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

Good morning, everybody. I'm Chris Schott at JPMorgan, and it's great to see everyone again. It's my pleasure today to be introducing Bristol-Myers who is again kicking off the JPMorgan Healthcare Conference. From the company, we have the company's Chairman and CEO, Chris Boerner. So Chris, happy New Year. Thanks for joining us and looking forward to the presentation.

Thank you, Chris. Good morning, and Happy New Year to everyone. It's great to be kicking off another JPMorgan this year, and I am looking forward to a very good discussion this morning and throughout the day. It has been an action-packed first year for me as CEO of Bristol-Myers Squibb. I am incredibly proud of what we accomplished last year. And today, what I want to do is give you an update on where we are in our journey and the path that we are charting to deliver for patients and for shareholders. So obviously, today, we'll be making some forward-looking statements and here are my disclosures. So let me start by saying that last year at this conference, we laid out a road map for the multiyear journey that we're on to reshape BMS with the overarching goal to deliver sustained top-tier growth and drive long-term shareholder value. We aim, in fact, to be one of the fastest-growing companies in the sector by the end of the decade. And we are now 1 year in, and I think 1 year closer to achieving that objective. And so what I want to do today is I want to give you an update and highlight 3 things in particular. The key in-line products that are going to be important to deliver our growth objectives, the late-stage catalysts that begin to play out this year and over the next 18 to 24 months that will really bring into sharper focus the company that we will be at the end of the decade. And then importantly, what we need to focus on from an execution standpoint to ensure that we continue to navigate the journey ahead. Last year was a busy year. We've made a lot of progress. We feel better today than even just a year ago about the company that we're building, but we have more work to do. So let me start with a look back at 2024. At a macro level, 2024 was a good year on many fronts. We made progress on reshaping the BMS growth profile. We have an exciting portfolio of young products today, and we saw solid performance in our growth portfolio, which is on track to deliver double-digit revenue growth for the year. We also achieved a number of important regulatory milestones, and I would highlight, in particular, the approval of Cobenfy, the first truly novel mechanism for the treatment of schizophrenia in decades and importantly, a new growth driver in our portfolio. And the approval of Opdivo Qvantig just a few weeks ago. This subcutaneous formulation of nivolumab is already available for patients and for physicians and is part of how we intend to extend our IO business into the next decade. We put considerable focus last year on R&D productivity. And as a result, we were able to advance and in some cases, accelerate our late-stage pipeline. We also made meaningful progress last year in evolving the organization and our ways of working, including taking costs out so that we could reinvest into higher-value activities. Taken together, these initiatives put us in a stronger financial position as a company. So on net, I'm pleased with the progress that we've made. We've sharpened our focus. Our execution has improved. And as a result, we're in a stronger position coming into this year. But as I said before, we're on a multiyear journey, and there's more to be done, but I feel good about the progress that we made in 2024. Now coming into this year, our overarching strategic objective remains unchanged. Our goal is to reshape BMS to achieve sustained top-tier growth by the end of the decade. And we're doing that in 3 ways. First, we're focusing on transformational medicines in disease areas where we have a competitive advantage. Second, we're driving operational excellence throughout the organization. And third, we're being smart about how we're allocating capital. And if we execute on these 3 things, we're going to deliver for patients and for shareholders. So let's double-click into each of these. Last year, I mentioned that one of the reasons that I was confident in our ability to navigate the LOE headwinds that we face was the strong position that we have in large, growing and commercially attractive therapeutic areas. Over the last year, we further strengthened that position. And we've done this by focusing our investments in specific areas and categories where we have a competitive advantage. For example, we have strengthened our oncology portfolio through the acquisition of RayzeBio, which gives us access to one of the fastest-growing platforms in solid tumor oncology with radiopharmaceuticals. Similarly, in immunology, we're increasingly targeting treatments that fundamentally reset the immune system, an area where we have a potentially first and best-in-class agent with our CD19 NEX-T program focused on autoimmune disease. We're accelerating an exciting set of mid- to late-stage assets and programs. In fact, as you can see on this slide, we now have at least 40 Phase II and Phase III