Q2 2023 Bristol-Myers Squibb Co Earnings Call
Good morning, everyone welcome to the Bristol Myers Squibb second quarter 2023 earnings Conference call.
All participants will be in a listen only mode should you need assistance. Please you know a conference specialist by pressing the star key followed by zero.
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At this time I'd like to turn the floor over to Jim Power Vice President of Investor Relations. Mr. Power. Please go ahead.
Thank you and good morning, everyone and thanks for joining US this morning for our second quarter 2023 earnings call.
Joining me this morning with prepared remarks are Giovanni before you or board Chair and Chief Executive Officer, and David Elkins, Our Chief Financial Officer.
Also participating in today's call are Chris burner, our Chief operating officer, Adam linked Penske, our chief commercialization officer someone here a lot 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 David's remarks, before we get started I'll read our forward looking statements.
During this call, we'll make statements about the company's future plans and prospects that constitute forward looking statements actual results may differ materially from those indicated by these forward looking statements as a result of various important factors, including those discussed in the company's SEC filings. These forward looking statements represent our estimates as of today and should not be relied upon as representing our estimates as of any future.
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 dot com with that I'll hand, it over to Giovanni.
Thank you, Tim and good morning, everyone.
Starting on slide four.
As you will have seen in our press release. This morning today, we updated our outlook for 2023.
The updates were driven by a significant change in our expectations for Revlimid and to a lesser extent palm a list for the year.
Let me say that we do not take an adjustment of this magnitude lightly.
Before I provide you with more detail when I look at the company overall I'm encouraged by the strength of the inline and new products as well as the progress with our pipeline.
These are the drivers that will enable us to renew our portfolio and strengthen our business in the future.
The impact we are discussing today is limited to revlimid and to a lesser extent polished and we expected to be relevant only to this year as I will discuss shortly.
Importantly, our in line and new product portfolios remain on track.
We are pleased with continued strong performance from our in line business and are confident in our ability to have roughly doubled revenue from our new products. This year.
In fact, our new product portfolio is already Annualizing at 3.5 billion as of Q2.
As a result of these strong trends, we are reaffirming all our financial commitments for the 2020 2025 period.
Given our confidence in our future. This morning, we also announced our intention to execute a $4 billion accelerated share repurchase in the third quarter.
Let me now provide some details on today's update.
Our revised guidance reflects a 1 billion dollar decrease for Revlimid and.
And we are now guiding to approximately $5.5 billion in 2023.
Combined with a roughly $300 million impact for Palmer list. These changes account for our revised guidance on revenue and EPS ranges.
As you know we are navigating genetic entry for Revlimid, though this is not the driver of our revision in outlook.
Concurrent with entry of the most recent wave of genetic volumes, we saw some softness in revlimid sales beginning at the end of the first quarter.
As we looked into each drivers we recognized there had been an unusual increase in utilization of three drug provided by the independent BMS patient assistance Foundation, starting at the same time.
In Q2, the number of patients on free drug continued to increased and reached a level significantly higher than normal.
The impact on Revlimid and polished revenues also accelerated in Q2.
This issue is the main driver of our revised guidance.
The situation is complex and to explain it all turn to slide five to remind everyone of some of the ways. We meet our commitment to support eligible patients who can't afford their medicines.
For commercially insured patients, we provide co pay support to eligible patients.
Under U S. Law. However, we cannot provide co pay support to government insured patients such as Medicare patients.
There are third party independent charitable foundations that provide financial assistance to patients to help with out of pocket costs, including Medicare patients.
These charitable foundation supported financially in a variety of ways.
These includes contributions from donors, including BMS consistent with HHS guidance.
Additionally, we donate BMS products to the independent BMS patient assistance Foundation.
Which provides free made it seem to all qualified patients who are not financially supported elsewhere.
Importantly to comply with government guidance once patients enter these program. The BMS patient assistance Foundation provides free product through the end of the calendar year.
Earlier this year's funds at independent third party charitable foundations, the ones that provide financial assistance to eligible multiple myeloma patients closed for a period of time.
This was because the collective funding from donors was not sufficient to meet the need for copay assistance for the patients taking the variety of medicines that the multiple myeloma funds support.
We believe the fund's closing for a period of time was the primary driver for an increase in patients requesting free products from the independent B M. S patient assistance Foundation <unk>.
During the second quarter the level of free product utilization continue to increase and ultimately reached a level that was significantly higher than normal.
These dynamics were building, while we were also navigating the most recent wave of genetic volumes for Revlimid.
Today, we are able to provide you with an update on our company guidance for the year that incorporates the impact from both Revlimid and polished.
I want to underscore that we do not expect these dynamics to continue into next year.
This is based on two key factors.
First the BMS patient assistance Foundation has seen applications for free project returning to normal levels.
Second changes in Medicare part D coverage, taking effect in 2024 will help improve patient affordability.
These should directly impact the number of patients needing to access the free drug program.
So.
To sum up what these means financially.
We estimate the impact of the increase in patients receiving a free products to be approximately $330 million for Revlimid and Palmer list in Q2.
With about 80% of that being Revlimid.
Because the BMS patient assistance Foundation provides free drag for the calendar year the impact for Revlimid in polished will be more significant for the full year.
Approximately $1 billion and $300 million respectively.
Since revenues for Revlimid at lower than expected. This year, we now expect a lower step down of approximately $1.5 billion in 2024 and $2 billion in 2025.
Now turning back to the products that will be key to our future. Let me turn to slide six and our new products.
Here you can see that we continued to deliver very strong growth and remain on track to roughly double revenue for this portfolio. This year.
David will provide more details in a few minutes.
And we see good momentum and growth opportunities across the portfolio.
Including progress with accelerating access for Citic too big.
Building demand and conversion to commercial dispense four comes I use in the U S and achieving approval in Europe .
Continuing to build capacity for our cell therapy assets as well as growing <unk> in its current indications in advance of an exciting future launch with commands.
On slide seven I would like to remind you of the targets, we provided for our new product portfolio.
The process of renewing our portfolio and growing the business for the long term centers first on our nine of recently launched products.
The combination of our scientific innovation and commercial execution gives us great confidence in the growth trajectory of these set of products.
We continue to expect to deliver 10 to 13 billion of revenue from this portfolio in 2025, and the opportunity remains significant with 25 billion plus or potential revenue in 2030 on unknown risk adjusted basis.
Importantly, we are continuing to further derisk these products with opportunities such as commands for Brazil C. L L and follicular and mantle cell lymphoma support Brianna <unk> and many more.
