Bristol-Myers Squibb Company

Good day and welcome to the Bristol-Myers Squibb Third Quarter 2024 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. And to withdraw your question, please press star then two. Please note this event is being recorded I would now like to turn the conference over to Mr. Chuck Triano, Senior Vice President of Investor Relations. Please go ahead, sir.

Thank you, and good morning, everyone. I'm happy to be here at Bristol-Myers Squibb, and we appreciate you joining our third quarter 2024 earnings call. Joining me this morning with prepared remarks are Chris Berner, our board chair and chief executive officer, and David Elkins, our chief financial officer. Also participating in today's call are Adam Lankowski, our chief commercialization officer, and Samit Hirawat, our chief medical officer and head of global drug development. Earlier this morning, we posted our quarterly slide presentation to bms.com that you can use to follow along with Chris and David's remarks. Before we get started, I'll remind everybody that during this call, we will make statements about the company's future plans and prospects that constitute forward-looking statements. Actual results may differ materially from those indicated by those 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, and 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. And with that, I'll hand it over to Chris.

Thank you, Chuck, and thank you all for joining us this morning. Starting on slide four, our third quarter results reflect our continued focus on near-term execution and building the foundation for long-term sustainable growth. During the quarter, we saw solid demand for key products across our growth and legacy portfolios. We remained disciplined in managing expenses, and we continue to advance important pipeline programs. Let me highlight a few achievements in the quarter. Growth portfolio revenues increased 20% in Q3 at constant currency and now account for approximately half of total revenues. These are primarily young assets that have exclusivity well into the next decade. Our legacy portfolio also performed well generating cash flow that allows us to strategically invest in growth opportunities. During the quarter, we achieved several clinical and regulatory milestones. Notably, we reestablished our presence in neuroscience with the approval of CoBINFI, which I'll speak to in a moment. We also strengthened our leading oncology portfolio. And earlier this month, we received FDA approval for an Opdivo-based perioperative treatment regimen in non-small cell lung cancer. Additionally, we continue to advance our innovative pipeline. In oncology, we presented data at ESMO highlighting eight new registrational opportunities. We shared positive clinical data for our nivolumab plus rilatilamib high-dose combination in first-line lung cancer, which is now advancing to phase three. And we talked about the progress we're making across other promising assets and modalities, including our bispecific ADC and our radiopharmaceutical pipeline. This past week at ENA, we also presented promising phase one data for our PRMT5 program across all the tumors. Turning to slide five, the acquisition of Karuna Therapeutics is a key example of how we are strengthening our long-term growth outlook. We're proud to highlight the recent FDA approval of CoBenfi, formerly known as CarXTE, with a strong label that reflects its efficacy and safety profile. This milestone marks significant progress in delivering value from the Karuna acquisition for patients. CoBenfi is the first truly novel mechanism approved for adults with schizophrenia in decades, and it addresses one of the most significant unmet needs in mental health. There are approximately 1.6 million people being treated for schizophrenia in the U.S. alone, many of whom have endured debilitating side effects from older treatments. Cobenvi delivers compelling efficacy without the notable side effects associated with atypicals. The BMS team has been laying the groundwork for a successful launch. We built an experienced sales and medical team, engaged with payers to secure access and develop sophisticated patient support services. We have ongoing clinical programs in adjunctive schizophrenia with phase three data expected in 2025. And we have expanded the ongoing ADEPT program in Alzheimer's disease psychosis with phase three data expected in 2026. we remain on track to start registrational trials next year in Alzheimer's agitation, Alzheimer's cognition, bipolar disorder, and autism spectrum disorder. Adam and Samit can speak more to our launch progress in schizophrenia and other potential indications we are actively assessing for CoBinFy in Q&A. Turning to slide six, I'll spend a moment updating you on our progress against our key strategic priorities. First, We're focused on transformational medicines where we have a competitive advantage. We are advancing our mission to serve patients with first or best-in-class treatments across our therapeutic areas. This includes driving leadership in hematology, cardiology, and oncology therapeutic areas with products like Reblazil, Breonzi, Chemzios, and Optulag. At the same time, we're strengthening our innovative pipeline by prioritizing key programs. One asset that continues to advance well is Milvaxian. We continue to see considerable unmet need across indications, in particular AF, as well as a large commercial opportunity. Today, we want to share an encouraging update related to our atrial fibrillation phase 3 trial, which continues to recruit very well. As you'll soon see on clinicaltrials.gov, we and our partner J&J have approved an increase in patient enrollment size. This is because at this time, based on review of event rates, we are seeing a lower rate of strokes and systemic embolisms than originally anticipated. And the increased enrollment supports maintaining the planned data readout in 2027. As a reminder, as described in our published study design paper, we indicated that the sample size may be adjusted based on review of event rates. We remain confident in the design and progress of the program. Beyond Milvexian, we continue to advance other programs where we have a right to win. This includes our CD19 NextT cell therapy, our radiopharmaceutical and protein degradation platforms, as well as additional indications for Cobenvi. Our second priority is driving operational excellence. We are reviewing overall spending and prioritizing investments that will deliver the best long-term returns. We remain on track to deliver $1.5 billion in savings by the end of 2025. These savings will be reinvested into high ROI opportunities that serve patients' needs and accelerate growth. We are becoming a more agile company with stronger commercial and pipeline execution. Our progress on this front was demonstrated by the performance of our growth portfolio in Q3, the approval of CoBEN fee, and acceleration of key programs. We see the drive for greater operational excellence as a continuous process. As such, we are exploring opportunities to further improve productivity and efficiency over the coming quarters. Our third priority is to strategically allocate capital for long-term growth and returns. We remain focused on our near-term goal of de-levering our balance sheet. We made further progress during Q3 and are on track to pay down our target of $10 billion of debt by the first half of 2026. We're committed to the dividend, and we will continue to invest strategically in growth through our own pipeline, as well as sourcing innovation externally. Now, turning to upcoming milestones on slide seven. At the American College of Rheumatology's annual meeting in November, we will present promising phase one data for our CD19 NextT cell therapy. This is a next generation immunology asset leveraging the Brionzi construct. We are optimistic about its potential to deliver benefits for patients across multiple immunology indications by resetting the immune system. In late December, we expect the FDA's decision on the subcutaneous formulation of nivolumab. We anticipate this launch in early 2025 will provide an important benefit for both patients and physicians while extending our leadership in immuno-oncology into the next decade. We're also on track to share top line phase three data from SOTIC2 and psoriatic arthritis by year end. This data should help strengthen the competitive profile for SOTIC2 as roughly one third of psoriasis patients also have psoriatic arthritis. Turning to our outlook on slide eight, given the strength of our results year to date, we are raising both our full year revenue target and our full year EPS guidance. David will discuss these updates in more detail shortly. Looking ahead, I'm confident in our ability to deliver long-term value for patients and our shareholders. To summarize on slide nine, I'm pleased with our achievements in critical areas. Our overall business mix is beginning to transform as our growth portfolio is becoming a bigger component. The U.S. approval of CoBinfi adds another asset with multi-billion dollar potential to serve more patients and accelerate growth. Our pipeline continues to advance with additional near-term catalysts, and we are maintaining a disciplined focus on expense management, driving initiatives across the company to lower cost. These actions underscore our focus on executing in the near-term while laying the groundwork for long-term sustainable growth. We look forward to keeping you updated as we build momentum with important milestones in 2025 and significant data flow in 2026. Before I close, I want to thank our employees for their dedication and performance in the quarter. Together, we are building a strong future for BMS and the patients we serve. Now, I'll turn it over to David.

