Operator: Welcome to the Bristol Myers Squibb Q3 2026 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Chuck Triano, Senior Vice President and Head of Investor Relations. Please go ahead.
Chuck Triano: Thank you, and good morning, everyone. We appreciate you joining our Q3 2026 earnings call. With me this morning with prepared remarks are Chris Boerner, our Board Chair and Chief Executive Officer, and David Elkins, our Chief Financial Officer. Also participating in today's call is Adam Lenkowsky, our Chief Commercialization Officer, and Cristian Massacesi, our Chief Medical Officer and Head of Global Drug Development. Earlier this morning, we posted our quarterly slide presentation to bms.com that you can use to follow along with Chris and David's remarks. Before we get started, I will remind everybody that during this call, we will make statements about the company's future plans and prospects that constitute forward-looking statements. Actual results may differ materially from those indicated by those forward-looking statements as a result of various important factors, including those discussed in the company's SEC filings.
Chuck Triano: These forward-looking statements represent our estimates as of today and should not be relied upon as representing our estimates as of any future date, and we specifically disclaim any obligation to update forward-looking statements, even if our estimates change. We will also focus our comments on our non-GAAP financial measures, which are adjusted to exclude certain specified items. Reconciliations of certain non-GAAP financial measures to the most comparable GAAP measures are available at bms.com. Finally, unless otherwise stated, all comparisons are made from the same period in 2025, and sales growth rates will be discussed on an underlying basis, which excludes the impact of foreign exchange. All references to our P&L are on a non-GAAP basis. With that, I will hand it over to Chris.
Chris Boerner: Thanks, Chuck. Good morning, everyone, and thank you for joining our Q3 2026 earnings call. We reported another quarter of double-digit growth in our growth portfolio and progressed our plans to de-risk the pipeline to position the company for long-term success. We have seen several positive registrational readouts and regulatory approvals over the past few months, and we expect more to come, bringing the next wave of launches into sharper focus. We are executing well commercially. Our differentiated pipeline is advancing nicely, and we continue to operate with discipline, which gives us strategic flexibility to invest for sustainable growth. Based on the strength of our results, we are raising our full-year guidance. David will provide additional details on this shortly. Let me start with our Q3 performance on slide 4.
Chris Boerner: Our growth portfolio continues to deliver solid results, with sales increasing 12%, driven by a broad set of differentiated products. We generated strong performance in key brands including REBLOZYL, BREYANZI, OPDUALAG, QVANTIG, and CAMZYOS. We also continue to expand the reach of our medicines. In September, CAMZYOS received approval for an expanded indication and became the only FDA-approved therapy for pediatric patients with obstructive HCM. We also achieved an important milestone in the quarter with the FDA's accelerated approval of ZENBEXUS, the first approved CELMoD and the newest addition to our portfolio. ZENBEXUS is approved for the treatment of multiple myeloma, where the combination of a highly efficacious and convenient oral option is an important treatment advancement for patients in both community and academic settings.
Chris Boerner: We are encouraged by positive early launch feedback and by the compelling phase III data we announced earlier this month, where ZENBEXUS demonstrated a meaningful improvement in progression-free survival. We will present these data at ASH in December. These results further strengthen our conviction in CELMoDs and our broader targeted protein degradation platform, where BMS is a clear leader. Behind ZENBEXUS, our second CELMoD, mezigdomide, has a PDUFA date of 13 May 2027. Mezigdomide offers the potential to introduce another highly efficacious and convenient oral option for a different segment of multiple myeloma patients. We also continue to advance golcadomide in lymphoma and will present the first phase II data in frontline follicular lymphoma at ASH. The momentum in our late-stage pipeline has accelerated. In the past 2 months alone, we announced positive data for 4 registrational studies.
