Bristol-Myers Squibb Company

Good day and welcome to the Bristol Myers Squibb first quarter 2023 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. for operator assistance throughout the call, please press star zero. And finally, I would like to advise all participants that this call is being recorded. Thank you. I'd now like to welcome Tim Power to begin the conference. Tim, over to you.

Thanks, Gavin, and good morning, everyone. Thanks for joining us this morning for our first quarter 2023 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 participating in today's call are Chris Berner, our Chief Operating Officer, and Saman Hirawat, our Chief Medical Officer and Head of Global Drug Development. As you'll note, we posted slides to bms.com that you can follow along with for Giovanni and David's remarks. But before we get going, I'll read our forward-looking statement. During this 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 certain 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. Before we discuss our first quarter results, I'd like to address the leadership transition plan we announced yesterday. After 23 years at Bristol Myers Squibb, including the last eight as CEO, I have decided to retire as CEO, effective November 1st, 2023, so our family can spend more time together in Europe. I will continue to serve as Executive Chairman for a transition period to be determined by the Board. Given the strong foundation achieved to position BMS for growth and success in the future, our strong pipeline and our incredibly deep bench of talent, now is a natural time for this transition. That's why I am pleased to share that the Board has selected Chris Berner, our current Chief Commercialization Officer, as Bristol Myers Squibb's next CEO as of November 1st. Effective yesterday, Chris was named executive vice president and chief operating officer. And the board also intends to appoint him as a member of the board after the annual meeting of shareholders. In connection with Chris's appointment, Adam Lankowski, SVP head of major markets, has been named to succeed Chris as Executive Vice President and Chief Commercialization Officer. The Board and I are confident that Chris is the right person to guide BMS through its next chapter of growth. Since joining BMS in 2015, Chris has been instrumental in shaping our strategy and our culture. His passion for science, his commitment to our workforce, and his tireless focus on our patients make him uniquely suited for the role. Among a long list of accomplishments, Chris has helped guide the evolution of our portfolio over the past several years, notably building our leading presence in immuno-oncology, growing our CV business, and launching multiple new medicines. His deep knowledge of our strategy and pipeline and his proven execution across all geographies give us confidence that he is the right leader to drive BMS's vision to be the world's leading biopharma company that transforms patients' lives through science. Leading BMS has been the highlight of my professional career, and I am incredibly proud of what our team has accomplished together. I remain enthusiastic about the opportunities ahead and know that we will continue to put patients at the center of everything we do as we drive growth and sustained profitability. Our patient-first culture coupled with our incredibly talented and diverse global workforce will continue to be the engine that drives our success. I look forward to working closely with Chris through the transition and know there is a very bright future for Bristol-Myers Squibb with Chris at the helm. Now, let's turn our attention to our Q1 performance. Starting on slide four, As we continue to execute our strategy and accelerate the renewal of our portfolio, I am pleased to share that we had a strong start to the year. I am encouraged by the performance of the products that will drive our future growth. During the quarter, our in-line brands and new product portfolio grew 8% or 10% adjusting for foreign exchange. Notably, revenue from our new product portfolio more than doubled compared to a year ago, reinforcing our confidence that we expect to roughly double revenue from these products this year. Obdivo and Eliquis both performed very well with strong demand growth, particularly in the US. Looking forward, we continue to expect top and bottom line growth driven by our in-line and new product portfolio. more than offsetting the impact of generics. And we are affirming our non-GAAP financial guidance for this year. Along with strong commercial execution in the quarter, we continued to advance our pipeline. Turning to our scorecard on slide five. As you can see, we delivered meaningful pipeline milestones in Q1. We have a number of catalysts in our pipeline and made important progress expanding our new products, particularly with respect to regulatory achievements. Starting with cell therapy, where we further strengthened our growing leadership position. Following the publication of our CARMA-3 results for triple class exposed multiple myeloma patients in the New England Journal of Medicine in February, We have now delivered global regulatory filings across the US, Europe, and Japan for this study. We look forward to the opportunity to offer these transformational products to patients in earlier lines of treatment in multiple markets in the future. We also continue to make progress expanding supply for both of our cell therapy products. We recently entered into an agreement for a vector facility in Libertyville, Illinois. to further strengthen our supply chain and expand manufacturing capacity. This will allow us to dual source vector supply and transition to newer, higher efficiency manufacturing processes. We look forward to supplying more patients with both abecma and brianzi as capacity increases over time. Our research teams remain focused on further improving outcomes for patients using cell therapy treatments, including with our exciting CD19 NextT for severe refractory SLE that is entering the clinic. Turning now to SOTIC2. As David will describe, the launch for plaque psoriasis continues to go very well, and we are successfully establishing this product as the oral choice for moderate to severe patients. And during the quarter, we delivered approval of this medicine for patients in Europe. In addition, we received data from our Phase II trial in Crohn's disease. And while it does not support moving to a Phase III trial at this time, we look forward to seeing data from the high-dose UC trial later this year to evaluate opportunities for this asset in IBD. Meanwhile, we continue to advance SOTICTO into key expansion opportunities in Phase III studies for both psoriatic arthritis, and lupus, which, as you know, has a very high unmet medical need. And turning now to Camsios, we recently announced positive CHMP opinion for this medicine. We look forward to bringing this product to European patients soon. Looking at our next set of registrational assets. we have initiated the Phase III study for Iberdomide in post-transplant maintenance during the quarter. This study will potentially enable us to demonstrate superiority of Iberdomide over Revlimid in an early-line setting of multiple myeloma. And with our partners at Janssen, we are pleased to have now initiated all three Phase III trials in the Milvexium program. We are excited about the benefits to patients from a potential next generation antithrombotic that is equal to or better than current factor 10a drugs in terms of efficacy, but with a better bleeding profile. As you can see, our progress is strong with multiple exciting pipeline opportunities ahead. Moving to slide six and tying together what this progress means for our new product portfolio. This slide demonstrates that the renewal of our portfolio continues to gain momentum through a combination of strong commercial execution and the achievement of important clinical data and regulatory milestones that further de-risk significant revenue opportunities. I am very proud of the accomplishments of our global colleagues as they strive to discover, develop, and deliver transformational medicines to patients around the world. Together, we have built the foundation for an even stronger company with a more diversified portfolio of growth products and increased durability across each of our four key therapeutic areas. Given our growing and rapidly diversifying business and our financial strength and flexibility, I'm excited about the opportunities we have for the rest of 2023 and beyond. I will now turn the call over to David to walk you through our product performance and financial results in more detail.