Thank you, Chris, and good morning, everyone. I'm pleased to share our quarterly financial performance. As a reminder, unless otherwise stated, all comparisons are made from the same period in 2023, and sales growth rates will be discussed on an underlying basis, which excludes the impact of foreign exchange. All references to our P&L are on a non-GAAP basis. Let's start on slide 10 with some highlights from our third quarter sales. We demonstrated solid commercial performance in the third quarter with higher sales driven primarily by our growth brands. The growth portfolio delivered another quarter of double-digit growth, up 20%, with continued progress across key brands, including Reblazel, Breonzi, Chemzias, and OptiLag. Our legacy portfolio also performed well, with U.S. growth led by Eloquus, partially offset by lower sales of Sprycell. As a reminder, the LOE for Sprycell in the U.S. recently occurred on September 1st, and the LOE for Pomalyst in Europe happened back in August. Our continued focus on commercial execution enabled us to deliver nearly half of our sales in the third quarter from the growth portfolio. And with the recent U.S. approval and launch of CoBenfi, our sales mix will continue to diversify and provide a stronger foundation for growth. Importantly, we will continue to optimize the strong cash flow generated from the legacy portfolio to invest in growth opportunities. Before going into key brand performance, it's important to note that third quarter sales were impacted by the reversal of an approximate $150 million inventory build from the second quarter. This tempered growth across several brands, primarily Opdivo, as well as Opdulag, Chemzios, and some immunology products. Let's start with our oncology business on slide 11. Global sales of Opdivo were higher in the third quarter, reflecting solid demand growth outside the U.S. Looking ahead, we continue to expect global full-year sales growth to be in the mid-single-digit range. We remain focused on the anticipated approval and launch of the subcutaneous formulation of nivolumab, which, as Chris mentioned, is expected to receive FDA approval by year-end. With this anticipated approval, we will have the potential to extend the durability of our immuno-oncology portfolio into the next decade. Moving to OptiLag, we delivered strong double-digit growth in the third quarter, driven primarily by demand. Three years post-launch, OptiLag has become a standard of care and first-line melanoma in the U.S. with 30% market share. Outside the U.S., third-quarter sales benefited from the strong uptake in newly launched markets such as the U.K., Brazil, and Australia. Moving to our cardiovascular portfolio on slide 12, Eliquis is the leading anticoagulant worldwide and delivered double-digit sales growth in the third quarter. U.S. sales benefited from the higher demand and market share gains. Sequentially, as we've seen historically, U.S. sales included an unfavorable gross to net impact related to the Medicare coverage gap. Outside U.S., sequential sales of Eliquis reflected higher demand across key markets and favorable inventory compared to the prior quarter. During the third quarter, we saw steady patient adoption with nearly 20% growth in patients on commercial drug, more than doubling the number from a year ago. Outside the U.S., sequential sales growth reflected higher demand in newly launched markets in Europe. Now let's turn to hematology on slide 13. Sales of Reblazel grew 81% in the third quarter, with strong double-digit growth, both in the US and international markets. The US sales were driven by continued demand and first-line setting. Outside the US, recent first-line reimbursement in Europe and Japan contributed to the strong performance in the quarter. In cell therapy, sales of Breonzi Morton doubled versus prior year, driven by demand and new indications and improved manufacturing capacity and reliability. In the U.S., sales grew more 40% on a sequential basis, driven primarily by pent-up demand and two of our newly approved indications, follicular lymphoma and mantle cell lymphoma. We expect more modest sequential growth from third quarter to fourth quarter as demand normalizes. Also in cell therapy, despite a competitive market, Abecma performed well in the third quarter with solid demand growth in both the U.S. and international markets. Moving to immunology on slide 14, sales of CertiQ2 nearly doubled when compared to the impact of the $30 million clinical trial purchase in the third quarter of last year. Outside the U.S., sales grew year over year, benefiting from the launch in a number of international markets. Looking to the fourth quarter, we expect a step up in gross to net discounts resulting from increased rebating associated with our approved access position. This would result in a fourth quarter sales being similar to this quarter. As we said previously, we expect that over time, demand growth will offset these pressures. Now turning to the P&L on slide 15. In addition to solid commercial execution, our third quarter performance demonstrated our focus on financial discipline and steady progress against our $1.5 billion cost savings program. As a reminder, we initiated this program to offset incremental OPEX from the recent deals. Savings from across the organization include reductions in direct clinical trial expense, site rationalization, elimination of roles, and a reduction in headcount. As we said previously, we expect the majority of the savings to come through this year. As we realize these savings, we are strategically reinvesting in high potential opportunities to fuel long-term growth and innovation in key areas. Moving to gross margin, we saw a decline in the quarter of about 130 basis points driven primarily by product mix. Operating expenses, excluding in-process R&D, were impacted by higher deal-related spend, partially offset by savings from our efficiency initiatives. Our effective tax rate in the quarter changed from 11.6% in the prior year to 18.5%, impacted by one-time adjustment in 2023 resulting from newly issued IRS guidance. Overall, third quarter earnings per share were $1.80. Now moving to the balance sheet and capital allocation highlights, we ended the quarter with approximately 8.4 billion in cash, cash equivalents and marketable debt securities on hand. During the third quarter, both our growth and legacy portfolios delivered solid revenue growth, contributing to robust operating cash flow of approximately $5.6 billion. In terms of capital allocation, we remain focused on strengthening our balance sheet. We are executing our plan to pay down approximately $10 billion of debt, and relative to our position at the end of the first quarter, we have reduced it by $5.9 billion. This includes roughly $3 billion of commercial paper and $2.9 billion of long-term debt. As we previously have said, we remain committed to our dividend. Our strong cash flow profile enables us to address these priorities while also strengthening our outlook. Turning to 2024 non-GAAP guidance, as is our practice, we provide revenue guidance on a reported basis as well as on an underlying basis, which assumes currency remains consistent with prior year. We now expect full-year 2024 revenue to increase approximately 5% as reported and approximately 6% at constant currency, primarily due to higher-than-anticipated sales of Revelmed. We are pleased with the performance of both growth and legacy portfolios, and in legacy, we have updated our full-year sales estimate of Revelmed to approximately $5.5 billion. As a reminder, for modeling purposes, in addition to Revlimid, other legacy brands should soften in the fourth quarter due to competition from generics for Sprycel and Abraxane in the U.S. and Pomulus in Europe. Turning to gross margin, we now expect a slightly tighter range to reflect the impact of our U.S. sales mix. Excluding acquired and processed R&D, we now expect total operating expenses for the year to increase approximately 4% to 5%. This increase reflects higher fourth quarter spending to support our product portfolio and pipeline and is in line with fourth quarter increases seen in previous years. These costs are partially offset by savings from our productivity initiatives. Remain confident in our ability to achieve our full year operating margin target of at least 37%. For OINE, we have increased our estimate from approximately $50 million of expense to approximately $125 million of income due to better-than-expected royalty and interest income. As a reminder, our tax rate was impacted by the non-deductible charge for acquired in-process R&D, primarily from the Karuna acquisition in the first quarter. Excluding the acquired in-process R&D, we continue to expect estimated underlying non-GAAP tax rate for the full year to be approximately 18%. Taking these updates into effect, we are raising our non-GAAP EPS guidance to a range of $0.75 to $0.95. In closing, our third quarter results were marked by significantly higher sales across key growth brands, robust cash flow generation, and continued financial discipline. As we reestablish our presence in neuroscience with the US launch of CoBenfi, we are excited about the long-term opportunity of this brand and its potential to serve more patients. We're looking forward to additional near-term catalysts as our pipeline continues to advance. Our solid performance year-to-date supports our raised full-year guidance and our increased confidence in our ability to drive long-term sustainable growth. And with that, I'll now turn the call back over to Chuck for Q&A.

Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. And to withdraw your question, please press star, then two. And at this time, we'll pause momentarily to assemble our roster. And the first question will come from Evan Siegerman with BMO Capital Markets. Please go ahead.

Hey, guys. Thank you so much for taking the question. And congrats on the progress this quarter. So one for Adam. Now that you have COPE NP approved, can you walk us through what the next year looks like when it comes to access? I know there's a lot of puts and takes when it comes to Medicaid and commercial, but maybe give us some color as to how we should think about it. Thank you so much.

Good morning, Evan. Adam? Yeah, thanks, Evan, for the question. We're very excited about the approval of COBENFI. As you heard from Chris, COBENFI is the first innovative therapy approved in schizophrenia in decades. And we're very pleased with the label. COBENFI does not carry the atypical antipsychotic class warnings and precautions or a box warning. And so how we think about this, Coventry addresses a large market. Remember, there are 1.6 million people treated for schizophrenia each year in the U.S. We do see this as a 2025 launch, with the launch picking up after attaining broad access. We expect to see Coventry sales ramp in the second half of the year, and I'll describe those dynamics. First and foremost, we're really excited that product is available this week. Our field teams are out now selling. They're engaging with customers, and so we'll see stocking this year. Now, access is a gaining factor to sales uptake, as over 80% of patients are either Medicare or Medicaid. And just remember, schizophrenia is a fundamentally different market than markets that are highly PBM-driven. So we expect to take about a year to achieve 80% to 85% access. It could move a bit faster in Medicaid, and we're certainly going to work to accelerate that. So the way to think about community access really is in a stepwise fashion. In Medicaid, recall roughly half of the states have zero to one-step access. And so Medicaid P&T meetings will take place over the course of the next several months. We've already seen a few states come online this week. Physicians can prescribe Coventry once P&T reviews are completed, and we are working to expand access across the remaining states. Now, in Medicare, recall, this is a protected class. So payers have 90 days to make a coverage decision, and we expect to see mandatory coverage determinations in Q1. But in the meantime, physicians can push through medical exemptions, for any of these formula reviews to take place. Our access teams have been meeting with payers for some time, and our team was out immediately post-approval with payers to review the approved label, and the response has been very, very positive. So, again, we know the work that we need to do to maximize this important launch, and we plan to make this a very big product for our company over time.

The next question will come from Chris Chibutani with Goldman Sachs. Please go ahead, sir.

Great. Thank you very much. Certainly you've been doing a lot to focus the operating expense profile here. And at the same time, you're seeing improving top line. Where are you in that trajectory in terms of what we should expect 2025? Any early commentary on the shape of 2025 top line dynamics as a function of operating expense would be helpful. Thank you.

Thanks, Chris. I'll ask David to take that one. Yeah, Chris, thanks for the question. And look, we feel really good about the progress we're making on our $1.5 billion savings initiative that we had in place. And if you recall, we're on track to achieve the majority of that this year. We also feel really good about the operating margin guidance that we provided of at least 37%, both this year and for next year as well. So we're continuing to look for efficiencies in our call space, and you'll continue to hear more about that. But as it relates to 25, we're going to give you full line art guidance like we typically do on a fourth quarter earnings call.

