Bristol-Myers Squibb Company

Good day and welcome to the Bristol Myers Squibb 2018 Fourth Quarter Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. John Elicker, Senior Vice President, Public Affairs and Investor Relations. Please go ahead, sir.

Thank you, Grodin. Good morning, everyone, and thanks for joining the call today. We do have a lot to discuss, including the quarter, our full year results, 2019 outlook, as well as some additional perspectives on our announced acquisition of Celgene. We will be using a slide deck today, so we did email it to you about 15 minutes ago. The slides are also available on our website. Joining me today with prepared remarks are Giovanni Coforio, our Chairman and CEO, Charlie Bancroft, our CFO, and Chris Berner, our Chief Commercial Officer. Tom Lynch is our chief scientific officer, will also be here for Q&A. You'll see on slides two and three of today's presentation our legal disclosures. And with that, on slide four, I will turn it over to Giovanni.

Thank you, John, and good morning, everyone. I am proud to speak to you today about excellent results in 2018 and the exciting outlook for the company in 2019 and beyond. As John said, let's start on slide four. Today we will cover our 2018 financial results, the planned cell gene acquisition, and how we are thinking about this in terms of the financials of the acquisition and the value we are creating for shareholders. Before we start, I'd like to address today's announcement on our FDA application for Checkmate 227 in high TMB non-small cell lung cancer patients. As you saw in our press release, we have decided to voluntarily withdraw the application. This is because following recent discussions with the FDA, we believe it is important to further characterize the interaction between the two biomarkers of TMB and PD-L1 in these patients in order to understand the relevance to overall survival in this setting. To do this, we will need data from Part 1A of Checkmate 227 that will not be available during the review period for this application. I would like to emphasize that we continue to believe that TMB is scientifically important, and we look forward to continuing to advance our research in this area. Turning now to slide five and our 2018 results. I could not be prouder of our very strong performance for the quarter, which wraps up a very good year for the company. This was driven by excellent commercial execution on our priority brands, and disciplined expense management that has driven improvement in our operating margin. Commercial execution was strong across the portfolio with significant growth driven by our two key franchises of Obdivo and Eliquis. Our IO franchise performed well throughout the year in highly competitive markets and we have consistently demonstrated very strong launch capabilities. During 2018, we saw very significant growth coming from adjuvant melanoma and first-line RCC in the U.S. And we are now working through the launch process in Europe, having received approval for first-line RCC in that market. Charlie will talk more about Obdivo a little later. And I will tell you that based on the strong momentum in the 18 business, we expect to see growth for Obdivo in the U.S. and internationally in 2019. Turning to Eliquis, we continue to see robust trends with Eliquis as the established number one NOAC globally and the number one OAC in the US. As I've said before, we see considerable room for the market to expand with continued increased adoption based on the superior profile in atrial fibrillation that has made it a leader to date. Eliquis will continue to be a strong growth franchise for our company in 2019. In addition to strong commercial performance, we have exercised disciplined expense management across our P&L, supporting significant earnings per share growth of 32%. Our focus on prioritizing investment in the most important opportunities will continue as we look to the planned integration of our company with Celgene. Our 2018 results and the approach that guided them provide a solid foundation for future success. You'll see today that we have provided additional line item guidance that shows expectation of sales growth in 2019. As I look back at our company's performance, I'm pleased not just with our results from last year, but over the past several years. As I've said many times, I believe a key part of our success has been our ability to execute very well against a consistent strategy. Let me remind you of the key features of our strategy and explain why acquiring Celgene fits so well within that framework. Looking at slide six, this is a slide you're very familiar with because it's the strategy we've been executing for over 10 years. Central to our strategy is bringing together the best of biotech, namely innovation and agility, with the best of pharma, the resources and scale to create a leading biopharma company. As I've said, this strategy has enabled us to be very successful over many years and has delivered strong performance. And I'd like to take a few minutes to explain what I mean by that. Now to slide seven. An important component of our strategy has been to ensure that we are constantly operating ahead of the curve. We took a very focused approach to creating the company we are today with an unwavering focus on science and innovation. We exited primary care and focused on specialty care and unmet medical needs. We designed a strategy to externally source innovation to build our priority therapeutic areas. Importantly, the actions we've taken have led to innovations that have helped transform diseases like atrial fibrillation, lung cancer, melanoma, and RCC, and resulted in strong earnings growth. The innovation cycle that led to Eliquis, Obdivo, and Yervoy has delivered for patients and at the same time has also delivered financially. We believe that now is the right time to move to the next exciting chapter of our company with the acquisition of Celgene. It allows us to become an even stronger company for the long term, bringing breath to our business while remaining focused in key therapeutic areas that we know very well. Slide eight is a slide you've seen before when we announced the acquisition of Celgene in early January. It provides an overview of how I am thinking about the combined company we will create, and I would like to call out the highlights. We will create a top five immunoscience and inflammation franchise with Orencia, Enotesla, and two near-term product launches. We will have the number one oncology franchise with leadership in hematology, and a pipeline that would sustain that leadership for the long term, along with a growing solid tumor franchise with Opdivo and the Ergoi. We are doubling our phase one and two pipeline for many more possible new medicines. And we will gain platforms and capabilities important for scientific leadership in the future. None of this would be possible without the people of BMS and Celgene. We are creating a science leader a leading scientific and innovation-based company that we believe will be a destination for talent moving forward. Moving on to slide nine, I want to explain how I view this transaction from a financial perspective. As I've described to many of you over the past weeks, we see an opportunity to create value for shareholders from day one. Let me walk you through these key points. I believe the combined company provides value to shareholders through a robust and complementary marketed medicines portfolio. The near-term launch of six new medicines, the doubling of our pipeline assets, and the opportunities for synergies. The strong cash flow of the two companies would allow us to deliver our balance sheet and strengthen our credit profile within two to three years. enabling a stronger balance sheet and increased flexibility. As we modeled the combined company, I see sales and earnings growth now through 2025. Overall, I believe that the combination of Bristol-Myers Squibb and Celgene will create a company that will be well positioned for the second half of the next decade, better than each company alone. Now, let me turn it over to Charlie to walk you through our financials in more detail.