programs across TAs, most in areas where we have the potential to be first or have the best profile. And of course, we're driving stronger commercial execution to grow our key marketed products again across TAs. Now while we're working to grow all of these products, we're differentially investing in a handful of key growth products that will be particularly important to the company as we get into the back part of the decade. And let me highlight on this slide the 5 first or best-in-class medicines that are particularly important for the company as we get into the back part of this decade. Reblozyl, our first-in-class therapy in MDS-associated anemia, saw very nice growth last year across both RS-negative and RS-positive patients. We have additional opportunities to grow these segments this year. And importantly, we have a line extension opportunity in myelofibrosis-associated anemia with data expected later in the year. Likewise, Camzyos is an important first-in-class therapy for patients with obstructive HCM. We expect to continue to see steady growth in this indication. And here, too, we have the potential to expand this product and in this case, into non-obstructive HCM, again, with data also expected later this year. Our cell therapy, Breyanzi, grew nicely in 2024 and given its best-in-class profile should continue to grow nicely in the near to medium term. Opdualag, which is now the standard of care in first-line melanoma has potential in additional indications and will be a key building block for our IO business into the next decade. And finally, Cobenfy, which is a new addition to the portfolio. So I'm actually going to spend a bit more time on that in a moment. But if you look across the entire growth portfolio, these are the 5 products that are particularly important to pay attention to. So let's talk a little bit more about Cobenfy. Cobenfy was approved last September with a very strong label. And while it's still early days, we're seeing nice pickup with the script data that you can see on the left-hand side of this slide. But at this point in a launch, I think it's even more important to look at what we're hearing from patients and from physicians. And as you can see in the quote at the bottom of this slide, the feedback has been very encouraging. Schizophrenia, as I think many of you know, is an area of very significant unmet need with over 1.5 million patients treated in the U.S. today, and we have a real opportunity with this medicine to transform outcomes for these patients and help change the narrative of this disease. Now what's particularly exciting about Cobenfy is though, is that while we're commercially focused on delivering for this first indication, we have also worked hard to build a very robust pipeline of potential new uses so that we can help even more patients. In fact, as you see here, we have a potential new indication or important new data set readout for Cobenfy every year for the rest of this decade, starting this year. We expect Phase III data in adjunctive schizophrenia coming in the coming months. I'm also pleased to announce that we now expect our ADEPT-2 trial for Cobenfy in Alzheimer's disease psychosis to read out ahead of schedule with top line data now expected in the latter part of this year. We are also starting 3 Phase III studies this year in Alzheimer's agitation, Alzheimer's cognition and bipolar I disorder. And we have a fourth Phase III in autism spectrum disorders beginning in 2026. But that's just Cobenfy. As you can see here, we have a wave of catalysts that we'll be reading out for the company starting this year and throughout the next 18 to 24 months. We have pivotal line extension data reading out for Reblozyl, Camzyos and as I just mentioned, for Cobenfy, with additional LCM opportunities across the portfolio in 2026 and '27. We have key pivotal data for potential registrational opportunities with new assets. And we have next wave assets with data readouts coming, including for CD19 NEX-T for RYZ101 and for golcadomide, as you can see on the right-hand side of the slide. These are important products that will provide the next wave of growth as we get into the back half of the decade and really collectively begin to frame what BMS will look like at the end of this decade. Now given the number of potential new products with data coming in the next couple of years, let me highlight a few products to pay particular attention to. And let me start with our CELMoDs programs. We have been investing in targeted protein degradation for a long time, and we have a clear leadership position today. In fact, we were the pioneers of the first generation of protein degraders with Revlimid and POMALYST. And we're now seeing the fruition of years of development that we've invested in. We have 3 next-generation CELMoDs that we're really excited about in the near-term, iberdomide, mezigdomide and golcadomide. Iber and mezi in multiple myeloma have the potential to replace Revlimid and POMALYST as important backbone therapies. And beyond our current registrational programs with these 2 products, we see potential opportunities for both to be used in novel combinations, including with bispecifics and CAR-T. And this platform continues to generate new medicines. One medicine