Analyst Conference Summary

biotechnology

conference date: October 26, 2023 @ 5:00 AM Pacific Time
for quarter ending: September 30, 2023 (third quarter 2023, Q3)

Forward-looking statements

Overview: Revenue still in slight decline y/y, as new product revenue growth does not quite keep up with decline in legacy (off patent) products.

Basic data (GAAP):

Revenue was $10.97 billion, down 2% sequentially from $11.23 billion and down 2% from $11.22 billion year-earlier.

Net income was $1.93 billion, down 8% sequentially from $2.07 billion and up 19% from $1.61 billion year-earlier.

EPS (earnings per share), diluted were $0.93, down % sequentially from $0.99, but up 24% from $0.75 year-earlier.

Guidance:

Adjusted 2023 guidance. Now expects somewhat higher revenue from Revlimid at $6.0 billion, but no change in total revenue. Expects a lower tax rate at 11% GAAP or 15.5% non-GAAP. So diluted EPS GAAP $3.68 to $3.83, non-GAAP 7.50 to $7.65.

Conference Highlights:

Giovanni Caforio will be stepping down as CEO. Chris Boerner will become CEO on November 1, 2023, and said "During the third quarter, we continued to grow our in-line and new product portfolio. We remain focused on accelerating commercial performance, advancing our pipeline and harnessing our financial flexibility to pursue business development opportunities that benefit patients." Bristol's focus is on the second half of this decade, for long-term growth. Y/y growth in new product revenue was very rapid.

In October 2023 agreed to acquire Mirati Therapeutics for $4.8 billion. This should close in 1H 2024.

A cash settlement from Turning Point Therapeutics in 2022 skewed y/y comparisons.

Authorized a $4 billion share buy-back in Q3. Anticipates that final settlement of these transactions will occur during Q4 2023.

Repotrectinib, acquired with Turning Point Therapeutics, an ROS1/NTRK inhibitor for NSCLC, has a PDUFA date of November 27, 2023.

In August 2023 the FDA approved Reblozyl label expansion for first-line treatment of anemia in adults with lower-risk Myelodysplastic Syndromes (MDS) who may require transfusions.

In Q2 the Phase 2 study evaluating BMS-986278, a potential first-in-class oral, lysophosphatidic acid receptor 1 (LPA1) antagonist in patients with idiopathic pulmonary fibrosis, showed 26 weeks of treatment with twice-daily 60mg dose reduced the rate of lung function decline, supporting progression into Phase 3.

With 2seventy bio, FDA PDUFA date for Abecma for r/r multiple meloma fourth line is December 16, 2023.

In Q3, 2023 Bristol received FDA approval for Reblozyl in first-line, MDS-associated anemia.

In Q3, 2023 reported strong results from a Phase 3 study evaluating subcutaneous nivolumab in advanced or metastatic clear cell renal cell carcinoma.

In Q3, 2023 received approvals from the FDA and the European Commission for Opdivo in stage IIB or IIC melanoma. Several positive trial results for Opdivo were also reported.

In Q3 2023 Bristol reported positive Phase 2 results evaluating its potential first-in-class LPA1 antagonist in progressive pulmonary fibrosis.

In Q3 2023 the FDA granted BMS-986278, a potential first-in-class oral, lysophosphatidic acid receptor 1 (LPA1) antagonist, Breakthrough Therapy Designation for the treatment of progressive pulmonary fibrosis (PPF). Results from the Phase 2 study evaluating BMS-986278 in patients with PPF demonstrated that twice-daily administration of 60mg of BMS- 986278 over 26 weeks reduced the rate of decline in percent predicted forced vital capacity by 69% compared to placebo.

Bristol expects a doubling of registrational assets from six to 12 over the next 18 months. More than 25 indication expansions are on the horizon.

Non-GAAP numbers: diluted EPS $2.00, up % sequentially from $1.75 and up 0.5% from $1.99 year-earlier. Net income $4.1 billion, up 11% sequentially from $3.7 billion, and down 5% from $4.3 billion year-earlier.

Cash and equivalents ended at $7.51 billion down sequentially from $8.7 billion. Cash flow from operations $4.8 billion. Long-term debt was $32.1 billion. $4 billion used for stock repurchases, and $2 billion remains authorized.

The mid to late stage pipeline includes repotrectinib, farletuzumab exteribulin, AR-LDD, iberomide, mezigdomide, alnuctamab BCMA TCE, CC-99282, cendakimab, LPA1, and milvexian.

Cost of products sold was $2.51 billion. SG&A $2.00 billion. R&D $2.24 billion. Amortization $2.26 billion. Acquired IPRD $80 million. Other income $258 million. Total expenses $8.83 billion. Operating profit $2.14 billion. Taxes $203 million.

Q&A selective summary:

Lower 2025 targets, confidence in longer term targets? For the new product portfolio in total there is no change in the long-term conviction. Question of when, not if. Timing change is due to a few products like Sotyktu and Camzyos where there is a delay, and a couple like Abecma and Zeposia where there are challenges. But portfolio overall looks good for long term growth.

Subcutaneous Opdivo? SubQ improves the patient experience. Could become 50% of Opdivo business. Extends franchise into early 2030s.

Lower margins in guidance? Partly due to Mirati acquisition, acceleration of R and D pipeline.

Sotyktu further uptake is dependent of expanded insurance coverage. Confident we will achieve that. Believes it will become the oral therapy of choice, with superior efficacy compared to Otezla.

Breyanzi manufacturing is going well, so should be able to ramp sales.

Mirati opportunity? Believes best in class KRAS therapy, believes will move to first line with Phase 3 study already underway. With rest of pipeline should be a strong growth catalyst for the second half of the decade.

Re 2030 goals, the new product portfolio is on track on the whole, with a few products ramping more slowly, and a few ramping faster.

2026 declines in Eliquis and Revlimid? We expect Revlimid to be down to about $2 billion in 2025. Our portfolio as a whole will be much younger by 2025.

For Camzyos, patients seem to like it and stay on it. Seeing rapid conversion of patients from the hub to commercial sales. Currently about 5000 patients in hub, 3500 on commercial product. Also working to increase diagnosis rates and to expand in Europe.

Business development remains the top priority for capital allocation. Looking to enhance the growth profile.

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