Q4 2022 Bristol-Myers Squibb Co Earnings Call
Good morning, My name is Dennis and I will be your conference operator today at this time I would like to welcome everyone to the Bristol Myers Squibb, a fourth quarter 2022 earnings conference call.
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After the Speakers' remarks, there will be a question and answer session.
If you would like to ask a question. During this time simply press Star then the number one on your telephone keypad to withdraw your question Press Star one again.
I would now like to turn the conference over to Tim Power Vice President of Investor Relations. Please go ahead.
Thank you and good morning, everyone. Thanks for joining us this morning for our fourth quarter 2022 earnings call.
Joining me this morning with prepared remarks are Giovanni for you Our board Chair and Chief Executive Officer, and David Elkins, Our Chief Financial Officer also participating in today's call are Chris Boerner, Our chief commercialization officer someone here, what our Chief Medical Officer, and head of global drug development.
As you'll note we've posted slides to BMS dot com that you can follow along with for Giovanni and David's remarks, before we get going I'll read our forward looking statements. During this call we will make certain 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 include.
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 <unk>.
First of all I'd items reconciliations of certain non-GAAP financial measures to the most comparable GAAP measures are available at BMS dot com with that I'll hand, it over to Giovanni.
Thank you Tim and good morning, everyone starting on slide four.
I am pleased to report another strong quarter for Bristol Myers Squibb, concluding a very successful year.
Last year was an important year for our company the first with Revlimid generics.
Given that I am very proud to say that in 2022, we grew our business and made tremendous progress advancing our pipeline.
Including launching three new first in class medicines, and progressing seeks promising programs into Registrational development.
While David will provide additional details on the financials in a moment.
I'll point out a few highlights.
Last year, we delivered revenue growth of 3% adjusting for foreign exchange.
Importantly growth was driven by our in line and new product portfolios.
So I am pleased to note that we delivered continued strong growth in the fourth quarter for these assets up 12% adjusting for foreign exchange.
We also grew our earnings including non-GAAP EPS growth of 8% for the full year.
As we start 2023 I am confident we have established a strong foundation for Bristol Myers Squibb.
As you'll note from our guidance, we expect to grow both revenue and non-GAAP EPS this year.
Importantly, we remain on track to achieve the commitments we have made for 2025.
Given increasing confidence in our new product portfolio and continued progress with our broader pipeline, we see multiple paths to growth through 2013.
Let me now I'll provide some perspective on 2022 on.
On slide five you can see our overall pipeline execution last year.
I am very pleased with our progress, which further supports a renewal of our portfolio.
Why do we advanced on many fronts I would like to highlight a few accomplishments.
Approval of three first in class medicines, including Abdulla comes Iris and fatigue too.
Which address areas of high unmet medical need and have significant commercial potential.
Further progress expanding the reach of our new product portfolio.
Including an important expansion opportunity for <unk> in first line M D S with commands.
Positive topline results of Cadamarteri based on which a bank might as the first be CMA Cup of tea to have demonstrated superiority to standard regimens in relapsed and refractory multiple myeloma.
And initiation of Registrational trials for <unk> in lupus.
Remember in the Phase II study so take two demonstrated an encouraging profile in this hard to treat disease.
We believe lupus can be an important expansion opportunity for the brand.
Progress with the next generation of medicines includes important proof of concept data for mill vaccine in secondary stroke prevention, enabling the initiation of the phase III program. This year.
And a positive trial for our L. P. A one asset in lung fibrosis.
This asset has come into focus only a recently and he is a prime example of the Optionality that comes from having a broad pipeline we.
We are looking forward to presenting data and starting phase III trials for this asset later this year.
On slide six you can see how we strengthened the outlook for our new product portfolio, which as you know is central to our strategy of renewing our portfolio over the coming years.
Our pipeline execution and strong commercial momentum position us well to achieve $10 billion to $13 billion of risk adjusted revenue in 2025.
And as a result of the strong progress with our pipeline, we have significantly derisked. The 25 billion plus of long term non risk adjusted revenue potential.
As you can also see on this slide we continue to see exciting catalysts I had for these assets.
So turning to our scorecard for this year on slide seven.
It's encouraging to observe the breath of catalysts, we see I had as a company in the near term.
I'll point out a few highlights.
Just last week, we announced our phase one two trial for Breanna Z in the relapsed refractory C. L. L met the primary endpoint.
In Europe , we expect it to launch comes IOC in obstructive HCM and are pleased to have received positive C. H M. P opinion for our first and only selective <unk> inhibitor. So take two.
Our Ros one inhibitor re contract and it is expected to be filed in the U S in lung cancer.
We have an important expansion opportunity for <unk> in first line M D S.
Along with our partners at Janssen, we have embarked on Registrational trials for the vaccine and.
And we expect to move our beckmann into earlier lines of therapy.
Finally, we are further advancing our multiple myeloma cell Mod program with a head to head study of <unk> versus Revlimid in the post transplant maintenance setting.
As we have done in the prior years, we look forward to updating you on our progress as we continue to advance our pipeline and further support our portfolio renewal.
Turning to slide eight.
I'd like to remind you about what we've accomplished in the past few years and how that prepares us well for the near mid and long term.
When we began the transformation of our company three years ago. We told you what we believed we could achieve and we have delivered across the board.
Financially, we have grown our company over delivered synergies reduced our debt and generated significant cash flows.
We have launched all nine new medicines, including three first in class products that were approved last year.