that garnered considerable attention coming out of last year's ASH, and you'll be hearing more about is golcadomide, which we're studying on top of R-CHOP in frontline large B-cell lymphoma with additional ongoing trials across lymphomas. And of course, this is just 3 of the CELMoDs that we're developing to address important malignancies in a broader portfolio. All of this is to say that we're seeing significant potential with the CELMoD platform, and we're starting to see these data readout coming now. Another area where we have been a leader for a long time is in cardiovascular disease. And we intend to continue this leadership with milvexian. We have 3 parallel Phase III studies running right now, 2 of these studies, we anticipate reading out in 2026 and a third in atrial fibrillation in 2027. In fact, we know we have the potential to be the only oral Factor XIa option in Afib. And I can say when I look across these 3 programs, I'm more confident in this asset today than I was a year ago at JPMorgan. Another promising asset in the pipeline is admilparant. Admilparant is our LPA1 antagonist in Phase III for IPF and PPF. This product has the potential to be the first and best-in-class treatment for pulmonary fibrosis, which is a fatal lung disease with significant unmet need. Supporting the Phase III programs is our extensive Phase II program, which delivered over 60% improvement against placebo in lung function decline in PPF and IPF. We're expecting the Phase III data readouts for IPF in 2026 and a bit later for PPF. Now in addition to these 5 assets, we have a robust portfolio of readouts coming. In fact, when you take the data readouts from these 5 products and you add it to data readouts from other programs that we're anticipating over the next 2-plus years, and we layer that on top of our existing growth portfolio, this is the picture that starts to emerge of what BMS could look like at the end of the decade with several important new medicines and incremental revenue drivers. And I hope you can begin to appreciate the potential growth trajectory that we have in front of us and the number of derisking events that will be playing out in the coming months. Now to deliver on all of these opportunities, we're going to need to continue to stay focused on execution. That's why evolving the organization is so critical, evolve in how we operate to drive greater accountability, say what we're going to do and then consistently deliver on it, streamlining and becoming more agile. And it also means a big focus on driving efficiencies so that we can invest in our growth drivers. And here, again, we're making good progress. We are well on our way to delivering against the $1.5 billion cost savings that we discussed last April so that we can reinvest those resources into higher-value activities. One area where we've made considerable progress has been in the efficiency and productivity of R&D, and that's why I have a high degree of confidence in our ability to deliver on this wave of new opportunities that are coming. And of course, we're increasingly leveraging technology and AI to accelerate our innovation cycle and to increase our probabilities of the success as well as to drive efficiencies and operational excellence across the organization. And those efforts will continue into this year. Taken together, these initiatives have enhanced our financial position as a company. And with respect to what we do with those financial resources, you can expect that we will continue to be strategic and thoughtful about how we're allocating capital. Our capital allocation priorities are very similar to what we discussed last year, investing in the growth portfolio and our most critical pipeline assets. Sourcing innovation remains a top -- externally remains a top priority, whether it's through pursuing business development or partnerships. We also remain committed to a strong balance sheet, and that includes maintaining a strong credit rating and paying down the $10 billion of debt by 2026 as we've committed to. And finally, we will continue to return cash to shareholders through our attractive dividend, something that we have been committed to for a very long time. So let's take a step back and summarize where we are. We are emerging as a very different company than we were just a few years ago. Today, we have an increasingly younger and more diversified portfolio, which we expect to continue to grow. Today, we've shown you that we expect to see a wave of catalysts with data readouts starting this year and over the next 18 to 24 months. In fact, when you look at the data that are coming, we're talking about the potential for 10 or more NMEs and over 30 line extensions in the next 5 years starting this year. We continue to have the ability to enhance value creation through business development and partnerships, all the while maintaining financial flexibility. But as I've said before, we know we're on a multiyear journey. We made good progress in 2024, and I believe that our picture has improved from just a year ago. Most importantly, we remain committed to our overarching goal to reshape BMS to deliver sustained top-tier growth and long-term shareholder value. So with that, I'll turn it back to you, Chris, for Q&A.