David? Thank you, Giovanni. I'm recognizing this is another busy day for all of you. Thanks again for joining our first quarter earnings call. Turning to slide eight, let's discuss our top-line performance. Unless otherwise stated, all comparisons are made for the same period in 2022, and sales growth rates will be discussed on an underlying basis, which excludes the impact of foreign exchange. Total company sales in a quarter topped $11.3 billion, driven by strong double-digit sales of our in-line and new product portfolio, offset by Revlimid's loss of exclusivity. Sales in the U.S. grew 4%, driven primarily by volume, while international sales were impacted by the annualization of loss of exclusivity for Revlimid. Let's delve deeper into the strong performance of the new product portfolio on slide 9. As Giovanni mentioned, the new product portfolio generated over $720 million in sales, which more than doubled versus prior year, and grew over 11% sequentially. This strong performance in the quarter was driven primarily by demand for OptiLag, Abecma, and Red Blazil, which I will touch on further in a moment, and provides us confidence in the growth potential for our increasingly de-risk and diversified new product portfolio. Moving to our solid tumor performance on slide 10, Global Opdiva sales were strong, growing double digit versus prior year, primarily driven by continued demand for our newly launched and core indications. In the U.S., Opdiva grew 17%, primarily driven by demand in first-line lung, upper GI indications, and adjuvant bladder cancer. Outside the U.S., first quarter revenues increased 18%, primarily driven by demand for recently launched indications and expanded access. The strong execution of first quarter gives us confidence in the continued growth expected for Opdivo. Now turning to the robust launch of Opdilag, sales in the quarter were $117 million, growing double-digit versus prior quarter. We are very pleased with the launch of Opdilag in first-line melanoma, with market share now over 20%, primarily being sourced from PD-1 monotherapy. Now turning to our expanded cardiovascular portfolio on slide 11, and starting with Eliquis, which generated over $3.4 billion globally, largely driven by the U.S. In the U.S., sales grew strongly, up 19%, driven primarily by robust demand. Internationally, sales were impacted primarily by generic entries in Canada and the U.K., and pricing measures we mentioned in the past. Moving now to our first in-class myosin inhibitor, Chemzias. We continue to be pleased with the progress we are making to bring Chemzias to more patients. ChemSci has generated sales of $29 million in the first quarter. Now, with approximately 2,700 patients in our hub, of which 1,500 patients are on commercial drug at the end of the quarter, we continue to build momentum with considerable growth expected in the quarter over quarter. We look forward to our upcoming PDUFA date for Valor in June, which will reinforce the strong profile of ChemSci, as well as the expected European approval, having just received a positive CHMP opinion. Now, turning to our hematology portfolio on slide 12, starting with Revlimid. Global sales in the quarter were approximately $1.8 billion impacted by generic entry. As we expected, the favorability seen last year reversed in the first quarter, and we continue to expect quarter-to-quarter variability. Now, on the POMA list, global sales grew 2% versus prior year. In the U.S., longer duration of first-line treatment impacted new prescription volumes. Internationally, revenues grew 12%, driven largely to demand for triplet-based regimens as well as some buying patterns. Turning to Rebizel, which generated revenues of $206 million in the quarter, sales were strong, up 33%, largely driven by demand. In the U.S., revenues grew 18%, primarily driven by continued total prescription share growth. Internationally, Rebizel more than doubled as we continued to secure reimbursement in additional countries, including being placed on China's national reimbursement drug list. We are now launched in 25 countries outside the U.S. and expect to launch in additional markets this year. We look forward to presenting the commands data in an oral presentation at ASCO and EHA to further accelerate the brand by bringing this first-in-class product to first-line ESA-naive MDS patients upon approval. Transitioning to our first-in-class and best-in-class cell therapy products, Abecma and Breonzi, we continue to make progress at expanding capacity, which has enabled robust sales growth driven by strong demand. With sales of $147 million in the quarter, we more than doubled our revenue for Abecma versus prior year and grew 16% sequentially. We continue to be pleased with the feedback from physicians on the reproducibility of efficacy and safety in the real world and reliability of our manufacturing capabilities. As Giovanni mentioned, CARMA-3 in triple cost-exposed myeloma patients is now under review in the EU, the U.S., and Japan, and we look forward to bringing it back to earlier line patients around the globe. Turning to Brianzi, sales in the quarter were $71 million, growing 66% versus prior year and 27% sequentially. Sales were driven by demand in second and third line plus large B-cell lymphoma. With the broadest label and second-line large B-cell lymphoma and differentiated safety profile, feedback from physicians has been very strong, and we are pleased with the strong demand for Breonzi. We'll afford to bring Breonzi to earlier-line patients in the EU in the coming months, with the recent CHMT positive opinion. Let's now move to our immunology portfolio on slide 13, starting with Zyposia. Global sales in the quarter were $78 million, more than doubling compared to prior year. In the U.S., growth was primarily driven by demand in multiple sclerosis and expanding contribution from ulcerative colitis. Internationally, sales increased primarily to demand in multiple sclerosis and securing reimbursement in additional countries. Lastly, turning to a strong launch of our first-in-class TIK2 inhibitor, Sotik2. We're extremely pleased with the launch so far. Just six months into the launch, we have over 9,500 script equivalents across bridge and commercial drugs. Certicta's share of the oral market is now in the mid-30s, sourcing business from systematic naive patients as well as our Tesla and biologic experience patients. Internationally, we are very pleased with the strong launch performance in Japan and recent approval in Europe and look forward to working with individual countries on securing reimbursement through 2023 and beyond. We are very excited about Certicta with non-risk-adjusted revenue potential of $4-plus billion based on exciting opportunities ahead in moderate to severe psoriasis, psoriatic arthritis, and in lupus. Moving to our first quarter P&L on slide 14, I will focus my remarks on a few non-key line items as I just covered sales performance. In the quarter, as expected, gross margin was impacted by product mix. This was partially offset by favorable foreign exchange and related hedging settlements that will not repeat in the second quarter. Operating expenses, excluding acquired in-process R&D, remain largely consistent with prior year. MS&A declined 4%, primarily due to timing of spend, which we expect to reverse going into the second quarter as we continue to invest in our new launches. Acquired in-process R&D in the quarter was $75 million, which was partially offset by $43 million of licensing income. Overall, first quarter earnings per share was $2.05, growing approximately 5%. Turning to the balance sheet and capital allocation on slide 15, cash flow generation and our balance sheet remain strong. Cash flow from operations in the quarter was approximately $3 billion, with over $9 billion in cash and marketable securities on hand as of March 31st. As it relates to capital allocation, our priorities remain unchanged, with BD continuing to be our top priority and a focus on balance sheet strength as well as returning capital to shareholders. In the quarter, we repaid $1.6 billion in debt, with an additional $2.3 billion maturing this year, and we remain opportunistic about share repurchases in the future, with approximately $7 billion remaining in our share repurchase authorization. Lastly, turning to our 2023 non-GAAP guidance on slide 16. Based upon the performance to date, we are reaffirming our non-GAAP guidance. We expect 2023 revenues to grow approximately 2% on a reported and constant currency basis, which reflects that our inline and new product portfolio will more than offset recent LOEs. Revenue and sales expectation remain at approximately $6.5 billion, and we will continue to monitor variability from generics and other market dynamics through the year. We remain excited about the promise of our new product portfolio and expect the portfolio to roughly double versus prior year. As we continue to launch these assets around the globe, we expect growth to be more back-calf weighted as we build momentum during the year. We continue to expect gross margin to be approximately 77%, which reflects a shift in product mix. Accounting for the FX favorability in the first quarter, we expect gross margin for the first half of the year to be approximately 77%. Excluding the impact of acquired and processed R&D in our operating expense, guidance remains unchanged and expected decline in the low single-digit range, reflecting efficiency initiatives in MS&A as we continue to up-invest in our launch brands. As I mentioned during the results for the quarter, we expect MS&A to increase in the second quarter as we continue to invest in our launches. The operating expenses are expected to be approximately $4.2 billion in the second quarter. Our tax guidance of 17% remains unchanged, and we continue to expect earnings per share to be in the range of $7.95 and $8.25. Before we move to Q&A, I just want to acknowledge the work of our colleagues across the globe for the relentless commitment and execution to transform this company into a younger and more diversified business. I'll now turn the call back over to Tim and Giovanni for Q&A.

