Bristol-Myers Squibb Company

Good day and welcome to the Bristol Myers Squibb 2021 Third Quarter Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Tim Power, Vice President, Investor Relations. Please go ahead, sir.

Thanks, Christina. Good morning, everyone. Thanks for joining us for our Third Quarter 2021 Earnings Call. Joining me this morning with prepared remarks are Giovanni Coforio, our Board Chair and Chief Executive Officer, and David Elkins, our Chief Financial Officer. Also with me for today's call are Chris Berner, our Chief Commercialization Officer, and Sumit Hirwat, our Chief Medical Officer and Head of Global Drug Development. You'll note that we posted slides to bms.com, and you can use those to follow along with Dave and Giovanni's remarks. But before we get started, I'll read our forward-looking statements. During today's call, we'll make statements about the company's future plans and prospects that constitute forward-looking statements. Actual results make different material 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 to the most comparable GAAP measures are available at BMS.com. With that, I'll hand it over to Giovanni.

Thank you, Tim, and good morning, everyone. I hope that you're all doing well. Now turning to slide four, I'm pleased to report a very good third quarter with solid sales growth driven by strong commercial execution and good progress in our pipelines. I'm proud of the performance of our commercial teams who dropped demand growth for our launch products and delivered solid performance of our inline products, including Red Limit, Obdivo, and Eloquest. In R&D, we are progressing the most promising assets in our pipeline for sustained growth. In the quarter, we advanced our third IO mechanism with the fixed dose of Relatlimab plus NEVO accepted for priority review in the US for the treatment of patients with unresectable or metastatic melanoma. This is an important development for the IO franchise, and we have additional data readouts for NEVO on the horizon. From a financial perspective, we reported sales of $11.6 billion. and non-GAAP EPS of $2, with growth of 10% and 23%, respectively. I'm encouraged by our results and how they position us for the rest of 21 and for the future. As a result, we are reaffirming our revenue guidance and raising the lower end of our non-GAAP EPS guidance range. Our balance sheet is strong, and we continue to pursue a disciplined capital allocation strategy. focused on investing in internal and external innovation opportunities. On the IP front, we are pleased with the decision by the US Court of Appeals for the Federal Circuit upholding the Eliquis IP and providing exclusivity until 2028 under existing settlements. This decision confirms our belief in the value of the science behind Eliquis and the underlying IP protecting its innovation. Overall, I'm extremely pleased with our progress in the quarter. Turning to our execution scorecard on slide five. At the start of the year, I laid out this scorecard with the milestones we thought would be important for us to deliver in order to successfully renew our portfolio. The team has worked hard and I'm proud that they were making progress across the board. A number of accomplishments were included on the prior slide, so I won't go through all the details. But I want to call out a few highlights here. David will provide more details in his remarks. I'll start with Ducrava-Citinib. Ducrava has demonstrated a compelling and differentiated profile in two phase three studies as the oral treatment of choice in psoriasis and is an important asset with significant potential across a number of indications, including psoriatic arthritis, where we have already initiated a phase three program. Although we did not achieve proof of concept in a Phase II study for ulcerative colitis, we are committed to advancing our promising Ducravacidinib clinical program in inflammatory bowel disease, including another study for ulcerative colitis, as well as Crohn's disease in lupus and other immune-mediated diseases. We continue to make great progress in our cell therapy franchise, and we look forward to presenting the transformed data for Brianzi in second-line DLBCL at ASHE. We're excited with the strength of this data, which have the potential to enable our cell therapy franchise to reach a broader set of patients. And we are also looking forward to presenting data from the first phase two study for Melvexian for VTE prevention in patients undergoing total knee replacement at the American Heart Association Conference in a few weeks. Looking at the overall strength of execution so far, I am confident that we are on track to deliver what is required for us to renew our portfolio. Moving to slide six, it has been two years since we formed the new Bristol Myers Squibb. As I reflect on this time, we have already made great progress. We are doing what we set out to do, delivering on the value drivers of the integration, and most importantly, establishing a strong foundation for our company's growth well into the future. Knowing that we face losses of exclusivity in the coming years, I recognize executing well on our multiple launches and continuing to advance our pipeline is particularly important for us. When I reflect on the last two years, I'm pleased on both fronts. We see strong demand for our newly launched products, and we are delivering on the promise of our pipeline, including a broadening data set for our launch products and continuing progress with our next generation of assets, such as Nelvexian and Iberdomide. Our company today is more diversified than ever before with four durable franchises and the financial flexibility to continue to invest in innovation. As we recently announced, we will be hosting an investor event on November 16 in New York City to review our progress over the last two years and further discuss the company's strategy, pipeline, and business opportunities. I look forward to the meeting and I hope you will join us. In closing, We have made significant progress through this period. And I would like to thank our global teams who have maintained the focus on delivering for patients. With that, I'll turn it over to David to walk you through the financials.

