Analyst Conference Summary

biotechnology

conference date: July 26, 2024 @ 5:00 AM Pacific Time
for quarter ending: June 30, 2024 (second quarter 2024, Q2)

Forward-looking statements

Overview: Good revenue growth, raised guidance.

Basic data (GAAP):

Revenue was $12.2 billion, up 3% sequentially from $11.9 billion and up 9% from $11.2 billion year-earlier.

Net income was $1.7 billion, up sequentially from negative $11.9 billion and down 19% from $2.1 billion year-earlier.

EPS (earnings per share), diluted were $0.83, up sequentially from negative $5.89, and down 16% from $0.99 year-earlier.

Guidance:

Increase 2024 guidance to non-GAAP diluted EPS of $0.60 to $0.90, on lower other expense and higher revenue growth. Note this appears low because of Q1 results including IPRD.

Conference Highlights:

Chris Boerner, CEO, said "Our second quarter results reflect progress against our strategy to position BMS for long-term, sustainable growth. As we move into the second half of the year, we remain focused on prioritizing opportunities with the greatest growth potential and impact for patients, including the anticipated U.S. launch of KarXT. We're also driving operational excellence throughout the company, becoming more agile and strengthening execution." Cost savings will be reinvested in high-growth initiatives.

Acquired IPRD charges and licensing income had a net $0.04 negative impact in the quarter. There was a $398 million GAAP income tax benefit, but the effective non-GAAP tax rate fell to 14.1% due to income tax reserve release.

In Q2 the FDA approved Breyanzi for follicular lymphoma and mantle cell lymphoma. Krazati received accelerated approval for KRAS mutated colorectal cancer, 2nd line. Augtyro got FDA accelerated approval for NTRK gene fusion solid tumors. Opdivo got a new EU approval for urothelial carcinoma.

The FDA assigned a PDUFA of December 29, 2024 for subcutaneous nivolomab (Opdivo) with hyaluronidase combo for solid tumors post Opdivo+Yervoy combo therapy. But Opdivo+Yervoy phase 3 study did not meet enpoints for advanced NSCLC.

Believes KarXT, a first-in-classs M1/M4 agonist for schizophrenia, has a very significant market opportunity. PDUFA is September 26, 2024. Prepping for launch. Prepping trials in other indications.

Revlimid had an increased volume of generic competition starting in March 2024.

Bristol has discontinued some development programs that do not offer good ROI. But Slide 9 lists a bunch of catalysts for 2025 and 2026.

Non-GAAP numbers: diluted EPS $2.07, up sequentially from negative $4.40 and up 18% from $1.75 year-earlier. Net income $4.19 billion, up sequentially from negative $8.9 billion, and up 14% from $3.67 billion year-earlier.

Cash and equivalents ended at $7.01 billion down sequentially from $10.0 billion. Cash flow from operations $2.3 billion. Long-term debt was $49 billion. $0 billion used for stock repurchases, but $5 billion remains authorized. Reduced debt by $3.1 billion in Q2. Plans to pay down $10 billion of debt in next two years.

US revenue increased 13% to $8.8 billion; international down 1% to $3.4 billion. Amortization of acquired intangibles was $2.4 billion due to RayzeBio acquisition and approval of Augtyro.

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 $3.27 billion. SG&A $1.93 billion. R&D $2.90 billion. Amortization $2.42 billion. Acquired IRPD $132 million. Other expense $273 million. Total expenses $10.92 billion. Operating profit $1.28 billion. Tax $398 million.

Q&A selective summary:

Immunology portfolio pricing? Highly competitive, including rebates. Sotyktu ramp has been slower than we would have liked, but we are addressing that, particularly access, which has been improving. Expect modest increase in gross to net. Will be in better position in 2025. Should be a big product for us.

IRA negotiations? Received final price on Eliquis. CMS will publish on or before September 1. Knowing the price, we are confident we can navigate the pricing. But we continue to oppose public price setting.

Cendakimab? Phase 3 study met both primary endpoints. Need to present at medical conference. About 300,000 potential patients in US, with most not on therapy, on steroids, or Dupixent. Will discuss with regulatory authorities.

Business development capacity? Interest in obesity? BD is a priority, now focus is on executing the deals we already made. Also paying down debt. But we will continue BD, must make financial sense. Bolt on deals are a priority. Not focussed on obesity. Firmly committed to dividend.

Once the CMS/IRA price is disclosed, we will give an update on our investor relations page.

KarXT, if approved, would mainly ramp in 2025. Schizophrenia market is largely a government market, not a PBM market. We are working on education and positive first experiences.

Breyanzi? We are happy with Q2. We anticipate strong growth for rest of 2025. It is best-in-class. We expanded our manufacturing capacity.

Part D redesign? We believe, across our entirely portfolio, it will be about neutral.

We remain committed to our 37% operating margin.

We do expect oral immunology to become more competitive over time.

LOE of Opdivo is not until 2028. We expect, if approved, the subcutaneous it could get 30% of the current Opdivo market.

We believe our ray platform will grow robustly over the next decade. The lead program is a modest commercial opportunity. But it could work across a host of solid tumors. A number of new INDs are coming as the decade progresses.

In ulcerative colitis biosimilars have taken on a prefered first-line position.

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