Thanks very much, David. Gavin, can we go to our first question, please?

Here comes the line of Seamus Fernandez from Guggenheim. Your line is open.

Oh, thanks very much for the question. So a couple of questions. First on SOTIC2, just wanted to get a sense of when you feel the free drug dynamic that's out there on the market today is going to catalyze a switch by payers to, you know, from kind of the loss of rebates of Otesla to then really drive them towards appropriate reimbursement of SOTIC2. And then just the second question from an R&D perspective, you mentioned lupus as it relates to SOTIC2. Just hoping to get a little bit more clarity on the discontinuation of the Crohn's disease or the failure of the Crohn's disease trial, as noted in your slide deck. Wanted to just get a better sense of whether that study was stopped for efficacy or if there were any safety signals at all. in that study that would be of concern, and perhaps if you could share the dose that was explored in that study and in the ulcerative colitis study. Thanks so much.

Seamus, maybe I'll start, and then I'll turn it over to Samit. This is Chris. First, the SOTIC2 launch, just as a top-line message, is going very well, as David mentioned. We're seeing very good uptake and feedback from physicians from a demand standpoint, which is To your question, probably the most important thing that we can stay focused on in order to free up market access, we're seeing very good progress in the quarter. We had over 9,500 TRX equivalents. We grew new patient enrollments just shy of 40% quarter over quarter. So we feel good about those underlying dynamics. And as you allude to, as we continue to build that volume of patients, we'll be able to be in a much better position to negotiate from a payer standpoint. What I would say is that our focus continues to be on where possible pulling forward access decisions into this year that would mainly occur in the second half of this year. Right now, most of the commercial drug is coming still from those patients who have open plans and had open plans at launch. But from a baseline standpoint, I would still consider 2024 to be the point at which you'll see substantive changes in market access. But we remain focused on doing everything we can to pull that forward.