David. Thank you, Giovanni, and thank you all for joining our call today. Starting with our top line performance on slide eight, we had yet another strong quarter with third quarter revenues growing double digits versus prior year, primarily due to demand, increased demand for our inline brands, but as well as our new product portfolio. So let me shed some light on some of our product performance, starting with Eloquist on slide nine. Eloquist continues to perform very strong with global sales up 15% versus prior year. In U.S., sales grew 18% versus prior year. Demand growth continues to be strong with total prescription growth of 14% versus last year, driven by a lack of market share gains and growth in new-to-brand volumes. Sequentially, as usual, sales were impacted by the expected coverage gap liability that occurs in the third and fourth quarters each year. We expect strong new-to-brand share growth to further translate to overall total prescription growth. Internationally, sales grew 12% versus prior year, primarily due to demand. Shares continue to increase across all key geographies and continues to rank as the number one OAC in multiple markets with additional room to grow. We remain really pleased with Eloquist's execution around the world and expect to continue to grow Eloquist's share within a growing class. Now, moving to Optiva's performance in slide 10, we're pleased with continued momentum for the brand. with sales growth of 7% versus prior year. In the U.S., sales grew 4% versus last year, primarily driven by uptake in first-line lung cancer and our multiple other new launches this year. And sequentially, we had demand growth of 5%, which was offset by work down of $40 million in inventory build we noted in the second quarter. Our commercial teams continue to execute well. We've retained strong positions and core indications, such as melanoma and renal, and are very pleased with the performance of our newer indications. Outside the U.S., we had another strong quarter with sales up 11% versus last year. Growth was primarily driven by demand for new indications of expanded access in Latin America, Turkey, and Russia. We continue to see strong updates from our new launches in lung and renal cancer in Germany and Japan, with pricing and reimbursement discussions ongoing in other key markets. These launches, together with recent approvals of first-line gastric and adjuvant esophageal cancer, are expected to contribute to further growth internationally. Based on positive momentum from our current launches and future potential launches, including first-line esophageal in May of next year, as well as expansion opportunities from clinical trials that we'll read out over the next few years, the promise for Abdeva's continued growth is high. Turning to our in-line multiple myeloma portfolio on slide 11, Revlimid was up 11% globally, primarily driven by demand for triplet-based therapies and increasing treatment duration. POMELA's global sales were up 10%, driven by continued demand for triplet-based therapies and use in earlier lines. Now, moving to our new products on slide 12, we continue to be very pleased with our new products, which generate sales of $344 million in the third quarter. This new diversified portfolio is already annualizing close to $1.5 billion run rate, giving us great confidence that we are on our way to renewing our business with products that are much earlier in our lifecycle. So let's start with Reblazel, which generated strong sales of 160 million in the third quarter, up 67% versus prior year. Sales growth in the U.S. was primarily driven by continued demand in the ESA refractory MDS patients, as well as a $20 to $25 million inventory build. We are very encouraged by the recent NCCN guideline update that now recommends evaluating ESA response sooner. at six to eight weeks instead of the previously recommended 12 to 16 weeks. This supports the need to monitor and potentially treat new patients earlier in their treatment journey. Additionally, we remain focused on ensuring you receive the most appropriate dose for sustained benefit. Outside the U.S., uptake continues to be strong in countries where Reblazel is launched. Sales were impacted by the usual price review one year after launch in Germany. expect to launch in italy in the netherlands in q4 pending reimbursement discussions and in more countries in 2022 to drive additional growth for the brand moving to our cell therapies of beckman brianzi demand for a becma our first in class bcma car t remains robust we generate 71 million in the third quarter versus 24 million in the second quarter remember that two Q revenues consisted of only one and a half months of sales, having launched in mid-May, so performance this quarter reflects a full quarter of sales. Demand continues to exceed supply, and we expect Q4 revenues to be largely similar to Q3. Now, moving to our CD19 CAR T, Brianzi, sales in the quarter were $30 million versus $17 million in the prior quarter. Sales increased due to patient demand with physicians, recognizing Brianzi's best-in-class profile. We're extremely pleased to have clinically meaningful EFS data in second-line large B-cell lymphoma and look forward to presenting the data at ASH and bringing this treatment to earlier line patients in 2022. Turning to Ziposia, global revenues were $40 million and a quarter driven by multiple sclerosis launch and one-time inventory build in the US. The MS launch continues to progress well, where Ziposia remains the S1P of choice in terms of written prescriptions. We continue to focus on establishing Zyposia as not only the S1P of choice, but also the oral treatment of choice in MS. Our launch in UC is also progressing well in the U.S. We are encouraged by the initial uptake and growth in the number of new trialists since launch in June. Our focus is building on volume, establishing demand for this oral, biologic-like medicine while broadening access over time. We are also very pleased to have just received CHMP positive opinion in Europe and look forward to making Deposia available to patients living with UC as soon as possible. Lastly, we're making progress on establishing Onurag in first-line maintenance in AML patients. Onurag generated sales of $21 million in the quarter, primarily driven by increased demand as well as inventory build versus prior quarter. We continue to focus on shaping the new maintenance segment and increasing adoption and patient adherence. Now let's turn our attention over to P&L on slide 13. We've already covered our strong sales for the quarter, so let me walk you through a few other non-GAAP key line items. Gross margin increase versus prior year, primarily due to lower rurality payments. Operating expenses were higher than last year, particularly in R&D due to COVID recovery, but also slightly in MS&A due to investments supporting our launch and pre-launch activities. MS&A versus prior quarter did experience some softness due to timing of investments that have shifted to the fourth quarter. Our effective tax rate of 14.9% was primarily driven by earnings mix. Overall, non-GAAP EPS increased 23% year over year. Now moving to our balance sheet and capital allocation on slide 14, our liquidity position remains strong with almost $16 billion in cash and marketable securities and a strong cash flow from operations of $5.3 billion and a quarter. Our capital allocation priorities remain unchanged. We have significant financial flexibility to support a balanced approach to capital allocation. Our priorities are to continue to renew and diversify our portfolio through business development, paying down our debt, and returning capital to shareholders. We've executed several business development deals this year, bringing in differentiated early-stage assets. business development remains a top priority as a leading innovation-based company. We have paid down $6 billion in debt year-to-date and are committed to maintaining our strong investment-grade rating. As it relates to returning capital shareholders, we're committed to growing our dividends subject to board approval and remain opportunistic about share repurchases. We have already purchased $3.5 billion of shares to date, and we currently have approximately $3 billion remaining in our authorization program. Now turning to our guidance on slide 15, based on the strong performance in the quarter, we are reaffirming full-year sales and raising the lower end of our non-GAAP PPS guidance. We continue to expect revenues to increase at the higher end of our guidance and gross margin to be approximately 80%. Moving to operating expenses, we are maintaining our MS&A and R&D guidance for the year. As I mentioned earlier, MS&A, we are expecting higher expenses in the fourth quarter due to timing investments that shifted by a quarter. Additionally, we're updating our tax rate guidance to approximately 16.5%, primarily due to earnings mix. All in all, I'm pleased with our performance. We had another remarkable quarter for the company and continue to execute well against our plans and to diversify and renew our portfolio. This performance cannot have been achieved without the passion and dedication of our employees around the world, and I look forward to providing you future updates on our progress. With that, I'll now turn it back over to Tim and Giovanni for Q&A.