Which brings me to our scorecard outlining our strong pipeline execution on slide eight.
As I mentioned, we are making progress derisking, our new products as well as accelerating our pipeline more broadly.
And we achieved some important clinical milestones this quarter.
During the second quarter, we presented exciting data for our L. P. A one agonist in Ethiopia take pulmonary fibrosis.
The phase two data for these drug showed more than a 60% reduction in the rate of decline in lung function without any of the Gi tolerability issues associated with existing drugs.
With a proof of concept also achieved in progressive pulmonary fibrosis, we look forward to presenting more data for this asset and we are rapidly moving to phase III trials.
Ask O N E. H E were important meetings for us this year.
In addition to presenting the Rab Roseville commands data strong data was presented for Opdivo in first line classical Hodgkin lymphoma and for our G. P. R. C. Five D cell therapy program in multiple myeloma.
And we are excited to move this into Registrational trials.
These underpin the growth potential of our Io franchise and the incredibly exciting opportunities. We see ahead for our leading cell therapy platform, including into new areas such as immunologic diseases.
We have also announced a positive outcome from our checkmate nine or one trial of Opdivo and chemotherapy in cisplatin eligible first line metastatic bladder cancer.
Not only is this a very positive development for these patients it speaks to the breadth of opportunity in our pipeline beyond what's shown on this slide.
We have a reach and broad pipeline that we continue to advance rapidly. We are looking forward to sharing more about the opportunities we see coming from our scientific research at our R&D day in September .
Now I'd like to spend a minute to take stock of where we are on our portfolio renewal journey.
Turning to slide nine with 60% of the Revlimid erosion behind us at the end of 2023, we are well on track to meet our commitment of growing revenue low to mean mid single digit CAGR from 2022 2025.
When as we have told you our recent eloise with represent at most 10% of our revenue.
The profitability of our business with operating margin of at least 40% provides us with the financial flexibility needed to continue to invest in our future.
Turning now to slide 10.
I want to reiterate that our focus and our confidence in the renewal of our portfolio.
As strong as ever.
This rests on our in line and new product portfolios and our pipeline is the key drivers of our performance beyond 2025, and we are pleased with where we are.
There are four important levers, which will enable us to renew our portfolio in the second half of the decade is illiquid and opdivo lose exclusivity.
The continued growth of the nine medicines and our new product portfolio from 10 13 billion in 2025 to realization of their full potential of at least 25 billion on a non risk adjusted revenue by the end of the decade.
The potential launch of six Registrational stage assets with meaningful contributions before the end of the decade.
Continued progress with our early stage pipeline.
And potential external innovation through business development.
We are executing well on all four fronts I'm excited and confident about what the future holds for Bristol Myers Squibb.
Before I turn the call over to David I want to thank our teams globally for their commitment to our patients and focus on our business day.
David will now walk you through our product performance and financial results in more detail David. Thank you Giovanni and thank you all for joining our second quarter earnings call, Let's turn to slide 12 to discuss our topline performance unless otherwise stated all comparisons are made versus same period in 2022 and sales growth rates will be disk.
On an underlying basis, which excludes the impact of foreign exchange.
Total company sales in the second quarter were $11.2 billion driven by continued strength of our in line and new product portfolio offset by the Revlimid the kind that Giovanni discussed earlier.
At the same time, we continue to be pleased with the strong growth of our new product portfolio, which grew 79% in the quarter.
Moving to our new product portfolio on slide 13.
Incredibly proud of the strong momentum in the quarter and pleased with the growth the portfolio generated $862 million in sales in the quarter already annualizing approximately $3.5 billion.
New products grew significantly in the quarter and year to date, with 79% and 91% growth respectively versus last year.
This strong performance was driven by several of our key products across the portfolio, including op deny grub was though and our cell therapies beyond Xena Beckman as well as Kim Zions oppose here.
Moving to our solid tumor performance on slide 14, global Opdivo sales year to date were strong growing 11% versus prior year, primarily driven by continued demand for our newly launched in core indications in the U S. Opdivo grew 2% in the quarter versus last year, driven by demand in first line lung gastric and <unk>.
Japan bladder cancer indications offset by customer buying patterns.
Sequentially, we estimate these buying patterns to be about $50 million to $100 million importantly.
Percent year over year, driven primarily by demand.
Sequentially as is typical in the second quarter, we started to experience unfavorable gross to net adjustments as patients enter into the genital.
As a reminder, these dynamics are more acute and the third and fourth quarters with the second half revenues being lower than the first half as we see each year.
Side use sales continue to be impacted primarily by generic entries in Canada and the UK.
As well as government pricing measures, we mentioned in the past.
Turning to camp Zeist, which generate sales of $46 million in the quarter. We are pleased with our continued progress we're seeing healthy increases in patients being treated weaker week with approximately 3800 patients and or hub.
Of which approximately 2500 patients are on commercial drug at the end of the quarter.
We continue to make great progress with centers of excellence and broadening our prescriber base into the community settings page.
Patients have highlighted significant improvement in symptoms, which has resulted in strong adherence and minimal dropoff.
We are delighted to have update the label for Kim's eyes based upon the valor study, which reinforces the strong data CNN explorer study and further strengthens the clinical profiles Kim's Iris.
Outside of the U S. We're excited to have received European approval last month and look forward to making this first in class medicine available to more patience once we secure reimbursement.
Now turning to our hematology portfolio on slide 16, I won't go into details on rebel that Obama synch Giovanni already discussed them earlier I'll turn to rebel cell, we had a strong quarter with revenues of $234 million growing 35% versus prior year, primarily driven by demand.
And the U S revenues grew 24% primarily due to continued total prescription share growth driven by longer duration of treatment.
Internationally rebels held roughly doubled as we continue secure reimbursement additional countries.
We have a strong foundation in place and look forward to the upcoming produce a date for <unk> and first line Esa naive MBS patients on the commands data, which will further accelerate growth of the band upon anticipate approval at the end of next month moving onto a transformative cell therapy products Beckman Briand Z, we continue to make progress of expanding.
Cassidy, which has enabled robust sales of $232 million growing 81% versus prior year, driven by strong demand Beckmann book sales of $132 million globally growing 48% versus last year, primarily do demand and an increase in manufacturing capacity.
We expect third quarter revenues to be lower than second quarter revenues due in part to plan manufacturing maintenance in June with growth expected in the fourth quarter.
Having said that we continue to be pleased with the reputed stability of our efficacy and safety data in the real world and the reliability of our manufacturing processes, which were reinforced that <unk>.