And thanks, Chris, and thanks, Seamus, for the question. On the Crohn's disease data set, so let me start first of all by saying, as was already mentioned by you as well as by David, that SOTIC2 continues to have a broad development program with the approval in psoriasis, ongoing phase 3 studies in psoriatic arthritis, as well as SLE, which contribute to that $4 billion forecast that we've always talked about. On the Crohn's disease side, let's first of all remember that as a TIC2 mechanism of action perspective, Currently, there is no proof of concept that is established for this pathway in IBD. As you remember, in our Phase II ulcerative colitis trial, we did not see a signal at that time, and therefore, we had an ongoing study with a higher dose that we will look forward to see the data at the back end of this year. In Crohn's disease, we did not see a signal at this time, so we do not have a proof of concept, and therefore, we are not going to move forward. That has nothing to do with safety signal. It is as safe as we have always already published the data in many other studies at this time. From the dose perspective, the doses tested in this particular study was 3 milligrams BID and 6 milligrams BID. More to come when we present the data in the future at a medical conference. But at the current time, we're looking forward to look at the data from UC higher dose trial to then have the totality of the data to make decisions of how we move forward.

Thanks very much, Samit. Gavin, can we go to the next question, please?

Your next question comes from the line of Andrew Bourne from Citi. Your line is open.

Thank you. A question for Samit and a question for Chris or maybe Adam, given the role change. Samit, you highlighted the Select T program. I assume this is a CAR T against CD19. I just want to confirm that this is... contains the Autoless suicide switch. And more importantly, there are a limited number of companies in this very exciting space given the Lucas data last year. How aggressively are you pursuing this in terms of timelines and breadth? If you could talk to where you intend to go with this trial, what constraints the FDA put on you given its a new cell construct, and then how quickly you can expand and more generally some sense of the level of excitement inside Bristol to address refractory or tumor disease. And then second for Chris and Adam, the impact potentially, well, the anticipated impact of Medicare price negotiation for Eloquist is likely to be very substantial. I'm curious as to the extent that you can reduce the rebate paid to PBMs without facing punitive action. Obviously, the PBMs tried to exclude it from the portfolio some years ago and they ended up providing access again. So how much leverage do you actually have to mitigate some of that impact onto the PBMs? Thank you.

So thank you, Andrew, for the question and very appropriately asked in terms of where we are going as well as the platform. So if you recall, Nexty CD19, the one that we're using in SLE, is the same platform that we've already tested, actually, and we presented the data from there last year on our hematological malignancies side. We're using that because it has a shorter turnaround time, and we will be taking that forward in SLE now. From a speed perspective, what I can tell you is that we submitted the IND to the FDA, and we got a safe to proceed within one and a half to two months So that shows the excitement not only for us, but also the productive dialogue and constructive dialogue we had with the agency of how to move forward. Our initial trial design is to do a phase one initiation in SLE, where the proof of concept from external data does exist already. So we want to go speedily, and it's a global trial, so we are not limited to just the U.S., but going to other countries, including the site that generated the data before in Germany, serving as the principal investigator. So we are pretty excited. And based on the data and the emergence of that data, we have the capacity and capability to then expand to other indications, which we have not yet decided, but certainly on track for that.

And then with respect to Eloquus, Andrew, I'll take that one. So as you know, we do anticipate that Eloquus will be impacted by government price setting. A couple of things just at a high level to keep in mind. First, the timing of that impact will run up against the timing of our LOE in the U.S. And second, of course, remember we split the economics on Eloquist with Pfizer. That said, we do anticipate that Eloquist will be in the early wave of IRA price setting. With respect to the ability of rebates to address that, as you well know, these are very competitive markets. Within that context, we are always trying to establish a very strong access position with the least impact on the value of our medicines through rebating. And I think we have, in our history on Eloquist, shown discipline in that regard. As you would expect, we're going to continue to do this in the post-IRA world, just as we do today. At the same time, it's at this point difficult to speculate on exactly how this is going to play out, while many of the details that would be necessary to describe that are still yet to be defined. But what I can commit to is that we're going to continue to negotiate commercial and Medicare rates and formulary positions separately, and we're going to be disciplined as we do so.

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

Your line is open.

Great. Thanks so much. Just two questions here. I guess first on the capital allocation front, I guess given the delivered balance sheet right now, I guess this is a two-part question. You've got a lot of launches that are ramping right now, and I guess one of the questions we've been getting is, is there capacity in the organization for Bristol to pursue either near-to-market or on-market drugs at this point, or is the commercial organization kind of full with what it's doing? and the focus should be maybe more on the pipeline side on the BD front. And the second part of this is when I look at, you've got a $7 billion repo outstanding, your stock's trading at nine times earnings. I guess, where does repo kind of fit into the mix as you think about capital allocation? I'll leave it there. Thank you.