Thanks, David. Christina, could we go to our first question, please?

Yes, thank you. Again, if you would like to ask a question, please press star 1. Again, that's star 1 for questions. We'll take our first question from Jeff Meacham with Bank of America.

Hey, guys. Thanks for taking the question, and congrats on a good quarter. I just wanted to ask on the new launches, the AVECMA launch, was pretty good. Just give us a sense for how much of that is still bullets of patients, you know, versus underlying demand, and just also help us with the impact that you're still seeing from, you know, the viral vector manufacturing. And then the second question, just on Opdivo, it was flat sequentially, and, you know, how do you view, you know, going into 2022 with respect to, you know, what indications could be more of a tipping point versus others? Thank you very much.

Thank you, Jeff. Thanks for the questions. This is Giovanni. Let me just start with a couple of comments and then I'll ask Chris to answer both of your questions. I just wanted to step back and really think about cell therapy. And, you know, you'll remember in the past we've had a number of discussions about whether cell therapy treatments would have a fast uptake in the marketplace, whether this market would grow over time. There were concerns with payers' willingness to provide coverage for those therapies. And I must say, when I look at the experience that we've had with both Abecma and Brianzi, it really confirms our belief that given the right treatments with the right efficacy and safety profile, there is tremendous willingness of physicians to prescribe and drive increased adoption in the marketplace. Many of the payer dynamics have been resolved. So, You know, beyond, obviously, the question that Chris will answer, as we look at the medium and the long term and the commitment we've made to a broad cell therapy portfolio, I'm very reassured that the commercial potential of this modality is being recognized, I would say, significantly more than in the past. Chris?

so thanks for the questions jeff um let me start with cell therapy so we are very pleased with the performance really of both abecma and brianzi in the quarter we saw a very nice increase in demand for both products there was some bolus for abecma still reflected in these numbers but the underlying demand for that product looks very strong the same is true with brianzi We're very happy with the commercial execution for both of these products. We now have over 70 accounts that have been activated across both products, and the majority of those accounts have been or plan to imminently use one or both of the cell therapy products. So overall, I would say the commercial performance continues to be very good. As has been mentioned already, we're actively managing the supply constraints. Those mainly are impacting Beckman, as David mentioned in his remarks. We do anticipate that ABECMA sales in the fourth quarter are going to be roughly similar to what we saw in the third quarter. And we're, of course, continuing to stay very focused on managing through the vector supply constraints and anticipating being in a much better position on that front as we get into the second half of next year. But, again, stepping back, as Giovanni just mentioned, we're very happy with what we're seeing in the marketplace on cell therapy, and it confirms the opportunity we have to build a strong position here. With respect to Opdivo, the performance for the quarter for IO was really in line with expectations. We saw very strong double-digit growth relative to same time last year. And while sales were flat, as you know, from Q2 into Q3, that was, as David mentioned, a function of inventory dynamics coming out of the second quarter. What is important here is that we had very solid growth in the quarter. We had solid growth relative to same time last year and quarter over quarter. And that growth was in the key tumors that are going to drive near and medium-term growth for the IO franchise, notably in gastric cancer, where we've seen a nice uptake since the approval in April. In renal cell cancer, we continue to see very strong demand. And we've seen, coming at the end of the quarter, some nice growth in first-line lung cancer. So overall, if you step back, we're very confident not only in the continued growth for Obdivo this year, but importantly, the momentum going into 22.

Thanks, Chris. Christina, could we go to the next question, please?

Yes, we'll take our next question from Seamus Fernandez with Guggenheim.