And we've continued to execute disciplined business development to further support our growth profile in the future.
Our record of execution further strengthens my confidence in our ability to renew our portfolio and deliver long term growth.
With all of this in mind, let me move to slide nine to discuss our outlook for this year and beyond.
As you know, we expect to drive growth through 2000, and 'twenty five and sustained strong profitability as we transform our portfolio.
And that journey continues this year.
We delivered growth through Revlimid generics in 2022.
And as you can see from our guidance today, we expect to continue to grow this year.
With the focus turning to the second half of the decade, we continue to see multiple paths to growth driven by growth of the new products contribution from our advancing late stage pipeline, including new vaccine L. P E one and sell modes and significant optionality from our early pipeline.
Complemented by flexibility for additional business development.
All the while we are transforming our portfolio to be younger more.
The more diversified and more resilient in the face of an increasingly complex pricing environment in the U S and internationally.
Before I turn to David Let me Express my gratitude to our teams across the globe, starting with our research and development organization, which had a stellar 2022.
As you will have seen this week, we announced Dr. Rupert Vessey his decision to retire effective July 3rd.
I want to thank Rupert for his extraordinary contributions since he joined BMS as a result of the acquisition of Celgene group.
Rupert led the successful integration of research and the development of a strong pipeline across all stages of development.
We are now combining development across early and late stage under some its leadership.
And preparing to transition the research organization to report to Dr. Robert plans.
Who will serve as EVP and Chief Research Officer, when Rupert retires this summer.
The focus and the termination of these leaders and all of our teams will enable us to continue to deliver for the patients depending on us.
I'll now turn it over to David to walk you through the financials David.
Thank you Giovanni and thank you all again for joining our call today I know this is a busy morning for all of you as Giovanni mentioned 2022 was another solid year of execution for Bristol Myers Squibb.
Let's get started with our top line performance on slide 11.
Less otherwise stated all comparisons are made versus the same period in 2021 and sales performance growth rates will be discussed on an underlying basis, which excludes the impact of foreign exchange.
We delivered on our full year commitments with sales of approximately 46 billion with growth of 3% demand for our diversified in line and new product portfolio was strong with revenue growth of 13% for the year more than offsetting the loss of exclusivity for Revlimid in the first year of generic entry.
Let me dive deeper now into the fourth quarter and full year performance of our new product portfolio on slide 12 <unk>.
Global revenues in the quarter were $645 million up 87%, while full year revenues topped over $2 billion nearly doubling over 2021 with nine new product approvals in multiple additional indications coming to fruition, we have an increasingly derisked new product portfolio. This provides us confidence that we're on.
Track to deliver the potential of our new product portfolio with $25 billion of non risk adjusted revenue expected at the end of the decade.
Moving to slide 13 to discuss our performance of our solid tumor portfolio.
Global Opdivo sales reflect strong demand for our newly launched in core indication with double digit growth in the fourth quarter and the full year.
In the U S fourth quarter revenue saw full year sales growth strong growing 13% and 15% respectively.
This growth was primarily driven by demand for our new metastatic and adjuvant indications, partially offset by declining second line eligibility as well some use of opt to lag in first line melanoma.
Internationally revenues grew 20% in the fourth quarter and 14% for the full year fourth quarter revenue growth was largely driven equally by demand and timing of shipments.
Demand was primarily driven the new indications, particularly first line lung and upper Gi cancers.
As we look to this year, we expect growth of Opdivo to continue this growth will come from an expanded indications in both early and late stage cancers.
Now turning to our first in class <unk> inhibitor opt to lag, which had an impressive first year on the market approved in the U S. In late March after like generated sales of $252 million in 2022.
Sales in the fourth quarter at strong sequential growth of 24% versus quarter three with first line melanoma market share now in the high teens, we continue to see room for growth of up to lag in first line melanoma, where PD one monotherapy share still is approximately 20% and further potential with pivotal studies in adjuvant melanoma.
In second line plus colorectal cancer underway on.
On slide 14, let's discuss our growing cardiovascular portfolio, starting with <unk>, which had another great year global revenues in the fourth quarter and the full year grew 6% and 14% respectively.
In the U S fourth quarter sales increased 15% driven primarily by demand and favorable gross to net adjustments.
Nationally <unk> as the leading <unk> in many countries given high market shares across these countries demand growth has been offset by pricing measures as well as generic entry in Canada, the UK and the Netherlands.
Now turning to our first in class myosin inhibitor <unk> sales in the fourth quarter was $16 million. We are pleased with the progress we have made since the launch in May of 2022, we laid a strong foundation of Rems certified over 2600 health care professionals and enabled key centers to get operationally ready to make him Zeiss available.
<unk>, we also significantly increased the number of patients on commercial dispense drug which provide strong momentum heading into this year.
We look forward to continuing this momentum as well as bringing Kim's eye as to European patients with approval expected by mid year.
Moving to our hematology portfolio on slide 15, starting with Revlimid global sales for the full year of approximately $10 billion impacted by generic entry as we noted last year, we expected variability quarter to quarter and in 2022, we saw slower than anticipated utilization of generic lenalidomide in the U S.
With favorability in 2022 and anticipated increase in generic volume. This year, we expect revlimid revenues to be approximately $6 $5 million $1 billion. In 2023, we continue to expect an average two $5 billion annual step down as a reasonable assumption for 2024 and 2025.