Thanks, David. Operator, next question, please.

The next question will come from Chris Schott with J.P. Morgan. Please go ahead.

Great. Thanks. Just maybe two-parter on COVID fee. Thank you for all the details on the reimbursement piece. Once reimbursement's in place, can you just talk about how you're thinking about the ramp of the drug from there? I guess historically, I think we've seen more gradual launches in schizophrenia, but these were largely assets with similar mechanisms to existing products. I'm just wondering in this case, are you anticipating this could be a faster ramp than we've historically seen given the unmet need and your unique mechanism of action? And then just my second part on the same product is just, When you think about the additional line extensions here, what's your confidence in the bipolar one opportunity? It's obviously a very large market, and a lot of the data you see in schizophrenia. Do you view that as a high probability of success study as you start to ramp that one? Thank you.

Thanks, Chris, and good morning. Adam will take the first part, and then Simon can chime in as well.

Yeah, Chris, thanks for the question. First thing I'd say is there's really no perfect analog here, because unlike previous launches where you've seen multiple success of approvals, for example, schizophrenia and MDD, that's not going to be the case with CoBENV. CoBENV's approval cadence is going to be in schizophrenia, first in monotherapy, then in adjunctive therapy. As I said, in terms of the, as we see the launch and access coming online, really this is going to be a second half ramp. That's how we see it. So physicians can prescribe today, push through medical exemptions before formula reviews, but we expect to see really full access 80 to 85 percent access within roughly, you know, 12 months post-approval.

And thanks for the question, Chris. If you think about bipolar, so if you think about mania in general, bipolar 1, that includes symptoms that are excessive activity as well as the psychotic symptoms of delusion, hallucinations, and thought disorders. Then xenomaline, and especially as we think about cobenfi, has demonstrated reduction of these agitation symptoms. In Alzheimer's disease, as well as in schizophrenia, Alzheimer's disease data, of course, came from the 1997 study that was published for Zanomaline in the past. So these are all predictive of efficacy potential in bipolar mania. There is no evidence thus far in the studies that have been conducted in the emergent program that shows a worsening of the depressive symptoms. So taken together, we are looking forward to initiation of that program in bipolar mania. in the middle of 2025. Just to also add to on top of that, beyond bipolar, in 2025, we're looking forward to the readout of the ARISE trial, which is the adjunctive schizophrenia trial. And of course, two additional indications that we will be initiating in 2025 will be AD agitation as well as AD cognition. Thanks, Silas. Can we go to our next question, please?

Next question will come from Louisa Hector with Barenburg. Please go ahead.

Hello, thank you for taking my question. On CITIC2, you mentioned the price impact in Q4, but could you add a little more color on the outlook for next year and the access and pricing as we roll into next year? And then perhaps just a reminder of the profile that you're looking for in the cirrhotic arthritis trial. Thank you.

Thanks, Louisa. Adam can take the first one, and then Samit.

Thanks, Louisa. As we said in the past, the TIC2 performance has been slower than we'd like, and we are making progress on executing against our plan, and that's securing favorable access and ultimately improving performance and execution. Recall we had 25% access in the first half of the year. We more than doubled that in Q3. We now have approximately 50% zero-step edits in the market, and I could say we are having productive conversations with the remaining payers and expect to enable broader access and adoption in 2025. But this comes with significant rebating and gross net impact that will be compensated by increased volume over time. It's going to take a few quarters for that to wash out. In fact, in Q3, you saw some of this. We saw some of the pull-through delivered both versus prior year and sequentially when you exclude clinical trials. So this is a market that is going to remain highly competitive. And we're going to continue to work to increase market share as well as paid prescriptions. But As we exit this year, we will be in a better position versus where we started the year, and we're going to work to be more competitive.

Thanks for the question, Luis, for the psoriatic arthritis part. Remember, we have been able to pull and accelerate the readout of the second study as well, so we are looking forward to the readout towards the end of this year for both poetic PSA1 and poetic PSA2 within 2024. Overall, as you can imagine, Since a lot of data has now been generated from a safety and efficacy perspective for Siltictu and psoriasis, the readout of the psoriatic arthritis program will put us in the right footing as we think about the competitor profile versus Tesla as well. So looking forward to that. We have no concerns from a safety perspective, as we've said. So hopefully the studies read out positive. That will lead to a filing in 2025. Great. Thank you. Next question, please, operator.

The next question will come from Jeff Meacham with Citibank. Please go ahead.

Morning, everyone. Thanks so much for the question. For Chris or Samit on the Milvexian program, I know you guys did talk about the use of the potential to upsize the trial previously, but what would you say is the cause for the lower event rate? Does this change the risk profile? We know that GLP-1s have an impact, for example, in cardio and metabolic trials. Do you think change is there? commercially could have changed the rent rate in your study. Thank you very much.

Thanks, Jeff. I'll start and then I'll turn it over to Samit. Let me just say at the outset, Jeff, that we're encouraged by what we're seeing with this program. Just a reminder, we're developing Milvexian because there remains high unmet need for patients in anticoagulation. That's particularly true in atrial fibrillation, whereas I think you know This is an area where 40 million individuals worldwide have atrial fibrillation, and that, despite the success of factor XAs like Eliquis, about 40% of those patients remain un- or undertreated due to the risk of bleeding. And we believe melbexian has the potential to improve the outcome for these patients. The update that we provided today is really intended to give some context to the decision to increase the sample size given the encouraging blended event rates that we're seeing at this point in the study. This is a potentially important medicine. We want to do everything we can to ensure that the program continues to read out in 2027. But before I turn it over to Samit, I want to leave you with we're encouraged by what we're seeing here, and we look forward to seeing this study come to its outcome in 2027. Samit?