Oh, great. Thanks for the question. So first one is on Ducravacitinib. Just wanted to get a little bit of a better sense. It just seems I was surprised to see that we don't have Ducravacitinib listed as filed yet. Just don't know what the limitations are. Are there new data being added? or that you plan to be added, or is it just simply waiting for FDA's acceptance of the filing? The second question really is, you know, as we think about the opportunity for Ducravacitinib, I wanted to just get a better understanding of what Bristol believes, you know, is necessary to succeed in ulcerative colitis. It's our understanding that the IC90 may, in fact, be the most critical part of the development plan and that, you know, perhaps Ducravacitinib may not achieve that unless the dose is really pushed. And so just wondering if a long-acting formulation may be something that Bristol's pursuing. And then just a final question very quickly. Between the MK-2 inhibitor, the BTK inhibitor, the S1P1 that you have in Phase 2, would you call out any of these as having data in 2022 that we should be watching for? Thanks.

Thank you, Seamus. Let me ask Sami to answer your questions.

Thank you for your questions. On the first one on Ducrava, let me just first start by reiterating our confidence in the data, which differentiates it and establishes it as a potential best oral therapy of choice in the future for patients with psoriasis. In terms of the filing, as you very well know, we don't comment on when we file, but we certainly do make it public when the file has been accepted, validated, after we have filed for vindication. So we will certainly make you aware and everyone aware when we hear as time goes. But having said that, we do anticipate bringing the medicine to patients in the second half of 2022, as we have said before. On the question on ulcerative colitis, you're right in the sense that the dose required in ulcerative colitis, Crohn's disease, or IBD in general, is going to be two to three times higher than what we see for psoriasis. And we've seen that for other molecules as well. And that is the intent of the ongoing trials to test out these doses. We obviously have not shared exactly what doses are being pursued for confidential reasons and competitive reasons. But we are looking at all avenues in terms of looking at the impact from not only PK, but the PD outcomes as well. And we'll continue to follow those. And those will be the ways to define a proof of concept in this disease for pursuing further in ulcerative colitis. In terms of the MK2, S1P1, BTK additional data, those trials are ongoing. As you know, these are in the phase 2A, phase 2B settings where we have multiple indications being pursued in BTK in the same trial in the autoimmune space. S1P1 also, additional work being done in Crohn's disease, for example, for Zyposia, and for MK2 as well, data is evolving. I can't say that you'll see the data in 22 or not, but certainly we'll make it available as soon as we have evolution of the clinical outcomes for these data.

Thanks so much.

Christina, can we go to the next question, please?

Yes, we'll take our next question from Chris Schott with J.P. Morgan.

Great. Thanks so much. Just two questions for me. First, it seems to be a lot of debate on the rate of Revlimid erosion in 22. I know you're not giving guidance for next year, but just any color you can provide there, both U.S. and international dynamics, and maybe specifically on the international side of the business. Is it reasonable to think about a business that's down like 50% for next year, given the LOEs you're facing, or are you thinking of something much better or worse than that? It's just, again, one of these things that I think we all have it eroding over time, but just any color on the rate of erosion would be much appreciated. And the second question is a bigger picture one. You've been steadily rebuilding the portfolio here, but you've had a stock that's underperformed this year, and I think the street remains concerned on some of these longer-term LOEs. Does that at some point lead to, I guess, a more aggressive deployment of your capital, whether that's a step up in BD, you look at maybe later stage deals, or even going in a direction with more aggressive share repo? I'm trying to get a sense of when you look at what I think you would think of as a disconnect between what's fundamentally happened with your business and the stock price. How do you think about starting to address that? Thanks very much.

Thank you, Chris. Let me take your questions here, Giovanni. So first of all, on red limit generic entries, you know, nothing has changed there. And let me just reiterate what we've said before and what we see happening next year. So, you know, next year we will begin to see a volume limited generic competition in the U.S. And at the same time, we expect to see generic entries for Revlimid ex-US. That's consistent with what has always been our understanding. It has not changed. It's been fairly clear in our filings, and we're preparing for that. The second thing that I would like to say is that, you know, if you remember beginning at J.P. Morgan, we clearly articulated how we think about the company during the period of loss of exclusivity for Revlimid and Pomalyst. And we expect to be able to grow the company. In fact, we've articulated low to mid single digit for the total company and low double digit for our continuing business through 2025. And when we provided that perspective, we obviously were reflecting our understanding of the revolutionary revolution. And I think the conviction that we have that we can continue to grow the company is really driven by the belief, which is proving right, that the combination of strong growth from our inline products, namely Optivo and Eloquence, combined with the strong uptake of our launch brands, which is happening, would more than offset the loss of exclusivity of revenue internationally next year and then over time in the U.S. So what I'm not going to give you exactly a percentage of erosion for next year, and we definitely will have an opportunity to talk more about this when we eventually provide guidance for the year. What I can tell you is that our belief remains strong, and I think that our perspective that we are able to grow sales and earnings per share applies to next year as well. And so nothing has really changed there. Now, with respect to your second question that speaks to what are our priorities as we renew the portfolio in the face of LOEs, first of all, I think we have a rapidly evolving portfolio of new medicines that has tremendous potential where we are executing multiple launches well. And I think our priority is always going to be first to maximize the opportunity that we have in a very, very rich late-stage pipeline. At the same time, we have tremendous financial flexibility, as David said. And, you know, obviously, we've said for some time now that business development is a priority for us as we think about allocating capital, and that continues to be the case. At the same time, as I've said before, we will be disciplined as we think about BD because we do have many opportunities to deploy our capital to accelerate growth. And I also believe that our capital allocation strategy will continue to be balanced where, as David mentioned, we have a history to look at our dividend and we have increased our dividend consistently over the last several years. We've done that double digit in the last couple of years. And looking at share repurchases, year to date, we've repurchased $3.5 billion. We have an existing authorization for another $3 billion this year. And obviously, we'll continue to look at that as well. But I can tell you that, of course, I understand the focus on LOEs at the same time as We believe that we are executing really well on a plan to renew our portfolio, and we have tremendous financial flexibility to continue to make the right moves to do that.

