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: relatively good quarter as sales of new drugs ramp

Basic data (GAAP):

Revenue was $11.9 billion, down 2% sequentially from $12.2 billion and up 8% from $11.0 billion year-earlier.

Net income was $1.21 billion, down 29% sequentially from $1.7 billion and down 37% from $1.93 billion year-earlier.

EPS (earnings per share), diluted were $0.60, down 28% sequentially from $0.83, and down 35% from $0.93 year-earlier.

Guidance:

Raised 2024 guidance to revenue about 5% y/y increase. Op ex 4% to 5% decrease. Other income $125 million. effective tax rate 60%. Resulting diluted non-GAAP EPS $0.75 to $0.95.

Conference Highlights:

Chris Boerner, CEO, said "We made important strides in the third quarter with the landmark U.S. approval of Cobenfy in schizophrenia, continued sales momentum, strong cash flow generation and key pipeline achievements. We are focused on closing out the year with strong execution as we deliver on our Growth Portfolio, prioritize high-growth opportunities and continue delivering transformational results for patients." Expects to deliver $1.5 billion in savings by the end of 2025. Plans to pay down $10 billion in debt by beginning of 2026.

Cobenfy (KarXT), a first-in-classs M1/M4 agonist for schizophrenia was approved by the FDA in September 2024. First new drug for schizophrenia in decades. Prepping trials in other indications. With this Bristol is re-establishing its presence in neuroscience.

The FDA has 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. In first line unresectable hepatocellular carcinoma set PDUFA of April 21, 2025.

In Q3 2024 the FDA approved Opdivo for resectable NSCLC (non-small cell lung cancer) in combination with platinum-doublet, for neoadjuvant treatment.

In Q3 2024 Zeposia Phase 3 data demonstrated decreased brain volume loss in relapsing multiple sclerosis.

In Q3 2024 Breyanzi completed submission to the EMA for expanding approval to third-line relapsed of refractory follicular lymphoma.

Non-GAAP numbers: diluted EPS $1.80, down 13% sequentially from $2.07 and down 10% from $2.00 year-earlier. Net income $3.7 billion, down 12% sequentially from $4.19 billion, and down 10% from $4.1 billion year-earlier.

Cash and equivalents ended at $8.42 billion up sequentially from $7.01 billion. Cash flow from operations $5.6 billion. Long-term debt was $48.7 billion. $0 billion used for stock repurchases, but $5 billion remains authorized. Plans to pay down $7 billion of debt in next two years.

US revenue increased 9% to $8.23 billion; international up 7% to $3.66 billion.

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 $2.96 billion. SG&A $1.98 billion. R&D $2.37 billion. Amortization $2.41 billion. Acquired IRPD $262 million. Other expense $234 million. Total expenses $10.2 billion. Operating profit $1.68 billion. Tax $461 million.

Q&A selective summary:

Cobenfy? We see this as a 2025 launch. Stocking this year, sales team out, will take time to get reimbursement access. Compelling efficacy and great safety with no boxed warning. Response from payers has been positive.

2025 op ex? We are on track for cost savings and improved margins. We continue to look for cost efficiencies. We will guide for 2025 on the Q4 earnings call.

Launch dynamics? No close precedent. Ramp more in second half of 2025, though physicians can already write prescriptions.

Sotyktu price impact? We now have about 50% access, having good conversations with rest of payers. But more gross to net impact, should be overcome by volume increase as we go forward. It is a very competitive market. More data coming out should help going forward.

Cobenfy label warnings, managing patients for liver, etc.? Cobenfy has efficacy at least as good as what is on the market without the side effects. Large majority of patients have recent lab tests. Most anti-psychotics recommend lab testing. We have the best in category safety profile.

IRA in 2025, volume benefits? We expect favorability with Eliquis due to elimination of the coverage gap. Offset by Revlimid and Pomalyst, where we will be responsible for 20%. So pushes and pulls. On the whole we think it will be net neutral across our portfolio.

GPRC5D CAR T v. Abecma? In Phase 3 registrational trial. Pleased so far. Used after BCMA CAR T treatments. Could be another leading cell therapy product for our company.

Sustainability? Focus is on long term sustained growth and shareholder value. Looking to end of decade. We have a young portfolio of growing assets. Cobenfy will be important. Many promissing assets in pipeline. We are maintaining financial discipline. Can invest in external developments.

We see no change in our partnership with J&J.

We saw very low discontinuation rates in our Cobenfy trial.

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