Great. Thanks so much. So maybe just to kick off the Q&A. Chris, you've been CEO for a little over a year now. Stock performed well in 2024, but we're still trades at a pretty reasonable discount to peers. What do you think it's going to take for investors to really understand this kind of longer-term profile you're laying out? And how do you kind of see that playing through as we look about how to narrow, I guess, that discount versus the broader sectors valuations?

Well, as I said, I'm very happy with how we performed in 2024. And I think that gives us momentum coming into this year. Obviously, over the last year, I've spent a lot of time talking to investors. And I think there are a few things that investors continue to want to see with us. First, they want to continue to see this focus on execution and accountability, saying what we're going to do and then consistently delivering that. That's why we put so much focus in 2024 on that, and it's why we're going to continue to have that as a primary focus for us coming into this year. I think the second thing is, and it's a bit of why I frame the discussion the way I did is they want to continue to see these opportunities for growth play out, right? We spent a lot of time in 2024 focusing on execution of the young portfolio of assets that we have on the market today. We saw good growth there. It's on track to deliver double-digit growth last year. And then they want to see these wave of assets that start to materialize. And again, these new opportunities and data sets begin to play out this year over the next 18 to 24 months. And as we get closer to that, I think investors will begin to see what the company is going to look like in the back part of the decade and the opportunities that we have we believe to be one of the fastest-growing companies coming out of this decade.

Great. Maybe just building on that, as you think about those upcoming patent expirations, how are you feeling at this point in terms of Bristol's ability to manage through those LOEs as we consider the new product portfolio pipeline more broadly. I guess the heart of it is, how are you feeling about kind of trough EPS and Bristol's ability to kind of manage through that period of time?

Well, what I feel great about and increasingly good about is the ability that we have to position the company for potentially top-tier growth within the sector by the end of the decade. And the components of that, I think, are starting to come into place. A portfolio of assets today that are growing the ability to add to that portfolio, but also bring on new opportunities. And again, those opportunities will begin to play out over the next couple of years. We continue to be in a strong financial position, which gives us strategic flexibility. So I feel very good about the ability for the company to grow as we get through the back part of the decade. With respect to EPS, I think we have been very thoughtful at managing the core components of EPS, clearly focused on top line growth. That's the north star, if you will. But we have also been very focused on managing our expense base, which you would expect us to do. It's the right thing to do for a company going through a period like we're going through. It's also an exercise that makes us more agile. It streamlines the organization, and I think it just makes us a better organization. And when you put those things together, it gives us the ability to feel much better about our ability to manage EPS over the course of the decade and through this period where we have intense LOE exposure.

And I guess one of the questions I get is, if I think about -- you've had Cobenfy in a much better competitive position, I think we had all imagine a few months ago, you've got this new product portfolio, it's getting real traction now. I guess what the question I have is, how do you think about, I guess, balancing near-term earnings performance versus some of the longer-term growth drivers. So I guess, is there maybe a willingness to lean into investment a little bit more today and think about long-term growth? Or do you really try to kind of maintain this balance that we need to preserve earnings and I'm just trying to get a sense of like has that thinking changed at all versus a year ago, let's just say?

Look, I think we're building an organization that can do both. As I sort of finished the previous question, talking about our management of expenses, clearly, that's important. We're going to continue to make sure that we're being mindful about how we're allocating capital, how we're managing our expense base, that's going to be not only a '24 issue but something we'll be mindful of going forward. But at the same time, I think we're very mindful not to get caught into the lure of managing today at the expense of tomorrow. And so we continue to make significant investments. We made significant investment in the growth portfolio, notably the products I mentioned in my prepared remarks, we've put a lot of effort around R&D productivity and efficiency, which has entailed investing in not only delivering on these catalysts that are coming but accelerating where possible. We've seen some initial indications even just in what I discussed today in terms of success there. So we're going to continue to invest for the long-term, and we're going to continue to invest to build the company that we're going to be exiting this decade, which is one that delivers sustained top-tier growth and drive shareholder value.

Great. Maybe just last big picture one. Just to think about Bristol's BD priorities. I think we came into the conference last year. There's a lot of activity. Just talk a little bit about is the focus now on, let's say, more Karuna type derisk larger market opportunities? Is it more smaller niche deals that kind of build around some of these verticals, just directionally where you're focused?