We also look forward to the upcoming produce a date in December for Beckman earlier lines based on the Karma three trial.
Turning to Brianti, which generate sales of $100 million globally more than doubling versus prior year, and 41% sequentially, primarily driven by demand and second line a third line large b cell lymphoma and to increase manufacturing capacity.
We are pleased with our success in increasing supply while factor constraints will result in third and fourth quarter revenues being largely similar to second quarter.
We're further building out our capacity for growth next year.
Outside the U S. We are excited about the E U approval Brianti and second line large b cell lymphoma, and look forward to bringing this treatment to earlier line patients in Europe .
Now, let's turn to our immunology portfolio and slide 17.
Global sales is opposing the quarter $100 million growing 52% compared to prior year and 28% sequentially.
In the U S growth was primarily driven by demand in multiple sclerosis, and expanded contribution from ulcerative colitis.
Outside the U S sales increased year over year, primarily do demand in multiple sclerosis, and securing reimbursement an additional countries.
And lastly, turning to Citic too.
We are extremely pleased with the launch in progress we've made to date since launch we have a greater than 23000 scripted groveland across bridge and commercial drug [noise] nearly doubling volume in Q2 versus Q1.
Sertich to share the oral market is now approaching 40% continues source more business from systemic naive patients as well as a tesla on biologic experienced patients I'm also very pleased to report that we've made progress accelerating access most notably half of Cvs plans for zero step edits effective Mitchell.
Lie.
Cvs indication based plans account for approximately 30 million people or roughly 15% of the commercial covered lives and we look forward to securing broader formulary access in 2024.
Outside the U S. We continue to be pleased with the strong launch performance to Japan and are working with the various countries across Europe secure reimbursement.
Now moving to our second quarter P&L on Slide 18, I will focus my remarks on a few non-GAAP key line items, having just covered $11.2 billion of sales in the quarter.
And a quarter gross margin of approximately 75% was primarily impacted by product mix.
Operating expenses of $4.2 billion, excluding acquired in process R&D increased approximately 2% versus last year, largely driven by an increase in spend to support our new product portfolio.
Acquired in process, R&D, and a quarter was $158 million, which is partially offset by $20 million of licensing income.
Overall second quarter earnings per share was $1.75.
Turning to the balance sheet and capital allocation on slide 19.
Cash flow generation, our balance sheet remains strong.
Cash from operations in the quarter was approximately $1.9 billion with over $8.7 billion in cash and Marcus Securities on hand as of June 30th.
Cash flow from operations in quarter was primarily impacted by a 3 billion dollar tax payments and the quarter, which is dynamic as we've seen in previous years.
Our priorities for capital allocation remain unchanged, our business development continuing to be a top priority and a focus on balance sheet strength as well as returning capital to shareholders.
And the quarter, we repaid approximately $240 million of debt and $1.9 billion a year to date with an additional $2 billion maturing this year.
Additionally is Giovanni mentioned, we intend to execute a 4 billion dollar ASR in the third quarter of this year with approximately $2 billion remaining in our share repurchase authorization after the ASR.
Turning to our updated 2023 non-GAAP guidance on slide 20 are updated guidance reflects the decline of Rabblement and to a lesser extent Palm list revenues Giovanni mentioned earlier.
We now expect 20 twenty-three revenues to decline in the low single digit range on a report it and X FX basis, and gross margin is expected to be approximately 76%.
Excluding the impact of acquired in process R&D, we continue to expect low single digit decline in operating expenses, which reflects efficiency initiatives and MSAA as we continue to invest in our new product portfolio.
For the third quarter, we expect total operating expenses to be largely similar to the second quarter at approximately $4.2 billion. Our tax rate is now expected to be $17, 5%, reflecting changes in product mix and our earnings per share is now expected to be in the range of $7.35 to.
Two $7.65.
Lastly, turning decide twenty-one despite ravelment dynamics this year, the future of our company or driven by our in line and new product portfolio.
Importantly, the robust growth of this business remains unchanged. We continued expect a new product portfolio to roughly double versus prior year. We are continuing to diversify your business and have become less concentrated as a result.
As you can see and is Giovanni mentioned earlier in 2025 greater than 90 per cent of our business is expected to come from our in line a new product portfolios.
We continue to expect low to mid single digit caviar from 2000, 2000 to 2025, [noise] and reaffirm our mid term outlook before we moved to Q&A I want to reiterate and recognized the strong execution of our teams to accelerate momentum of the future of our company, our new product portfolio remain laser focused on bringing these transformational medicines to patients around the glue.
So I will now turn the call back over to Tim and Giovanni for Q&A.
Okay. Thanks, very much David and can we go through the first question.
[noise], Okay. The first question Lee.
Ladies and gentlemen, we will go to the question and answer session.
Ask a question once again, you May press star in one.
Draw your questions you May press star and two.
You are using a speaker phone we do ask you. Please pick up your handset before pressing the keys to ensure quality.
Your questions.
R Q.
Our first question today comes from <unk> from Goldman Sachs. Please go ahead with your question.
Thank you very much good morning, when we think about a new product portfolio, particularly five seven when you outline your objectives for 2025 1920 30.
Pets at the top of that list in terms of being able to factor in to contribute.
Journey, I think it's pretty clear outline in kind of a challenge in developing in your market.
There's the Rams et cetera.
When do you think we're gonna be able to get a kind of inflection that will build confidence in achieving those numbers, particularly approaching at 4 billion dollar range.
Packers dwelling headaches can you highlight started the most important and potential timing.
Chris Chris All chart, and then I'll turn it over to add him to provide.
But since you mentioned the new product portfolio, let me just highlight a few things at a macro level first we continue to be very often any progress with a new product portfolio as you heard in Eric.
Eric remarks, we remain on track to roughly double the revenue of that portfolio were very much on track.
Tore attendant $13 billion in 2025, and as Adam will highlight.
We've made some very good progress really across App portfolio.
Not just camped Diana's certainly Adam can provide additional details on comes ISO Adam.
Alright. Thanks for the question, let me see about campaign and we're very pleased with the performance of impasse, which is on track. We are launched expectations, we're seeing an Eric I'm David week over a week in patients treated with <unk> can we expect to see continued steady and consistent cost is important brand.
Remember that the launch trajectory of Kim's iOS.
What you see from Seb product.
The analogy is more similar to a product like eloquent.
Continues to grow steadily now urinate, we have great momentum for both patients coming into the hub and a commensurate increase in commercial patients so an agent to agent accumulate.
At these patients too drunk.
