The Bristol-Myers Squibb Third Quarter 2023 Earnings Conference Call has begun, with the operator introducing the participants and explaining the format of the call. Tim Power, Vice President of Investor Relations, will lead the call with prepared remarks from the company's CEO, COO, and CFO. Slides are available on the company's website for reference. A forward-looking statement is read, and the focus will be on non-GAAP financial measures.

In the second paragraph of the article, Giovanni Caforio, the CEO of Bristol Myers Squibb, reflects on the company's solid performance in the third quarter and their plans for the future. He mentions important milestones, such as the planned acquisition of Mirati, and the company's diversified business. He also expresses confidence in the company's ability to navigate through a patent loss and highlights their strong pipeline and focus on patient-centric mission. Caforio then introduces his successor, Chris Boerner, and expresses his gratitude to his colleagues and employees. Boerner then takes over to discuss the quarter in more detail and acknowledges Caforio's impact on the organization.

The speaker, who is taking over as CEO, praises the previous CEO for his focus on strengthening the company and delivering for patients. They then provide an overview of the company's performance in the third quarter, including top line growth, advancements in the pipeline, and a planned acquisition. The speaker also outlines their objectives for sustainable long-term growth, which include commercial execution, R&D leadership, and strategic business development. They highlight the strong demand for key in-line products and future growth drivers. The speaker concludes by mentioning that the details of the company's commercial results will be provided by David.

The company's new products are performing well, with strong growth seen in Reblozyl, Opdualag, and Breyanzi. Reblozyl has a broad label and is recognized by NCCN guidelines as an important treatment for MDS. Opdualag is on track to become the new standard of care in first line melanoma, with potential for future indications. While Camzyos and Sotyktu have strong performance, growth has been slower than expected due to longer adoption curves and onboarding processes. The company remains confident in their long-term projections for these products.

The profile for Sotyktu remains strong with increasing share, but access is still a challenge. There will be improvements in access in 2024, but reaching zero step edits may take longer due to emerging payor dynamics. Sales expectations for Abecma and Zeposia have been impacted by competition and access constraints, but real world data and recent studies show their efficacy and safety. The company expects sales from this portfolio to be $3.5 billion in 2023, slightly lower than expected, but still sees continued growth and expects to achieve over $10 billion in sales by 2026. The commercial team is focused on maintaining momentum and increasing investment in certain brands to improve performance.

The company is expanding its product portfolio with the addition of repotrectinib and Krazati. They have also made progress in their R&D, with plans to add 12 assets to their registrational pipeline in the next 18 months. They have achieved several milestones in oncology, including meeting endpoints for a sub-cutaneous nivolumab trial and receiving fast-track designation for Krazati. The company is also making progress in their CD19 NEX T cell therapy and has received FDA clearance to begin a trial for multiple sclerosis. They are committed to advancing cell therapies and becoming leaders in the space.

The company will be providing updates on their hematology assets and ARLDD at upcoming medical conferences. Business development remains a top priority for the company, as shown by their recent acquisition of Mirati. Despite a setback in a study for Opdivo in liver cancer, the company has seen positive progress in other areas and has multiple strategies in place to drive growth in the future.

In the third quarter earnings call, David Elkins discusses the company's top line performance, with total sales of $11 billion driven by growth in the new product portfolio. However, there was a decline in Revlimid sales. The new product portfolio saw solid growth, but there was an impact from manufacturing site maintenance and competition from alternative therapies. The company expects the new product portfolio to deliver $3.5 billion for the full year 2023. Opdivo, the flagship oncology product, saw a global sales increase of 11%, driven by demand and favorable buying patterns. Outside the U.S., sales increased by 15% due to demand for specific indications.

The performance of Opdivo in peri-adjuvant lung, first line bladder, and adjuvant melanoma indications, as well as the positive data for the sub-cu formulation, reinforce confidence in its continued growth. Opdualag has also seen success in the first line melanoma market, with a 25% market share in the US and a total share of 65% in metastatic melanoma. Eliquis continues to grow with $2.7 billion in revenue, despite some challenges in international markets. Camzyos, a first-in-class obstructive HCM product, has also seen growth with $68 million in revenue and a steady increase in patient base.