Chris Boerner: These include ZENBEXUS's PFS, as I mentioned earlier, admilparant in idiopathic pulmonary fibrosis, interim results for RYZ101 in GEP-NETs, and arlo-cel in relapsed and refractory multiple myeloma. Let me comment on the last 3. Admilparant met its primary endpoint at the 60-milligram dose with a favorable safety and tolerability profile that supports its potential as a first-in-class IPF treatment. IPF is a progressive and often fatal disease where there remains a need for effective, well-tolerated treatment options like admilparant. We will discuss the IPF results with regulators and expect phase III results in progressive pulmonary fibrosis in Q1 of next year. PPF is a larger opportunity and another area where admilparant has significant commercial potential. With respect to RYZ101, our actinium-based radiopharmaceutical therapy, we are encouraged by the interim readouts in GEP-NETs.
Chris Boerner: These results demonstrated a clinically meaningful improvement in PFS in patients whose disease has progressed following existing lutetium-based therapy. These were the first phase III results for an alpha emitting targeted RPT, representing an important milestone for RYZ101 and further strengthening our conviction in radiopharmaceuticals as a platform. We are engaging with the FDA on next steps towards regulatory submission. Finally, arlo-cel, our GPRC5D-directed CAR T, delivered positive results in the registrational phase II QUINTESSENTIAL study this September. A milestone that underscores its potential to set a new standard of care in the post-BCMA multiple myeloma market. This study represents the only prospective trial exclusively conducted in the post-BCMA quadruple class exposed setting, a growing patient population with poor outcomes and no therapies approved specifically for this segment.
Chris Boerner: As these programs advance, we are building the manufacturing foundation for the next generation of our medicines with two US investments recently announced. In Houston, we shared plans for a new state-of-the-art manufacturing campus at Generation Park, an approximately $2.3 billion investment that will create nearly 500 skilled jobs. This facility will give us manufacturing flexibility across small molecules, biologics, and antibody drug conjugates. It is also designed to evolve and scale to meet patient needs for decades to come. In Indiana, RayzeBio is investing more than $170 million to establish a new radiopharmaceutical manufacturing facility, complementing its existing footprint in the state and creating up to 100 new jobs by the end of 2029. Together, these investments support the next wave of medicines coming through our pipeline and advance our US manufacturing commitments. Turning to slide 5.
Chris Boerner: As we look ahead, we have several meaningful readouts over the remainder of 2026 and into 2027. Before year-end, we expect phase III data for milvexian in secondary stroke prevention and SOTYKTU in lupus. With COBENFY, we will share open-label Alzheimer's disease psychosis data from the ADEPT-1 and from the long-term extension ADEPT-3 studies at CTAD next month. In 2027, we continue to expect results for milvexian in atrial fibrillation in the first quarter. We also anticipate additional data from the broader ADEPT program, bipolar 1 data from the COBENFY BALSAM studies, and the first registrational data for golcadomide in high-risk first-line LBCL. While we have made good progress in our pipeline, there is more to come. As we close out the year and move into 2027, we are focused on a few key priorities as noted on slide 6. First, sustaining the momentum across our growth portfolio.
Chris Boerner: We now have eight growth portfolio medicines, each annualizing over $1 billion based on Q3 sales, giving us a broad base of growth drivers. Second, translating pipeline progress into filings, approvals, and successful launches. ZENBEXUS is an early example of that progression, and as additional studies read out, our focus will be on launch preparedness and moving with urgency to bring these medicines to patients. Third, continuing to rewire how we operate. We are focused on becoming faster and more efficient in R&D, and over the past year, we have made changes across the organization to strengthen how we design and conduct clinical trials. At the same time, we continue to drive productivity and efficiency, including through our organizational structure, capital allocation decision-making process, and the use of technology.
Chris Boerner: That discipline gives us flexibility to invest behind the growth portfolio and pipeline, pursue business development where it makes sense, and return cash to shareholders. Taken together, we are entering the final quarter of the year with real momentum. Our growth portfolio is performing well. We are advancing our pipeline with meaningful wins and remain highly disciplined in ensuring our cost structure is aligned with our revenue base. The team is energized and focused on delivering value for patients and our shareholders. With that, I will turn it over to David.