Drunk now for for many years multiple retailers in 2023 and beyond.
Most importantly patient feedback as well as a physician feedback it needs to be extremely positive.
We're also excited about the value of approval, which happened in the quarter, which further strengthened and solidify the profile of Camden iOS.
Okay to increase adoption. We're also happy about the approval in Europe as well. So we're just getting started there. So taken together we're very confident this will lead to continued and sustained growth in 2023 and beyond.
Thanks, Adam.
Alright, thanks, very much changes so we go to the next one please.
Our next question comes from Evan Hagerman from BMO. Please go ahead with your question.
Hi, guys. Thank you so much for taking my question I'd Love for you to walk me through a little bit more of the rationale to do an accelerated share repurchase just given what's happening with revlimid and the potential it's maybe maybe need to reinvest more into business to grow revenues near term with us some color there. Thank you.
Thanks Heaven.
So first of all the decision to execute the 4 billion at ASR and as you know we had a $6 million.
Authorization outstanding.
By the great confidence, we have in the future of the company and and importantly, the strong financial position, we are in and the financial flexibility as we have so.
We remain in a position in which we are investing in the future of our company.
And that's in terms of supporting a great pipeline and we have internally, but also continuing to be committed to business development as the <unk>.
Central pillar of the capital allocation strategy I think you know.
His name is mentioned many times, we adding a strong position and the capital allocation strategy. The company remains very balanced, but given the confidence we have in where we are in the future of the company, we made a decision to execute.
Sarah 4 billion in Q3.
Alright, Thanks, Giovanni Jamie because we go to the next one.
Our next question comes from Jeff Meacham from Bank of America. Please go ahead with your question.
Thanks, guys for the question.
Just had a couple of so Giovanni went over the rebel minute dynamic and two Q, maybe just talk about you know the risks of recurrence of the of this co pay assistance looking to 2024 for rebel night or.
<unk> and then real quick on so ticked to you guys with with with obviously Cvs and maybe some other pairs removing step added how should we think about kind of demand and and share look into the second half of this year and going into 24. Thank you.
Sure. Thank you Jeff can you take the first question and then we'll move too should take too.
So we do expect the dynamics that I discussed for.
<unk> and to a lesser extent for <unk> to be limited to this year.
And our confidence based really on two factors first of all we are seeing that.
Three derived applications to the B M. S patient assistance foundations have been returning to normal levels and second remember that as significant changes to the past D design next year, which will improve patient affordability in fact Asian continuation to the catastrophic.
Face are eliminated and that is an expansion to the portal patients that qualifies for.
And so as a result of that we see this one being very much of.
We expect this one to be very much an issue of that <expletive> impacted D C or <unk> <unk>, <unk>, <unk>, <unk> and a lesser extent punished.
Adam.
Thanks for the question gas. So we're very pleased with this would take to launch.
Two oral market share is nearing 40 per cent of the oral new demand market, we're making great progress towards our goal, which we have aided becoming the standard of care for oral products. We now have over 2000, 3000 prescriptions and that means we double the volume up to your next equivalent from the second.
Order versus the first quarter.
And as you mentioned, we're very very pleased that we were able to secure and pull forward and access when it should Cvs moves, particularly winter preferred position.
In the middle of the month so.
That brings the 30 million lives in percent of the total commercialized covered in the United States, So being able to pull that all where we are expect that it takes about two to three months to move patients from bridge to commercial drugs. So we would expect a ramp.
Too commercial product in the back end of the year. We're also in continue negotiations with payers right now to walk to secure improved commercial access in January and for all those reasons I feel very good about our launch performance, but our execution and continued growth in the second half of the year as well as as of 2024.
Sure.
Alright, thanks, very much out of Jamie could lead up to the next question. Please.
Our next question comes from parents Flynn from Morgan Stanley . Please go ahead with your question.
Great. Thanks, so much for taking my question maybe two for me. It was just I'm wondering if if it's on it's on if you can talk about your confidence in <unk> securing abroad label and first line M. D. S. I know there's been some discussion here post the the ask a presentation and then I was wondering if there's any update on the opdivo.
Hodgkins lymphoma indication in the frontline setting for M C C and guidance guideline updates. Thank you.
Thank you.
So let me ask some it to start and then and then Adam will cover the deeper question. Thank you turns. Thank you for that question for Red blows and of course, we we cannot amon specifically on the label.
Discussions with regulatory agencies, but I just wanted to remind again.
On how this study was conducted with the intent to treat principles apply to the study you met all conversation population was engaged in the first time setting combating versus Esa artist positive and not as negative patients and you saw the data and all conversation population is vented and this upset dynamicism repeatedly certainly tried to convey that.
Do you think about the efficacy of the drug what is most important for the patients.
The state of transfusion and then all upset you see that consistently across the board in patients who benefit benefit as well as stay off of transfusions.
For a long duration. So we are confident in our data but of course, we will continue to.
Right for the labor is finalized and is able to share and we're able to share that but Adam you Wanna add to make sure. So.
I ended up what we see or rather go for the quarter growth is coming from.
From the U S and internationally as it relates to the commands approval and this is certainly an important launch for us and for weeks.
And are you at teams launch ready and so.
What we're hearing some positions both at L. O D. J E chain additions talent, they Wanna use rebel bill regardless of Orange status because of the durability and the opportunity for transfusion independent so.
Taken together.
We are well positioned to be really the new standard of care in the front line tanks.
So as it relates to the second question, which is up Tivo in C. H L.
We also were very pleased with the data presented at <unk>.
<unk> Evo demonstrated superiority versus an address.
Alrighty.
Emily we've heard from oncologist at that.
His practice changing and as a reminder, this was a confirmatory study for our current indication under accelerated approval and we will work with smog on next steps to analyze the data that.
And we also look forward to discussing this with regulators.
I would also expect to see <unk> guideline adoption over the coming weeks to months as well.
Alright, thanks, very much Adam.
The next question please Jamie.
Alright next question comes from Chris shot from J P. Morgan. Please go ahead with your question.
Great. Thanks, so much just to for me, let me first on the sales guidance just just so I'm clear did anything else change and your revenue outlook beyond this update for Revlimid, an unpublished or is that really the only change in the overall topline numbers and.
And then my second question was was just on <unk> I'm, just trying to get a sense of how to think about the capacity ramp from here. You say you had a nice you know kind of built in the first half of the year, but it seems like the guidance is pointing to sales kind of flattening out in the second half. So I guess when can we think about the next kind of leg up for capacity for these these products and how much of a ramp can we <unk>.
