scripts. Look, emraclidine, obviously surprising failure. I think I don't even think your team necessarily expected that as a base case. How does that change, a, your urgency of pipeline expansion? I mean you -- I noticed how much your team talks about Alzheimer's psychosis. What does that do in terms of your probability of success, but also the urgency of pipeline expansion? But then number two, from a payer discussion, you're not going to have theoretically any competition in this class, a novel MOA for potentially years on end. How does that change your urgency for launch uptake year 1, year 2 out of the gate? Has that shifted the balance of what you're going to be willing to spend now given that you have less competition?

Yes. Good question. A couple of things I'd say is, first, you never want to see a Phase III study like this fail because there's a lot of patients that are out there. So that's number one. Number two, what it does do is it does change how you think about where you're spending your time and your energy. And clearly, look, this is an important class of medicines. There's a lot of unmet need. 70% of patients cycle through multiple medicines in a year. So there's a lot of switching that goes on. And then this is with the safety profile of Cobenfy, no black box warning. We really see this as a huge opportunity for patients to be put on a new mechanism of action, which both goes for the M1 but as well as the M4. And that's why we think it can work not only in with psychosis, but also it can work in Alzheimer's disease. The trade-offs that you really make when you do this is one is it's a new class of medicine. So how much time do you spend promoting on expanding the class and increasing awareness versus a competitor product out there that's detailing against you. So the opportunity here is, on the one side, you would have 2 companies out there increasing awareness about new mechanisms of action and getting to grow that class versus the generic class. But now you're in a position where, like you said, we can really focus on the clinical profile of this product. We can really focus our time and energy on every new indication that comes. So that's a huge opportunity for us versus defending older indications. So that's where you see incremental potential that you can focus your sales and marketing activities on that.

Understood. I want to -- ACR was there, you had your CD19 data. I -- the way that we kind of look at it, how different any of these CD19 programs are really going to be is not necessarily the clinical profile, right? All of them show tertiary lymphoid cells getting depleted, the spleen gets depleted. I feel like what's maybe underappreciated with Bristol is you've made a lot of advancements on your manufacturing profitability, scale, and that's probably what doesn't get discussed enough. So when do you think about, a, with your next CD19 program, clinical profile, what would you call out with your lupus data that stands out as differentiated, but then b, from a manufacturing and scale perspective, to actually supply this and deliver it to payers in a way that makes sense financially, what are the inherent advantages that Bristol really has?

Yes. That's a good question. Look, there's a couple of things. We cannot be more excited about CD19 [ XT ] and the opportunity that we have to really reset the immune system for people suffering with lupus disease. And look, these patients are -- as you learn more about the disease, these are patients that are going into organ failure. This is the most serious disease that you can possibly have. The excitement around CD19, we know the construct well, we have Breyanzi that's out there. The safety profile of this because that's one of the other big things, particularly going in to dealing with these markets versus hematological diseases where people are dying. Safety profile is really important. We believe not only do we have one of the safest constructs, but the efficacy, as we were talking about, is very strong. And what we saw with these 15 patients is complete malignant B-cell depletion in both blood and tissue. And that's truly remarkable to see that. So look 15 patients. We don't want to get ahead of ourselves. We got to see, but it looks very promising. I think we're at the forefront. We're really excited to bring this as quickly as we can to registrational studies in multiple indications right away. So going after and being really efficient, freeing up resources, we want to do everything we can to bring this in as many indications as we can as quickly as possible. So you'll hear more about that next year. But also thinking about it, and thank you for raising the point about where we are. I mean we spent years figuring out the manufacturing. You may recall there is vector constraints. We fixed those vector constraints. We've bought a vector manufacturing. So we have that in-house. We're now in the process of automating many of our manufacturing processes which is important. This is a much larger patient population, but also improve the cycle times, which also gives you even more capacity. But also the success rate of what's going through is also improved dramatically. So if you think about us, we probably are one of the best companies position not only from having a great construct with the CD19 where it has a lot of similarities with Breyanzi, the safety profile of the product, but the manufacturing capabilities that we have and we really know on the research and development side, look at our track record of getting products approved that are in Phase III is very, very high. We think we're in a really good position, probably one of the best positions to capitalize on this new technology.