David Elkins: Thank you, Chris, and good morning, everyone. Our Q3 results reflect continued strong execution across our growth portfolio and continued strength from ELIQUIS. We remain focused on financial discipline, balancing investments in our growth drivers with continued productivity improvements. Based on our performance year-to-date and our outlook for the remainder of the year, we are further raising our full year guidance. Let me begin with a review of our Q3 results. Starting with slide 8, total revenue in Q3 increased 7% year-over-year to approximately $13.1 billion. Growth portfolio revenue rose 12% to $7.7 billion, driven by double-digit growth across several products. Our legacy portfolio revenue increased 1%, with growth in ELIQUIS more than offsetting the declines from generic entry across the remainder of the legacy portfolio.
David Elkins: Turning to product performance on slide 9, starting with oncology, for OPDIVO, revenue decreased 6% year-over-year to approximately $2.4 billion, primarily reflecting continued conversion to Keytruda in the US and in Europe. Keytruda continued its strong launch trajectory with revenue of $334 million, representing sequential growth of 28% and is now annualizing at over $1.3 billion. OPDUALAG delivered another quarter of strong double-digit growth, driven by continued global demand and its leading position as a standard of care in first-line melanoma in the US. Turning to slide 10, REVLIMID grew 22% to $750 million, reflecting continued uptake in first-line MDS-associated anemia. BREYANZI posted 48% growth, resulting in revenue of $526 million, driven by its best-in-class profile and strong demand in both the US and in international markets. Moving to cardiovascular and immunology on slide 11.
David Elkins: ELIQUIS revenue was approximately $4.7 billion, up 28% driven by net price, along with strong demand and continued market share gains. ELIQUIS sales in Q4 will be impacted by the upcoming LOE in Europe, which will be partially offset by the continued growth in the US. CAMZYOS revenue increased 42% to $420 million, reflecting continued strong demand growth, including new patient starts and deeper penetration into the community setting. On a sequential basis, revenue was impacted by the typical inventory drawdown during Q3, which we expect will normalize in Q4. Moving to immunology. Global revenue for SOTYKTU grew 25%. We are supporting the recent indication for psoriatic arthritis in adults and look forward to the upcoming phase III readouts in lupus expected by year-end. I will wrap up our product performance review on slide 12 with neuroscience.
David Elkins: COBENFY revenue grew 33% to $57 million in the quarter. On a sequential basis, inventory destocking offset increased demand. We anticipate that revenue will more closely track prescription volume going forward. Let's now move to the P&L on slide 13. Gross margin in Q3 was 68.4%, reflecting product mix and to a lesser extent, a one-time expense for a contract termination. Operating expenses for Q3 were $4.1 billion. We continue to benefit from our strategic productivity initiative, which is enabling us to reduce expenses in identified areas while maintaining flexibility to invest in multiple growth-oriented opportunities. Our effective tax rate in the quarter was 14.1%, reflecting jurisdictional earnings mix and the impact of acquired in process R&D charge. We had a $0.58 per share impact from acquired in process R&D and licensing income in the quarter.
David Elkins: Considering all these factors, diluted earnings per share was $1.35 for the quarter. Turning to the balance sheet and capital allocation highlights on slide 14, we remain in a solid financial position with approximately $13 billion in cash equivalents and marketable securities as of 30 September, and we generated approximately $4.2 billion in operating cash flow during the quarter. In terms of capital allocation, we maintain a strategic and balanced approach to deploying our strong cash flows. Business development remains a priority, and we are regularly evaluating opportunities in the therapeutic areas we know best, while continuing to return cash to our shareholders through our commitment to the dividend. Moving to guidance on slide 15, we are increasing our full year revenue guidance based upon our year to date results and our current projections for the balance of the year.
David Elkins: When excluding the Q3 acquired in process R&D charges and licensing income of $0.58 per share, the midpoint of our 2026 non-GAAP EPS guidance would have increased by approximately $0.15 per share. After including the $0.58 per share previously referenced, our expected non-GAAP EPS guidance range for 2026 is now $6.35 to $6.55. We are maintaining our projections for gross margin, operating expenses, and tax rate, while slightly lowering the expense level on our other income and expense line.