Pamela it's global revenues continue to grow in the fourth quarter and for the full year, driven primarily by demand for triple based regimens in earlier lines of therapy, and extending duration of treatment for patients.
As usual in the first quarter I would like to remind you of the typical seasonality revlimid and palmas experience due to patients entering the Medicare coverage gap early in the year.
Now moving to <unk>, our first in class EMEA demand for robots, though was strong with fourth quarter and full year sales growing over 30%.
In the U S revenues grew over 20% in both the fourth quarter and full year, we have made great progress since launch by increasing patient adherence extending treatment durations and accelerating switches when Esa scale <unk>.
Internationally <unk> Zelle continues to launch in different markets across the globe with launches now in 16 markets outside the U S.
<unk> growth continues to be driven by demand in both Mds and beta thalassemia associated anemia, and obtaining reimbursement in additional countries.
Turning to our differentiated cell therapy portfolio, a beckman brianti.
Our first in class B CMA cell therapy at Beckman continued its robust performance.
Mobile revenues for the full year were $388 million versus $164 million in 2021.
This represents strong growth year over year, reflecting significant patient demand and the work the company has done to increase manufacturing capacity.
We focus on continuing to ramp up capacity and believe this will enable us to get at Beckman to more patients with highly refractory myeloma as well as preparing to move into earlier lines of therapy.
Lastly, moving to our best in class CD 19 cell therapy, Brianti global sales for the year were $182 million more than doubling over 2021 sei.
Sales in the quarter reflect strong demand and hard work of our teams to expand supply looking to this year. We continue to expect growth driven by demand for <unk> in second line plus large b cell lymphoma, and we will remain focus on continuing to build manufacturing capacity to further support the uptake and prepare for additional indications.
Now, let's move to our expanded immunology portfolio on slide 16, starting with our first in class <unk> agonist as oppose here.
Fourth quarter sales grew 69% of our full year global sales nearly doubled driven by increased demand in multiple sclerosis, and ulcerative colitis.
Our strategy to expand volume and to improve commercial access is materializing, we've made progress with several plans with either zero or one step at it which will meaningfully expand access as we move into 2023, we expect continued growth as oppose to evolve primarily from EMS today to you see over time.
And remember as with any new immunology medicine heading into the first quarter. The typical dynamics of Copays resetting each year tend to impact the first quarter performance as additional co pay supports affects gross to net adjustments.
Internationally, we are continuing to focus on securing reimbursement in additional markets to get suppose you to more patients living with Ms and UC.
Finally, turning to our first in class <unk> inhibitor for moderate to severe plaque psoriasis citic too.
We're extremely pleased with the U S launch so far still early days, but physician feedback has been outstanding as of December we had over 2000 script equivalents on bridge and commercial drug.
Since then we continue to make progress in new scripts and see that the use of Tso TIK. Two is roughly evenly split across systematic naive patients a tesla switch patients and biologic switch patients. We remain focused on driving demand for this new medicine as the oral choice and ensuring as many patients as possible get some.
It took two to enable broader formulary positions in 2024 <unk>.
Internationally, we are now approved in Japan, and Canada with expected European approval by mid year.
Switching gears to our fourth quarter P&L on slide 17, having just covered sales performance. Let me walk you through a few non-GAAP key line items.
As expected fourth quarter gross margin was impacted primarily by product mix and higher manufacturing costs for the full year gross margin was in line with our prior guidance at approximately 79%.
Excluding acquired in process R&D fourth quarter and full year operating expenses decreased primarily due to reallocation of investments behind our growth opportunities and the impact from foreign exchange and dilution from the turning point acquisition.
Acquired in process R&D in the quarter was $52 million, which was partially offset by $16 million of licensing income that benefited OID in the quarter.
Fourth quarter effective tax rate was approximately 11% driven by earnings mix and one time items with the full year tax rate of approximately 15%.
Overall fourth quarter earnings per share was $1 82 from a full year perspective, we ended the year at the upper end of our guidance range at $7 70.
Representing 8% over previous year.
Moving to the balance sheet and capital allocation on slide 18 cash.
Cash flow from operations in the fourth quarter was $3 $3 billion. The company's balance sheet remained strong with approximately $9 billion of cash and marketable securities on hand as of December 31.
Our capital allocation priorities are unchanged business development remains a top priority to further renewable and diversify our portfolio and strengthen our growth outlook. While also focused on balance sheet strength and returning capital to shareholders. We have executed several early stage business development deals as well as acquiring turning point therapeutics last year.
Our strong balance sheet allows us to be size agnostic on deals.
As it relates to balance sheet strength in 2020 to reduce debt by over $5 billion and we are committed to maintaining a strong investment grade credit rating.
And finally as it relates to returning capital to shareholders. We have a long standing track record of paying dividend for 91 consecutive years and recently grew the dividend for the 14th consecutive year.
We remain committed to growing the dividend subject to board approval and continue to be opportunistic on share repurchases with approximately $7 billion remaining in our share repurchase authorization.
Let me close with our 2023 non-GAAP guidance on slide 19.
Due to unpredictable macroeconomic factors and large swings in foreign exchange last year, we were providing guidance on a reported basis as well as an underlying basis, which assumes currency remains consistent with prior year.
We expect 2023 revenues to grow approximately 2% on a reported and constant currency basis. This reflects our confidence that our in line and new product portfolios will more than offset the impact from Revlimid and <unk>, we expect revlimid sales to be approximately $6 5 billion, which assumes additional.
It'll step up to generic manufacturers later in Q1, as well as continued variability quarter to quarter.