Yeah, thanks, Chris. And Jeff, just extending from where Chris left off from an encouraging point of view, Remember where we started the program from. What we have seen from oceanic trial in AF, it was very clear that one of the key drivers of the outcome was the dose. We started the malviction program with well-designed phase two studies that led us to pick the right doses for our phase three programs in AF as well as in combination with antiplatelet agents in ACS as well as SSP. Secondly, our event rate is lower. compared to what we had designed the study for at the current time. And that gives us the reason to increase the sample size, which you will see the numbers when we update contrast.gov. Thirdly, as we think about why the study was stopped, the organic study was stopped because the DMC reviewed the data and saw almost three times the event rate on the investigation arm in that study. Our study is periodically reviewed by the DMC. There are no indications from the DMC that we should go any other route. and they are supportive of continuing the study at this time. We truly are encouraged by all of this, and as you know, ACS as well as the SSP programs are slated to read out in 2026, and we are on track for that.

Great. Thanks for the background. Next question, please, operator.

Next question will come from Carter Gold with Barclays. Please go ahead.

Great. Thanks for taking the questions in solid print this morning. Maybe – I don't mean to – to hammer on this again, but just wanted to follow up on the prior question for Samit there. With the increased patient enrollment, will there be any shifts in the criteria or enrichment of patients away from the OAC-naive or proximal segments? I mean, I appreciate your commentary on, you know, what happened to your competitor from Bayer, but at the same conversation at ESC, you know, there was talk about the challenges in those populations given explicitly what seems to be going on here at the event rate. Any color would be appreciated. Thank you.

Yeah, thank you, Carter. There are no plans to change any of these criteria. We will continue to observe them, and the study will continue as is, except for the change in the sample size.

Right. Let's move to the next question, please.

The next question will come from Mohit Bansal with Wells Fargo. Please go ahead.

Hi, this is Serena on for Mohit. Thanks for taking our question, and congrats on the quarter. We wanted to dig more into the CAR-XP development plans as it relates to cognition. Perhaps starting with the AD psychosis trial, I was wondering if it'll still have the three times in one day dosing and longer titration period. And then moving on to the cognition trial, I was wondering what this could look like. Like, would it need to be longer than the emergent studies? And do you plan to enrich for patients cognitively impaired at baseline? Thank you.

Thanks for the question, Serena Summit.

Yeah, thank you, Serena, for the question. So we're looking forward to, obviously, the initiation of three Phase III programs next year, one in AD agitation, second in bipolar mania, third in the AD cognition program. The reason for belief, of course, is the dual mechanism of action in terms of M1 and M4 direct agonism that is obviously associated with xenomaline. as well as the available data from the old studies that were conducted with denomaline that already showed the right trend in terms of the cognition improvement in those studies. Your question around the three times a day dosing, right now that is built into the AD psychosis program. We are working on the BID dosing for these patients, and they will be instituted in the new studies that we will start in these three indications that I talked about, as well as we are thinking about how we will institute a bridging program so that we can bring it back into the AD psychosis program as well. Overall, in a good track, and certainly looking forward now to the readout of the ARISE study next year. Great. Thanks, Amit. Let's take our next question, please.

Next question will come from Chung Chung with UBS.

Please go ahead. Morning, guys. Thanks for taking my question. Just one on the recent PMRT5 data. We saw an ORR of 21% across a bunch of solid tumors. Can you perhaps talk about efficacy as regards to durability that you're seeing here with the product, and what tumor types are you going to be prioritizing? Thank you.

Thanks for the question, Trunks Summit.

Trunks, thank you for the question. Really, actually, very encouraging data from our perspective. We look at it from a breakdown in terms of the tumor types that were enrolled, and the two that stood out from that program thus far are non-small cell lung cancer, where if you look at just the non-small cell lung cancer cohort, the overall response rate is about 31%, with a very good durability. The one thing to note in that program is that the responses do occur late, so it's more of a long-term duration of control of these patients. on the drug, and most patients actually have disease control for a very long period. As you saw, the duration of response is already 10.5 months. Then if you talk about the stable diseases as well, that also constitutes about a similar trajectory from a non-small cell lung cancer population. The second thing that was very encouraging was looking at the pancreatic cancer patient population, and at the right doses, at the 400 and 600 milligram dose, We saw actually increased response rates, again, a very good durability, some patients now going all the way almost up to a year. And so those two indications look very promising, and we are looking forward to giving you updates next year in terms of the later phase development for this program. Great, thanks.

Let's move to the next question, please.

Next question will come from Steve Scala with Calwin. Please go ahead.

Oh, thank you so much. I have two questions. They're just really clarifications. But each one percentage point of Bristol revenue growth is about $500 million. And that's the amount that Bristol is increasing its guidance. That's roughly equivalent to what Revlimid beat by. So is the increase solely attributed to Revlimid? And then secondly, and I apologize for going back to Austin Dexian, But the AFib trial had a lower than expected event rate and failed. Why is a lower than expected event rate in the Milvexian trial encouraging? It as easily could be a risk, I would think. I understand the DSMB point. So any clarity would be appreciated. Thank you.

Thanks for the question, Steve. I'll ask David to start, and then we'll flip over to Samit.

Yeah, Steve, thanks for the question. And, look, we saw strong performance in our growth portfolios. as we talked about, and that's why we also saw good performance and raised the Revlimid guidance to $5.5 billion, and that caused us to raise the full-year outlook 5% growth versus prior year on a reported 6% excluding currency. The other thing I would note, too, as I said on the call, we have generic entry coming in on Sprycel, Braxane, and Pomalyst. Sprycel and Braxane are already facing generic entry. as is POMLIS. So we just want to make sure that people update their models for that additional generic erosion in the fourth quarter. But net-net, when we put all that together, as we said, we raised our revenue guidance as a result.

And Steve, thank you. This is Samit. Great question. Just to recall, if you go back to Oceanic Study and we look at the event rate for Essendexian Arm, then we look at the rate for Apixaban Arm. Apixaban was 1.03%. Asyndexian was 2.33, if I remember, and even more so. And then if you think about what we have planned in the Malvixian studies, 1.33. So overall, if you think about it, we are looking at a blended event rate, as Chris mentioned, which is much lower than the planned event rate. So overall, we are encouraged by this and not necessarily thinking that it's an issue. As I said earlier, DMC continues to look at it, and they are okay with us continuing this study, and we are increasing the sample size.

Great, thanks for the added context. Next question, please.

The next question will come from Courtney Breen with Bernstein. Please go ahead.

