Bristol-Myers Squibb [BMY] Conference call transcript for 2023 q1
2023-04-27 11:19:04
Fiscal: 2023 q1
Operator: Good day and welcome to the Bristol-Myers Squibb First Quarter 2023 Earnings Conference Call. [Operator Instructions] And finally I would like to advice all participants that this call in being recorded. Thank you. I would now like to welcome Tim Power, to begin the conference. Tim, over to you.
Timothy Power: Thanks, Scott and good morning, everyone. Thanks for joining us this morning for our first quarter 2023 earnings call. Joining me this morning with prepared remarks are Giovanni Caforio, our Board Chair and Chief Executive Officer; and David Elkins, our Chief Financial Officer. Also participating in today's call are Chris Boerner, our Chief Commercialization Officer; and Samit Hirawat, our Chief Medical Officer and Head of Global Drug Development. As you'll note, we've posted slides to bms.com that you can follow along with for Giovanni and David's remarks. Before we get going, I'll read our forward-looking statements. During this call, we will make statements about the company's future plans and prospects that constitute forward-looking statements. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the company's SEC filings. These forward-looking statements represent our estimates as of today and should not be relied upon as representing our estimates as of any future date. We specifically disclaim any obligation to update forward-looking statements even if our estimates change. We'll also focus our comments on our non-GAAP financial measures, which are adjusted to exclude certain specified items. Reconciliations to certain non-GAAP financial measures to the most comparable GAAP measures are available at bms.com. With that, I'll hand it over to Giovanni.
Giovanni Caforio: Thank you, Tim, and good morning, everyone. Before we discuss our first quarter results, I'd like to address the leadership transition plan we announced yesterday. After 23 years at Bristol-Myers Squibb, including the last 8 as CEO, I have decided to retire as CEO effective November 1, 2023. So our family can spend more time together in Europe. I will continue to serve as Executive Chairman for a transition period to be determined by the Board. Given the strong foundation achieved to position BMS for growth and success in the future, our strong pipeline and our incredibly deep bench of talent now is a natural time for this transition. That's why I am pleased to share that the Board has selected Chris Boerner, our current Chief Commercialization Officer as Bristol-Myers Squibb's next CEO as of November 1. Effective yesterday, Chris was named Executive Vice President and Chief Operating Officer. And the Board also intends to appoint him as a member of the Board after the Annual Meeting of Shareholders. In connection with Chris' appointment, Adam Lenkowsky, SVP, Head of Major Markets, has been named to succeed Chris as Executive Vice President and Chief Commercialization Officer. The board and I are confident that Chris is the right person to guide BMS through its next chapter of growth. Since joining BMS in 2015, Chris has been instrumental in shaping our strategy and our culture. His passion for science his commitment to our workforce and his tireless focus on our patients, make him uniquely suited for the role. Among a long list of accomplishments, Chris has helped guide the evolution of our portfolio over the past several years, notably building our leading presence in immunology, growing our CD business and launching multiple new medicines. His deep knowledge of our strategy and pipeline and his proven execution across all geographies give us confidence that he is the right leader to drive BMS' vision to be the world's leading biopharma company that transforms patients' lives through science. Leading BMS has been the highlight of my professional career, and I'm incredibly proud of what our team has accomplished together. I remain enthusiastic about the opportunities ahead and know that we will continue to put patients at the center of everything we do, as we drive growth and sustained profitability. Our patients first culture, coupled with our incredibly talented and diverse global workforce will continue to be the engine that drives our success. I look forward to working closely with Chris through the transition and know there is a very bright future for Bristol-Myers Squibb with Chris at the helm. Now let's turn our attention to our Q1 performance. Starting on Slide 4. As we continue to execute our strategy and accelerate the renewal of our portfolio, I am pleased to share that we had a strong start to the year. I am encouraged by the performance of the products that will drive our future growth. During the quarter, our