With the momentum of our new product portfolio, we expect it to roughly double versus last year and will be approximately $4 billion.
As it relates to our line item guidance for the year, we expect our gross margin to be approximately 77%, which reflects a shift in product mix.
We do not predict acquired in process R&D. So excluding this we expect our total operating expenses to decline in the low single digit range. This reflects the reallocation of cost and efficiency initiatives and M. S. N. A as we continue to invest in our new launches.
R&D expenses are expected to be largely in line with last year due to our dynamic portfolio of studies reading out and new study starts.
We project our tax rate to be approximately 17%, reflecting changes to Puerto Rico tax laws and product mix.
Finally, we expect to grow our non-GAAP earnings per share.
With a range of $7 95 to $8 25.
This represents growth of approximately 5% excluding.
Excluding prior year acquired in process R&D, adjusted EPS would grow approximately 2%.
So before we move over to Q&A I want to thank our colleagues around the world for the strong performance in 2022, our strong execution in 2022, and our commitments for 2023 reflects the resiliency of our business and the renewal of our product portfolio. The performance in the year positions us well for long term growth.
I'll now turn the call back over to Tim and Giovanni for questions and answers.
Alright, thanks, very much David I know, it's a very busy schedule today, so we're going to get into the Q&A. If you could keep questions just to one that would be very helpful. Dennis can we go to the first question. Please.
Yes. The first question is from the line of Chris Schott with J P. Morgan. Please go ahead.
Yes.
I'm sorry is from the line of Geoff Meacham with Bank of America. Please go ahead.
Okay.
Thanks for the question I'll keep it to one so so tick to I realize it's early days in the launch but.
What are the opportunities to improve formulary positioning this year.
As your market share improves into the many biosimilars launching this year humira.
No.
As well as <unk>.
Across the board have an impact on any of these pbms discussions. Thank you.
Sure. Thanks for the question, Jeff This is Chris I will take it.
So first we're very happy with the performance of <unk>. Two it's obviously early days, but as is reflected in the remarks that David just had the reception for the product has been very very good feedback that we're getting on the profile coming from customers is good and we now have over 2000 scripts as of the end of November our market share.
For the oral market in moderate to severe psoriasis is roughly 35% for new products and it's roughly 12%. If you look at the overall market and Thats just after two full months of launch so very happy with what we're seeing in terms of the momentum coming out of Q4.
And as it as it relates to whether we can accelerate the access position I think the way we would characterize it as the base case continues to be 2024.
Before moving into a better access position that said, we're doing everything we can to possibly accelerate that we're obviously having good discussions.
With Payors.
The strategy that we have for potentially accelerating that remains unchanged, which is continue to drive demand as quickly as possible for this product and the good news is we have the profile.
And we're seeing the feedback from customers that we think will enable us to do that.
As for the impact of Biosimilars. Obviously this is a dynamic.
<unk> seen a number of movements just in the last few weeks, what I would say is that our approach to.
Gaining access really doesn't evolve based on what we know about Biosimilars. We think 2023 is going to be a transition year for biosimilars clearly the strategies of companies and Pbms will continue to evolve. So it's something we'll stay on top of but as we sat right now certainly the strategy that we have for so take two dozen.
Change.
Alright, Thanks, Chris Dennis can we go to the next question. Please yes.
Yes. The next question is from the line of Chris <unk> with Goldman Sachs. Please go ahead.
Great. Thank you very much with Ken XI us that progress of rolling that out.
You have previously talked about the different mix of centers of excellence and you gave us a patient number can you give us a sense for what the relative distribution is of those larger centers versus perhaps maybe smaller practices are you seeing momentum.
The setup of certification.
Essentially the patient flow that you are hoping for at the pace so far.
Sure.
Thanks for the question Chris.
We're seeing a nice acceleration.
Both patient and physician dynamics for <unk> as I think David mentioned, we now have over 18 100 patients who have been prescribed importantly, we're seeing good and increasing conversion of those scripts to commercial drug you may recall that.
In the third quarter, we talked about 30% of scripts that converted over to commercial drug in Q4 that was 50%. So we're gaining momentum there and the feedback that we're getting from the centers of excellence continues to be very strong.
And so we've seen a nice pickup in what I would say is that that pickup has accelerated over the.
The course of the fourth quarter recall that we are targeting approximately 500 accounts nationally those accounts account for roughly 60% of the overall patient volume and what we've seen over the last quarter is a nice acceleration.
And the use of <unk> in those accounts and importantly, some of the slower accounts that we have been focused on continuing to build the infrastructure necessary to get patients on therapy, and so we've seen a nice acceleration with those specific accounts as well. So overall, we feel like we're making good progress as we exit 2022.
Thanks, Chris Dennis can we go to the next question. Please.
Yes. The next question is from the line of Chris Schott with J P. Morgan. Please go ahead great.
Great. Thanks, so much.
So tick to mild to moderate or Tesla label represent a hurdle at all for so take two is you can think about competing for frontline share obviously, you're seeing some now but is that a hurdle you guys think about and then maybe just slip a really quick second one in <unk> you saw some favorable gross to net and most of the quarters in 2022 does that continue.
<unk> and 'twenty three or should we think of growth. This year, maybe more aligned with volume growth. Thanks, so much.
Sure. This is Chris I'll take both of those things for the questions Chris.
With respect to <unk>, two we don't see that.
Oh, Tesla broader market going into.