Christine, can we go to our next question, please?

Our next question from Tim Anderson with Wolf Research.

Thank you. A couple of questions. Lag three, when can we expect that you'll have overall survival data in hand in melanoma for the package you've already submitted? And can you update us on what the development program looks like from here in terms of new trials and new tumor types? If I look at Roche with TIDGET, they pushed into lots of registrational trials for lots of different tumors kind of all at once. And I'm wondering why we're not seeing Bristol do the same here. There's a signal that your confidence just isn't there yet in this molecule and that the survival data melanoma is a gating factor. And then second question on Mavicampton. Last quarter I asked a question why you got only a standard review when it was a word of breakthrough therapy designation previously. I didn't quite understand your answer, but in 2019 it was pretty clear you expected a 2021 approval and launch. So I'm going to re-ask it here. Are you confident you have an approvable drug at the PDUFA date, or is there a potential that they'll want additional data and you'll get a CRO?

Sure. Thank you, Tim. Let me ask Same to answer both of your questions, LAC3 and Mavacampton.

Sure. Thank you, Tim. For LAC3, overall survival data, of course, is dependent on the events, and we are going to continue to follow them and we'll share the data once available through a medical conference, but certainly make you aware of it. We have to remember, though, that in IO therapies, more important than those hazard ratios are going to be the shape of the curve, and we're going to continue to watch out for that, and we'll share that when that becomes available. I cannot tell you exactly what the timing would be at this time. From a development program perspective, yes, the first aligned melanoma study read out. We submitted it. We have a PDUFA date for March of 2022. We have initiated the adjuvant trial in melanoma at this time. We have a randomized phase two study ongoing in non-small cell lung cancer and plans to initiate phase three trials late this year, meaning at the end of this year or early next year. And we have a randomized trial ongoing in hepatocellular carcinoma as a proof of concept generation. LAC3, as you know, has had a history for a long time where we didn't have any data So one has to ensure that the proof of concepts that we are following are going to be strong, and we believe that the trials that we have ongoing will give us that data to go forward. For TIGIT, if you recall, there is a proof of concept in non-small cell lung cancer, and that is a different tumor type and different milieu in terms of the tumor microenvironment. So we have to sort of judge the scientific data and put that in that perspective as we look for new tumor types to explore. And we'll certainly keep you posted if new tumor types are added in the LAC-V program as well. For Mavacamtin, we are certainly comfortable with the data that we have from the EXPLORER trial, from the efficacy perspective as well as safety perspective. We have a PDUFA date for January of next year. We have not heard from the FDA in terms of what additional data would be required. We certainly don't comment as to what the outcomes will be. and how the ultimate decisions will be made by the agency, but we continue to engage with them. And as is usual for any filing, the back and forth and answering questions continues, but that is not unusual as we look at Mavacampton or any other drug.

Christina, can we go to the next question, please?

We'll take our next question from Louisa Hector with Barenberg.

Hello. Thank you for taking my question. I wanted to check on Ducravacitinib whether you have started hiring your dermatology sales course already or whether this is now the Q4 and the reason for the phasing of the marketing costs into Q4 from Q3. And maybe you could also update us on where you are with your cost savings or where you plan to be by the end of this year and what kind of increment we could see in 2022, given that it's made a generic impact as well, just to think about the phasing of those various items. Thank you.

Thank you. So let's start with the CRAVA commercial investment in preparation for launch.

Chris, and then David on synergies. Sure. Thanks for the question. We are well on our way to building out the U.S. commercial and medical teams and feel great about the quality of the team that we're pulling together as well as the commercial readiness. The medical teams have actually been in place for a number of months. We've managed to hire a very strong team with deep dermatology experience there. Key in-office roles have been filled, and they're in the process of executing against launch plans, and we are building out the sales teams now.

Great. And thanks for the question on synergies. The execution on the integration continues to go extremely well. As we indicated before, we'll over-deliver our initial commitment. We're now at $3 billion. By the end of this year, we anticipate being about $2.5 billion, which you may recall was the original overall commitment. So as we head into next year, getting to that $3 billion is what we're targeting. So good execution and continued overachievement of our initial expectations on the synergies.

Thanks, David. Christina, can we go to the next question, please?

Our next question will come from Andrew Baum with Citi.

