The operator welcomes participants to the Bristol Myers Squibb Second Quarter 2024 Earnings Conference Call and provides instructions for the call. Tim Power, Vice President and Head of Investor Relations, introduces the speakers for the call, including CEO Chris Boerner and CFO David Elkins. Forward-looking statements are mentioned and the company's non-GAAP financial measures are discussed.

In the second quarter, BMS saw progress in their strategy for sustainable growth, with increased uptake of marketed products and advancements in their pipeline. They also achieved milestones in their I-O franchise and are focusing on reshaping the company to prioritize transformational medicines and prioritize pipeline assets with growth potential.

BMS is taking actions to ensure their R&D efforts are focused on programs with a high chance of success and good ROI, improving operational excellence, strategically allocating capital for long-term growth, and delivering important medicines to patients. They are also expanding their focus in hematology-oncology, cardiovascular, and immunology, with a strong emphasis on cell therapy.

The company is focusing on re-establishing its presence in neuroscience, starting with the launch of KarXT for neuropsychiatry and expanding it to multiple indications. They are also preparing for the launch of nivolumab subcutaneous formulation and have plans for a Phase 3 study for Opdualag in non-small cell lung cancer. In immunology, data is expected for CD19 NEX-T this year.

The company is confident in their ability to deliver significant benefits for patients through their pipeline, with important data readouts expected in the second half of the year. They have raised their guidance for top-line growth and EPS, and are focused on strengthening their foundation for sustained long-term growth. The employees of the company are committed to delivering breakthrough medicines to more patients. The presentation then moves on to discuss the quarterly sales results.

The company had a strong second quarter with a 21% increase in their growth portfolio and a 3% increase in their legacy portfolio. They also saw favorable expenses and a higher operating margin. Sales across their key therapeutic areas showed continued momentum, with several important growth brands performing well. However, there is still work to be done in the highly competitive immunology category. The company also saw some inventory and gross-to-net favorability in the quarter, which will impact sales in the second half of the year. The company's oncology franchise, particularly Opdivo, had a strong quarter with global sales increasing and expected growth in the mid-single-digit range for the year.

The I-O franchise of the company has shown strong growth, particularly with Opdualag, which is expected to enter Phase 3 registrational program later this year. In the cardiovascular segment, Eliquis remains the market leader with global sales of over $3 billion. Camzyos and Reblozyl also showed significant growth, driven by higher demand and market share gains in the US and favorable reimbursement in international markets.

In addition to strong sales growth in the US, the brand has been approved in approximately 40 countries, with plans for further global reimbursement. Cell therapy sales have also seen growth, particularly in international markets. In the immunology sector, access and competition have impacted performance, but the company has made progress in improving access and anticipates continued demand growth. The company is also focused on financial discipline and cost savings to reinvest in higher growth opportunities. Gross margin was favorable due to product mix, while operating expenses were impacted by deal-related spend but partially offset by cost savings initiatives.

The company's expenses were lower than expected due to a shift in planned investment spend, resulting in a higher earnings per share. They also had solid revenue growth and a strong operating cash flow. The company reduced their total debt by $3.1 billion and plans to pay down $10 billion over the next two years. They are prioritizing opportunities for long-term growth and remain committed to their dividend. The company's guidance for full-year revenue is now at the upper end of the range, and their gross margin guidance has been raised due to better-than-expected sales.

The company expects its total operating expenses to increase by a low-single-digit percentage, with a step-up in Q3 due to delays in expenses. They maintain their operating margin target of at least 37% for the year. They expect annual expenses of $50 million for OI&E due to higher royalties and favorable net interest expense. The estimated underlying tax rate for the year is 18%, except for one-time nondeductible expenses. The company is raising their 2024 non-GAAP EPS guidance to between $0.60 and $0.90. They anticipate similar growth in the second half of the year as in the first half, with a strong fourth quarter. Sales for Revlimid are expected to be at the higher end of the $4.5 billion to $5 billion range.

The company has entered the second half of 2024 with strong sales momentum and financial discipline. They are excited about the potential of their emerging neuroscience platform and are committed to investing in high-growth areas. The first question is about the immunology portfolio and the potential for pricing going forward. The second question is about IRA negotiations and any surprises or insights that can be shared. The company has received the government's final MFP price for Eliquis.

The company anticipates CMS to publish the MFP price by September 1st and is confident in their ability to navigate the impact of IRA on Eliquis. They firmly oppose government price setting and remain concerned about the long-term implications on innovation. In the immunology category, they are making progress and are focused on improving access for their products. Sotyktu's performance has been slower than expected, but they are making efforts to improve it and have doubled their access since the beginning of the year.