David Elkins: Incorporated into these revisions is a total legacy portfolio revenue decrease, now expected to be between 3% and 5%, while we continue to expect ELIQUIS full-year revenue growth of 20% to 25%. In closing, our strong performance year to date reinforces our confidence in the business. We remain focused on executing across our growth portfolio and pipeline while maintaining financial discipline to deliver long-term value for our patients and shareholders. With that, I will now turn the call back over to Chuck for Q&A.
Chuck Triano: Betsy, can we please poll for questions?
Operator: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. We ask that you please limit yourself to 1 question. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question today comes from Michael Yee with UBS. Please go ahead.
Michael Yee: Hey, guys. Thanks for the question. Congrats on the good quarter. Recently, you had results for the admilparant drug, as you just mentioned, and there were some mixed results in the IPF study. Could you just comment a little bit about your confidence at the 120 mg high dose, which had some more mixed results, and whether you still expect that dose to be working and that you still have high confidence in 60 and 120 in the PPF study to complete the package? Thank you.
Chris Boerner: Thanks for the question, Mike. Cristian.
Cristian Massacesi: Good morning, Mike. Thank you for the question. First of all, let me tell you, I am pleased with the positive top-line results for the phase III ALOFT IPF study. I believe that this drug has the potential to be the first in-class LPA-1 antagonist, in a setting like pulmonary fibrosis that is very difficult to treat, and honestly, a very challenging drug development area. As we announced, the trial met the primary endpoint at 60 mg with a statistically significant improvement in FVC. In addition, we have seen an excellent safety and tolerability profile. This is both with 60 mg BID and 100 mg BID. For instance, the number of discontinuation for adverse events were lower or the same level of placebo. 120, going to your question, we have seen an improvement, a decline, FVC, but not statistically significant.
Cristian Massacesi: Our preclinical work demonstrated an adequate target coverage with both doses, 60 and 120. You may recall that we did not formally test the 120 mg in phase II setting clinically. It was a modeling, and we had run-in in the phase III study. We continue to analyze the data. We continue to dig into the data, and we will present the data in a medical meeting next year. Anyway, we are pleased with this outcome. We will discuss these results with health authorities, and we are looking forward to the outcome of PPF studies happening next year. We cannot predict what will be the outcome according to the doses, but we are testing both of them, and we will see the outcome.
Michael Yee: Thanks, Cristian.
Chuck Triano: Next question please, operator.
Operator: The next question comes from Alex Hammond with Wolfe Research. Please go ahead.
Alex Hammond: Thanks for taking the question. Since ZENBEXUS was approved in August and mezigdomide is expected mid-year next year, I guess, what are you seeing on the ground in the early weeks of launch? What feedback are you hearing from the community and academic myeloma physicians on uptake, tolerability, and where they are using it? Thank you.
Chris Boerner: Thanks for the question, Alex. Adam?
Adam Lenkowsky: Alex, we are excited to have launched ZENBEXUS. It is the first approved CELMoD in the market. It is still early in the launch, but our teams are executing well. We are pleased with the adoption that we are seeing over the first few weeks on the market, and physician feedback has been positive, largely based on the strength of the MRD results as well as the simplicity of use. We are seeing use come from both the community and the hospital setting.
Adam Lenkowsky: We do expect the majority of use to come from the community, where 70% to 80% of patients are treated. We will see that longer term. Our teams are focused on establishing a broad base of prescribers and reinforcing the efficacy, the safety, and quite frankly, the simplicity of using ZENBEXUS to replace Revlimid and POMALYST-based regimens. We also are excited about the PFS data, which will further augment the efficacy profile, and we look forward to presenting these data at ASH. We are seeing good commercial potential for ZENBEXUS and for mezigdomide, we are excited to launch it as well and aim for both products to be foundational therapies in the community by replacing IMiDs over time.