Yeah, thank you. First question is on the tick two. Number one, could you just update us on the additional maturing data sets in terms of what you're seeing from zoster, cardiovascular, as well as malignancy, if anything? for JAX and RA. How are you thinking about potential labeling for TIK2s? Obviously, there's a continuum of potential labels, some very unfavorable, some obviously more favorable. And then second, in relation to your analyst meeting that is coming up, to what extent will you be able to talk to your Phase III program for your Factor XIa inhibitor? Or will we have to wait until you have the arterial data in hand next year before you and your partner can talk to the overall Phase III trial program? Thank you.

Sure, Angelo. Let me just start by giving a perspective about the investor meeting. And then we'll ask Samit to comment on the TIC2 program. So, you know, as we think about getting together in the middle of November, the objective is really primarily to give you an update on everything that has happened in the company and our portfolio over the last two years. It will be two years since we closed the acquisition of Celgene, and a lot has happened. And so we'll talk about the progress with the pipeline, some of the stage programs, the commercial opportunities we see from the asset, and we'll talk about the outlook for the company. Specifically, there will be an opportunity to focus on a few of those. So, for example, as you know, the Milvexian data will be presented at AHA just before our meeting, and we'll look forward to discussing that update with you. We're also making progress in another area, which is hematology, and that includes the cell modes and the Brianzi second line data that were mentioned earlier. They are expected to be at ASH, and we have an opportunity to review those at the event. So these are just some of the examples of the updates that we're planning on discussing at the meeting, and that includes some of the data sets that you were referencing. Samit?

Yeah, thank you. And in regards to the TIK2 inhibitor, the long-term data that we continue to follow these patients and we've seen, we don't see the profile differentiating in any other way than what we've already discussed before. But we believe this is a TIK2 inhibitor with not having a JAK-like signature. The overall profile from the lab parameters perspective, cardiovascular perspective, infections perspective remain stable as the data had been shared before. So we are looking forward to continuing the engagement with the agencies as we go forward and looking to bring it to patients in the second half of next year. As far as the JAK and labeling in RA as well as other conditions are concerned, again, these are going to be in the future as we go into with the regulatory agencies how we see it. We don't see it as a JAK inhibitor, so we're not really thinking about it like that. We'll continue to update you once we get a more sound place in terms of advice, if there is any to be shared.

Thanks so much. Kristina, can we go to the next question, please?

We'll take our next question from Carter Gould with Barclays.

Great. Good morning. Thanks for taking the question. First, I guess maybe start commercial. I'm hoping you could add maybe a little bit more in terms of anything tangible on sort of UC demand with the posia and to what extent the start of the year will be sort of an important milestone in terms of broadening access. And then maybe just a clarifying question on the kravisitinib, Samit. You talked about in UC needing to explore doses two to three times higher than what's active in psoriasis? I know you don't want to get into specific doses, but are you exploring something above and beyond sort of the 12-mig that I think was the high end in the psoriasis study? And then I know it's a bit of a sensitive topic given some of the ongoing litigation, but, you know, just maybe how you're thinking about sort of the backup TIK2 compounds you have in your portfolio. Thank you.

Sure.

Um, Chris, why don't you, uh, why don't you start on, uh, on UC demand?

Yeah.

So we feel very good about the, um, performance that we're seeing for Zapposia in UC. And let me start with execution. The execution of the team really since approval has been very strong. We've got very good, uh, awareness for the product. The unaided awareness now is over 60% aided awareness is well over 90%. Since approval in UC, we estimate that we have around 400 trialists that have already begun to utilize the product. Virtually all of the gastros that we surveyed who are aware of the POSI are interested in trying it. And frankly, in spite of a still relatively restricted access environment, the sales teams are having very good success in engaging with customers both in person and remotely. So from an execution standpoint, it's early days, but we feel very good about where we are. As you note, access is going to continue to be something we pay a lot of attention to. We feel good about our ability to start generating volume this year and into the first part of next year, and we think that volume will build momentum as we get into the second half of 2022 when we begin to get additional more favorable access with key payers. But so far, the UC performance that we're seeing commercially is very, very strong and very happy with where we sit.

Thank you, Chris. Before I ask Samit to comment on the Ducrava dose, Let me just say, Katra, we're not going to comment on any ongoing litigation. I just want to say that that litigation is really not related at all to the BMS program or any backup that may exist. They're completely different programs, and there is no relationship there.

Yeah, and just a minor thing to add over here is as we talk about the doses, without getting into the specifics of it, I can tell you that we selected the doses which are higher than what we used in the psoriasis program. based on PK modeling and taking into account the historical experience. We will certainly say that at this point, we don't know if these higher doses will translate into efficacy or not. That's the proof of concept we're trying to get, and once that is available, that will certainly pave the way for the future program. We will need to see what the data are from the next trials that we are pursuing right now, both in Crohn's disease as well as in ulcerative colitis.

Can we go to our next question, please?

We'll take our next question from Ronnie Gao with Bernstein.

Good morning, and thank you for taking the questions. The first one is on the PD-1 space. There's been some debate about the approvability of following PD-1s with data from Asian populations only. You've obviously generated a lot of data in various populations. I was wondering if there was any scientific basis to this concern. That is, in your trials, is there a difference in either efficacy or safety in different ethnic populations with your PD-1. And second, on Washington and the discussion around price reform in the drug area, it seems to be clear that the negative scenarios for the industry will not play out, but there's still some discussion of pharma contributing to catastrophic insurance in Part D, and if there will be price negotiations, the discussion seems to be focused on Part D as in BOI. Given that you're essentially more exposed to the oncology space, I was wondering if there's any basis for that, that is, is there a risk that oncology will take the brunt off the impact of the DC, whatever giveaways they're taking, or will it be more balanced across product types?