Thank you, Chris. This is Giovanni. I'll get started, and then I'll ask David to comment. So with respect to your question about our capacity for first of all, supporting ongoing launches and potentially looking at business development focused on later stage assets. I don't see commercial capacity as a factor that would constrain our ability to do that. We have fully resourced organizations across all four therapeutic areas. In fact, several of the launches are happening across different therapeutic area organizations right now, and we've demonstrated our ability to shift resources in support of new launches in new therapeutic areas like dermatology very effectively in the recent past. So we definitely, as I've always said, look at areas where we have deep research development and commercial expertise first when we look at BD. And there is clearly capacity from multiple perspectives to continue to add assets to the portfolio. So when we look at business development, we look at early deals that strengthen the long-term growth profile of the company. Our pipeline is actually really strong right now with respect to that. And we also look at opportunities that have a meaningful shorter-term impact, like we've done with Myocardia and Turning Point, which are definitely models that, given the right circumstances, we would be happy to continue to support. And I'll ask David to give you a perspective on capital allocation as it pertains to your second question.

Chris, thanks for the question. As you know, business development remains our top priority as far as capital allocation is concerned as we look to continue to replenish the portfolio and add additional growth opportunities in the second half of the decade. What I'd also say is that we've been committed to de-levering, and you've seen that we've been able to do that. We're down to two times that to EBITDA, which gives us a lot of strategic flexibility from a business development perspective. And also, you know, growing the dividend remains a priority for us. We've grown the dividend for the past 14 years, and, you know, that's a commitment that we, you know, have, as you've seen, for the past 14 years in doing that. And from a share repurchase, you're right, we have $7 billion in shares. authorization remaining, and we look to be opportunistic as we move forward with that.

Thanks very much, David. Gavin, can we go to the next question, please?

Your next question comes from the line of Tim Anderson of Wolf Research. Your line is open.

Hi, this is Adam on for Tim. Thanks for taking our question. So on ChemZios, it seems like the update has been a little slow so far. Is REMS the major gating factor? Can you comment on what percent of target prescriber market REMS is certified at this point, and should we expect, and how should we expect this to progress throughout the year? Also, at what point will the majority of targeted doctors be REMS certified? Is it too optimistic to think that that could be by year end 2023? Thanks.

Sure, let me take that, Adam. So first, we're pleased with the continued rollout of CAM-Zios. To your question about RIM-certified physicians, we actually saw about a 25% increase in HCPs who were RIM-certified in the quarter. We're now at approximately 3,250. The vast majority of those are coming from our top-tier accounts. we continue to drive utilization in those top tier accounts and so remember we were targeting roughly 500 accounts at launch if you look at the highest volume of those those 500 accounts we have utilization now in excess of 90 percent in those accounts we're continuing to add additional utilization in those accounts every week and then in the quarter we expanded the team the Eloquus cardiovascular team to begin targeting accounts beyond those initial 500. The purpose being to continue to not only expand utilization outside of those institutions, but also importantly to increase referrals into those institutions. And we've seen a nice uptake in patients coming in for enrollment. In fact, we saw about a 50% increase in the first quarter relative to the fourth quarter. As we step back and look at it, the rollout of ChemZios continues to perform well. We do anticipate that the majority of use will continue to be in those top-tier accounts, as you allude to. We're seeing nice uptake, and we'll continue to see uptake through the course of the year. And I would expect that ChemZios' growth profile will continue to accelerate as we get further into the year as well.

Could we go to the next question, please?

Your next question comes from Steve Scala of Cohen. Your line is open.

Thank you. I have two questions. First, can you describe the progression of Revlimid in 2023 on a quarter-by-quarter basis, and what are the primary drivers of that? So specifically, was Q1 likely the high quarter in 2023, or will it be more volatile? And then secondly, if I may, Giovanni, given your experience, tenure, and now transition, Any thoughts on the outlook for the industry over the next decade on pricing, IP, ability to be continually innovative would be helpful. Is the industry just headed for death by a thousand cuts, or will the future be more like the past? And we know there's huge unmet needs, so we're more looking for what's likely to happen. Many thanks.

Thank you, Steve. Thanks for your question. This is Giovanni. I'll answer briefly. The second question, obviously be happy to continue the dialogue and then I'll ask David to give you the answer on Revlimid. Listen, I think as I step back and think about where the industry is, the most important point is that science is progressing faster than ever. And quite frankly, you know, as I've stepped back and really thought about the last few years, the immunology impact on cancer care has been extraordinary. I personally believe that cell therapy will be as impactful going forward. Earlier today in the call, we discussed what's happening in terms of hematologic malignancies, but also the potential to expand to other immune diseases and one day solid tumors. I think that will be a modality that will have a really big impact in the industry. I think we're very well positioned as the leader in that sector. I personally think that science will continue to be creating exciting opportunities. I also believe that when I look at what is happening at BMS, we are now beginning to see the impact that the data technology, the digital transformation we invested in for many years is beginning to have in terms of fundamentally accelerating R&D efforts and productivity. I think that's going to be really important for us to bring the full pipeline to bear, you are right that there are meaningful headwinds from an access and pricing perspective everywhere around the world. And I think that just raises the bar for innovation. But I do believe that companies like BMS will continue to be successful just because of the strength of science.

David? And Steve, thanks for your question on Revlimid. Just a couple of things. One, just reaffirming the whole year guidance of $6.5 billion on Revlimid. As far as quarter to quarter, you should expect to see continued variability because we really don't control how the generics bring product to the marketplace. But as you're thinking about it, just a couple of points for you to consider. One, remember, we had a better Q4 than we're anticipating, so we think some of that has come out in Q1. Also, the other thing I'd remind you of, Q1 of last year is first we saw generic entry really didn't come in until the February timeframe in Europe and in the US it was March. So Q1 of last year is our toughest comp. But look, I think the main takeaway is here is we're still thinking about this as six and a half billion for the full year. We continue to expect that we're going to have variability and we'll update you as the year progresses on that.