Chuck Triano: Thanks, Adam. Let's take our next question.
Operator: The next question comes from Seamus Fernandez with Guggenheim. Please go ahead.
Zach Dunn: Thank you for the question. This is Zach Dunn on for Seamus Fernandez. Just to start, as you mentioned, there has been a series of positive phase III programs that have read out successfully and I am not sure these are getting fully appreciated. So what do you think the market is missing from these readouts? Focusing on the upcoming readout for milvexian in SSP. Based on the baseline characteristics and assuming the asundexian time from index event data are reliable, how confident are you that SSP can still be successful? I know a lot we have talked to have looked at those forest plots from OCEANIC-STROKE. So any color you can provide there would be helpful. Thank you.
Chris Boerner: Thanks for the question, Ben. On the milvexian question, Cristian, you could start and then I will close out with just your comments on the market.
Cristian Massacesi: Shamus, you started with the readouts. Let me go there first. We are pleased. I am pleased to see that this 2026, we are getting a very good pace, a very good flow. Last year, when we started and we discussed that, we explained how much scrutiny we put in every single trial to try to mitigate risks that intrinsically every trial may have. I think it is starting to pay off. What I am pleased that we have positive outcomes across therapeutics areas. In dermatology, in immunology, we will have cell therapy. This looks good. If we close this year, because there are three remaining this year, SSP and the two SOTYKTU studies in lupus with positive outcome, I think we can be very pleased on the rate of success that we will score in 2026.
Cristian Massacesi: Your specific question, SSP, I think I would put in the big picture first. This study was designed based on a very solid phase II trial that we ran showing 30% risk reduction in strokes. With a very careful selection of the dose and the benefit risk profile, efficacy, safety. I imagine you refer to the randomization window that there has maybe difference compared some competitive studies. We based all the criteria when the patient randomized based on our own phase II and based on prior phase III studies. What I can tell you that the data pointing that the randomization window that we selected could provide the best efficacy. So we are looking forward to see SSP data this year. Of course, we are also very eager to see the AFib readout Q1 next year.
Chris Boerner: Ben, the only thing I would just add on top of what Cristian just said is in our discussions with investors, we have been very focused on emphasizing that the long-term focus that we have is building a strong company that can deliver sustained growth, particularly as we get into the next decade. To do that, we think we have got to continue to do, frankly, what we have demonstrated this year, which is drive the business that exists today.
Chris Boerner: You see that in our quarterly postings. Deliver on our late-stage pipeline. Cristian and team have done a really nice job of scrutinizing those studies. We are obviously happy with the results that we have seen with arlo-cel and ZENBEXUS at admilparant and RYZ101. We are looking forward to the additional readouts we have through the rest of this year and into next year. And as we discussed in our prepared remarks, being very disciplined in how we operate from a financial standpoint and executing consistently. We are obviously happy with the performance we have seen thus far, but the team is heads down and making sure we continue to deliver across each of those areas going forward.
Chuck Triano: Thanks, Chris. Betsy, let us move to the next question, please.
Operator: The next question comes from Akash Tewari with Jefferies. Please go ahead.
Akash Tewari: Hey, thanks so much. Can you frame the admilparant opportunity relative to some of the historical products in the States and also maybe investor expectations around milvexian or COBENFY? We are seeing JASCAYD did have one of the best launches in IPF despite a modest FVC, and PPF could be a bigger opportunity than IPF. So could this actually be one of your biggest products now that you have the IPF data? And did admilparant show a benefit on time to event or mortality in your IPF trial? Thank you.
Chris Boerner: Adam, do you want to take that? Then Cristian, you can chime in.