In the paragraph, the speaker discusses the progress of the company in terms of access improvements and expected increases in gross-to-net due to rebates. They also mention a stocking benefit of $150 million in Q2, primarily in their I-O and immunology franchises. The questioner also asks about the potential launch of cendakimab and how it will be positioned, to which the speakers respond that they are pleased with the positive readout and will provide more information in the future.

The company has positive results from a recent Phase 3 study for cendakimab, meeting both primary and secondary endpoints. They are currently analyzing the data and considering next steps for the drug. From a commercial perspective, they expect it to be positioned behind Dupixent and are looking forward to presenting the data to regulatory authorities and at an upcoming meeting.

The speaker, Chris, asks about the company's recent aggressive approach to business development and how they prioritize programs to avoid overspending. He asks about their current capacity and appetite for expansion, particularly in areas like cardiovascular disease, metabolic conditions, and obesity. The response is that business development remains a top priority, with a focus on executing recent deals and paying down debt. They are interested in strategic and financially sound partnerships in their areas of expertise, with a preference for smaller, bolt-on deals. The question about obesity is addressed as well.

The speaker responds to a question about the ongoing price negotiations in the IRA market, stating that there is no formal gag order preventing drug companies from discussing the negotiations, but CMS has asked companies to keep quiet. The speaker also mentions the possibility of an earlier announcement and confirms that they will provide an update shortly after CMS publishes the information.

Evan Seigerman asked two questions during the conference call. First, he asked about the preparations being taken for the launch of KarXT in order to capitalize on their competitive headstart. Second, he asked what else needs to be known in order to understand when the trough earnings will occur. Adam Lenkowsky discussed the excitement surrounding the launch of KarXT, which is expected to be in late September or Q4 of 2025. He also mentioned that KarXT is the first innovative therapy for schizophrenia approved in decades. Chris Boerner added that more details about the trough earnings will be provided once the price is disclosed and that they are confident in their ability to navigate the impact of IRA on Eliquis. They also stated that they will announce earlier if CMS comes before September 1st and will communicate the impact of IRA on their IR website.

The company is preparing for the launch of their new medication, KarXT, by sourcing experienced sales and medical teams, reinforcing the profile with payers, and ensuring a positive first experience for physicians and patients. They are also executing on the overall development plan for KarXT, with ongoing studies for schizophrenia and Alzheimer's disease, and plans for future studies in bipolar disorder and Alzheimer's agitation and cognition impairment.

The company is currently working on autism studies involving children and is focused on improving the shape of the business in the long term. They have various strategic levers to pull, including a growing portfolio of young assets, new product launches, late-stage pipeline assets, early programs, and a strong balance sheet for potential partnerships and business development. The company is committed to delivering short-term results while also accelerating growth in the back half of the decade.

The speaker asks Adam to provide more details about Breyanzi's performance in the second quarter and how it will continue to grow in the second half of the year. Adam mentions the increased manufacturing capacity and new indications as key drivers for this growth. He also acknowledges the expanded manufacturing capacity and best-in-class status as factors that will help them compete effectively in the market. The next question is about the company's CELMoD portfolio and how it will be positioned in the crowded multiple myeloma landscape.

The speaker responds to a question about the potential impact of Part-D redesign on the company's payout for Eliquis. He explains that multiple myeloma is a disease that requires multiple therapies, including small molecules, large molecules, and cell therapies. The company has two drugs in development that they believe will play a role in treating the disease. They also mention the need for manageable toxicities and the potential for their drugs to be used in patients who are not eligible for cell therapies.

Chris Boerner and David Elkins answer a question about the redesign of Medicare Part D and its impact on Bristol Myers Squibb's (BMS) products. They mention that the redesign will be favorable for Eliquis, but Revlimid and Pomalyst will have more responsibility in the catastrophic phase. They also state that BMS is monitoring the situation closely and believe that the overall impact on the portfolio will be largely meaningful. In response to a question about 2025 operating margins, David Elkins says that it is too early to provide commentary and they are still evaluating the potential impact. The paragraph ends with a request for disclosure of the WINREVAIR royalty from Merck.

The company remains committed to maintaining a high operating margin and saw strong gross margins in the quarter. They are executing operational efficiency programs to maintain this margin. They also expect growth from their royalty rate on WINREVAIR sales. The company is facing challenges in the immunology space, but is focused on accelerating growth with other products such as Reblozyl, Camzyos, Breyanzi, and Opdualag.

Adam discusses the performance and execution of Sotyktu, stating that it is slower than expected due to the difficulty in gaining access in the highly controlled immunology market. However, they have made progress and now have approximately 65% access with most at zero step edit. Zeposia has had a successful launch in the multiple sclerosis market, but has faced challenges in the more managed UC market. Overall, the immunology market is competitive, but Orencia continues to perform well. Adam also mentions the upcoming launch of KarXT, which has different access dynamics. He expresses confidence in their ability to continue to grow the business in both the near and long term.