Thank you. Thanks. Kevin, can we go to the next question, please?

Your next question comes from the line of Christian Bertini from Goldman Sachs. Your line is open.

Thank you very much, Giovanni. I appreciate your tenure. Chris, congratulations, and Adam as well. My question in terms of as you think about what you bring to bear from your commercial experience, Chris, do you think that on the forward that Bristol and the industry has the right structure, strategy, and footprint in terms of thinking about commercializing in the U.S. as well as in Europe? And then Secondly, related to that, if I could also ask about the immunology portfolio overall, good initial traction with Sotictu. It's an area where the company historically had a bigger presence, seems to be emerging. How are you thinking about whether you have critical mass in that realm and how intrigued are you about focusing potential business development in that area on the commercial or in the R&D side? Thank you.

Thanks for the question. I'll obviously take that. So first, let me just say in terms of the transition, I'm absolutely thrilled with the opportunity. The past eight years have been really the highlight of my career here at BMS, and I'm certainly looking forward to taking on the broader opportunity and continuing to work with the absolutely exceptional talent that we have at the company across all aspects of the company. With respect to the structure and how that's evolving, first, I think that if you look at a BMS historically, we have always evolved how we're organized, where we place our resources, how we allocate those resources across channels to be aligned with A, the portfolio we have, and B, the environment that we're operating in. And I think that just at a macro level, that's how I would think about how we're going to continue to operate going forward. As Giovanni just alluded to in the previous question, there are obviously puts and takes in the industry. There's a lot to be excited about. There are also some headwinds. And so as we constantly are looking at the commercial model, we're staying focused on aligning that model to the world we live in. Clearly, digital is going to continue to play a much bigger role. We do believe that there will continue to be personal interactions required with key stakeholders. Health care is by its nature a personal interaction. The size and focus and orientation of those personal interactions will undoubtedly evolve, and we're going to continue to stay ahead of all of those trends. With respect to immunology specifically, that's an incredibly exciting area for us. As you've alluded to, we have had a presence in that space with Orencio. We're very excited about both Supposia and the launch with SOTIC2. And as we've talked about on this call, there's considerable opportunity to continue to grow that presence over time. That's required already for us to build additional capabilities in, for example, market access, which is a different dynamic in immunology versus oncology. And we're going to continue to make sure that we're allocating resources to ensure that that particular portfolio is very successful commercially, both in the U.S. and ex-U.S.

Great. Thank you, Kevin. Can we go to the next question, please?

Your next question comes from Jeff Meacham of Bank of America. Your line is open.

Morning, guys. Thanks for the question. We also wanted to start by saying best wishes, Giovanni. You'll be missed. And congrats to both Chris and Adam. On the life cycle management for Opdivo, you know, Opdilag has seen pretty strong demand. Can you talk about where you think you could go beyond long? I wasn't sure what was supported by the mechanism or any newer data that you have. And then secondly, on subcutaneous Opdivo, Maybe talk about where this falls and your priorities across the pipeline and then what your expectations are for additional IP. Thank you.

Sure. Thank you, Jeff, for the question. For Up to a Lag, let's first of all review, there is a large program already underway. Number one, already approved in the first line, metastatic melanoma. Number two, adjuvant melanoma. We are looking forward to the readout of that trial. Number three, the registration trial ongoing in colorectal cancer and MSS stable patient population. Again, looking forward to that readout in the coming year or two. Then beyond that, the proof of concept studies that are already ongoing in non-small cell lung cancer, we are conducting a randomized phase two study to generate the data and also to look at the progression-free survival as we compare combination of Obduolag with chemotherapy, comparing it to a single agent IO plus chemotherapy. So that'll be a very important data set to define our path forward in non-small cell lung cancer. In addition to that, we have the programs ongoing in hepatocellular carcinoma as well, and there's a large investigator-initiated program that is going in parallel to see where the signals might be generated as we look forward. From the sub-Q of DOA perspective, certainly excited about that in terms of looking at a readout. You know that the registration trial was ongoing in renal cell cancer, and as is the general practice, the application, if it is successful and if it is approved, then the application would be good for all other indications where Nivolumab today is used as a single agent. From a commercial perspective, maybe Chris, you want to comment on that?

Sure. I think Samit's covered most of it, but I would say that we've always thought about SubQ as something that is mainly focused on pushing the science forward and being able to support the needs of our customers. And in that regard, We see SubQ potentially playing an important role in those accounts where chair time is at a premium. It could be particularly important in, for example, an adjuvant setting where physicians may not need to have a more involved conversation with patients when they come in and there's a desire to get patients in and out and back on with their lives over an extended period of time. And so that's where we see SubQ playing a particularly important role. I know there's been a lot of questions around the impacts of this under IRA. I think it's still unclear and too early to talk about that. But the way we think about SubQ is very much in how do we improve the profile of this modality for customers and for patients.

Great. Can we go to the next question, please, Gavin?

Your next question comes from the line of Terence Flynn of Morgan Stanley.

Your line is open. Great. Thanks so much for taking the question. My congrats to Chris as well, and best to Giovanni in your retirement. Maybe a two-part one. Just wondering on Reblazil and Firstline, I know we'll see the commands data at ASCO, but just maybe you could speak to your confidence in a broad Firstline label. And then given the recent Cartitude 4 data for a competitor product, Just wondering how you think about the competitive positioning here of a BECMA once we see supply normalized in the CAR-T space for myeloma. Thank you.