Talk about as we look up to 2024, thanks, so much.
Thank you, Chris David and Adam.
Thanks, Christy only changed our guidance was related to the.
Almost dynamic that we discussed before.
Yeah.
Okay. The second part of your question.
Seeing across Arsenotherapy franchise issue, we've made very good progress on increasing at each boat.
And <unk> and so when you look at our our approach to the market.
Number one our focus is rapidly expanding our footprint both in the U S and internationally based on.
Greece and supply.
When you look at E approach, we're taking overall for khaki manufacturing.
There are really two components to south therapy at John Panic, and <unk>. So for drunk product, we have increased capacity with successfully executed <unk>, both our existing sites for <unk> <unk>.
And additional ramps planned for each product in the back end of 2023, you will building new state of the art facilities as we talked about in <unk>, Massachusetts online this year as well as light and and add a link which will come on board in 2025 to further.
Increase in salary capacity secondary Israeli round, better and we continue to both internalizing external externalized X or an R. F. At the increase capacity of our current doctors to partner with a third party manufacturers. So.
You heard about our new manufacturing plant, maybe available annoy, it's part of our dual sourcing strategy to internalize actor, which compliments are interesting partnerships with external third parties you are accelerating our transition to next gen. After technologies as well so thank them together, we're making very good progress in increasing our capacity.
Both of <unk>.
The only thing I would add is just at the manufacturing investments that Adam alluded to are part of a broader strategy that we have that I think is going to be important for us as we think about this platform.
More generally and as you've heard us talk about in the past and we'll talk again about at the R&D day in September . We've obviously had a very exciting portfolio of cell therapy assets, notably GPRS C. Five D as well as next ECT 19, and so these investments are going to be critical for those as well.
Thank you very much Chris let's go to the next question. Please James.
Our next question comes from Seamus Fernandez from Guggenheim Securities. They go with your question.
Great. Thanks for the questions. So just a couple here first is in terms of the pipeline assets.
You guys are.
Focusing in on L. P. A one just wanted to get a sense for the pace of development you know for that program and what you see is a market opportunity for an I P. F. M. P. P. F. Specifically and then separately on the I R. A just hoping that you could.
Give us a little bit of your sense of the pushes and pulls we've had some conversations recently where experts expert legal consultants would suggest that there's potential for a preliminary injunction to be issued because of the pressure points around the fifth amendment.
Would be very interested to hear your thoughts along those lines around the I R. A as well as some of the positive influences of I R. A in 2024 and 2025 that could positively impact your your revenue lines. Thanks.
Thanks, Thanks famous let me let me just start maybe with a short comment on I R. A and then some it and and the add on will.
Answer your question on L. P. A one which is really exciting program. So.
<unk> I'm not going to comment on on litigation and account and told me to comment on on what May happen on that front I think we'd be clear with our concerns with I have a as it relates to the negative impact.
On on innovation any particular cancer.
Care in the future, but also with the concerns we have with respect with the process of course and the mechanisms poor price setting.
Now with respect to the things that <unk> of course as we've always said that are that are positive elements to buy at a which include the improvements we see in affordability for patients in fact, I mentioned earlier that obviously.
The fact that next year patients with no longer contribute to the catastrophic face and and that is an expansion of the definition for L. I S and <unk>. These are good examples of things that go very much in in the right directions.
And of course named box parts of our thoughts about where business, including including adequate as an example.
Summit.
Thank you. Thank you too and thanks for the questions it seems sort of empty.
<unk>, if you think about Ips M. P. P S to both our conditions, which have a very high unmet medical need to date. There are only two times improved for IPF and only one approved for P. P. S. So and both of them have their own.
Safety liability you've reached does not allow patients to continue on treatment for a very long duration.
We have now shown in three different studies the first one with the first generation of Avon and.
The two studies have recently completed we've shown the efficacy of the oral drug you want inhibitor and improving the outcomes with these patients in terms of degrees in the reduction of F. A V C.
You saw the data for empty you wanted IPF, where we showed an improvement in that in the F. B C. O inpatient population, which was treated without any background therapy as well as in patients right on back on therapy. Later this year will be able to share the data at a medical conference four P. P F as well both of these.
Since I'm, giving us confidence that we will be launching two phase three trials.
Starting later this year very early next year for IPF M. P. P F.
To be able to bring this medicine to patients in the short term Adams.
I don't even want to add about yeah. Thanks from a commercial standpoint, we're very encouraged by the a one asset and stomach alluded to this a very high unmet need in IPF and P. B S and the prognosis.
These are not too dissimilar to some metastatic cancer diagnosis, and we generated and finally mentioned every encouraging <unk>. There was no G. I oxime with the current treatments known liver toxicity. It was shot in the earliest days and it gives us confidence that sounded mentioned to move into a three.
Now the current products have significant limitations and advocacy and <unk> Inc.
Alrighty standpoint awareness and better diagnosis tools I'm going to really help.
The diagnosis ranch with.
Pretty low today, they reached around 30% to 40%, we think when Rayne R. L. P. One to market will be between account like that significantly and and make an impact in patients with these diseases.
Thanks, Adam could we go to the next question. Please Chang.
Our next question comes from Carter Gold from Barclays. Please go ahead with your question.
Great. Thank you to for me I guess first just I'm, hoping to get a little bit more color on some of the trends you're seeing with with I Leah I mean.
Basically your <unk> your confidence on Reacceleration in the back half of the year given the sequential decline in the U S and flat X U S. And then it just quickly on up to allow you talk about potentially becoming standard of care in melanoma can you talk a little bit about maybe just a little bit more color on kind of what's a reasonable kind of market share assumption or how how.
What really would that you know need to be in terms of market share. Some further color on that front. Thank you.
Sure Adam.
And your car to start let me just say, we're very please what mercy.
Our cell therapy branch I know for a bank and even mentioned year on year. We grew up <unk>. There are a few factors that impacted second quarter for Batman.
The code on board a decline was driven mainly by pricing dynamics in Germany.
Second there was a plan impact due to manufacturing maintenance Avenue in June and anticipation comment three approval, which we expect in the back end of the year would also my isn't a significant increase in volume in the fourth quarter and thirdly, we anticipated and can.
<unk> and the use of other B C M a agents.
In the U S and we know this is a competitive market.
<unk>, we know extremely well and we're very confident in our ability to compete.
Myeloma with this important product or background I think most importantly, we continued to see and hear about conditions about favorable perceptions for <unk> based on a durable was on real world setting as well as high manufacturing successfully now that are north of 90%. So taken together, we do remain very.