Adam Lenkowsky: Yeah, Akash, thanks for the question. We think there is significant need that remains for new and improved disease-modifying therapies in both IPF and PPF that are both effective and well-tolerated, and that includes impacting how patients feel. It includes how patients function and ultimately the impact on survival rates. As you know, there are dismal survival rates in both IPF and PPF. We hear from KOLs that taking a holistic approach to the data is going to be important, and that includes, as you mentioned, looking at both the primary and the secondary endpoints of the study. We know that safety and tolerability will be a key area of differentiation for admilparant. Even with the advent of newer therapies, GI tolerability and cough, they are challenging to manage, especially in an older comorbid patient population.
Adam Lenkowsky: Cristian talked about, the ALOFT study showed a positive impact on FVC, but also admilparant demonstrated a well-tolerated safety profile where discontinuations due to adverse events were similar to placebo. So there is a real opportunity to gain share as effective and well-tolerated treatments like admilparant come to market. We also expect the market to grow significantly. I have talked about this previously, where today it is a $4 billion market. We think this market could nearly double as we are going to start to see the creation of a large second-line switch
Adam Lenkowsky: in our add-on market with newer treatments available. We have got a number of pre-launch activities underway with a focus on bringing in pulmonology expertise to the company, providing education to physicians on this new and promising mechanism, and we are also looking forward to the PPF readout early next year because that is the larger commercial opportunity that can complement the IPF results.
Chris Boerner: Thanks, Adam. Anything to add, Cristian?
Cristian Massacesi: Akash, your question is more related to key secondary endpoints, some key secondary endpoint outcomes. We didn't disclose this. We mentioned, we talk in the press release about the primary and some of the safety profile. I can tell you that we are pleased with the overall outcome of the trial, and we will present this data in a medical meeting next year.
Chris Boerner: Thanks, Cristian. Let's move to our next question, please.
Operator: The next question comes from Matt Phipps with William Blair. Please go ahead.
Eric Yeung: Hi, this is Eric Don for Matt Phipps. Just a question on the ADEPT trials. With ADEPT timelines reiterated for 2027 again, I was wondering if you could give some specifics on current enrollment progress as well as site quality remediation, and if we should expect the ADEPT 1, 2, and 4 readouts to land together or be more staggered throughout the year.
Chris Boerner: Thanks for the question. Cristian, do you want to take that?
Cristian Massacesi: Thank you, Matt, for the question. Let me start with the program status as you were asking for. Everything is tracking as we guided. We have a potential interim analysis for ADEPT 1 later this year, and we anticipate the top-line results readouts for all the ADEPT program throughout 2027. Some readouts can coincide or can be more or less the same time or can be staggered a year. ADEPT 1 is event-driven, for instance. I think Chris mentioned in his opening remarks, we also expect on top of ADEPT program, the readouts of our bipolar 1 program in 2027. So very important year for Cobenfy in terms of data flow. I want to point out one aspect that is important to your attention. in November, we look forward to the CTAD presentation in Boston. There we will present two datasets.
Cristian Massacesi: The first is the open-label lead-in period from the ongoing ADEPT 1 study, and the second dataset is from the open-label extension rollover study, ADEPT 3. So both cohorts, substantial number of patients, all patient treated with Cobenfy. This presentation will address some improvement in psychotic symptoms with KarXT. Of course, we're waiting the randomized control studies to read out. I think these CTAD data are encouraging in our view and I believe support ongoing development programs.
Eric Yeung: Thanks, Cristian.
Chuck Triano: Great. Let's move to our next question, please.
Operator: The next question comes from Carter Gould with Cantor. Please go ahead.
Carter Gould: Good morning. Thanks for taking the question. You have a number of small cell lung cancer studies expected to read out over 2027 and 2028. I was hoping you could talk about your confidence and the relevancy of these studies in light of the IMDELLTRA frontline data, and if that augurs any sort of changes to your strategy. Thank you.
Chris Boerner: Christian?
Cristian Massacesi: Thank you. Thank you for the good question. The data we have seen at ESMO are quite impressive. Actually, we welcome this data in such a difficult disease, like extended disease, small cell lung cancer. As you said, we have ongoing registrational studies with atigotatug in combination with nivolumab and standard chemotherapy. The study is completed. We are just now looking at the readout. We are running the combination with pumitamig and standard chemotherapy.
