Analyst Conference Summary

biotechnology

conference date: February 4, 2021 @ 5:30 AM Pacific Time
for quarter ending: December 31, 2020 (fourth quarter 2020)

Forward-looking statements

Overview: Rapid revenue growth, but most of y/y increase is due to the Celgene acquisition, which negatively impacted profits. Increased non-GAAP EPS guidance for 2021.

Basic data (GAAP):

Revenue was $11.1 billion, up 5% sequentially from $10.54 billion and up 39% from $7.95 billion year-earlier.

Net income was negative $10.0 billion, down sequentially from $1.9 billion and down from negative $1.1 billion year-earlier.

EPS (earnings per share), diluted were negative $4.45, down sequentially from $0.82, and down from negative $0.55 year-earlier.

Guidance:

For the full year 2021 Bristol expects revenue to increase in the high single digit percentage. GAAP EPS range $3.12 to $3.32; non-GAAP EPS guidance range increased to $7.35 to $7.55.

Conference Highlights:

The Celgene acquisition closed on November 20, 2019, so Q4 2020 is the first quarter where it contributed revenue in the prior year's quarter. Most revenue increase y/y was due to the acquisition.

Giovanni Caforio, M.D., CEO of Bristol-Myers Squibb stated "The growth opportunities from our in-line and launch portfolios combined with a robust product pipeline and disciplined business development strategy strongly position the company to accelerate the renewal of our portfolio and achieve long-term sustainable growth." Plans to use cash flow to reduce debt and grow the dividend, plus $3 to $4 billion in share repurchases in 2021.

U.S. revenues increased 43% y/y to $6.78 billion. Ex-US revenue was up 34% y/y to $4.3 billion. Pro-forma total revenue was up 10% y/y (takes Celgene into account)

The extraordinary expenses impacting GAAP earnings included $11.4 billion for the MyoKardia acquisition and $2.5 billion for amortization of acquired intangible assets.

In Q4 2020 Bristol announced it acquired all outstanding shares of MyoKardia for a purchase price of $225.00 per share in cash, or approximately $13.1 billion. In September announced successfully completed the transaction to acquire Forbius for their TGF-beta program, including its lead investigational asset AVID200, currently in Phase 1 studies for oncology and fibrosis. In August, announced entry into a definitive agreement with Dragonfly Therapeutics for the global exclusive license to its interleukin-12 (IL-12) investigational immunotherapy program, including its extended half-life cytokine DF6002.

Non-GAAP numbers: diluted EPS $1.46, down 10% sequentially from $1.63 and up 20% from $1.22 year-earlier. Net income $3.33 billion, down 11% slightly sequentially from $3.7 billion, and up 39% from $2.4 billion year-earlier.

Cash and equivalents ended at $16.3 billion were down sequentially from $22 billion. Long-term debt was $48.3 billion (avg rate 3.4%). Does not plan share repurchases in the current environment. Committed to paying the dividend, but will focus on paying down debt.

In September 2020, the company announced that the FDA approved Onureg (azacitidine, CC-486) for adult patients with acute myeloid leukemia (AML) who achieved first complete remission (CR) or CR with incomplete blood count recovery (CRi) following intensive induction chemotherapy and who are not able to complete intensive curative therapy.

In September 2020, with bluebird bio, announced that the FDA accepted the BLA for idecabtagene vicleucel (ide-cel; bb2121), an investigational B-cell maturation antigen (BCMA)-directed chimeric antigen receptor (CAR) T cell immunotherapy, for the treatment of adult patients with multiple myeloma who have received at least three prior therapies. PDUFA goal date is March 27, 2021

In February, 2021 Bristolannounced results from POETYK PSO-2, the second Phase 3 trial evaluating deucravacitinib for the treatment of patients with moderate to severe plaque psoriasis. POETYK PSO-2 met both co-primary endpoints. In November 2020, announced positive results from the Phase 3 POETYK PSO-1 trial evaluating deucravacitinib, a selective tyrosine kinase 2 (TYK2) inhibitor, for the treatment of patients with moderate to severe plaque psoriasis. POETYK-PSO-1 met both co-primary endpoints evaluating deucravacitinib versus placebo on the Psoriasis Area and Severity Index (PASI 75) and Physician Global Assessment (sPGA) scales and met multiple key secondary endpoints versus Otezla (apremilast). Believes should be the best oral option for psoriasis. In Phase 2 for psoriatic arthritis, lupus, crohn's, ulcerative colitis.