The company's hematology products, including Revlimid, Pomalyst, Reblozyl, and Abecma, saw mixed sales in the quarter. Revlimid had strong global sales, while Pomalyst saw a decline due to free product dynamics in the U.S. Reblozyl had a 28% increase in U.S. revenue, driven by increased demand and use in first line and second line patients. Abecma's revenue was impacted by manufacturing site maintenance and competition from other BCMA targeting agents. Reblozyl's sales doubled compared to the previous year, but were down slightly due to timing of infusions. The company is confident in its ability to grow in the future with expected increases in supply.

In the third quarter, global sales for Zeposia increased by 75% compared to the previous year, mainly driven by demand in the multiple sclerosis market. Sotyktu also saw strong sales, with over 38,000 script equivalents dispensed since launch and a 40% share in the oral category. The company expects to continue strengthening its market access next year. Gross margin was positively impacted by product mix, and the effective tax rate decreased due to a recent guidance on deductibility of research and development expenses. Overall, third quarter earnings per share grew by approximately 1%.

The company's cash flow and balance sheet remain strong, with a focus on business development and growth through acquisitions, dividends, and share repurchases. The company expects a decline in revenue and operating expenses in the low single digits compared to last year. The effective tax rate has been revised to 15.5% and the non-GAAP EPS guidance has been increased. The company reaffirms its revenue growth target and adjusted its new product portfolio target to greater than $10 billion in 2026. The operating margin target remains at greater than 37% through 2025, taking into account the dilution from the Mirati acquisition.

The speaker is acknowledging Giovanni's leadership and thanking him for his contributions in transforming BMS. They also acknowledge the hard work of their teams and mention that they will continue to focus on delivering for patients under Chris' leadership. They then move on to the Q&A portion of the call, where the first question is about the company's lowered 2025 targets and how they plan to achieve their longer term targets. They also discuss the potential of rethinking the peak sales of some assets based on the lessons learned from recent launches.

The company's new product portfolio has strong long-term potential, but the timing for some products has changed. Some products are performing well, while others need improvement. Overall, the company remains confident in the portfolio's importance for driving growth and diversifying the business. The focus is on executing commercial plans, advancing the pipeline, and seeking external innovation through business development. Adam Lenkowsky has nothing to add.

Geoff Meacham from Bank of America asks about the recent data for sub-cu Optivo and the potential benefits and strategic importance of this approach. Chris Boerner explains that sub-cu could improve patient experience and address treatment burden, and they are pleased with the data for 67T. They plan to present this data at a conference and engage with regulators. The sub-cu program is expected to address specific patient needs and potentially convert 50% of the overall business, extending the franchise into the early 2030s. Luisa Hector from Berenberg also asks a question.

The speaker, David Elkins, confirms that the long-term guidance for the new product portfolio does not include any contribution from Mirati. The margin guidance factors in investments in the launch portfolio and R&D pipeline, as well as dilution from Mirati. The company sees opportunities to accelerate in the R&D pipeline and expects margins to be above 40% in the medium term. However, the 37% margin guidance for 2025 reflects the loss of the Keytruda royalty and the potential loss of other products in the future.

David Elkins responds to a question about the 37% guidance for 2025 and clarifies that it is a floor, with more guidance to come in the fourth quarter earnings call for 2024. He mentions that Revlimid's guidance has been revised and they will update on other line items in the fourth quarter. Tim Power thanks David and asks for the next question. Chris Shibutani asks about Sotyktu and the reimbursement environment, and Adam Lenkowsky responds by stating that they are pleased with its performance and their goal is to be the standard of care in the oral market. They have achieved a 40% share of newly written prescriptions and plan to achieve broader access in 2024 and 2025.

The company expects significant improvements in coverage for their product Sotyktu next year, as they are currently in negotiations with PBMs. They are confident in their ability to achieve this. During a recent R&D meeting, they discussed changes in their midterm guidance, which were mainly driven by trends related to their product Abecma. This has resulted in a slightly lower projected revenue for the year.

The company has updated its 2025 guidance due to changes in its product portfolio. They will provide more information about 2024 next year. They are confident in the success of their launch reboot strategy for products that have not met expectations, such as Opdualag and Reblozyl. Breyanzi is also performing well and is expected to continue to do so in 2024.