So, thanks, Terrence, for the questions. For Reblosal commands, let's again look at Reblosal commands. Study was conducted in an all-comer patient population, so both RS-positive and RS-negative. Certainly, you'll see the data being presented at ASCO, and we can have a longer discussion at that time. But overall, the studies that are positive, we met the primary endpoint, we met the secondary endpoints as well. Very important to note that in general, the longevity of that transfusion independence is a very critical factor that one should observe during the presentation, because that's what matters in the real world and to the patient, how long they can stay away from transfusion. So overall, we are actually quite excited about the data. And of course, regulatory interactions will continue.

Just from a commercial standpoint on commands, and then we'll talk about the competitive dynamics you mentioned. I think it's important to recognize that commands is a very important opportunity commercially, both in the U.S. and potentially outside of the U.S. It roughly doubles the size of the MDS opportunity. And as Simon just alluded to, it's important to keep in mind the significant unmet need in this space. Chronic anemia and transfusion dependence for lower risk MDS patients across the board is a significant challenge. There's a significant risk of death at roughly 50% greater compared to transfusion-independent patients. And while ESAs are the dominant first-line option for these patients, we need to remember that efficacy and duration of response is very limited. So we view this as a potentially very attractive commercial opportunity. As it relates to the competitive dynamics with a BECMA, obviously data in this space continues to evolve very quickly, both with respect to the CAR-2 data and our own CARMA-3 data. As we think about it, first and foremost, we need to see the data. We need to see the details of these data. But as we've consistently said, as the data progresses with CAR-Ts in hematology, we're seeing real patient benefit. And I think that's very exciting for patients. Across these products, we continue to see the importance of BCMA targeting, and most importantly, as we said from the very beginning, we see the room for multiple competitors to operate in this space, and that continues to be our view. It is, however, important to keep in mind that CARMA-3 and CARTITUDE-4 have two different patient populations, so it's difficult to compare these two studies. In CARMA-3, we intended to design a study that reflects the patients that physicians see. We enrolled patients who are more difficult to treat. The vast majority of them are Dara refractory. All of them are triple class exposed. And so these are patients who you can think about being more third to fifth line patients. Um, so I think it's going to be really critical that we see the full data set and then we take that data set into consideration. with respect to how these products are performing in the real world. And what we consistently hear from customers is they want to see efficacy and safety that aligns in the real world to what they saw in the clinical studies, and they want to see manufacturing reliability, and we think those are all going to be important to keep an eye on as the full data sets get presented.

Okay, let's go to our next question, please.

Your next question comes from the line of Carter Gould of Barclays. Your line is open.

Great. Good morning. Thanks for taking the questions, and Giovanni, best of luck in the future. I guess two for me. First on, I'd love to hear how you guys are thinking about sort of the frontline opportunity in Hodgkin's. Obviously, we're going to see the late breaker of nivolumab versus brontuximab at ASCO, but could that NCI data under certain circumstances be registrational, how you're thinking about that? And then, Samit, to whatever extent I can get you to comment on sort of the next generation TIK2 asset and how you think about differentiation there versus the TIK2.

Sure. Thank you, Carter. Look, on the first question around the Hodgkin's lymphoma data, we are aware of the data, of course, as you know, that this was a cooperative group that conducted the study. So it is not sponsored by BMS. But as we look at the data and as they're supportive, we will certainly, as appropriate, engage the health authorities, but certainly very excited to see that the data has come out positive. that could be really beneficial for patients in the future. In terms of the next generation TIK2 inhibitor, we are in the early stages. We've just initiated our program, phase one study, and then looking into psoriasis right now. But as we evolve with the data, we have deep expertise and deep knowledge of the TIK2 pathway as well as psoriasis, so we'll be able to contrast and compare and define the clinical development plan as we go to the future for additional indications and look for differentiations as well. So more to come. But at this time, we are just beginning those studies. Let's go to our next question, please, Gavin.

Your next question comes from Robin Conacus from Trust Securities. Your line is open.

Great. Thank you. Just a couple on Opdulag. It looks like your market share quarter over quarter is sort of slowing a little bit. Can you just give some dynamics of how you think, how much more penetration you can get into the melanoma space? And then second, just going back to the lung readout this year, a lot of other companies are focused on different IO-IO combos. You know, what is your thought on the bar for success that you want to see and then how you think it will shake up mechanistically compared to other IO compounds that other companies are developing today?

So maybe I'll start and then I'll turn it over to Sumit. Look, we're very pleased with the continued uptake of Opdilag, as I think was referenced earlier. The shares are now over 20%. Keep in mind, we're also seeing some use in the second line plus setting. There are a few underlying dynamics that we're particularly happy about. First, we're seeing roughly 65% of the utilization coming from PD-1 monotherapy. And remember, that is the lowest hanging fruit for continued growth of this product. And we see monotherapy is still in that 15 to 20% range in terms of use in the first line setting. So there's still considerable opportunity to grow there. We are seeing some physicians source from Opdivo Urovoi. Those are mainly physicians who have some concerns about Urovoi toxicity, but we would envision that that will continue as well. So that's an additional opportunity to grow this business. The other thing I would note is that During the first quarter, we actually saw an NCCN update. And that update is really important because what it did was it removed BRAC MEK inhibitors as a preferred treatment in the first-line setting. And so now when you look at preferred treatment options in first-line melanoma, they are all dual IO, either Obdivo, Urovoi, or Obdulag. And I think that's a really important recognition on the importance of dual IO therapy targeted in that first line setting. Opdilag is going to continue to play a really important opportunity there. And then beyond melanoma, clearly Samit has already articulated some of the opportunities there. Samit?

