Analyst Conference Summary


Bristol-Myers Squibb

conference date: October 31, 2019 @ 5:30 AM Pacific Time
for quarter ending: September 30, 2019 (third quarter 2019)

Forward-looking statements

Overview: Good revenue growth, preparing for Celgene acquisition. EPS down y/y on a GAAP basis, but up non-GAAP.

Basic data (GAAP):

Revenue was $6.01 billion, down 4% sequentially from $6.27 billion and up 6% from $5.69 billion year-earlier.

Net income was $1.4 billion, flat sequentially from $1.4 billion and down 26% from $1.9 billion year-earlier.

EPS (earnings per share), diluted were $0.83, down 5% sequentially from $0.87, and down 28% from $1.16 year-earlier.


Expects about 1/3 of synergy savings from Celgene acquisition to take place in 2020. The Otezla proceeds will be used to reduce debt.

Conference Highlights:

In April, Bristol-Meyers stockholders and Celgene stockholders voted for a merger agreement under which Bristol-Myers will acquire Celgene. This should close late in 2019 or early in 2020.

Giovanni Caforio, M.D., CEO of Bristol-Myers Squibb stated "I believe we have an opportunity to play an important role in first line lung cancer. . . Our teams have done a great job in a very competitive market for Opdivo. . . Today Celgene announced strong results for the third quarter. FTC clearance is the remaining regulatory milestone to complete the transaction."

U.S. revenues increased 7% y/y to $3.47 billion.

In July, the company, Bayer and Ono announced a clinical trial collaboration to evaluate Opdivo in combination with Stivarga in patients with micro-satellite stable metastatic colorectal cancer. In July, the Bristol announced the completion of its previously announced sale of its consumer health business, UPSA, to Taisho Pharmaceutical. In October, the company announced that CheckMate -9LA, a pivotal Phase 3 trial evaluating Opdivo plus low-dose Yervoy (ipilimumab) given concomitantly with two cycles of chemotherapy for the first-line treatment of advanced non-small cell lung cancer, met its primary endpoint of superior overall survival at a pre-specified interim analysis. In August the EC approved Empliciti (elotuzumab) plus pomalidomide and low-dose dexamethasone for the treatment of adult patients with relapsed/refractory multiple myeloma who have received at least two prior therapies, including lenalidomide and a proteasome inhibitor.

See future revenue growth by Opdivo to be driven by continuing expansion to new indications. Remains committed to the dividend, but will remain active in early and small deals while working to reduce debt.

The tax rate in the quarter was lower due to one-time items.

Non-GAAP numbers: diluted EPS $1.17, down 1% sequentially from $1.18 and up 7% from $1.09 year-earlier. Net income $1.9 billion, flat sequentially from $1.9 billion, and up 6% from $1.8 billion year-earlier.

Cash and equivalents ended at $33.5 billion were up sequentially from $30.4 billion. Net cash after debt was $8.5 billion, up sequentially from $5.4 billion. Long term debt was $24.4 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
Q3 2019
Q3 2018
y/y change
Opdivo $1,817 $1,793 1%
Eliquis 1,928 1,577 22%
Orencia 767 675 14%
Sprycel 558 491 14%
Yervoy 353 382 -8%
Empliciti 89 59 51%
Baraclude 145 175 -17%
Other 350 539 -35%
Total 6,007 5,691 6%

In September, 2019, at ESMO Bristol updated data showing Part 1a of the Phase 3 Checkmate-227 study evaluating Opdivo plus low dose Yervoy vs. chemotherapy met the co-primary endpoint of overall survival in first-line non-small cell lung cancer (NSCLC) patients whose tumors express PD-L1=1%. But Part 2 of the Phase 3 Checkmate-227 study evaluating Opdivo plus chemotherapy versus chemotherapy did not meet its primary endpoint of overall survival in first-line non-squamous NSCLC patients regardless of PD-L1 status.

Cost of products sold was $1.81 billion. SG&A $1.06 billion. R&D $1.38 billion. Other income $411 million. Total expenses $4.66 billion. Operating profit $1.35 billion. Tax benefit $17 million.

Q&A summary:

Checkmate 9LA data strength? We are truly happy with the results. It bodes well for the combination, data will be presented at a future medical meeting. No comment on regulatory strategy yet. We believe Opdivo revenue should return to growth in 2021.

We are holding 30% to 35% share in renal, that has been stable for a few months. In second line we are at 36%, but the pool of second line patients in declining.

First line lung cancer, chemo induction vs. not? 9LA is in the context of 227. First line lung has significant unmet needs. Physician feedback is there is a need for more options, including dual IO therapy for patients who don't want chemo.

At exit of 2020 we expect to be about 2.5 debt to EBITDA leverage. We will end with less debt that originally planned due to the cash from the Otezla sale to Amgen.

9LA started in 2017, so the data so far are relatively short term and stats like PFS may improve further as the data matures.

Will you rebuild a presence in IBD, psoriasis, post Otezla? We are looking forward to our TIC2 inhibitor development. TIC2 is differentiated from JAK inhibitors. BMS165 interupts the IL and interferon pathways in a way that is more safe. Psoriasis will be the initial indication, the Phase 2 data of 75% response rate is great. IBD is also a large market.

Combined P&L guidance, why reveal today? There were analysts who were modeling poorly, for stock based compensation and share count in particular.

Eliquist patent litigation? We feel good about our IP position for Eliquist. 20 generic companies have already settled with us. A few challengers remain. The trial starts today.

LAG3 readout? Melanoma, LAG3 mono vs. LAG3 plus nivolumab, seamless 2/3 trial, no readouts so far, data towards end of 2020.

In head & neck and other cancers we see the same effect of there being less 2nd and later line sales because the eligible pools of patients are decline.

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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