Thank you so much for the question. Another question just on the Coventry launch. What I wanted to make sure we were able to understand is some of the practicalities around kind of a patient receiving a script and kind of the doctor choosing that patient to prescribe to. Can you share some of the context on the warnings and precautions in the label, particularly around liver and how many patients you practically expect to be managed through these challenges? I do note that obviously there isn't the boxed label warning, but there are some warnings that require extra physician attention. And so can you just speak to some of those challenges?

Thanks, Courtney. Adam? Yeah, Courtney, thanks for the question. Just as you know, Coventry offers efficacy that's at least as good or better than Zyprexa without the significant adverse events that have plagued the D2s. Weight gain, dyslipidemia, EPS, sedation, those are the ones where they lead to the greatest level of discontinuation and why you see patients stop treatment and physicians re-challenge with another agent. We're very pleased with the label, and it's just at the beginning, but the progress and the feedback that we're hearing have been very, very positive. When you look at some of the monitoring that's in the label, remember, the large majority of patients have had recent lab assessments, so we don't anticipate this to be a barrier. In the label, this is recommended. It's not mandated, and lab assessments are very common in this patient population. Most antipsychotics today recommend lab assessments, so we don't think it's an issue for adoption. And when you look at renal impairment, In patients with schizophrenia, it's in the mid-single digits. So taken together, you know, we are very pleased with the efficacy profile that is unique to CoBENFI based on its mechanism of action and its best in, you know, best in category safety profile.

And just to add to what Adam is saying, you will also see the data on longer-term studies, Emergent 4 and Emergent 5. Hundreds of patients have been treated through those as well, and the safety profile continues to remain the same with certainly efficacy maintained. So that, in addition, gives us a lot of confidence in the overall profile for Coventry, as Adam said.

Great. Thank you both. Next question, please.

The next question will come from Seamus Fernandez with Guggenheim Securities. Please go ahead.

Oh, thanks very much for the question. So I wanted to just get a sense for your enthusiasm for the upcoming data at ACR for your CD19 asset. And, you know, how you see the evolution of a potential market for intensive immunologic treatments like this versus, you know, the potential for whether it be T-cell engagers or bispecific products, you know, with a similar type target profile but perhaps less efficacy. And then just the second question is on the 2025 dynamics, just hoping to get maybe a little bit of a better sense of the sort of pushes and pulls on IRA. I know you've said that you expect it to be largely neutral, but it does seem like there are opportunities to potentially increase volume in that context. I just wanted to clarify whether or not any volume benefits are incorporated into your assumptions around that neutral assumption. Thanks.

Thanks for the question, Seamus. Samit, maybe you can start and then turn it over to Adam.

Thank you. Thanks, Seamus. Great question. And let me start. There are two parts on the drug side of things. Let's start with the card cell therapies, truly a transformational approach to treatment of autoimmune diseases, as we've seen with the emerging data from others. And now we will have a chance to present our own data. Just remember one thing. We started our study at the end of November last year. First patient was actually dosed in November of 2023. And so we are looking forward to presentation of that data at ACR. There are a few things that you may want to notice as we present that data. Number one, who are the patients who are enrolled in these studies, and what is the severity of the disease that they have been enrolled in? And then secondly, after treatment, what happens to the B-cell dynamics in terms of the loss of B-cell or depletion of B-cells as well as the emergence? And then what is the impact on their remission in terms of stopping the treatment that they were on for immunomodulators, immunosuppressants? And then, of course, what is the safety profile? Remember, many of these patients will have underlying organ damage, and so that will be important to keep in mind as you look at the data. These are small number of patients, but we will be able to update these data again at ASH with additional patients, longer follow-up, and even additional indications. Second part of your question was around how do you see these as opposed to T-cell engagers by specifics. I think that's an important element that we will need to consider, and new publications have recently come out using BCMA-directed therapy, and there's a case report for CD19-directed T-cell engager as well in the past. And they look very promising, encouraging. We'll have to see which patients should go on to car cell therapies in the future and which patients should go through with a T-cell engager and bispecifics because bispecifics will require repeated administration at a certain point in time, either weekly, biweekly, or every four weeks. And we'll have to define then the duration of that treatment. So all of those questions are still to be answered for T-cell engagers. You recall we have a BCMA T-cell engaged that we stopped developing multiple myeloma, but next year in 2025, you will see a couple of studies starting and a couple of indications that we will certainly test out the theory for application of BCMA-directed bispecific in those diseases.

Adam? Yes, so just the question around the changes to the benefit design as relates to IRA. So with the elimination of the coverage gap, you know, we... expect favorability with Eloquist next year due to Part D redesign with the elimination of the coverage gap. But that's going to be offset largely by products like Revlimid and Pomalyst in the catastrophic phase where we're now responsible for 20%. So there are pushes and pulls with IRA opportunities, including patient affordability, also with changes in the Part D benefit design. But taken together, we see this as essentially net neutral across our portfolio. Thanks, Adam.

Thank you. Let's move to the next question, please, operator.

The next question will come from Matt Phipps with William Blair. Please go ahead.

Good morning. Thanks for taking my question. I was wondering how you all view the market opportunity for the GPRC 5D CAR T, maybe relative to a BECMA, given you've now moved the 5D program into a second-line phase D trial. Do you think the profile is strong enough to really challenge a BCMA CAR T or would it be used after a BCMA CAR T? And, Chris, what type of candy are you going with tonight?

So we'll start with Adam, and, Samit, you can chime in as well. Yeah.

We've started the study with our – GPRC5D agent and be moving that quickly into phase three registrational trials. We are very encouraged what we've seen thus far. Remember, this is going to be an important asset that is going to be used after BCMA CAR-T treatment. This is a competitive environment, we know, but with a single dose and the toxicity profile that we are seeing thus far with GPRC5D, we think we have a really great opportunity here with this asset to be another leading cell therapy asset for our company.

Thanks, Adam. And, Matt, I'm a rhesus guy.

Thanks for that important insight. Next question, please.

Next question will come from David Rissinger with Lerink Partners. Please go ahead.

Yes. Thank you very much. So I'll just keep it to one high-level question, please. So, Chris, I think you mentioned a few times on the call that You see Bristol Myers as a sustainable growth company. Could you just provide some more context on that? You know, your sustainable growth expectations in light of 2026 revenue pressures and the end of the diabetes royalty stream. Thanks very much.