Yeah, just carrying on from there for the non-small cell lung cancer. Look, it's not a bar we have set for success, but because it's a randomized phase two study, the bar and the statistical programming is actually within the study. comparing the combination of obdulag with chemotherapy versus nivolumab plus chemotherapy, it gives us two elements. One is the contribution of rilatilumab to obdulag plus chemotherapy. And second, the differentiation and superiority, if we can find one, in PFS. And that's what we're trying to gather. And that data will then pave the way for initiation of our phase three program. And in terms of other IO mechanisms and comparisons, I think you're alluding to some of the others, such as the TIGIT programs that are ongoing. And those are yet to be proven. We're certainly looking forward to more and more data presentations. We have two of our programs already in that space as well. And as we generate the data and we look at the external data reading out towards their final stages, we'll be able to define and decipher where the application should be for which agent. And hopefully, as we see the data, can define then future combinations as well with those agents. Great.

Thanks. Gavin, we're running short on time here. Maybe we have time for two more. Can we go to our next one?

Your next question comes from the line of Colin Bristow of UBS. Your line is open.

Hey, good morning. I want to offer my congrats to Chris and Adam and Giovanni, all the best in the future. I guess in terms of the clinical readouts we're going to get from you this year, the main ones that we're getting the questions on that stick out are the phase 2 in IPS, the tip 2 in UC, and then lag 3 in LUNGS. I wondered if you could just walk us through your expectations for each of these and maybe even offer which one you're most enthused about. Thank you.

Thank you. So since I don't have an eight ball, I'm enthused about everything. That's why we conduct the studies. Of course, LPA1 data presentation is coming up very soon. That data has given us the excitement and encouragement to be looking forward to initiation of the phase three trials in IPF as well as in PPF. We've already talked about the Crohn's disease data that it did not have the proof of concept yet for TIK2 inhibition mechanism in IBD. And looking forward to that readout, certainly later this year. We'll have, we're looking forward to the non-small cell lung cancer readout late this year, early next year for Abdullag, and that will pave the way for the future. But we also have several other readouts. If you think about cell therapy, we might have the ability to look for the data in additional indications for Brianzi as well. and that will be important. You will also see the data for CLL study being presented at ASCO, which is going to be important in addition to what we talked about for command as well. So those are all going to be critical, and we are looking forward to adding more and more in terms of our pipeline successes as we look to the future.

Thanks so much. Kevin, let's go to our last question, please.

Your last question comes from Credit Suisse. Your line is open. from Credit Suisse. Your line is open.

Gavin, maybe we'll go to the next question if Trang's not available.

Your next question comes from Olivia Breyer from Cantor. Your line is open.

Hey, good morning, guys, and thank you for the question. It looks like sub-Q at Devo was discontinued in some indications in Phase 3, just looking at your development slides. So can you give us any more color on what led to that decision and what it means for the SubQ program going forward. And then if I can just sneak in one more, how much added capacity does your new US cell therapy manufacturing facility get you? Is that something we should start to expect to contribute to supply this year, or should we be thinking about that more as a 2024 driver?

Sure. Thank you, Olivia. For the first question on SubQ, so let's clarify that. there are two sub-Q programs that we had for Abdevo. One was the syringe and vial, which is the one that we talked about before in renal cell cancer, the study that we're looking forward to the readout. The other program that we were initiating was the auto-injector program, and that is the one that we have discontinued. We didn't see more additional benefit of continuing that program at this time. So we will certainly have a readout of the sub-Q program in the phase three in renal cell carcinoma. And as I said earlier, If the data are supportive and appropriate, then, of course, discussions with regulators will ensue for applying that to all other indications that OBDII was used today as a single agent.

And let me quickly take the capacity question. So first, as you look at cell therapy across the board, we're increasing capacity. We anticipate to continue to increase capacity this year as well as going into next year. That said, within the context of CAR T, you have to stay consistently focused on manufacturing. And remember, we have a threefold approach to how we're doing that. First, we're staying focused on manufacturing success rate. That's important on the reliability point that I made previously. Second, and this is where the Illinois facility comes into play, is we've got to increase vector supply. We have a dual sourcing strategy for that, both leveraging external partners as well as internalizing vector And clearly the acquisition of the Libertyville facility is important in that regard. And then finally, of course, is drug product. And there we've made a number of investments, including facilities in Devon, Massachusetts, and in Leiden in the Netherlands. As for when the vector facility in Illinois will be up and running, we need to take ownership of the facility first. And then we've got to complete all of the site onboarding. And there's a fairly complex process in terms of tech transfer that's going to be required. So we anticipate it's going to take about 18 months from when we fully acquire the site, which would put that meaningfully contributing as we get into 2025.

Thank you, Chris and Samit. Thanks, Olivia. And thanks, everyone. So to summarize, strong start of the year with double-digit growth of our inline and new product portfolio on track for the year to grow. top and bottom line, as we discussed earlier, and we feel good about where we are after the first quarter. The team will be available after your very busy day to answer any other questions you may have, and I want to thank all of you for participating in the call. Thank you, and have a good day.

That does conclude our conference for today. Thank you for participating in Man at Water's Connect.