Bristol-Myers Squibb Company

Good day, and welcome to the Bristol-Myers Squibb 2019 Second 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.

Thanks, Orlando, and good morning, everybody. We're here to discuss our second quarter earnings as well as the news that was press released last night. With me this morning, Giovanni and Charlie will have prepared remarks. Chris Berner, our chief commercial officer, will be here for a Q&A, as well as Fuad Numuni, our head of oncology development, is here for Q&A as well. I'll take care of the safe harbor language during the call. We'll 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 of these non-GAAP financial measures and those comparable GAAP measures are available at our website.

Giovanni? Thank you, John, and good morning, everyone. I'm pleased to speak with you today about our strong performance in the second quarter and the progress we've made on our planned acquisition of Celgene. But first, let me start by discussing the results we announced last night and frame what it means for Obdivo and how I think about our outlook going forward. With respect to 227 results, as you know, we announced important results last night. We had a successful outcome but also a part of the trial that didn't meet its endpoint. Starting with the results of Part 1a, this is the third major tumor in which Obdivo plus Yervoy shows an overall survival benefit in the first-line setting, and we believe these results represent a potentially differentiated opportunity in first-line lung cancer. If approved, the combination would provide an additional and chemo-sparing treatment option for patients. And I have full confidence in my commercial team's ability to execute in this competitive marketplace. As we noted in the press release, we also saw in an exploratory analysis an overall survival benefit in PD-L1 negative patients. We'll be sharing all the data at an upcoming medical meeting, so I won't go into the specifics today. Now, turning to the results of Part 2, they were not what we had hoped for. There are, however, important aspects of the study results to keep in mind. First, we're looking at one-year landmark analysis. Obdivo plus chemo performed consistently with the experimental arms of other successful trials. The chemo control arm somewhat overperformed compared to what we regularly see. The performance of Obdivo was consistent with our expectations, but the trial was not positive. The totality of the data we've seen from both Part 1 and Part 2 confirms our belief in the profile of Obdivo as an important medicine and further strengthens the value of the combination of Obdivo and the Airboy. We know lung is a highly competitive market and we are excited about the potential opportunity to offer a differentiated option for patients. We plan to discuss these results with health authorities as soon as possible. We continue to expect growth for Optivo in the U.S. and ex-U.S. this year compared to last year. Looking forward, we see the growth trajectory for Optivo being driven by data supporting future approvals, and Charlie will discuss the near-term dynamics for Optivo. Now, let me turn to the second quarter results. Our results were driven by excellent commercial execution across the entire portfolio. Eliquis continues to drive significant growth through strong execution and a best-in-class profile, with a compelling growth outlook ahead. I've already talked a lot about Obdivo, and as you've seen, we've had a really good quarter. Additionally, our results this quarter reflect strong financial discipline from an OPEX perspective. Charlie will provide more color on performance in the quarter and the potential opportunities that we see ahead. Reflecting on a strong performance in the first half of the year and the clinical trial results we announced last night, I want to move to discuss how I am thinking about the future company overall. When we announced the Celgene acquisition in January, we said it was attractive from a strategic and from a financial perspective. As I speak with you today, I am even more convinced of the rationale of the deal and the exciting new company we are creating with the acquisition. When we first announced the deal, we said we viewed Celgene as providing us with a unique value creation opportunity through five potential near-term launches and an attractive pipeline. As the year has progressed, we've seen very positive developments with Celgene's business. Both IPRs for Revlimid were rejected, and an additional settlement was announced. We've seen the late-stage pipeline opportunities move closer to launch, with three of the big five filed with the FDA and other health authorities. As a combined company, we'll have a broader and more diversified portfolio with significant growth prospects. In the medium term, we will have potential for four hematology launches, a Nosanimod approval in multiple sclerosis and later in IBD, a TIK2 approval in psoriasis, among other indications, as well as life cycle management opportunities for our IO portfolio, including adjuvant therapies. Longer term, as we face losses of exclusivity in our portfolio in the second half of the next decade, we will be in a much stronger position as a combined company. We'll have an earlier lifecycle portfolio, including the potential six near-term launches. The 50 Phase 1 and 2 programs will be maturing, and we expect our balance sheet to be reset, allowing us to continue to source external innovation through business development. As you know, we announced the decision to divest from Tesla based on our ongoing discussions with the FTC, and we are currently engaged in a strategic sale process. Charlie will say more in a few moments. I feel good about our preparedness for the integration and our ability to execute as a combined company. In June, I announced my future leadership team. The team includes key talent from across both companies and was selected to ensure key value drivers are protected. Specifically, it was critical to ring-fence hematology, and solid tumor commercial capabilities, while bringing best-in-class enabling functions to bear across the entire portfolio. With R&D execution a key priority for the combined company, we've named two talented leaders, Rupert Bessie and Samit Hirawat, to run the research and late-stage development organizations, respectively. I'm pleased to note that Samit has been with VMS for a few weeks. As he transitions into the company, is not permitted to work on oncology development until the end of October. However, as John mentioned, Fuad is here today to answer your questions regarding oncology. To conclude my remarks, I'd like to reiterate I am pleased with our strong performance this quarter. I am encouraged by the results we announced in our first nine-month program and the potential opportunity to provide new treatment options to patients with unmet needs. I'm very excited to create a leading biopharma company and build significant value for our patients and shareholders. And with that, I'll hand it over to Charlie.