Thanks for the question, David. Yeah, look, as we have said consistently, our North Star since I took over as CEO in November has been that we execute in the short term and stay focused on building a company that will deliver long-term sustained growth and shareholder value, particularly as we work our way through the middle of the decade, exiting with a very strong growth profile towards the end of the decade. And as I think about the way that we continue to build confidence in that, I would say I'd highlight three things. First, we have a young portfolio of growing assets. You've seen that in the quarterly results. And we're squarely focused on continuing to drive performance in this growth profile. We've got products like CoBenfi, which just launched very early in its life cycle. Clearly, schizophrenia is important. You're going to see additional indications, notably the adjunctive indication in 2025. Brianzi continues to show very solid and strong growth in cell therapy. And remember, that's at the tip of a pipeline of assets we've discussed this morning, in fact, that look promising, including CD19 and GPRC5D. We saw continued steady growth for Reblazil and Camxiles. We would expect that to continue. Those two products have line extensions coming up in the next 12 months. And of course, we've talked considerably about Optulag and Nevo SubQ providing a foundation for our IO business through the end of this decade and into the next. And then when you step back from that, the second thing that's encouraging is we continue to see very good progress in our late stage pipeline. We've talked about Movexian and the encouraging progress of that program in AFib as well as the two other additional indications we're running in parallel. We're excited about LPA1. And remember, we have multiple phase two programs that have demonstrated efficacy and safety for that program. So we're excited to see that play out. Ibertamide and Mazigtamide give us opportunities in multiple myeloma. And these are products that have important readouts over the next 12 to 24 months. So we've got continued excitement in the late stage pipeline. And then across all of our businesses, we've maintained financial discipline. That gives us the ability to have a solid balance sheet Our P&L looks good, and that gives us strategic flexibility to continue to invest both in our internal program as well as source innovation externally, as we did with the Karuna acquisition, for example, in December. So if I add it up, I think those are the core components of how we continue to build conviction in the sustainable growth that we're looking to drive for the company.

Great. Thanks, Chris. Let's move to our next question, please.

Next question will come from Akash Tiwari with Jefferies. Please go ahead. Hey, thanks so much.

Given that there's been reports of J&J shutting down their cardiometabolic division, is there any potential for your team to renegotiate your partnership with them around Milvexian? And on Sub2Optivo, your team doesn't seem to be guiding for branded reps beyond the FDA regulatory protections. which is a market contrast to what Merck's communicating on sub-Q Keytruda. Any color on why your team seems to be more conservative here? Thank you.

So do you mind repeating the second question?

Yeah, just in terms of protections around sub-Q Opdivo in terms of the length of duration versus what Merck's communicating on sub-Q Keytruda. You got it. Thanks.

Sorry, we just missed that. So with respect to J&J, no change in our partnership with J&J. J&J has communicated. They continue to be squarely supportive and engaged on the Milvexian program. And in fact, their work on the ongoing Phase 3 programs continues to be very, very good. And we've got a very good relationship with J&J on that program. And then Adam, I'll ask you to take the second question.

Yeah, regarding the sub-Q, first we look forward to the PDUPA date for the Nivolum app sub-Q in late December. Launch planning is progressing very well, and we talked about shifting at least 30% to 40% of the total U.S. Updivo business. We could do that ahead of the LOE, which is in late 2028. As far as the extension of the IO franchise, this is what excites us potentially about this product because Not only does Nevo SubQ address the treatment burden for patients and physicians with a three to five minute infusion time, as well as in-office injection, what this is going to do, based on the broad patent state for the SubQ, it will allow us to extend our franchise into the next decade.

Great. Thanks, Adam. Let's move to our next question, please.

Next question will come from James Shin with Deutsche Bank. Please go ahead.

Hi, guys. Thanks for taking our question. Just want to go back to Milvexian real quick. I really appreciate the update on the stroke and embolism event rates, but was there any separation between the arms? And perhaps even more importantly, do you have any color on bleed rates? Thank you.

Thanks for the question, James. Salman?

Thank you, James, for the question. Obviously, we can't look at those from a bi-arm perspective. This is a blinded study. We don't get to see the data that way. It's a blended event rate that we can talk about. and we don't get to the specifics of the general profile of the drug at this time.

Thanks, Amit. Let's move to the next question.

Next question will come from Olivia Breyer with cancer. Please go ahead.

Hi, good morning. Thank you for the question. Can you guys talk through what you're looking to see in that adjunctive schizophrenia data set next year? And when you think about uptake in that setting, are you getting any early feedback around potential off-label use from potential early adopters. I mean, how big of a market do you think that could realistically be, just given the focus on making monotherapy use a standard of care? Also, I just wanted to ask a quick clarification on Milvexian timelines. I know it's still 2027, but should we assume that it's later in the year considering today's update? Thank you.

Thanks for the questions, Olivia. Maybe we'll ask Samit and Adam to get those questions between the three of them.

Thank you. Remember, Olivia, how patients are treated today with the antipsychotics that are available without even having an approval in the label. Patients are being treated with combinations of D2 agonists in this space. So it was important from our perspective to generate the data to showcase efficacy as well as the safety profile of combining a muscarinic agonist with the background therapies that patients are on. And that's the intent of showing from the ARISE program perspective as an adjunctive therapy, what CoBEN-P can deliver on top of the background therapies. That will be important, and that study will read out in 2025. On Melvixian side, from a clarification perspective, the 2027 is an event-driven endpoint in the trial, so we can't give you a specific in terms of the timing within 2027. That's why we're giving you a general guidance to 2027 as before.

Olivia, thanks. As it relates to adjunctive schizophrenia commercially, today psychiatrists use two D2s to get greater efficacy in around 20% to 30% of the patients. Even though the D2s are not FDA approved for adjunctive treatment, we do believe that Cobenpi could be an important adjunctive treatment option. Simon talked about the ARISE study, and we're working to generate evidence on this. And pharmacologically, it makes sense adding an M1 and M4 on top of a D2 because it's And we think that could be synergistic effects there. So we're excited to see the study read out. Just to be clear, though, our teams are focused on driving on-label use in schizophrenia to make CoBENF-E a standard of care there. And it's not going to be our choice, but physicians may or may not choose to use CoBENF-E off-label because of the safety profile of the product. But we're really excited for the data readout. next year in adjunctive schizophrenia, as well as some of the other data readouts that Simon talked about, Alzheimer's, psychosis. These are going to be important accelerators of growth for this product.