And about outlook in the second half of 2023 and beyond.
The second question was round opt lag and so for Abdulla lag.
As you heard from from David Upper leg is rapidly becoming the standard of care in the U S with any strong growth in sales.
Sure in first of all I meant that melanoma is approaching 25% and I'm sure. It's coming on T. One mono therapy and from people. Your boy combination spin up two thirds of that chair is he saw some P. D. One mile therapy, roughly iffy iffy from emailing Keytruda.
That last order and you see an update their guidelines and change opt lag from category to a category one in Newton patient population and they removed yeah Mac inhibitors at a preferred treatment and the first line, adding so as a result, we're seeing a really nice inflection in the <unk> even the patient.
[noise] population would opt lag and four Opdivo Your boy Ashworth, beginning to focus our efforts on that segment. So.
Can I think about the total Vms sure available on <unk> normal market are sure you look at <unk> and <unk> mono therapy I sure is now greater than 55%. So I'm very proud of our continued leadership in a matter of fact melanoma.
And just to add to what Adam is just talk about doing like that is obviously a large program behind.
The approved indication in medicine melanoma, we have the abdomen studying melanoma that read out as the events come through as well as the phase III studying called the rectal cancer M. S. S.
That would also be <unk> Benjamin overall surviving primary endpoint studied the ability to out over 2024 2025, and then of course behind that have you looking forward to seeing the data on your next year or non sponsor lung cancer as well as <unk>.
To my mind, the first and the second line.
So there was a large program behind.
The melanoma metastatic disease.
So the next question please Jamie.
Our next question comes from Tim Anderson from Wolf Research does go ahead with your question.
Thank you I wanted to go back to the I R. A and it's not on the drug prices negotiation pizza upon the part they redesign of kicks in a 2025 so.
So you guys are talking about a positive thing that's out of pocket spending, but there's a negative to contemplate too which is manufacturers having to pick up the healthy portion of catastrophic spending that has not been part of the equation before.
So on a net basis, when you're thinking about the redesign starting next year or is that gonna be a net dragged her earnings it seems to me like it could be.
Oh, so that's the first question and then the second question.
<unk> the press release mentioned lower average net selling prices I think in Europe , and Q2 at Merck is poor worn or something similar for awhile now I'm.
I'm wondering what's driving this.
Chris Yeah, maybe I'll start and then I'll turn it over to add on to talk about <unk>. Thanks for the question with respect to I R. A I think this is in some ways very consistent with way, we've been describing iras impact generally which is that when you look at the changes in our D. It's gonna be very much product specific and so there will be pushed.
As in polls, depending upon which product you're talking about and so it's very difficult to make a blanket statement that it's a negative or a positive I think you really do have to get into the specifics and understand the details as to how it will impact a given product just given the nature of <unk>.
Patients, who were being treated by that product as well as the concomitant medicines that they're on and so that's very much how we think about.
Redesign Adam do you want to pick up on the <unk>.
Question escalate to up Evo internationally.
Seeing his continued strong growth in the international market in fact, when you look at year over year quarter.
10%.
Evo internationally and that's really due to continued growth of our core business and first time long and gastric and we're just starting to unlock some of our new indications very please E. R approval checking 816 in Europe , and when I think about the kind of the <unk>.
Klein or Bali price in Europe at anytime you get a new indication in many of our markets you start to take.
Price increases, but the volume that we see or Evo as we add these tumors and get reimbursement and we look to continue to increase our sales volume was certainly off at any price decline.
Yeah, and just team just to add on what Chris mentioned before on I R. A we have discussed before that we don't see a meaningful impact for us until 26. So the dynamics that Chris described don't don't meaningfully impact our pianette an hour an hour.
I was looking 24 25.
Thanks, Giovanni and because we go to the next question. Please.
Our next question comes from Andrew <unk> from City. Please go ahead with your question.
Oh, Hi, <unk> <unk>.
Are there any other <unk>.
50 per cent and across our early Adjmi indications.
And as you noted sequentially in the second quarter of the demand growth in the U S. From our core business was all set I impact from unfavorable customer buying patterns and so we expect to that to normalize and continue to grow based on its banks across multiple tumors.
We'd all competitors every tumor in the U S and we're indicated in with the exception of first line law, who were making progress. We also have a number of significant read outs in the short term. So we've got some nice catalyst, including our speed to melanoma.
Indication, which is has it produced the date of October of this year and you'll also ran our press release in first line fifth eligible bladder check me 901, and that's really exciting and multiple Io failures. The next week and I'd.
Catalyst next year, along with pending read out next year and check <unk> check me 73 L. Amongst several others. So for those reasons, we remain very confident.
Even the ability to grow in 2023.
Our next question comes from <unk> from T. D. <unk>. Please go ahead with your question.
Thank you very much I'd like to ask a question about Revlimid. So you mentioned that you started to see the weakness at the end of Q1 get the guidance was reiterated at the end of April presumably because you thought it was temporary so what was the <unk> the error in that assumption.
Noted the free drug program is expected to return to normal levels in future years.
Why then is the expected decline on an annual basis expect it to be less than before I know that you said government support could be an offset but that seems like a dynamic in which we should not have high confidence.
Thank you, Steve Let me I know, we've I know, we've discussed a lot and on Revlimid and in our prepared remarks, and and I just wanted to go back to explaining the the dynamics at play ear. So we start.
To see some softness in arrive only made revenue at the end of Q1.
And obviously, we needed to understand why I think it's important to remember that there were a number of dynamics happening at the same time. So as you know the the most recent increase in genetic volumes at <unk> in March and we have seen that dry <unk>.
If he can't but I think I've been in the past.
At the same time, we so and increasing the number of patients that when receiving free drag from the <unk> Assistant Foundation, which also started in Q1 of course, we looked into this dynamic N S cute to come in Rasht.
So you know we we have been looking at these trends in one of the things that is important to consider here is that once the b M. S patient assistance Foundation.
Provides free drug to a patient consistent with H H S guidance, we provide that free drag for the totality of the.
And so what we what we looked at was not only the impact on the quarter, but also the impact on the phone ear.
And you know today, we are in a position to assess those inputs and that's why we are in a position to give you a clearer picture of what happened beginning at the end of two one and and most importantly in queue to you asked a question. So so you know the generic diner.
<unk> that we've discussed for a wide, which really account for month to month and quarter to quarter variability noticed a factor in what we are we've wednesday's close today, but obviously they were at play as we were looking at the development of Alright <unk> <unk>.