Cristian Massacesi: We do not know, of course, the outcome of the study and how they can benchmark, but I think these are studies that allow us, first of all, to benchmark the activity of a novel mechanism of action like atigotatug in this space, but targeting an important antigen expressed in most of the patients with small cell lung cancer tumors. Also for our PD-L1 VEGF, this will give us a benchmark, because then we will prepare the next step. As you know, we started the combination with pumitamig plus a DLL3 engager from Boehringer Ingelheim that we announced. So we are paving the road with the next wave because we believe our asset can play in this space, of course, through combinations with engagers.
Chris Boerner: I think the only thing I would add is just that as you look at impressive data, and I would agree, these are impressive data. Over time, in all of these hard-to-treat diseases, small cell being one of them, what is likely to occur is you are going to see patients continue to be subtyped and additional therapies be required to treat patients not only in initial lines of therapy, but subsequent lines of therapy. I think at the end of the day, there is going to be room for multiple agents to be engaged to help treat these patients.
Chuck Triano: Thanks, Chris. Let us take our next question, please.
Operator: The next question comes from Courtney Breen with Bernstein. Please go ahead.
Courtney Breen: Hi, Bristol team. Thank you so much for taking our question today. I just wanted to zoom into milvexian and expectations in terms of the AFib readout. Can you help us understand with regards to the Q1 release that we are expecting, are we likely to see the details, the numerical details in that press release, or are we just going to get a positive or not positive trial details there? We are trying to figure out how long do we need to wait throughout next year to actually get validation on the likely utilization of this product, given that that non-inferiority number on the primary endpoint is going to be so critical and there is a wide range that can meet a successful trial. Thank you.
Chris Boerner: Thanks for the question, Courtney. First of all, we understand that the AFib study is an important opportunity. It is an important opportunity for us. There is obviously a lot of focus. Of course, I would be remiss not to remind everyone that we need to put this study in the context of a much broader and very rich pipeline that we have got. Having said that, we get how important this readout is. In terms of how we are going to communicate in our initial press release, look, we are going to work to give an accurate view of the outcome of the study and a view that allows you to get a sense of the opportunity that we have with AFib.
Chris Boerner: We understand that in that context, providing more specifics in the press release will likely be important. But we are going to need to balance this, of course, with ensuring that we can communicate the data in a more fulsome way at a future medical conference. So what I can tell you is that we are going to be working with our partner on this program to strike that balance.
Chuck Triano: Thanks, Chris. Let us take our next question, please.
Operator: The next question comes from Chris Schott with JPMorgan. Please go ahead.
Chris Schott: Great. Thanks so much. Just one follow-up for an earlier question and then a second one. On IPF, I think you mentioned the potential for add-on usage for the drug. I guess specifically there, do you think additional studies would be needed to maximize commercial value, or would your existing data set here be enough? Then just on the core question I had was just as we think about 2027, just any initial pushes and pulls we need to think about in the business and maybe just extending that a little bit longer term, do you think there's anything the Street's kind of getting wrong in terms of whether it's 2027, 2029, kind of how the company's going to manage through this upcoming LOE cycle as you're thinking about kind of, again, where consensus is currently? Thanks so much.
Chris Boerner: Hey, Chris. Thanks for the question, Chris. Cristian, do you want to start?
Cristian Massacesi: Let me start. First of all, the study that we ran, as you know, has an equal distribution of monotherapy and add-on treatments, and we don't comment on the outcome on subgroups. We will see when we present the data. Adam, do you want to add anything on the market needs?
Adam Lenkowsky: No, I agree. I agree, Cristian. That is why I talked, Chris, about the increasing expanding size of the market because prior to the launch of this next wave of innovation in both IPF and PPF, there was very little add-on and switch use because of the high rates of mortality. In fact, 50% of patients in this disease, they do not survive 5 years. Also, there is a very high level of discontinuation. Half the patients discontinue treatment within 12 months. The creation of a very large second line switch and or add-on market after the use of generic OFEV and Esbriet will become much more significant opportunity for these newer treatment options. As I said, we look forward to the PPF readout. It is a larger commercial opportunity and ultimately will complement the positive IPF results.