in-line brands and new product portfolio grew 8% or 10% adjusting for foreign exchange. Notably, revenue from our new product portfolio more than doubled compared to a year ago, reinforcing our confidence that we expect to roughly double revenue from these products this year. Opdivo and Eliquis [ph] both performed very well with strong demand growth, particularly in the U.S. Looking forward, we continue to expect top and bottom line growth driven by our in-line and new product portfolio, more than offsetting the impact of generics, and we are affirming our non-GAAP financial guidance for this year. Along with strong commercial execution in the quarter, we continued to advance our pipeline. Turning to our scorecard on Slide 5. As you can see, we delivered meaningful pipeline milestones in Q1. We have a number of catalysts in our pipeline and made important progress expanding our new products, particularly with respect to regulatory achievements, starting with cell therapy, where we further strengthened our growing leadership position. Following the publication of our car mat [ph] results for triple class-exposed multiple myeloma patients in the New England Journal of Medicine in February, we have now delivered global regulatory filings across the U.S., Europe and Japan for this study. We look forward to the opportunity to offer these transformational products to patients in earlier lines of treatment in multiple markets in the future. We also continue to make progress expanding supply for both of our cell therapy products. We recently entered into an agreement for a vector facility in Libertyville, Illinois to further strengthen our supply chain and expand manufacturing capacity. This will allow us to dual-source vector supply and transition to newer, higher efficiency manufacturing processes. We look forward to supplying more patients with both Abecma and Breyanzi as capacity increases over time. Our research teams remain focused on further improving outcomes for patients using cell therapy treatments, including with our exciting CD19 NEX-T [ph] for severe refractory SLE that is entering the clinic. Turning now to Sotyktu. As David will describe, the launch for plaque psoriasis continues to go very well, and we are successfully establishing this product as the oral of choice for moderate to severe patients. And during the quarter, we delivered approval of this medicine for patients in Europe. In addition, we received data from our Phase II trial in Crohn's disease. And while it does not support moving to a Phase III trial at this time, we look forward to seeing data from the high-dose UC trial later this year to evaluate opportunities for this asset in IBD. Meanwhile, we continue to advance Sotyktu into key expansion opportunities in Phase III studies for both psoriatic arthritis and lupus, which as you know has a very high unmet medical need. And turning now to Camzyos. We recently announced positive CHMP opinion for this medicine. We look forward to bringing this product to European patients soon. Looking at our next set of registrational assets. We have initiated the Phase III study for iberdomide in post-transplant maintenance during the quarter. This study will potentially enable us to demonstrate superiority of Iberdomide over Revlimid in an early line setting of multiple myeloma. And with our partners at Janssen, we are pleased to have now initiated all 3 Phase III trials in the milvexian program. We are excited about the benefits to patients from a potential next-generation antithrombotic that is equal to or better than current factors than a drugs in terms of efficacy, but with a better bleeding profile. As you can see, our progress is strong with multiple exciting pipeline opportunities ahead. Moving to Slide 6 and tying together what this progress means for our new product portfolio. This slide demonstrates that the renewal of our portfolio continues to gain momentum through a combination of strong commercial execution and the achievement of important clinical data and regulatory milestones that further derisk significant revenue opportunities. I am very proud of the accomplishments of our global colleagues as they strive to discover, develop and deliver transformational medicines to patients around the world. Together, we have built the foundation for an even stronger company with a more diversified portfolio of growth products and increased durability across each of our four key therapeutic areas. Given our growing and rapidly diversifying business and our financial strength and flexibility, I'm excited about the opportunities we have for the rest of 2023 and beyond. I will now turn the call over to David to walk you through our product performance and financial results in more detail. David?