Revenue during the second quarter you asked a question as to why we are expecting now the the step down for Revlimid to be nowhere next year.
And a couple of things that I would like to say against so first of all I <unk> as I mentioned earlier, we don't expect these dynamics to continue next year, because we are seeing that the number of patients applying for free product for from the B M. S patient assistance Foundation.
Returning to normal and important to me because of the past the redesign dynamics that I've covered before I show you know if you think about it if you have a lower base coming out of 2023, even that we don't really see a change in the generic.
<unk> on assumptions that we have made before now this step down is Lola and we've estimated that to be 1.5, and 24 and approximately 2 billion in 2025. So that's the.
The number of dynamics at play here.
And second question for Adam if the second question to ask you was round E. What we're seeing in the Gis marketplace and so overall, we're seeing for as opposed to you is really strong 28% quarter over quarter growth as well as 50 per cent growth versus the same time last year.
C acceleration of demand for his <unk> in you see what we're hearing from thought leaders.
I need to emphasize the benefit of using suppose you in the first line, adding act you'll get our business shift now about 60% of our business for as opposed to you is in the first line us and will continue to make good progress on the <unk>. We're now 40 per cent of life have either zero or one and edit and we're working to continue to improve that in 2000.
24, so for those reasons and more please.
Please with our growth in the job market was suppose yeah. We're also seeing strong performance in M. S. When I shares at an all time high and so we expect continued growth for is always in the back into this year and 17 to 24 as well.
Let's see just a couple more in here if you don't mind me, putting the next one please jamie.
Our next question comes from Matt X from William Blair. Please go ahead with your question.
Guidance for this year for any product portfolio that seems about 50% in the second half versus the first ask what my drive that especially cell therapies are flat and then saw that you mentioned seeing they'll do like data in a small cell next year, but I did notice on slide seven the first line non small cell rubbed the leg is a key milestone as a.
Initially been added that some of the long term opportunity. So just to confirm you haven't seen that data in house you have to make that decision.
Maybe I'll start Matt and then I'll turn it over to Adam a ongoing summit. So as I mentioned earlier, Matt we continue to be competent in the progress of this portfolio. We remain on track to roughly double revenue for the portfolio. This year and by extension, we have clear line of sight to the 10 to 13.
2025, Adam can walk you through a lot of the specifics around the the confidence for the remainder of this year, what I would highlight though is some of what you've already heard on this call. We continue to see a really nice uptake on <unk>, we had the the access wins that Adam alluded to on searching too.
<unk> is clearly going to continue to be important and while we discuss the dynamics on <unk> with respect to manufacturing keep in mind that we have a number of catalysts coming with a backup but more importantly, you've seen a really nice continued rosewood briand Z as well, but Adam anything you would add I guess just to put it.
Finer points you. What we said was right date of birth. After you were annualizing at $3.5 billion, but that's because it's alluded to we have a number of catalyst to accelerate growth of our new product portfolio in the second half of the year, which we said we would roughly double sales from last year. So you're just and as Chris mentioned with rebel Bill in the first line and we're looking forward to <unk>.
Would you pay for commands David mentioned and we're also pleased with their.
To pull forward large P. B M. This year for so take too and those patients will ship the commercial product from bridge over the next two to three months and also as Chris mentioned <unk> <unk> continued Eddie for patients coming into our house and then moving out to commercial product in the back into the you remember that.
Around 810 weeks on occasion to move from our hub into commercial product and finally, you know, okay, you've reached supply or a back my in advance of our apartment three launch as well as ramping spy for Brianti in the back into the air and for those reasons, we remain committed to roughly doubling our sales of new products. This year.
Thanks, Adam and cancel the question on I'll do that non small cell lung cancer than to my space to study is continuing to enroll an ongoing we have not seen the data and that decision will be based on meeting pushing to phase three will be based on looking at the overall data set from both overall just altered but also the BFS Directionally van Gogh. So that's why I was saying that we'll get to see.
Thanks Bye bye.
I'm a little short on time, so I'll nail squeeze a few more and if you could just keep it to one questions we'd get as many people as possible.
Because it is in excellent condition.
Our next question comes from <unk> from Credit Suisse. Please go ahead with your question.
Hi, guys. If it's one I guess, an adequate tasteful sales declined this quarter for the first time I think.
So perhaps can you talk about some of those dynamics, you'll saying with a gross and that in the U S and foster.
Erosion, how should we think about the price demand for the rest of the year and then into the future just.
Alright, Thanks, as you heard from David Eloquent had unable gross and net adjustments in the corner.
When we saw it can increase in Medicare and P. H S patients as you probably know there's a lag in getting claims in those planes came in and a second order so really that's.
Unable adjustment, but we're very pleased with what we're seeing with <unk> in the U S. Remember 75 per cent of eloquence business remains in the U S. And we expect continued strong growth or share. Our embarek sure is north of 70 per cent and continues to grow our <unk>.
Coupled with the Olack market, which is also accelerating.
Any of the year out you also mentioned that X U S dynamics International dynamics.
We are seeing demand increases that offset by an act of price erosion in a number of our European markets, David talked about the impact of generic penetration in Canada, and the UK with Martha M exclusivity, both those markets, but overall I'm very pleased with eloquence performance and we would expect you to strong growth.
Think about it let's go to the next <unk>.
Our next question comes from David <unk> from Leerink Partners to go ahead with your question.
Yes, thanks very much. So my question is on.
Revlimid volume expectations. So could you. Please provide some more color on go forward generic anticipated volumes, specifically any volume inflections to watch over the next 12 to 18 months. Thank you.
Yeah. Thanks, Yeah.
You know so we talked about before it's <unk>, we saw more volumes come in that were expected in March of this year. The next inflection point will be in March of 24, and then February of the following year. So those are the two ones, which are planned step down and I think it's important is Giovanni headset earlier as you think about.
The forecast rather literally can go forward basis.
Change the guidance this year from $6 five down to 5.5 of the step-down of one and a half billion next year $2 billion, and 25, which will get you to essentially where consensus was previously so no change to to where we were.
Like standard let's go to the next one please jenny.
Our next question comes from <unk> from Wells Fargo. Please go ahead with your question.
Hey, Thanks for taking my question.
My question is regarding the inline portfolio, how often do you feel about the good Reds you. The auto expect this outlook you provided in the beginning of the year asking because by our map. It was about four 8% growth and if you. If you are calling for the 200 million dollar <unk> <unk>.
It seems like seven per cent growth and considering you have been going two per cent, including effects and two per cent. Excluding a pixel five just wanted you to understand you should still feed wondering about that goes out to look at this point. Thank you.