Thanks, Ronnie. Let me just start there, and then I'll ask Samit to comment on your question about PD-1 development. So let me just start by saying that it's really difficult to forecast at this point what price reform may look like in the future. From my perspective, what's important is that any change that is made actually improves affordability of medicines for patients, and that's the lens. that we are applying. And from that perspective, there are a number of elements of potential reform, like establishing auto pocket caps in Part D, redesign of the Part D benefit to reduce the exposure of patients that we support. And we also support some changes like introducing market forces in Part B. Very difficult to answer your question with respect to whether a disproportionate impact may happen in oncology or not. I think what's important is that we don't go to reforms that actually impact the ability of the industry overall to continue to invest in innovation. And that's the primary lens here. You know, I think from the perspective of the BMS portfolio, when you look at our portfolio, it is actually very diversified. across therapeutic areas, across actually Part B versus Part D. And so I can't speculate what the impact of any reform would be on us. I think what's really important is to continue to advocate for reforms that, yes, improve affordability of medicines for patients, but at the same time enable us to continue to invest in innovation. And some of the hyper-partisan initiatives scenarios being discussed in Washington would actually impact both negatively.

Yeah, and just starting from where you left off in terms of the portfolio, we have a very broad portfolio, which means that when we conduct our clinical trials, we do them globally, including those in the Asian countries. And when we file the data, we have to provide subset analysis by region or sometimes even by country, and that's how we seek approval in some of the regions and countries of the world, including in Asia. As it comes to the PD-1 inhibitors where we have conducted clinical trials globally and across the 20-odd indications or 12-plus tumor types that have now sought approvals, we don't see a major difference occurring because of regional differences or population differences. That doesn't mean that representation of larger populations may not be required in clinical trials, so one has to just keep that in mind rather than thinking about A singular country trial will lead to approvals or not.

Christine, can we go to our next question, please?

We'll take our next question from Matthew Harrison with Morgan Stanley.

Great. Good morning. Thanks for taking the questions. I guess two for me. On the second line, CAR T study, I'm just wondering how you're thinking about that commercially and specifically, you know, whether you think you need longer-term follow-up to compare to transplant for that to be commercially successful. And then as we look at the data coming at ASH, I think we're going to get data from kite study as well. I'm wondering if there's any... differentiation you're looking for your product versus those. And then second, on Zipposia, I'm just wondering if you could talk about or you've thought about if Biogen wins their appeal on Tecfidera and branded Tecfidera comes back to the market, does that change any of your assumptions on how you think about the MS market? Thanks.

Thank you. Thanks, Matthew. Let me start with Chris, just maybe a comment on Zipposia. And then we can move to the second-line CAR-T data, and Samit will add some comments.

Samit Sharma Yeah, so just on Zapposia very quickly, we have We don't anticipate that any potential change on the Tech Fidera side would have an impact on us. We've seen very limited competitive impact of generic Tech Fidera. That's prominently been cannibalization of branded tech and then obviously a shift in the utilization within that portfolio. Our focus on Zapposia and the MS side continues to be not only establishing ourselves as the number one SP, which we are right now in terms of written scripts, but also becoming the number one oral. And so our focus will continue to be in a very disciplined way focused on that. And let me just give the commercial perspective on the second-line CAR-T study, and then I'll turn it over to Sumit. When you look at that second-line setting generally, you generally see that population divert into those physicians who tend to be very focused on transplant. There's a sort of defined segment of those physicians. There are a number of physicians who are very open and look for opportunities to avoid transplant where possible, and then there are a number of physicians who really take it on a case-by-case basis. And so we're excited about the data that we've seen so far and look forward to seeing that data continue to play out and be presented at ASH and we'll adjust, obviously, accordingly from a commercial standpoint.

Yeah, and just continuing that excitement from a data perspective, we truly are looking forward to sharing the data at ASH from the second line study. And EFS in this particular case is an accepted endpoint from a regulatory perspective. So looking forward to certainly getting engagement with the agency and getting this, again, to the patients as soon as possible. We'll obviously continue to follow patients for overall survival, and as is required for card cell therapies, long-term safety follow-up as well. So those data will evolve and will be shared in the future. At the current time, the primary endpoint of this study was EFS, and we have that in hand, and that will be presented.

Thanks so much.

Christina, can we go to the next question, please?

We'll take our next question from Steve Scala with Cowan.

Thank you. A couple questions. Lupus seems like an area of strategic interest to the company. Does Bristol feel it has all the assets and needs in lupus, or would you look for M&A to supplement this area? So that's one question. Second question is on the Factor XIa. data at AHA. It was mentioned on this call that the company is excited about what we're going to see. On the second quarter call summit, you noted that the data we're going to see is dose finding and safety data. So should we conclude that what we will see at AHA is that you have the phase three dose and it is proven safe, or might we see more than that? Thank you.