Well, last December was a quieter December than 2023. But business development remains a key priority for the company. As I said, we have always sourced innovation externally. It's important. We clearly have a willingness and ability to do so as evidenced by those initial deals that we did right after I became CEO. So the priority to focus on business development is still there. We actually, in terms of the size of deals, I get this question a lot. We actually don't think about it that way. We don't really say we want to do a big deal or a smaller deal our focus, and I think over the last year, 1.5 years, we have really been much more disciplined about this is to say, First of all, is this a deal that's going to improve the growth profile of this company, to your question about long-term sustainability of the company. So that's one thing. Does it have a broader strategic intent that makes sense for us is the science something that we like. And frankly, are we the rightful owners of that science. Do we have a competitive advantage? And can we make more of this asset than others? And then, of course, the financials have to make sense. And so that's how we think about it. But the priority to focus on business development is still there. The nice thing is, as a company, we're in a strong financial position. We've got a good balance sheet, which again gives us strategic flexibility and so that's the way we think about it.

Great. Maybe just pivoting to products, Cobenfy, a big focus for the company this year. Just elaborate a little bit more in terms of the launch traction so far? What are you hearing out there? Any surprises with the ramp?

Well, actually, the feedback has been very good. Still relatively early days. We were approved in September. We effectively launched in October. And the things we're looking at right now, obviously, we look at script data. But as I mentioned, even more important at this point is what are you hearing back from customers and physicians. And there, the feedback has been stellar. We're seeing patients who are benefiting not only in their positive symptoms, hallucinations, hearing voices, but the negative symptoms as well. They're more alert. They're able to engage more. We're even hearing stories about cognition coming back, which is obviously important. And so the feedback has been quite good. We're making good progress in terms of market access. But again, it's early days. We're taking nothing for granted. We're continuing to stay focused on driving awareness and understanding of the product and its benefits. We're selling the efficacy of this drug. And we're happy with what we're seeing so far. And again, schizophrenia is an important first indication, but outside of the commercial focus we have there, Samit in the R&D team have been really focused on getting that pipeline in place to continue to see this opportunity grow over time.

Obviously, a lot of excitement around the asset in the market. I guess one of the questions we get though is BID dosing, there's some food effect with the drug. Just initial experience with that, have you had any pushback from physicians or is that being generally well tolerated so far?

We really haven't at this point in the launch. And I think the reason for that is the way physicians are managing it is something that patients can remember and can adhere to, which is you take Cobenfy first thing when you wake up in the morning on an empty stomach and you take it the last thing you take before you go to bed, again, sufficient time before since dinner that you're taking it on an empty stomach and that direction has resonated pretty well. But again, in the spirit of not taking anything for granted, we're educating customers not only on the efficacy and safety profile of this product, but how to make sure that those customers have a good experience with these initial patients that are going on and certainly educating around dosing and administration as part of that.

Great. You mentioned the coverage ramp. Just remind us how you're thinking about coverage ramping this year and how those efforts are progressing?

Well, you'll remember when we got approval, we were talking about coverage here, really phasing in this year, the 80% of this market is government payer, Medicare or Medicaid, and we had originally anticipated that, that would come online really by the end of the first half, beginning of the second half. Commercial is a smaller percentage of the business, about 20%. That's going to take a bit more time. I'm happy to say that we've actually made really good progress on market access. We think that -- well, actually coming into this year, the majority of Medicaid plans have already announced coverage of Cobenfy. And then we now expect Medicare to be online at the end of -- by the end of the first quarter, early second quarter of this year. So feel great about that. And again, that's the biggest part of the business. One reminder, though, is that as this coverage comes online, you remember, this is a switch market. There's decades of habit that are ingrained in physicians in terms of how they treat. So that's not an immediate flip in terms of commercial revenue. I would still think about this as a ramp that's going to launch over the course of this year and take off as we get back into the back part of this year.

And just maybe one follow-up. Do you expect physicians will wait until both the Medicare and Medicaid pieces are in place? Or will we see some uptake even prior to Medicare?