The mild category has an impact on us and in fact, what we're seeing is very strong momentum with so take two in moderate to severe patients when we talk to customers. What we hear from them is excitement to use the product in the full spectrum of our label, which includes not only the.
The severe patients, but importantly, those moderate patients and then you look at the uptake that we're seeing so far it's reflective of the fact that physicians are going to be willing to use it.
Bolt in moderate to severe so given the fact that we have two phase III studies that clearly show superiority across that patient population relative to Tesla, we don't see that being a particular barrier with respect to how we think about the uptake of the product as for gross to nets for <unk> for 2022 as you know we did see some.
Favorability due to mainly the source of business and channel mix, but as you well know this this space is a very competitive space. It's heavily managed so we don't see gross to net favorability as we look forward there will continue to be variability across quarters.
As we've talked about many times in the past you do see late year seasonality with a product like <unk> and gross to nets, but on a forward looking basis, we don't see favorability with gross to nets with this product.
Thank you Dennis go to the next question. Please.
The next question is from the line of Seamus Fernandez with Guggenheim. Please go ahead.
Thanks for the question. So my question actually is on a in the drugs that are potentially going to be selected for negotiation towards the end of this year.
Just wondering how.
Bristow is going to manage that situation in particular I know that you do have patent exploration that will limit the impact there but.
If that is starting in 2026 given.
<unk> current product portfolio <unk>, one of the top players there.
Just interested to know what it is that you feel Bristol can do too.
Temper the impact there and then also sort of separate but related question on I R. A.
We're seeing the sort of free drug launches that are running for at least a full year.
Maybe not purely free drive, but but substantially aided trying to just get a better understanding particularly for oral that's starting to look like the lifecycle. There is starting to get truncated the 6% to seven years wonders.
I'm wondering if you feel comfortable or even confident that there'll be a better alignment of the oral incentives versus biologic incentives.
Inside IRI as well thanks, so much.
Thanks, Seamus this is Giovanni I'll I'll take your question and.
I'll ask Chris to comment on that.
Your second question about the <unk>.
<unk>.
Strategies. So I think when you look at IRI similar to the discussion we've had before I would say.
There is a lot that we still don't know as you know CMS is working through.
The procedural aspects of implementing the <unk>.
The legislation and of course over the course of this year, we'll learn much more now when you look at.
Your question about BMS, So first of all we know.
That we do not see any impact from from IAA until 2026 win.
Some of the government price setting stars.
And you are right that it is possible that liquids is impacted in 2026 of course, we need to learn more in order to understand what the degree of impact Nate maybe I'll just remind you that.
While we book, 100% of the revenue for <unk>.
We split obviously, the prostate with with Pfizer So many ways.
It is an important brand by as.
Smaller.
Brand in terms of determining our earnings.
Activity versus what you would think about the revenue line now what can we do.
We continue to grow the company so the execution and implementation of IAA in many ways. It's exactly what we are doing is advancing new medicines.
To the market in order to accelerate the renewal of our portfolio. So when you look at 2026, given our expectations that new launch brands will be 10% to $13 billion in sales I would say there will be a very dynamic young portfolio that we drive the company growth.
For the second half of the year and of course those products will have been launched.
Very recently and therefore won't be.
Candidate to government price setting for a while now the last comment that I would make is you are right about.
The challenges associated with the.
Diverging incentives as you refer to them for the nine years for all of our 13 year for biologics wheat. They obviously are not pleased with that because the science is going very matching in terms of enabling us to de lever.
To develop more small molecules, but obviously any change there would require.
It just it changes Chris do you want to comment on the launch dynamics.
Sure.
Seamus, it's an interesting question on the role that free drug programs play in light of Iras as I think most of you know free drug programs, our typical particularly in markets, where rebates are require that you have a transition period, particularly for new products to make them make their way into a more favorable access.
Position.
Now, there's a dynamic there and that those free drug programs that typically targeted to commercial payers I mean commercial patients and area of course is focused on Medicare.
That dynamic notwithstanding I think that youre right, though that to the extent that <unk>.
Free drugs.
And free drug programs play out for extended periods. It could have a negative impact when you look at the IRI restrictions and price setting coming in in nine years, I think what that reinforces for US though is the importance of very strong commercial execution, because clearly what you want to do is transition from free.
Drugs into a more favorable access position as quickly as possible and so as we just discussed for a product like <unk>, that's going to continue to be our focus but I, but I think it's a very important question and it's something that we're gonna have to continue to monitor as we learned more about the rollout of IRI.
Great Dennis can we go to the next question. Please.
The next question is from the line of Steve Scala with Cowen. Please go ahead. Thank you very much we noted that Bristol initiated a mill vaccine SSP phase III trial with primary completion in November of 2026 and that additional phase III will be started in the first half of this year, but buyers studies.
Our expected to read out a full year earlier is this consistent with your perception that Bristol is a year behind buyer.
Should add that you are not first with Ela question ended up dominating but but let me ask let you answered the question. Thank you.
Thank you Steve <unk> here.
Thanks for the question.
We plan the studies and we put a timeline.
With those studies in terms of the enrollment and then of course these are event driven trials.
Wait for the events to happen before we read out and report the results. So we have to take all of those into accounts, but of course, the clinical trials, we can impact them by looking at what the enrollment rates are and how these trials that enrolled so I think what you see on controls Dot Gov is a guesstimate of when the trials are going.
