Analyst Conference Summary

biotechnology

conference date: July 27, 2022 @ 5:00 AM Pacific Time
for quarter ending: June 30, 2022 (second quarter 2022, Q2)

Forward-looking statements

Overview: Revenue continues to grow despite foreign-exchange headwind.

Basic data (GAAP):

Revenue was $11.89 billion, up 3% sequentially from $11.6 billion and up 1.5% from $11.70 billion year-earlier.

Net income was $1.42 billion, up 11% sequentially from $1.28 billion and up 34% from $1.06 billion year-earlier.

EPS (earnings per share), diluted were $0.66, up 12% sequentially from $0.59, and up 40% from $0.47 year-earlier.

Guidance:

Revised full year 2022 to net sales of $46 billion. GAAP diluted EPS of $2.71 to $3.01 (a decrease); non-GAAP reaffirmed at $7.44 to $7.74.

Conference Highlights:

Giovanni Caforio, M.D., CEO of Bristol-Myers Squibb stated "I am very pleased with the continued strong demand for our in-line products and new product portfolio, resulting in solid top and bottom-line growth. The momentum with our business and strength of our pipeline, gives us significant opportunities to drive continued growth, starting with the anticipated approval for deucravacitinib in moderate to severe plaque psoriasis and the expected transition of milvexian, our next generation anti-thrombotic, to Phase 3 development. With our financial strength and dedicated workforce, we are well positioned to help more patients and drive long-term value for our shareholders." Adjusted for foreign exchange rates, revenue rose 5% y/y. Revenue growth, including new products, offset by Revlimid decline due to generic competition. Well-positioned for future revenue and profit growth. Opdualag and Camzyos successfully launched.

Plans to acquire Turning Point Therapeutics, a leading precision oncology company. Plans to launch repotrectinib, an ROS1/NTRK inhibitor for NSCLC in 2H 2023. Deal should close in Q3 2022.

Opdualag (relatlimab and nivolumab) fixed-dose combination for unresectable or metastatic melanoma was approved by the FDA in March 2022.

Camzyos (mavacamten) for symptomatic obstructive hypertrophic cardiomyopathy was approved by the FDA in April 2022. Launch includes free initial doses, so revenue in Q2 was minimal.

Breyanzi received a label expanding FDA approval: second-line LBCL. Has over $3 billion annual revenue potential by end-of-decade. Demand is above manufacturing capacity, which is being expanded. So revenue will be flat for a couple of quarters. In January 2022, the CHMP in the EU recommended approval of Breyanzi (lisocabtagene maraleucel) for the treatment of adult patients with relapsed or refractory diffuse large B-cell lymphoma, primary mediastinal large B-cell lymphoma, and follicular lymphoma grade 3B after at least two prior therapies.

Deucravacitinib for psoriasis could have an approval in September 2022. Further indication approvals are possible in 2023 and after. In Q4 2021 the FDA accepted the NDA and the EMA validated the Marketing Authorization Application for deucravacitinib for the treatment of adults with moderate to severe plaque psoriasis. The FDA assigned a PDUFA goal date of September 10, 2022. Japan also accepted the NDA for deucravacitinib for the treatment of adults with moderate to severe plaque psoriasis, pustular psoriasis and erythrodermic psoriasis.

Milvexian in secondary stroke prevention had positive Phase 2 data, to be presented at ESC 2022. Phase 3 trial to start by year-end.

in Q2 2022 Opdivo was approved for first line ESCC in the U.S. and Japan.

Beginning with the first quarter of 2022, significant R&D charges or other income resulting from upfront or contingent milestone payments in connection with asset acquisitions or licensing of third-party intellectual property rights are no longer excluded from non-GAAP results. For Q2 2022 acquired IPRD decreased from $793 million in the same period a year ago to $400 million in the current quarter. Acquired IPRD in the current quarter primarily related to the buyout of a future royalty obligation related to mavacamten ($295 million) and the BridgeBio licensing transaction ($90 million). Acquired IPRD in the same period a year ago was primarily related to a collaboration agreement with Eisai ($650 million).

Non-GAAP numbers: diluted EPS $1.93, down 2% sequentially from $1.96 and up 18% from $1.63 year-earlier. Net income $4.15 billion, down 2% sequentially from $4.25 billion, and up 13% from $3.67 billion year-earlier.

