Analyst Conference Summary


Bristol-Myers Squibb

conference date: April 25, 2019 @ 7:30 AM Pacific Time
for quarter ending: March 31, 2019 (first quarter 2019)

But I do own Celgene stock, and so will own BMY when the merger completes.
Forward-looking statements

Overview: Strong revenue growth, approved Celgene acquisition. Increased 2019 guidance.

Basic data (GAAP):

Revenue was $5.92 billion, down 1% sequentially from $5.97 billion and up 14% from $5.19 billion year-earlier.

Net income was $1.71 billion, up 44% sequentially from $1.19 billion and up 15% from $1.49 billion year-earlier.

EPS (earnings per share), diluted were $1.04, up 42% sequentially from $0.73, and up 14% from $0.91 year-earlier.


Increased 2019 GAAP EPS guidance range to $3.84 to $3.94 while confirming its non-GAAP EPS guidance range of $4.10 to $4.20. This excludes the Celgene acquisition.

Conference Highlights:

In April, Bristol-Meyers stockholders and Celgene stockholders voted for a merger agreement under which Bristol-Myers will acquire Celgene. Drivers include loss of exclusivity of Eloquist in 2026 and Opdivo in 2028, while Celgene has a very deep pipeline as well as the currently marketed products.

Giovanni Caforio, M.D., CEO of Bristol-Myers Squibb stated "We had a very good first quarter during which the company remained focused on delivering strong sales growth of our prioritized brands and continuing to advance the science in our disease areas of focus. We also achieved approval from Bristol-Myers Squibb and Celgene shareholders to move forward with the acquisition. Looking forward, we are focused on our integration planning with Celgene and creating a leading biopharma company, with potential first-in- and best-in-class medicines, to address the unmet needs of our patients and create long-term substantial growth." Strong demand for Opdivo (nivolumab) and Eliquis (apixaban) led the sales growth.

U.S. revenues increased 24% y/y to $3.4 billion. International revenues increased 2% or 10% when adjusted for foreign exchange impact.

Adjuvant and metastatic settings provide growth oportunities in Opdivo, with new indications possible in 2020.

In December 2018 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 2018 announced Taisho Pharmaceutical Holdings Co., Ltd. will purchase the company’s UPSA consumer health business for $1.6 billion, to close in July.

In Q1 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 $1.10, up 17% sequentially from $0.94 and also up 17% from $0.94 year-earlier. Net income $1.80 billion, up 17% sequentially from $1.54 billion, and up 16% from $1.55 billion year-earlier.

Cash and equivalents ended at $10.0 were down sequentially from $10.7 billion. Net cash after debt was $4.0 billion, up sequentially from $3.3 billion. Long term debt was $5.6 billion.

Believes cash flow will be strong, allowing for paying off debt and increasing the dividend. Believes revenue growth from newer drugs will allow growth to continue even when Revlimid revenue levels off starting in 2022.

sales in $ millions
Q1 2019
Q1 2018
y/y change
Opdivo $1,801 $1,511 19%
Eliquis 1,925 1,506 28%
Orencia 640 593 8%
Sprycel 459 438 5%
Yervoy 384 249 54%
Empliciti 83 55 51%
Baraclude 141 225 -37%
Other 487 616 -21%
Total 5,920 5,193 14%

The company announced on April 25, 2019, topline results from the Phase 2 CheckMate-714 trial evaluating Opdivo versus Opdivo plus Yervoy (ipilimumab) in patients with recurrent or metastatic squamous cell carcinoma of the head and neck. The study did not meet its primary endpoints.

Near term will look for smaller business development deals.

The FDA in January 2019 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 February, the European Medicines Agency expanded approval of Sprycel, in combination with chemotherapy, to include the treatment of pediatric patients with newly diagnosed Ph+ ALL.

In January 2019 the European Commission approved the combination of Opdivo plus Yervoy for the first-line treatment of intermediate- and poor-risk advanced renal cell carcinoma.

Cost of products sold was $1.84 billion. SG&A $1.01 billion. R&D $1.35 billion. Other expense $260 million. Total expenses $3.94 billion. Operating profit $1.98 billion. Taxes $264 million.

Q&A summary:

Integration, cost synergies, cost of new product launches? We are focused on where we can drive value. Investing in new drug sales would be the same as Celgene would have done.

First line lung cancer reimbursement issue? Launch of IO drugs in first line is impacting use of IO in the second line. This happened faster in the U.S. than it is happening outside the U.S.

RCC market Opdivo competition? We see strong business in first line renal cell in the U.S., grew our share to over 40%. Believes Opdivo Plus Yervoy data is very strong.

We believe the opportunity for IO in adjuvant is very important. This is clearly demonstrated in the Optivo for melanoma space. We have 9 trials reading out for adjuvant space in next couple of years. Melanoma trial reads out in 2020. Muscle invasive bladder cancer is also an important unmet medical need.

Do you agree with Celgene's announced expectations for their big five product launches? We provided an aggregate, risk adjusted number. More details after we close the transaction.

Stock price comments? We will create value for shareholders.

Opdivo slight sales decline? In context it was a very good quarter except for non-small cell lung cancer. We did see a decrease in monotherapy sales in first line. For rest of year we see global growth, but Q1 dynamics (in US) will continue.

Pricing reform? We expect the discussion to continue. It will evolve over time. There will be pressure to demonstrate value in the US. It is important to strengthen and broaden the pipeline and cover more payer segments. IPI, international referencing, we do not think that is a good idea. It results in patients not having access to new therapies. We support programs that reduce out of pocket expense for patients but allows for innovation.

Dividend policy after Celgene close? We will increase the dividend, but will not set a payout ratio. It depends on the specifics of the business. We reset the dividend once each year.

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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