To be reading out it is possible that we might be reading out earlier. It is possible that our competitors will be reading out later, but these are early days and we'll update you as the trial progresses, if the timelines do shift.
Thanks, So much Dennis can we go to the next question. Please.
Yes. The next question is from the line of Tim Anderson with Wolfe Research. Please go ahead.
Thank you a few questions.
On <unk> two.
Can you just quantify where you are on market access from 'twenty three in terms of number of lives covered.
And where you do have access or are there any step that is requiring a tesla first.
And then on your bridge program will that last all the way through 'twenty, three or will you begin to phase it out before year end.
Thanks for the question.
So with respect to market access we think we have about 10% of patients who are in plans that have opened or preferred access.
Obviously, that's going to continue to increase as we continue to engage with with payers and as we said our base case for <unk>.
A much more favorable access position writ large across the major pbms as for 2024, but we're doing everything we can to.
To accelerate that as for the bridge programs.
Bridge programs are typical in this market and I think we would typically think about keeping those bridge programs opened until we find that we are in a.
Our position, where we've got the volume to negotiate a much faster.
Access are more favorable access with the big Pbms. The nice thing that we're seeing Tim we'd so take two is that the vast majority of patients are going into our hub what that enables us to do is monitor the status of those patients with respect to formulary positioning and so even if that bridge program has opened we have the ability.
To transition those patients to commercial drug the moment, we certify that their plans.
Are able to take them on commercial drug and so it's a more dynamic process than might be indicated.
And the discussions that we've had in fact, we have the ability to look at this on a more real time basis, but we do anticipate that those rich programs will remain open.
Certainly as we get into 2024.
Hi, Thanks, Chris can we go to the next question. Please.
The next question is from the line of Evan <unk> with BMO capital markets. Please go ahead.
Hi, guys. Thank you so much for taking the question on our back Boston you went from kind of struggling to meet patient demand in early 2022 to now expanding into earlier lines of therapy. How should we think about bridging this gap really I'm talking about expanding capacity and when we could potentially see.
More thoughts on the line for both yourself therapies. Thank you.
Yes, and then maybe I'll take that one this is Chris So we're actually quite happy with the expansion of capacity that we continue to see with Beckman and actually we saw with both products in the fourth quarter. You may recall that for <unk>, we had anticipated the expansion of capacity would wait until we got into this year, we were very happy to see that.
Expansion.
Accelerated into Q4.
So.
I think that as we look forward to this year, we continue to see an expansion of our capacity for both cell products a cell therapy products and that's certainly true with Beckman and I would say the other thing to keep in mind as we've thought about manufacturing, which is going to continue to be an area of focus for us for cell therapy.
<unk> is we have a threefold strategy first we continue to stay focused on manufacturing success rates that is.
One of the more important elements that are frankly affect all of cell therapy products. These.
These are complex drugs, they're living products and you have to stay focused on.
Your manufacturing success rate second we've talked at length about vector supply and we obviously have a number of strategies in play from dual sourcing to increasing the number of suites and ultimately switching to a next generation suspension vector on that on that front and then finally drug product and there it's mainly about bringing.
Additional manufacturing sites online and we've discussed previously our efforts in devins, Massachusetts enlightened to do just that so.
What I would say sort of leveling. It up is that manufacturing has to continue to be an area of focus for us. We've got good strategies in place and we've seen those strategies play out.
With expanded capacity not only in Q4, but we anticipate through the remainder of this year.
Chris can we go to the next question. Please Dennis.
The next question is from the line of Terence Flynn with Morgan Stanley . Please go ahead.
Great. Thanks for taking the question.
David probably for you just thinking about the guidance Opex, you've got at a low single digit decline this year, which offset some of the gross margin pressure.
R&D, you're holding flat so it looks like most of the decline is going to come on the SG&A side. So just as we look into 2024 I guess, we're anticipating additional gross margin pressure given revlimid rolling off more fully how should we think about expenses and margins as we think about the cadence into 24. Thank you.
Terence Thank you for the question and.
Youre right as it relates to gross margins, we do anticipate them coming down in last year was in line with expectations as what we're guiding this year that 77% due to that product mix as revenue declines.
As far as Opex is concerned.
We continue to find efficiencies operational efficiencies, we learned a lot through COVID-19 with digital technologies, particularly on how we're engaging with health care professionals, but also on top of that.
Reallocating resources from the mature brands to our launch products, making sure they're fully funded.
We have been able to do that very effectively from an R&D perspective, you may recall as we talk about the levels of R&D spend it's really driven by our portfolio that has the single biggest impact on the level of R&D spend and we just launched nine new products. So we had many late stage programs coming offline, we have some new ones coming online but.
Those are through partnerships I think more vaccine is a great example of that where we have several phase III programs that are going to be beginning but thats shared with those costs are shared with our partner. So that's why we believe as we look at our business. This year of low single digit decline.
The decline in our overall operating expenses as you know what we're anticipating but we feel very confident even with the step down in gross margin as we look at our base continuing to grow the top line faster than our expense base that gives us the flexibility to maintain those operating margins above 40%.
Thanks, David can we go to the next question. Please Dennis.
The next question is from the line of Mohit Bansal with Wells Fargo. Please go ahead.
Great. Thanks for taking my question, maybe if I may ask a little bit more on the guidance side.
So from our math it looks like.
Four inland progress you are looking at another really good year or so after the 11% growth.
We calculate you're expecting about 8% growth again this year, we seem to be the delta between you and consensus. So could you. Please talk a little bit about puts and takes there and.