Thank you. Samit, do you want to take it back? Sure. Absolutely. Thank you, Steve, for your questions. And starting with lupus, as you know, that we will, first of all, get the data for Ducrevacetib and SLE at the beginning of next year. We have a discoid lupus study that is also ongoing, which we'll read out in 23 or later part of that. We have a couple of other assets in early developments, which are on controls.gov, which we have ongoing studies looking at lupus as well. So we do believe that we've covered a broad range of targets and broad range of medicines being explored in lupus, and one of those or several of those could be pursued for the future. From an 11a perspective, from Melvixian, as we've said, at AHA, you'll see the data. And there are two things to really take away. One, the intent of the study was to define a range of those that will be pursued for future evaluation in Phase III once the data from SSP study is also available so that collective data set then leads to the decision-making for future exploration and indications as we go forward. Second, we wanted to see a differentiation in terms of not only efficacy but, very importantly, from a safety and bleeding risk perspective, and when we think about that, it is going to be important to pay attention to major bleeds and minor bleeds and overall bleeds. So those are the kinds of things that you probably will see at AHA, and then we can certainly have a discussion in the middle of next month when we have the presentations for the investors meeting. Thanks so much.

Christina, can we go to the next question, please?

We'll take our next question from Dane Leone with Raymond James.

Hi, thank you for taking the questions, and congratulations on the update. uh i'll keep it to uh two from me um firstly just going back to the generic erosion uh debate heading into 2022 uh taking a different angle obviously post the acquisition of cell gene that was accretive to your overall operating margin the question from a lot of us that followed cell genes historically along with bristol has been the belief was Revlimid drove a lot of that margin for Celgene. And with that going away, even with new brands ramping up, is there enough from the portfolio and steady state growth of maybe Eloquist and Optivo to offset an impact operationally from EBITDA? Or will there need to be bridging, like you said, of additional cost efficiencies from the organization? So that's one, essentially getting to whether there could be a lost year or two of EBITDA growth from the existing portfolio. Secondly, a quick one for me. It's been brought up a lot why the team has not aggressively moved to start studies in more of a mild to moderate population for Ziposia and ulcerative colitis. So any thoughts around the development plan there would be appreciated. Thank you.

Thanks very much. So let me just stop and ask David to make some comments there. You know, I'll just reiterate what I said earlier, that from our perspective, you know, as we think about the period of loss of exclusivity of Revlimid, first of all, we always said that our perspective was that, particularly in the U.S., there would be a slope that would be happening over time. We've made a comment in the past. We're more conservative on that slope than consensus. At the same time, we believe strongly in the fact that the growth of the in-line portfolio and the launch brands will actually enable the company to grow through that period. But David can give you a better perspective about the profitability of our business going forward and how we think about that.

Yeah, thanks, Dane, for the question. And we've been very confident in our ability to maintain our operating margins. in the low to mid 40 through 2025 and there's a couple things driving that one as i discussed earlier we're doing better on our synergies and strong execution against that um as we head into next year and and the run rate after that i said the others we've been very disciplined on the p l side of things and as you may note um you know from an msna perspective um we're very efficient and top tier in our industry. And the other thing I would say is that we've been very disciplined from the standpoint of reallocating resources from those LOE brands to our launch brands. which gives us further confidence in that. And the last thing is, if you think about the portfolio and the launches, many of those products have strong margins, as you talked about on the inline with Updivo being a high-margin product, but also some of the other ones that are in the launch portfolio, like Supposia as well as Red Lizelle. Those products have nice margins as well. So that's what gives us confidence in our ability to keep those operating margins in that low to mid-40s as we progress.

And in terms of Zyphosia, we have obviously got the indication for MS as well as UC, and the trials are ongoing in Crohn's disease. We currently do not have any plans in the mild to moderate patients with UC at this time.

Great. Thanks. Christine, I think we've time for one last question.

We'll take our last question from Matt Phipps with William Blair.

Thanks for including me. You mentioned that a BECMA would be relatively flat going into the fourth quarter, but should we expect to be more or less flat until the vector supply issues resolve, which I think you said would occur in the second half of next year? And then can you just comment on if the higher dose that was explored in the LATIS-UC trial with Ducra is also being explored in Crohn's and SLE, or just maybe how there's different doses among those indications as well?

Thank you, Chris. I'm going to sign it. So just quickly on abecma, yeah, we've commented on how we anticipate abecma cells growing in Q4, and we've also said that we are staying very focused on increasing vector supply as we get into the first half of next year. And so I don't have the ability to give you any additional information for next year, but obviously we'll continue to update you on future calls.

Yeah, and as it relates to the doses, again, on Ducaracetamib and UCNCD, There are some similarities in the doses, but we have optionality over here to amend and change the dosing patterns here. So we'll continue to work with our DMC as well as our clinical trial teams are looking into the data to see if there are any adjustments needed for either of the two trials.

Thanks, everyone. Thanks again for participating in the call. We had a great quarter with very, very strong performance. The launch portfolio continues to progress. Inline brands are growing. strongly. We look forward to the opportunity to continue to discuss the evolution of the pipeline and the future outlook of the company when we get together in the middle of November for our investor day. Tim and the rest of his team will be available throughout the day to answer any other questions you have. Thanks and have a good day.

And this concludes today's call. Thank you for your participation. You may now disconnect.