And I would just remind you what Adam ended on is really important, which is that this is a product that obviously we're super excited about the initial indication in schizophrenia. We've got the adjunctive data coming, but this is a product that will continue to generate new line extensions with the very robust clinical development plan that we put in place for it.

Great. Thanks. Let's move to the next question, please.

Next question will come from Sean McCutcheon with Raymond James. Please go ahead.

Hi, guys. Thanks for taking the question. One more on Coventry. Can you speak to your view on the import of the M1 component for Coventry as it relates to potentially driving cognitive improvements in schizophrenia in particular? What proportion of the population have cognitive deficits? Do you expect these patients to be kind of parsed out in the monotherapy setting or, you know, post-atypical or in the adjunctive setting. And what are your comments to those that are looking at the BID regimen and GI adverse effects as potential barriers on ease of use in this patient population where compliance or lack thereof is a significant variable when thinking about your competitors that are coming up behind you? Thanks.

Good morning, Sean. Samit will take the first part and then Adam.

Yeah, thank you. Remember, the differentiating feature for Covenfe is that it's a dual direct agonist as opposed to some of the other therapies in development that target the M4 through indirect ways because they're allosteric modulators which require a ligand such as acetylcholine to be present in the brain. And M1 is a very important component because from a biological perspective, that is associated with cognition function in the brain. And so having a direct impact on M1 as well as M4 gives us that opportunity to really impact the cognition. And during the overall life cycle, as we think about the Alzheimer's disease patients as they go through it, cognition does become important in terms of the impact on the patient and patient life and quality of life. So there's a large proportion of patients who will have cognitive impairment and will be eligible, if the data reads out positive, to be treated with the drug. That's why we've developed a program in all three parts of AD that impacts from a psychosis perspective, agitation perspective, as well as the cognition perspective. Adam?

Yeah, so it relates to the dosing regimen. You know, first I'd step back and just talk about the leading causes of discontinuation. Number one is efficacy, and Coventry delivers unsurpassed efficacy, efficacy that's at least as good as Zyprexa. And the other areas of high-level discontinuation include areas like weight gain, include sexual dysfunction, trouble concentrating, excessive sedation. And so now, physicians don't need to trade that off. People living with schizophrenia commonly manage multiple medications at significantly higher rates than the general population. In fact, when you look at patients with schizophrenia, they're on average seven pills a day, which includes their antipsychotic. It could include different psychotropic medications, including antidepressants, anti-anxiety medications, as well as medicines to combat the adverse events of their existing products. So yes, we know we're going to need to manage this, but we don't believe that this will impact uptake based on the unprecedented efficacy that Copenfi has shown. Last thing I'd mention is we saw very low discontinuation rates in our clinical trial due to the fact that patients are seeing that robust efficacy, that the product is well-tolerated, and we will provide support to both patients and caregivers to maximize compliance with this medicine.

Thanks, Adam. I know you all have a busy morning in the space, so we'll take our last question, and then we'll turn it to Chris for some brief closing remarks.

The last question will come from Krypta Dvorakonda with Truist Securities. Please go ahead.

Hey, guys. Thank you so much for taking my question, and congrats on the quarter today. I'll switch gears and not ask a Kubenfi question. I want to ask a question about your HFPEF program. You've recently published data from a phase two with Naver Camden. Can you talk about how this translates to 224, which I think is the drug you've indicated as the HFPEF drug? And what percentage, like how big of a market do you see? And can you remind us of the timelines for this program? Thank you.

Thank you, Kripa, for the question. HFPEF is an important indication. We've always indicated that As we think about myosin cardiac inhibitors, with the impact that it does have on the cardiac function and remodeling in general, there's an important element that we wanted to test out, which we first tested out with Mavacamta in a small number of patients, which gave us an inkling through the biomarker work that we did over there through antiproBNP as well as the troponin measurement, which gives us confidence to continue with that program. We switched over to MYK224, which was the second program that was available to us, And that's the beauty of having two cardiac myosin inhibitors in the programs. And that trial is enrolling very well. We are now extending that trial in terms of the Phase 2A study to enroll more patients to generate the data. We anticipate that that Phase 2 data read out in the next couple of years and then start the Phase 3 program based on the doses that we have identified in that Phase 2 program. And then in the early part of next decade is when we anticipate to really have the Phase 3s reading out. We don't have a timeline specifically in terms of a year but really excited to see what we have seen thus far and looking forward to initiation.

Yeah, as far as the opportunity, this is a large opportunity where HFPEP affects around 3 million people in the United States, and that is expected to grow significantly over the course of the decade. In fact, the heart failure drugs as a category is valued at over $12 billion in 2022, and we expect this to almost double by 2032. This is a significant opportunity, and we're really pleased with what we're seeing early on with MIC-224.

Thanks, Adam. Well, thanks, everyone, for joining us for the call today and for the very thoughtful questions. Maybe I'll just leave you with a few thoughts on the performance for the quarter. First, as you hopefully have gotten from the discussion, we remain very focused on execution. The growth portfolio is now, as David mentioned, contributing nearly half of our total revenue. And that profile continues to benefit from robust demand for key products, products like Reblazil, Breonzi, Chemzios, and Optulag. Second, the CoBinfi approval is a pivotal achievement. We've been working hard to deliver that since we closed the Karuna transaction. And this is an important medicine for patients, and it's an important growth driver for the portfolio. Third, we continue to advance our innovative pipeline across therapeutic areas. We've had several important readouts over the course of the year, and we have a few more coming between now and the end of the year, as well as beginning of next year. And then finally, again, as you've hopefully gathered, our commitment to operational excellence is yielding results, and we're going to remain focused on driving value across the organization. So thanks again for your time today, and as always, the team's available for follow-up questions, and have a great rest of the day.

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