Well, yes, we so.
The discussions that we had in Alaska Adam too.
Dump in but I remember the discussion that we had was in fact, we've updated our expectations for <unk> and for Revlimid and for <unk>, specifically about 300 for for this year and 20% roughly three.
$330 million definitely sofa made in place for the first quarter when you're looking at the totality of performance for the online business. We continued to feeling really strongly about the strength of the trends and that's one of the reasons why we feel any confidence.
Reaffirming the guidance for 425.
<unk> four hour inline portfolio and the phone for the new products.
Thank you.
The next one please <unk>.
Our next question comes from calling Bristow from UBS. Please go ahead with your question.
Hi, This is <unk>, thanks for taking a a question.
So we all know and that's the only way I'll have your arm D day on September 14th. So just wondering if we could have a teaser trailer what's your <unk> <unk> any new data on this event and I sent today. It is <unk> <unk> <unk> <unk>.
Ed you initiated a phase one trial of C. D 19 cartoon E E. S. L E, which has which has uhm primary completion date in 2028. So your previous stay notated you with go fast on this program. So just I'm wondering if there's any guidance on the tiny off the daytime read out.
Thank you so much.
I <unk> I will start and then stomach can very quickly I hit on the car G question looks very excited about the opportunity to spend some dedicated time talking about R&D. The focus on the day will be a few things well, obviously walk through the R&D strategy will give you an update on the pipeline and that will <unk>.
Fortunately include our our discussion around some of the programs and black ones that were most excited about when you step back and look at where we are we are actually entering a catalyst rich period for the company and I think this is going to be an important opportunity for us to talk about some of those catalyst in more detail. So we're really looking forward to hosting.
The events on September the 14th so yeah. Thank you Chris and thank you for the question for the next Gen Heart T. C D 19 therapy.
What you're seeing is address that we have just started the phase one sorry, there's gonna be does escalation than those expansion and what you would also see later this year and possibly we might be able to talk about it in September we will be adding additional indication. So we're taking that into account and putting debates into the system and <unk>, but certainly there'll be earlier data.
I was an earlier date of shedding prior to that date. So if you informed as we progress with this study.
Thanks, So I'm thinking maybe a time for one or two more let's schedule an excellent <unk>.
Our next question comes from gain Leone from Raymond James. Please go ahead with your question.
Thanks for taking my questions.
As you think about the conversion too commercial pay drug for those patients that you've gained market share with and <unk>. It seems like by our math on this prep run right you're running around maybe 800 million plus 800 million, maybe slightly above on an annualized basis, which would <unk>.
July the actual paid or drug product is.
Below 25 per cent of total scripts that you're now generating for your guidance convert those free drug patients to commercial pay over the next several months does that take a penalty of <unk> continued market share gains that you've already carved out or do you expect to continue taking additional market share.
Wow converting to free drug into the end of the year and then just one quick question does your ASR agreement is that included in your EPS guidance or is that in addition to your EPS guidance for the full year. Thank you David.
David <unk> David.
David Once you start and then Adam can can answer the question on stick to <unk>. Yes. It is included in our guidance since we said to speak to him about 4 million dollar S. R. In the third quarter and just remember the dynamics, sometimes as far as about 80 per cent of the shares retired upon execution of that and the remaining 20 per cent.
Happens over the service contract period.
Yeah <unk> is related to particular as I mentioned, you know certainly our objective is to continue to grow market share. Instead, it's nearing 40 per cent and could we continue to see month over month increases and.
Feel very good about where our market share is trending towards the back end of VR objective is to surpassed okay.
And so when you think about where we are today, we have a double the volume with your ex equivalents from two two to Q1 and we spent that also to accelerate.
It will take time to move patients from branch to commercial drug certainly round as I mentioned two to three months, so that ramp will happen in the back end of the year and as we start to unlock other plans you starting in January of next year will also see that start to take place as well more patients.
Moving into commercial supply so we feel very good about.
Even with prospects for some <unk> in the back into his ear and certainly into 2024.
I think I would like to go to our last question. Please Jamie.
Our final question today will come from Olivia Breyer from cancer Fitzgerald. Please go ahead with your question.
Hey, good morning, guys and thank you for your question wanted to follow up on it that sounds manufacturing capacity gone forward and now you've had that shut down in June but is that a headwind that we should be factoring in for those to you.
And is there a way to minimize the revenue disruption from from <unk> Theater shutdowns going forward and then just quickly on Lactary in long how are you thinking about the bar for success in that phase two and what's the strategy and timing for moving into registering channel studies. Thanks.
Okay I'll take the first question <unk>. Thanks for the question so as relates to manufacturing and the capacity shut down so we're making very good progress to increase our capacity across.
I felt therapy franchise, both of <unk> I talked about the two components of that but as it relates to the manufacturing shutdown. It really is limited to <unk> <unk> <unk> <unk> is is manufactured and so all of our shutdowns are planned accounted for in our capacity.
The plans this is routine shut down to execute maintenance at our site for approximately one month and ramp or <unk> is really tied to overall supply plans with commentary being one important aspect of that ramp and as important as we now have over 90% manufacturing success rates and <unk>.
Ramps since launch so.
This routine manufacturing maintenance process are really important for us to continue our strong success rate and build on readiness or increase capacity in advance of the commentary launch so as David mentioned no I'll have some impact in Q3, and we expect our back in the day also accelerate in Q4 and certainly into 2024 and.
Very quickly on the question on Mercury announcements of lung cancer as you know.
Okay. Some studies, combining abdulla with chemotherapy <unk> chemotherapy, but for the phase three trial, we intend to do the combination.
That is an versus bend iliza Memphis chemotherapy. So we have to keep that in mind as we look at the data evolution and the outcome. So that'd be have the appropriateness in terms of the magnitude of <unk>. So that's <unk> and in terms of the size of the study depends on when the sudden needs out and then be.
Ready for bed quickly gone to the safety program, if that'd be nice.
So thank you everyone. So it is I think about the <unk> first of all I'm Gonna say, obviously, we provided any important update until I went out to look for the year, we don't take that lightly at the same time when I look at the future of the company <unk> and I I am very optimistic about.
When we are driven by the discussion we had about our online products. The performance of the launch portfolio and the strength of our pipeline with that I want to thank you for participating our team as always remains available to answer any questions. You may have and we should have any one of the day.
Ladies and gentlemen, with that will conclude today's conference call and presentation. We thank you for joining you may now disconnect your lines.