The dynamics for Sotyktu and Camzyos are taking longer, but their fundamentals remain strong. Abecma and Zeposia are seeing continued growth, while the teams are focusing on expanding site footprint, differentiating and contextualizing real-world data, and educating on sequencing. Manufacturing for Abecma is progressing well and Zeposia is seeing quarterly demand growth.

The company is experiencing growth in the MS market despite a decline in the oral market. They are also making progress with UC, but access challenges remain. Zeposia is expected to continue growing in the first-line setting. The company is also focused on increasing the utilization of Camzyos and Sotyktu and reinforcing their superior efficacy compared to Otezla.

Mirati has recently faced challenges with their KRAS G12C class, but the acquisition of Krazati presents a significant commercial opportunity as it is considered a best-in-class KRAS G12C. Krazati has the potential to combine with multiple agents, including PD1, which could bring greater upside to the opportunity. Mirati's other assets, such as PRMT5 and KRAS G12D, also show promising efficacy. The company believes this deal will be a strong catalyst for growth in the future. During the Q&A, they also discussed the potential headwinds for Abecma and the timeline for getting back to the previous run rate, as well as their confidence in an on-time approval for KarMMA-3.

The company has a PDUFA date in December and is working with regulatory agencies. The S12 maintenance in June has affected Q3 sales, along with competition from other BCMA targeted agents. The approval of KarMMA-3 could help return the company to growth. The company is confident that 60% of CVS insured patients will be converted from bridge to commercial status by the end of the year.

The company is seeing new patients quickly adopt their products, which is helping to drive growth. They are confident that with broader formulary access in 2024, there will be strong growth for a specific product. The company has given peak sales targets for several products up to 2030 and some are performing better than expected. However, there have been some early manufacturing constraints and competition from other products, but the company believes they will continue to be competitive in the long run.

The company is confident in the long-term potential of their products Camzyos and Sotyktu, with Camzyos potentially surpassing their initial expectations. While some products are performing below projections, the overall portfolio is still expected to exceed their objectives by 2030. Reblozyl and Breyanzi are performing well, and the company expects Sotyktu to accelerate once access is secured and important data read-outs are released.

Chris Boerner and Tim Power discuss the potential for the product portfolio to reach $25 billion by the end of the decade. David Risinger asks about the potential declines of Eliquis and Revlimid in 2026, but David Elkins clarifies that there is no change to the in-line product segment guidance for 2025. The only change is an extension of the new product portfolio guidance to 2026. Revlimid is expected to face erosion in the coming years, but Opdivo's double-digit growth demonstrates the company's confidence in the in-line portfolio.

In 2025, the company's LOEs will make up less than 10% of their revenue, leading to a younger portfolio in 2026. There has been positive feedback on the company's launches and they remain confident in the profile of Camzyos. There is potential for changes to the REMS, but no commitment has been made. Patients have not shown a desire to stop taking Camzyos and have seen benefits in their quality of life.

A question was asked about Sotyktu and the changes in the immunologic contracting market. The speaker, Adam Lenkowsky, explained that they are working to improve formulary access in 2024 and expect a significant increase in coverage. However, PBMs are still finalizing decisions for 2025. The company remains confident in their growth opportunities for Sotyktu. Another question was asked about M&A strategy after the Mirati deal, and the speaker, Chris Boerner, stated that they are still open to midsized deals and are looking for areas that align with their growth strategy.

The company's top priority is business development, which involves finding deals that are scientifically interesting, strategically relevant, and financially sound. They will focus on deals that enhance the company's growth profile, such as Mirati's contribution to their oncology business. They have seen positive trends in the launch of Camzyos, but there may be some concerns about the burden of the REMS program for physicians.

The company is seeing consistent growth in patient starts and conversion from the hub to commercial for their product. They expect this trend to continue in the future, with a focus on increasing penetration at top centers and expanding use outside of those centers. Additionally, they are working on increasing diagnosis rates and have recently received international approval. The company remains confident in the growth potential of their product portfolio and is focused on execution and driving momentum in their current products, as well as seeking new assets externally.

The operator concludes the conference by thanking everyone for attending and wishing them a good day and rest of the week. They then inform the participants that they may now disconnect.

This summary was generated with AI and may contain some inaccuracies.