During a conference call, David Risinger asked Bristol for their thoughts on potential price pressure for drugs that are not currently rebated, such as Opdivo, compared to heavily rebated drugs like Eliquis. He also inquired about competition for their growth drivers, Sotyktu and Opdualag. Bristol's Chris Boerner declined to speculate on the impact of future negotiations and Adam Lenkowsky stated that it is premature to discuss Opdivo's eligibility for negotiation. They also mentioned their goal to convert as much business as possible before the LOE for their nivo subcu.

The company expects to convert a significant portion of the US market for Opdivo before its patent expires, and believes this will benefit both physicians and patients. They also anticipate continued success for Opdivo in the next decade, despite competition from a biosimilar. In the immunology field, the company is preparing for competition and plans to have several indications, including PSA, approved by the end of the year. They also have high hopes for their drug Sotyktu, which has already been approved for melanoma and has promising data in other areas. The company is also progressing with their drug Opdualag for melanoma and non-small cell lung cancer, and is not concerned about competition in this area.

Steve Scala from TD Cowen asks a question about Bristol's plans for providing guidance on the Eliquis business. He also asks about the potential of cendakimab in EoE, to which Samit Hirawat responds confidently. Chris Boerner states that the company has moved away from providing long-term targets but will continue to update on the business as appropriate. They will provide forward-looking guidance at the beginning of the year.

The speaker discusses the differences in measuring results for Dupixent and their own study, and mentions that they will not comment on the specificity of the data until it is presented at a medical conference. They also mention the ongoing discussions with regulators. The next question is about subcutaneous Opdivo and the conversion rate, and the speaker says they are expecting a PDUFA date in late December and have converted at least 30-40% of the total US Opdivo IV business. They have time until the LOE in 2028 and expect the conversion to come from patients in the adjuvant setting and first-line RCC.

The speaker discusses the potential benefits of nivo subcu, including a faster infusion time and freeing up chairs for physicians in the community setting. They also mention the broad patent estate and potential for nivo subcu to continue being a leading IO franchise until the early 2030s. A question is asked about recruitment and supply for the ACTION-1 trial with RZ101, as well as the dose taken from Part 1 to Part 2 of the Phase 3 trials for mezigdomide. The speaker confirms that recruitment has resumed for the Actinium-225 trial and enrollment is ongoing for the mezigdomide trial, but does not reveal the dose taken forward.

Olivia Brayer from Cantor Fitzgerald asks a question about Sotatercept and the company's other income guidance. David Elkins explains that the increase in other income is mainly due to better-than-anticipated diabetes royalties and interest expenses. Samit Hirawat also mentions the progress of the PRMT5 program and plans to initiate Phase 2 studies in selected patients. The next question comes from Steve Chesney with Redburn Atlantic.

The company is enthusiastic about its RayzeBio platform and expects it to grow significantly in the coming years. The lead program, RYZ101 for GEP-NET, is a modest commercial opportunity but the technology has potential for other tumor types. The company is also looking into launching the GEP-NET indication and other new INDs in the future. In regards to KarXT, the company is confident in their construct and is conducting studies for CD19 NEX-T.

James Shin asks about the upcoming readouts for PRMT5 and CD19 NEX-T in the pipeline. He also asks about the potential impact of CDMs entering the biosimilars market on negotiation dynamics in immunology.

The speaker asks about disclosure for PRMT5 and CD19, and the company plans to present data on these molecules at upcoming medical conferences. They are also preparing for conversations with regulatory authorities. In regards to biosimilars, they do not expect them to have a preferred position in the PSO market. Another question is asked about Camzyos and the company notes that they are starting to see a slight acceleration in patient uptake, potentially due to increased awareness and understanding of the drug.

The speaker is asking about the potential impact of the November election on IRA implementation. Chris Boerner responds that they have seen steady growth from Camzyos and are deploying additional representatives to drive treatment. The speaker then asks about the upcoming Oceanic AF data and potential risks to stroke prevention.

Chris Boerner addresses a question about the impact of the US election on policies related to healthcare. He mentions that it is difficult to predict any changes due to the election's outcome and the composition of Congress. Samit Hirawat then responds to a question about the Milvexian program and explains that it was based on prior learnings and that independent investigators have conducted preclinical work to differentiate it from Asundexian. He also mentions that enrollment in trials for AF, stroke prevention, and ACS is going well and they are looking forward to the data.

The company is pleased with the performance of their business and growth portfolio, which has led to a strong first half of the year. They are also looking forward to upcoming catalysts, such as the KarXT launch and data readouts. The company has executed well in the quarter and is raising their outlook for the full year. They are focused on driving strong execution in the busy back half of the year.

The speaker thanks the audience for their time and mentions that the Investor Relations team is available for any further questions. The operator then concludes the conference call and thanks everyone for attending.

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