Analyst Conference Summary

biotechnology

Bristol-Myers Squibb
BMY

conference date: January 24, 2019
for quarter ending: December 31, 2018 (fourth quarter 2018)


Forward-looking statements

Overview: Strong finish to the year, preparing for Celgene acquisition.

Basic data (GAAP):

Revenue was $5.97 billion, up % sequentially from $ billion and up 10% from $5.45 billion year-earlier.

Net income was $1.19 billion, well up from negative $2.33 billion year-earlier.

EPS (earnings per share), diluted were $0.73, up sequentially from $, and way up from negative $1.42 year-earlier.

Guidance:

Excluding the Celgene and any other acquisitions or divestitures, for 2019 expects GAAP EPS range of $3.75 to $3.85 and non-GAAP EPS range of $4.10 to $4.20, assuming current exchange rates.

Conference Highlights:

In January, the company and Celgene Corporation entered into a merger agreement under which Bristol-Myers will acquire Celgene.

Giovanni Caforio, M.D., CEO of Bristol-Myers Squibb stated "Our planned acquisition of Celgene will position us to create a leading biopharma company, with best-in-class franchises, significant near-term launch opportunities and a deep and broad pipeline, creating an even stronger foundation for long-term sustainable growth." Plans dividend increases based on combined cash flow.

U.S. revenues increased 16% y/y to $3.3 billion. International revenues increased 3% or 7% when adjusted for foreign exchange impact.

Disciplined expense management led to expansion of the operating margin. Focusing investment on the most promising opportunities.

In December Bristol with Eisai Co., Ltd. and its U.S.-based precision medicine research & development subsidiary H3 Biomedicine, Inc. announced a multi-year research collaboration to explore modulating RNA splicing to develop first-in-class immunotherapy. In December announced Taisho Pharmaceutical Holdings Co., Ltd. will purchase the company’s UPSA consumer health business for $1.6 billion, to close in April.

Today voluntarilly withdrew its application for an sBLA for the Opdivo and low-dose Yervoy (ipilimumab) combination for treatment of first-line advanced non-small cell lung cancer (NSCLC) in patients with tumor mutational burden TMB=10 mutations/megabase (mut/Mb). But will continue to work towards reapplying.

Non-GAAP numbers: diluted EPS $0.94, up 38% from $0.68 year-earlier. Net income $1.54 billion.

Cash and equivalents ended at $10.7 billion. Net cash after debt was $3.3 billion.

Therapy
sales in $ millions
Q4 2018
sales
Q4 2017
sales
y/y change
Opdivo $1,804 $1,361 33%
Eliquis 1,705 1,363 25%
Orencia 731 662 10%
Sprycel 536 527 2%
Yervoy 384 269 43%
Empliciti 69 63 10%
Baraclude 165 233 -29%
Reyataz Franchise 99 143 -31%
Sustiva Franchise 54 174 -69%
Hepatitis C Franchise 4 59 -93%
Other 422 595 -29%
Total 5,973 5,449 10%

With Boston Medical Center announced a study to identify and analyze sensitivity and resistance markers in patients treated with checkpoint inhibitors.

With Vedanta Biosciences announced a clinical trial collaboration to evaluate Opdivo in combination with Vedanta Biosciences’ VE800 for advanced or metastatic cancers.

With Infinity Pharmaceuticals, Inc. announced a clinical trial collaboration to evaluate Opdivo in combination with Infinity’s IPI-549 for advanced urothelial cancer.

The FDA this month expanded the indication for Sprycel (dasatinib) to include the treatment of pediatric patients one year of age or older with newly diagnosed Philadelphia chromosome-positive (Ph+) acute lymphoblastic leukemia (ALL) in combination with chemotherapy. In December, the Committee for Medicinal Products for Human Use of the European Medicines Agency recommended the expanded approval of Sprycel, in combination with chemotherapy, to include the treatment of pediatric patients with newly diagnosed Ph+ ALL.

In January the European Commission approved the combination of Opdivo plus Yervoy for the first-line treatment of intermediate- and poor-risk advanced renal cell carcinoma.

Q&A summary:

Significant cash flows from combined company, use? We have planned dividend increases. No comment on payout ratio, though we did model increases.

Opdivo lifecycle development? We want to create products usable in a wide variety of settings, including IO products beyond Yervoy. Cannot comment on IP implications at this time.

Opdivo plus chemo interim look? No comment on interim analysis.

Hospital lack of profitability with CAR-T due to hospitalization need? There has been a struggle with logistics and access. Existing products must be administered in hospital. With liso-cel's lower toxicity this could change. Access and reimbursement is improving. We would like to expand the eligible patient pool.

Decision to buy Celgene, was it defensive? There is a strong strategic rational for the merger.

Confidence in new potential Opdivo indications? We need to see the lung cancer readouts. We have a lot of opportunities in different indications over the next few years. Short run growth depends on readouts in the next few months.

Slide 11, non-Revlimid growth to 2025? Look at the separate companies as baselines.

Projections relative to analyst models? We have rapid growth through 2025, with potentially six product launches. By then the pipeline will be advanced enough to project growth rate for the second half of the decade.

Generic challenges to Revlimid? We are consulting with Celgene on that.

Lung cancer, lack of FDA confidence in TMB? The issue is the interaction between biomarkers. It is a complex filing. We are in discussions with the FDA. More broadly, nothing has really changed. The trials are event-driven, so hard to predict exact timing of results. Believe we have a real opportunity to play a role in lung cancer. We think TMB (total mutation burden) will continue to be important.

Flat q/q Opdivo cells? Grew outside the US, but near flat in US due to inventory; demand growth was 3%. Ended 2018 in line with expectations. First line renal cell is a growth opportunity.

In 2019 we note two dilutive items, the pension derisking at 5 cents, sale of UPSA business to close in April will be 4 cents. The Sanofi alliance income ended in 2018.

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Disclaimer: My analyst call summaries may include both condensations of statements made by company representatives and my own analysis. They are not covered by any warranty. I cannot guarantee anything said by company representatives is true. I try not to make errors, but it is possible. These are my personal notes which I share with other investors and which I use as the basis of my blog and Seeking Alpha articles.

Copyright 2019 William P. Meyers