In October 2020, the company and Exelixis announced the FDA accepted the sBLAs, respectively, for Opdivo(nivolumab) in combination with Cabometyx (cabozantinib) for patients with advanced renal cell carcinoma (RCC). The PDUFA goal date is February 20, 2021.

In Q1 2021 announced Licensing Agreement with The Rockefeller University for SARS-CoV-2 Neutralizing Monoclonal Antibody Combination for the Treatment of COVID-19.

In January 2021, Bristol announced that the FDA) approved Opdivo(nivolumab) in combination with Cabometyx (cabozantinib), for the first-line treatment of patients with advanced renal cell carcinoma. The FDA and EMA also accepted the sBLAs for patients with advanced or metastatic gastric cancer. In November 2020 the EMA had approved Opdivo for esophageal squamous cell carcinoma. Also got EMA approval for Opdivo plus Yervoy for certain NSCLCs.

In July resubmitted liso-cel BLA. In May 2020, Bristol announced that the FDA extended the action date by three months for the BLA for lisocabtagene maraleucel (liso-cel). The new U.S. FDA action date is November 16, 2020. In March, the company and bluebird bio had announced the submission of their Biologics License Application (BLA) to the U.S. FDA for idecabtagene vicleucel (ide-cel; bb2121), the investigational B-cell maturation antigen (BCMA)-directed chimeric antigen receptor (CAR) T-cell immunotherapy, for the treatment of adult patients with multiple myeloma who have received at least three prior therapies.

In May 2020 the FDA accepted for Priority Review the New Drug Application (NDA) for CC-486 for maintenance treatment of adult patients in remission with acute myeloid leukemia (AML) with an action date of September 3, 2020.

Cost of products sold was $2.91 billion. SG&A $2.72 billion. R&D $3.75 billion. Amortization $2.53 billion. In process R and D $11.44 billion. Other income $1.83 billion. Total expenses $21.52 billion. Operating loss $10.45 billion. Tax benefit $424 million.

Full Year 2020 revenue was $42.5 billion, up 63% y/y. GAAP EPS negative $3.99. Non-GAAP EPS $6.44.

Q&A summary:

Expectations about liso-cel and ida-cel adoption? We are excited about liso-cel, very soon, looking to activate sites quickly. Then we want to leverage the CAR-T portfolio.

Tipping point in demand for the three new products on Slide 15? Reblozyl execution has gone well, this year should tap into the true underlaying demand, then more with label expansion. The other two are also looking good for continued strong growth.

Deucravacitinib v. Xeljanz? D. is not a JAK inhibitor. It works downstream, which leads to a differentiated profile without the problems of JAK inhibitors. The Phase 3 trials show remarkable efficacy, looking for readouts in other indications.

Opdivo revenue outlook? Expect it to return to growth in 2021, and meaningfully beyond that. We see a good opportunity in first line renal.

Opdivo risk from new PD1 agents? We watch the dynamics closely. In U.S. we do not see much risk, given the data-driven nature of oncology, and our reputation. Ex-U.S. we do see come commoditization in some smaller markets, but will continue to monitor.

Multiple Myeloma market? There are four classes being developed for MM. Right now we are trying to extend PFS for resistant cases. Cell therapies like ida-cel can address that. Cel mods, we will release expansion data later this year. But at a higher level, the important attack is with combination therapies.

China opportunity? Our business there is small, but we see multiple opportunities to expand our market their. We could see PD1 competition there. As China's population becomes wealthier we expect payer dynamics to improve.

Revlimid goes off patent next year, modeling? Litigation is ongoing. Erosion will begin in 2022, and will likely represent no more than 10% of company revenue by 2025.

For Reblozyl, we think we need to drive utilization in the existing indication and then expand to the broader MDS population and also indications like myelofibrosis.

IBD is a competitive space, but there is room given efficacy, safety, mode of administration. Patients are likely to cycle, so mechanism of action is important.

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