David Elkins: Thank you, Giovanni. And recognizing this is another busy day for all of you. Thanks again for joining our first quarter earnings call. Turning to Slide 8. Let's discuss our top line performance. Unless otherwise stated, all comparisons are made for the same period in 2022, and sales growth rates will be discussed on an underlying basis, which excludes the impact of foreign exchange. Total company sales in the quarter topped $11.3 billion, driven by strong double-digit sales of our in-line and new product portfolio, offset by Revlimid loss of exclusivity. Sales in the U.S. grew 4%, driven primarily by volume, while international sales were impacted by the annualization of loss of exclusivity for Revlimid. Let's delve deeper into the strong performance of the new product portfolio on Slide 9. As Giovanni mentioned, the new product portfolio generated over $720 million in sales, which more than doubled versus prior year and grew over 11% sequentially. This strong performance in the quarter was driven primarily by demand for Opdualag, Abecma and Reblozyl, which I will touch on further in a moment and provides us confidence in the growth potential for our increasingly derisked and diversified new product portfolio. Moving to our solid tumor performance on Slide 10. Global Opdivo sales were strong, growing double digit versus prior year, primarily driven by continued demand for our newly launched and core indications. In the U.S., Opdivo grew 17%, primarily driven by demand in first-line lung, upper GI indications and adjuvant bladder cancer. Outside the U.S., first quarter revenues increased 18%, primarily driven by demand for recently launched indications and expanded access. The strong execution in the first quarter gives us confidence in the continued growth expected for Opdivo. Now turning to the robust launch of Opdualag. Sales in the quarter were $117 million, growing double digit versus prior quarter. We are very pleased with the launch of Opdualag in first-line melanoma with market share now over 20%, primarily being sourced from PD-1 monotherapy. Now turning to our expanded cardiovascular portfolio on Slide 11 and starting with Eliquis, which generated over $3.4 billion globally, largely driven by the U.S. In the U.S., sales grew strongly, up 19%, driven primarily by robust demand. Internationally, sales were impacted primarily by generic entries in Canada and the U.K. and pricing measures we mentioned in the past. Moving now to our first-in-class myosin inhibitor, CAMZYOS. We continue to be pleased with the progress we are making to bring CAMZYOS to more patients. CAMZYOS generated sales of $29 million in the first quarter. Now with approximately 2,700 patients in our hub, of which 1,500 patients on commercial drug at the end of the quarter, we continue to build momentum with considerable growth expected in the quarter-over-quarter. We look forward to our upcoming PDUFA date for Valor in June, which will reinforce the strong profile of CAMZYOS, as well as the expected European approval having just received a positive CHMP opinion. Now turning to our hematology portfolio on Slide 12. Starting with Revlimid. Global sales in the quarter were approximately $1.8 billion, impacted by generic entry. As we expected, the favorability seen last year reversed in the first quarter, and we continue to expect quarter-to-quarter variability. Now on to Pomalyst, global sales grew 2% versus prior year. In the U.S., longer duration of first-line treatments impacted new prescription volumes. Internationally, revenues grew 12%, driven largely to demand for triple-based regimens as well as some buying patterns. Turning to Reblozyl, which generated revenues of $206 million in the quarter. Sales were strong, up 33%, largely driven by demand. In the U.S., revenues grew 18%, primarily driven by continued total prescription share growth. Internationally, Reblozyl more than doubled as we continue to secure reimbursement in additional countries, including being placed on China's national reimbursement drug list. We are now launched in 25 countries outside the U.S. and expect to launch in additional markets this year. We look forward to presenting the COMMANDS data in an oral presentation at ASCO and EHA to further accelerate the brand by bringing this first-in-class product to first-line ESA-naive MDS patients upon approval. Transitioning to our first-in-class and best-in-class cell therapy products of Abecma and Breyanzi, we continue to make progress at expanding capacity, which has enabled robust sales growth driven by strong demand. With sales of $147 million in the quarter, we more than doubled our revenue for Abecma versus prior year and grew 16% sequentially. We continue to be pleased with the feedback from physicians on the reproducibility of efficacy and safety in the real world and reliability of our manufacturing capabilities. As Giovanni mentioned, KarMMa-3 and triple cost exposed myeloma patients is now under review in the EU, the U.S. and Japan, and we look forward to bringing up Abecma to earlier line patients around the globe. Turning to Breyanzi. Sales in the quarter were $71 million, growing 66% versus prior year and 27% sequentially. Sales were driven by demand in second and third-line plus large B-cell lymphoma. With the broadest label in second-line large B-cell lymphoma and differentiated safety profile, feedback from physicians has been very strong, and we are pleased with the strong demand for Breyanzi. We look forward to bringing Breyanzi to earlier