Where do you see the most robust growth in the inland portfolio, considering the considering <unk> challenges there.
Yeah.
Yes, well thanks for the question and you're right, we do see multiple drivers for our growth in 'twenty three.
Overall, 2% growth with our in line and new product portfolio offsetting the declines in our.
In Revlimid and the low <unk>.
And that's really coming across as we think about the in line and as we've talked about before we had really strong double digit growth on <unk>. This past year, we continue to see.
Growth despite some of the headwinds that we see in Europe . Good strong growth in the U S and opdivo year avoid with our additional tumor indications and adjuvant setting we continue to see good growth in lung as well as in gastric cancers and continue to see very strong growth continuing on our Io Fran.
And then the new products remember, that's a significant growth driver.
I talked about in my earlier remarks and <unk>.
Doubled last year and as we said, we see that continuing into this year. So between the in line business as well as that new product momentum that we have as we exited last year and the guidance, we're providing this year.
We have multiple ways to continue to grow and we're very confident in our ability to do that this year.
Alright, Dennis can we go to the next question. Please.
Your next question is from the line of Carter Gould with Barclays. Please go ahead.
Great. Good morning, Thanks for taking the questions maybe just focus on one of those launch products with rebel assault here.
Alluded to some duration growth would love any additional color you can provide there and then as you think about command.
How should we think about the stage H filing and when we might see that data presented is that something we might have to wait to say late June four or is there the opportunity to potentially share that data ahead of them. Thank you.
Yes, maybe I'll start and then switching over to summit for.
On your questions on command, so with respect to <unk>.
Yes, we continue to see good acquisition of new patients on <unk>.
Out of coming out of the fourth quarter and certainly we would expect to see that continue.
Continue into this year, but as you note, where we see the potential for the most significant growth with this product is really.
First is increasing dosing and administration and ensuring that we've got the right titration.
Patients we have seen some improvements.
Improvements in that regard over the last year in fact duration of therapy is up 6%.
In 2022 versus 2021, and we would expect to continue to see particularly as as patients titrate up over time consistent with the medalist study that that duration of therapy.
We continue to increase this year.
And then the second big area of focus that we have is getting those patients who are no longer responding to Esa as in the first line setting to move on to <unk>. That's been a big area of focus for us and again here too we have made good progress there.
The time on ESA has has decreased since our approval from roughly 18 months to now roughly 11 months and so those are the two big dimensions that we have as a focus in 2023.
And then obviously the commands study provides the next large catalysts for growth and we think that that indication will roughly double the opportunity that we have with <unk>, but in terms of timing I think amit can speak to that.
Okay. Thank you, Chris and Thanks Carter for the question as well.
So we don't have the specifics of the conference right now, where we will be able to share the data, but certainly we will confirm that.
Information becomes available in terms of the filing again, we do not comment on that until we have a we really do a press release. After the file is accepted but certainly pleased with the data.
Chris just mentioned.
Commands is an important study for moving those into their frontline, where we compared against an active control of Esa and showing the superiority.
Can we go to the next question please Dennis.
The next question is from the line of Matt Phipps with William Blair. Please go ahead.
Good morning, Thanks for taking my question.
Noted in the slides the decision not to move <unk> into.
Forward in atopic derm is that suddenly specific from the product profile in the phase II, so that could maybe read through to the ongoing <unk> trial or is it just the competitive dynamics in atopic dermatitis.
Yes, sure Matt I can take that question summit here. Thank you for that.
Remember, we've always said that as we move our programs forward.
<unk> looked at the data and we're going to see the differentiation of that data and then of course look at the landscape and the competitive dynamics as well in atopic dermatitis. There are several therapies that have recently become available for patients and they're very effective and so we had set out threshold quite high in terms of making that difference for the patients for atopic dermatitis. So.
We have seen the data we do meet the primary endpoint, but we don't think that it is a competitive advantage over what is available to the patients at this time and therefore, we're not moving into the registration trials.
It has nothing to do with what we saw for some vacuum add Ben you said, particularly as of today This where we not only saw.
Change in the use of local infiltration, but also the dynamics in terms of the outcomes of patients for their this change as well as the fibrosis in the phase II study and so that study continues and certainly those here, but it has also been the studies completed.
Great. Thanks Summit, we go to the next one please Dennis.
Your next question is from the line of Robyn <unk> with <unk> Securities. Please go ahead.
Great. Thank you for the question so you have <unk>.
And lupus subject you in lipids theres going to be a phase III reading out with Pfizer and Jack plus 16 later this year maybe frame it on if that trial sales like what's your thoughts on the biology, and how you'll think about potential success. The two Arctic two and then the flip question <unk>, how do we think about kind of <unk>.
The campaign, if you know anything about how much value, adding Jack on top of that kick to might be friendly that it's I know it could influence its safety profile, but anything you could give us on efficacy would be great. Thanks.
Maybe I can take that again this is Simon. Thank you Robert the question. If you think about it today there is no JAK inhibitor approved for treatment of patients with psoriasis.
B demonstrated the benefits of a <unk> two inhibitor would have very specific downstream effects on Iot.
23, and interferon, which of course is important and throughout the last year or maybe even more we've been answering that question of differentiation and protecting.
From a safety perspective, the profile of particular inhibitor with the JAK inhibitor.
If you just move that fast forward now and think about it.
For a patient population for whom we've just shown.
Superiority versus the prior standard of care that was being used in the oral setting we've shown two trials that superiority.