Cash and equivalents ended at $13.2 billion down sequentially from $15.0 billion. Cash flow from operations $2.3 billion. Long-term debt was $37 billion (avg rate 3.4%). In Q2 repaid $2.9 billion of debt. $0 billion used for stock repurchases, but $10.2 billion remains authorized.

Bristol withdrew the application for priority review the supplemental Biologics License Application for Reblozyl for the treatment of anemia in adults with non-transfusion dependent beta thalassemia. PDUFA goal date had been June 27, 2022.

In Q1 2022 the FDA approved Opdivo with chemotherapy as neoadjuvant treatment for resectable NSCLC. The EC approved Opdivo for the adjuvant treatment of adults with high-risk muscle-invasive urothelial carcinoma with PD-L1 expression. The EC also approved Opdivo in combination with Yervoy for the first-line treatment of adult patients with unresectable advanced, recurrent or metastatic esophageal squamous cell carcinoma with tumor cell PD-L1 expression.

Cost of products sold was $2.72 billion. SG&A $1.79 billion. R&D $2.32 billion. Amortization $2.42 billion. Acquired IPRD $400 million. Other expense $284 million. Total expenses $9.93 billion. Operating profit $1.96 billion. Taxes $529 million.

Q&A summary:

Milvexian readout? Next-generation anti-thombotic, hoping for improved outcome.

Camzyos launch? Very pleased. Awareness is good with physicians and patients. Patients are seeing benefit within 4 weeks. Number of subscribing centers growing weekly. Revenue depends on conversion of patients to commercial drug. Most patients on free product until drug is added to formularies.

Milvexian Phase 3? Will soon see Phase 2 data, clinical strokes is the main issue.

CTLA-4 data? We need to think about combination strategies going forward, given the single-digit response rates in the past.

Reblozyl trends? Pleased with growth. Seeing new patient acquision. Moving patients off of ESAs, more quickly than in the past. Higher dosing has result in improved efficacy. Ex-US, in early stages, but good uptake so far.

Turning Point acquisition, oncology strategy? Combinations will be dependent on explorations and data. Will look at more specified populations.

Breyazni supply ramp? Cell therapy demand is strong, competitive profile is good. Manufacturing success rate issue has been resolved, but capacity delivery will be more Q1 2023. Abecma supply has increased, hope that will happen for other cell therapies as well.

Deucravacitinib black box, committee? Confident in the data, differentiation and superiority. Profile continues to evolve in other trials. Commercial team is in place. We anticipate strong demand, hope to become oral brand of choice.

Medicare pricing reform, if passed? Discussions are ongoing, details are not set. We support reform that makes it more affordable for patients. But price setting by government at 9 and 13 years could have a negative impact on innovation. It is too early to guess the impact on our company. The drugs mainly impacted for us are declining in revenue or loosing patent protection anyway.

Acquisitions? Valuations are resetting, so we intend to be active.

Milvexian, higher bleeding in triple therapy arm? Looking forward to presenting data. Important questions are efficacy on clinical strokes and bleeds, including whether they are meaningful.

We are seeing physicians used Opdualag in second line as well as first line patients.

CAD/PAD for milvexian? Factor XI inhibitor. Will discuss Phase 3 plans towards the end of 2022, after data is presented. Trying to solve some of the problems of inhibitors like Eliquis.

Opdivo/Yervoy new data? Dreamseek data provide insights into sequencing. Data is compelling, but targetted therapy first line BRAF is sticky because we cannot promote to this data.

Eliquis foreign headwind ahead? EU generic impact is in UK and Netherlands for remainder of 2022. We lost the composition of matter patent in UK, will appeal. Netherlands generic launch was before the trial, so depends on trial outcome. Each jurisdiction will make its own decision. Most of Eliquis growth comes from the US, protection goes to 2028, so overall growth should continue.

Deucravacitinib for IBD? IBD is a large and underserved market with a need for oral options. Waiting for trial data.

Milvexian v. Bayer's Riva in afib market? We are looking at a broad set of indications beyond afib. When data comes in we will be able to talk about competition.

Repeated Opdualag has potential for $4 billion annual revenue, but that does eat into current Opdivo revenue.

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