line patients in the EU in the coming months, with the recent CHMP positive opinion. Let's now move to our immunology portfolio on Slide 13. Starting with Zeposia. Global sales in the quarter were $78 million, more than doubling compared to prior year. In the U.S., growth was primarily driven by demand in multiple sclerosis and expanding contribution from ulcerative colitis. Internationally, sales increased primarily to demand in multiple sclerosis and securing reimbursement in additional countries. Lastly, turning towards a strong launch of our first-in-class TYK2 inhibitor, Sotyktu. We're extremely pleased with the launch so far. Just 6 months into the launch, we have over 9,500 script equivalents across bridge and commercial drug. Sotyktu's share of the oral market is now in the mid-30s, sourcing business from systematic naive patients as well as Otezla and biologic experience patients. Internationally, we are very pleased with the strong launch performance in Japan and recent approval in Europe and look forward to working with individual countries on securing reimbursement through 2023 and beyond. We are very excited about Sotyktu with non-risk-adjusted revenue potential of $4-plus billion based on exciting opportunities ahead in moderate to severe psoriasis, psoriatic arthritis and in lupus. Moving to our first quarter P&L on Slide 14. I will focus my remarks on a few non-key line items just covered - as I just covered sales performance. In the quarter, as expected, gross margin was impacted by product mix. This was partially offset by favorable foreign exchange and related hedging settlements that will not repeat in the second quarter. Operating expenses, excluding acquired in-process R&D remained largely consistent with prior year. MS&A declined 4%, primarily due to timing of spend, which we expect to reverse going into the second quarter as we continue to invest in our new launches. Acquired in-process R&D in the quarter was $75 million, which was partially offset by $43 million of licensing income. Overall, first quarter earnings per share was $2.05, growing approximately 5%. Turning to the balance sheet and capital allocation on Slide 15. Cash flow generation and our balance sheet remained strong. Cash flow from operations in the quarter was approximately $3 billion, with over $9 billion in cash and marketable securities on hand as of March 31. As it relates to capital allocation, our priorities remain unchanged, with BD continuing to be our top priority and a focus on balance sheet strength, as well as returning capital to shareholders. In the quarter, we repaid $1.6 billion in debt with an additional $2.3 billion maturing this year, and we remain opportunistic about share repurchases in the future with approximately $7 billion remaining in our share repurchase authorization. Lastly, turning to our 2023 non-GAAP guidance on Slide 16. Based upon the performance to date, we are reaffirming our non-GAAP guidance. We expect 2023 revenues to grow approximately 2% on a reported and constant currency basis, which reflects that our in-line and new product portfolio will more than offset recent LOEs. Revlimid's sales expectations remain at approximately $6.5 billion, and we will continue to monitor variability from generics and other market dynamics through the year. We remain excited about the promise of our new product portfolio and expect the portfolio to roughly double versus prior year. As we continue to launch these assets around the globe, we expect growth to be more back half weighted as we build momentum during the year. We continue to expect gross margin to be approximately 77%, which reflects a shift in product mix. Accounting for the FX favorability in the first quarter, we expect gross margin for the first half of the year to be approximately 77%. Excluding the impact of acquired in-process R&D and our operating expense guidance remains unchanged and expect to decline in the low single-digit range, reflecting efficiency initiatives in MS&A as we continue to up invest in our launch brands. As I mentioned during the results for the quarter, we expect MS&A to increase in the second quarter as we continue to invest in our launches. The operating expenses are expected to be approximately $4.2 billion in the second quarter. Our tax guidance of 17% remains unchanged, and we continue to expect earnings per share to be in the range of $7.95 and $8.25. Before we move to Q&A, I just want to acknowledge the work of our colleagues across the globe for the relentless commitment and execution to transform this company into a younger and more diversified business. I'll now turn the call back over to Tim and Giovanni for Q&A.
Timothy Power: Thanks very much, David. Kevin, can we go to our first question, please?
Operator: It comes from the line of Seamus Fernandez from Guggenheim. Your line is open.
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Giovanni Caforio: Thank you, Chris and Sami. Thanks, Olivia, and thanks, everyone. So to summarize, a strong start of the year with double-digit growth of our in-line and new product portfolio on track for the year to grow top and bottom line, as we discussed earlier. And we feel good about where we are after the first quarter. The team will be available after your very busy day to answer any other questions you may have. And I want to thank all of you for participating in the call. Thank you, and have a good day.
Operator: That does conclude our conference for today. Thank you for participating. You may now all disconnect.