Now David, you made a comment at the start that I think stands out, obviously, we cover Merck. On subcu Opdivo and then just the value proposition of a subcutaneous product, I think a lot of people listen to what Merck says. And they said, look, it's going to make sense if you're taking a drug oral and then a subcu PD-1 product, it's going to make sense if you're using this in an adjuvant setting. That's going to be 50%. I think even your team has given like a number of patients who would be in that kind of early stage setting. But that's not necessarily what you're talking about. You're talking about infusion capacity getting reduced on a hospital level. That doesn't seem to be stratifying patients in an adjuvant and early stage or oral setting. That seems like I'm going to use subcu KEYTRUDA across all of the treatment paradigms in which Opdivo is currently approved. Talk to me about that. Is that the right way we should be thinking about it, a hard switch type of strategy?

Look, we're treating like this as a launch, as a major launch. And I just went through about 2 weeks ago, I went through with the brand team, the launch preparations. Our team is ready to go once we get that PDUFA date and the product gets approved. At the end of this year, will really be a 2025 launch. But look, this is something where you're talking about changing medical practices, you're talking about making practices more efficient. You're talking about freeing up practice time. So there's a constraint on the number of infusion chairs. And also think about it, patients by the time they commute, go in, do the infusion, you're talking about hours of time. And then you're also thinking about everything that you have to do and taking care of those patients when they're there in the office versus subcutaneous or for the patient, they just come in, they get their injection, they walk out. Number of man hours that is going to come out of the health care system is going to help bring down the cost of the health care system. So we see a significant opportunity there from that perspective to really focus on the efficiency of the health care system. And I also just think about it from a patient perspective, patient guides so much of what we do. Anybody that knows anyone has to go in for their treatments. This is when you're being reminded of your disease and you're sitting there in a chair for over an hour sometimes, waiting to get infused and then getting infused and then leaving, being able to just go in, get your injection, come out. For the patients themselves, this is a huge benefit for patients. So we're really focused on those areas. And when we talk to physicians and we talk to patient groups, we hear the similar type of feedback. So I think this is really -- we're really excited about it, as you can tell. We're really excited. We are treating this as a major launch. And we got 4 years before Opdivo goes generic in December of '28 to bring those patients over and to really help medical practice.

Understood. Now just on milvexian, it's interesting. The Q3 commentary, there's different ways that you can interpret, hey, we're increasing our enrollment. And I don't think a lot of people -- the Librexia AF design paper actually got published earlier this year, I think one of the things that stood out to our team is, if you look at the event rate assumption and the efficacy that you assume for Eliquis, just like what we saw with Asundexian at ESC. Eliquis is doing better now than it was when the original clinical data came out. You guys are assuming a more modern event rate assumption for Eliquis. So talk to me about why you've been going out of your way to call out your excitement about increasing the enrollment. What do you think the [ Street ] is missing here?

Yes. I mean, look, think about it this way. We assumed a 1.3% event rate. It's coming in lower than that. You got to be excited for patients. I mean it's blinded, so we don't know which arm it's in. But regardless, for the study overall, it's lower. So for these patients, that is a really great sign. And the reason why the [ Bayer ] study was stopped, it was significantly -- the event rate was significantly higher than that. We have a DMC that reviews the events, and they review it at a lower level. So we're really confident. So every day that goes by on milvexian, we continue the studies and enrollment rates are increasing on the AFib study. So that's why we're excited about this, and it gives us increasing confidence that we're headed in the right track on this. And we couldn't be more excited to bring the product to market.

Okay. I'm going to stick in this last question. Please don't kill me. Okay. RFK, we have to put it out there. Obviously, very surprising announcement. I think a lot of people within the health care industry are concerned. But talk to me about how you view this announcement. Where are you concerned about the biggest disruption either with the FDA or how you do day-to-day business? And are you confident that Bristol will be fine through this period of regulatory uncertainty?

This industry is one of the most resilient industries. I've been in this industry for 25 years, and it doesn't matter when it was Clinton talking about health care or we came through and we talked about Obamacare, then came through. There's all every administration. There's going to be a health care factor. The fact of the matter is, it's one of the largest expenditures for any government. What we know and what we do as an industry is we work with both sides, it doesn't matter who's in office. We're going to continue to work to them. I think it's too soon to tell with the Trump administration, what their policies and priorities will be, but we're going to fully engage with them on those. But this is a resilient industry. And I think many of you who have been in this industry for a long time as well know we deal with every administration that comes through. And we got to focus on what we do, which is to bring really innovative medicines that address serious unmet medical needs. And if we continue to do that and help bring down the overall cost of health care by coming out with better therapeutics, that's what we can do in that overall calculus of what health care costs.

Understood. I'm going to let you guys go. Thank you so much. Really appreciate it.

Thank you very much.