The data in the phase II setting for Psoriatic arthritis, as well as SME.
We are in the phase III.
Clinical trials for both or all of these indications. So I think the profile also take two is.
Both sets now I think and the confidence that we have on that data and the evolution of the data is making it.
Very promising for physicians to prescribe it as Chris talked about earlier, so we will rely on that information on the evolution of the data for our own molecule I cannot speak to what Pfizer will do when their data reads out, but certainly I'm pretty sure you will all be asking the question is a JAK inhibitor. The right thing to do in psoriasis has been there.
Efficacious safe therapies available for these patients.
Alright. Thanks Summit can we go to the next question. Please.
The next question is from the line of Olivia Brayer with Cantor Fitzgerald. Please go ahead.
Hey, good morning, guys. Thanks for the question, Chris maybe one for you is there any update on Revlimid sales expectations looking beyond this year.
And I know you've talked about a $2 billion plus annual decrease in the past, but any changes to your thinking with respect to the revenue run rate there.
And then a quick clarifying question on <unk>, where are you guys out with the high dose program and could we see that move into any indications beyond UC at some point. Thank you.
Great Hi, Olivia, it's David Elkins here I'll take the Revlimid one yes.
Yes, nothing has really changed in our outlook for Revlimid through 2025.
We provide our update for this year that $6 5 billion, which is a $3 $5 billion stepped down given.
Better performance last year in 2022, as we think about 'twenty four 'twenty five on average about a $2 5 billion step down is how we're thinking about it.
Chris.
For summit.
Thank you David So certainly subject to as two studies in IBD that are ongoing one of them using a higher dose and ulcerative colitis. If you recall, we do not have a proof of concept in <unk>.
Gladys IBD at this time and the one of the hypothesis that we wanted to test the higher dose of <unk> in IBD or specifically over here in ulcerative colitis. So we're looking forward to seeing the data in the latter part of this year and dependent on the data dependent outcome, then we will be able to formulate the strategies.
Two how to move forward in IBD and our other indications at the higher dose unit call, though that we've also tested higher doses in previous trials and other indications and our safety profile has been maintained in those clinical trials. So we're not necessarily looking forward to any major signals that could arise in the higher dose, but certainly looking for efficacy signals.
Thanks, Amit can we go to the next one please Dennis.
The next question is from the line of Andrew Baum with Citi. Please go ahead.
Thank you a couple of questions when you're out power one antagonist can you just remind us when we might see that phase two data.
And also at <unk>.
Given the ferocious contract from say, how you're thinking about the phase III trial design and then finally, what other fibrotic indications aside from Ips are you looking at for that drug.
Thank you.
Thank you Andrew.
<unk> certainly we're looking forward to presentation of that data.
Within this year within the first half of this year and certainly as soon as we have confirmation on the conference we will be able to share that information.
Did see the news from the competitor program.
Youre, referring to Roche.
The phase III trial was stopped we do see that our data of the phase two data that we've seen thus far are very strong we've talked about the patient population.
With no no background standard of care as well as in combination with the background standard of care therapies, and we are pleased with what we've seen.
We're in discussions on the appropriateness of the clinical trial design with the regulatory authorities and you will get to see that as we launch that and as we make that public so more to follow on that an appropriate time to come but really pleased with that and the last question that you had on the additional diverse programs. We're looking at FPA one from two perspectives right now.
One is the IPF program and the other one is the progressive are pulmonary fibrosis, but that phase II data is going to be reading out later this year. So we're looking at those two things for now.
Sure.
But I think we're running short on time, maybe you can go to our last question. Please Dennis.
Today's final question will come from the line of Colin that Bristow with UBS. Please go ahead.
Hey, good morning, and thanks for squeezing me in maybe just a couple of very quick pipeline questions ICU or another <unk> inhibitor in phase one.
Could you just give us any color on the SaaS.
How you'd anticipated differentiating versus to two and then just another one on <unk> Avenue recent determinant at phase one development in non small crowds just wondering if you would.
E ticket I think you cited safety issues. So I was just wondering if you could specifically say what these issues. Thank you.
Sure. Thank you.
In terms of your first question around the phase one that is ongoing with the <unk>.
Next <unk> two inhibitor in general we all.
Please have one or two programs that we look at in terms of having the next generation of molecules in development and so this is just of phases of development. The general pipeline that we have additional ticks two inhibitor. We also have a CNS penetrant <unk> two inhibitor that is in phase one. So there is nothing special at this time.
To talk about but certainly as the data arises as the data evolves, we will be able to share those data in the future. While the ticket program. Remember this is a trial that was being conducted in patients with non small cell lung cancer looking at a combination with the volume up and at the moment and what we have seen thus far are not going into the specifics because those data will be.
It had some future conference, but we do see that there is a toxicity that is observed when combined with dual I O therapy for this particular Puget inhibitor and so more data to come as we get more insight and more specifics on that and then the presentation will be done.
But because of those safety reasons, we have decided to terminate this particular trial at this time.
King.
Thank you Amit and thanks to all of you for your participation.
As you've seen it's an exciting time for the company. We have another important year ahead lots of things to talk about but we know it's a very busy morning for all of US. So we're going to end the call here and as always please reach out to our team. If you have any additional questions. So thanks, everyone and have a great day.
Thank you.
This does conclude the Bristol Myers Squibb fourth quarter 2022 earnings conference call. Thank you for your participation you may now disconnect.
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