Chris Boerner: David, do you want to comment on the 2027 question?
David Elkins: Yeah, thanks. Chris, thanks for your question. Look, we feel really good about how the business is performing this year. I think the 3 quarters of beat and the momentum that we have as we exit 2026 going into 2027, that growth portfolio is really performing well. As we talked about earlier, having 8 products that are now annualizing over $1 billion in that growth portfolio really shows the diversity of that. Not to mention the phase III trials that we have been talking about today coming out. Looking forward to adding those to the portfolio as we head into next year. Then I would say on the other side, as we already talked about with ELIQUIS, anticipate that $1.5 billion to $2 billion step down in 2027.
David Elkins: Lastly, our strategic productivity initiative, that $2 billion worth of efficiencies that we are well on track to achieve that by the end of 2027. Then as we look at from a cash flow perspective, continue to have strong cash flow generation. We ended with $13 billion of cash on hand, which gives us further strategic flexibility as we think about the portfolio. So feeling really good about the execution this year and that continuing as we go into 2027.
Chris Boerner: Chris, the only thing I would add is just that we have been consistent in saying what we are focused on and executing against that. As we think about the business today, we feel good about the momentum we have going into Q4. We hope that and anticipate that will continue into 2027. We have got some wind at our back with respect to late-stage development, but clearly there is a lot of focus we have as a company on strengthening R&D and continuing to deliver not just on that late-stage pipeline, but also progress the earlier pipeline so that we drive sustained growth over time.
Chris Boerner: Then, of course, we are going to be aligning our OpEx base, as David just alluded to the opportunity that sits in front of us while also investing in growth opportunities. We have been really disciplined about doing those things throughout the course of this year, and that is what we are going to stay focused on.
Chuck Triano: Thanks, Chris. Betsy, let us move to the next question, please.
Operator: The next question comes from Asad Haider with Goldman Sachs. Please go ahead.
Asad Haider: Great. Thanks for taking the questions, and congrats on all the progress. A couple of big-picture questions for Chris. First, just on BD, given this remains a top capital allocation priority, would be curious to hear any updated thoughts on how you are thinking about ideal stage of development, therapeutic area, deal structures, and even transformative deals. Second, just would also be interested in hearing any updated framing on your efforts to embed AI across the research organization.
Asad Haider: Know that you have partnerships with both Anthropic and NVIDIA. On the Anthropic announcement earlier this week, they said that they are looking to accelerate drug development with Claude. Bristol was named as one of 6 partners in that effort. So what can you tell us about the progress you are seeing across the organization with these partnerships, particularly as it relates to any quantifiable metrics or KPIs that your teams are reporting back to you? Thank you.
Chris Boerner: Thanks, Asad. Maybe I will start, and then Cristian can chime in with the AI question specific to R&D anyway. Let me start on the BD question. BD continues, as we have said consistently, to be a top allocation priority. We have got a very strong late-stage pipeline, but we are always going to be looking for opportunities to source innovation externally if it makes sense for us to do so. The criteria that we are going to continue to use as to how we do that is we are going to be looking for opportunities that make sense for us from a scientific standpoint.
Chris Boerner: They have got to fit and align with us strategically. Clearly, if there are opportunities for us to strengthen the nearer-term growth portfolio, we are going to be keenly interested in looking at those. Ultimately, across all of these deals, they have to make financial sense. In terms of size, we continue to be agnostic on the size of the deal. Far more critical to us is does it make sense for us to be the rightful owner of the opportunity? Does it make strategic sense, and can we show value to our shareholders?
Chris Boerner: In respect to therapeutic areas, again, we are going to focus mainly on those areas where we know well in therapeutic areas that make sense for us. Just maybe before I turn it over to Cristian, let me comment briefly on AI investments. Look, AI, as we have said on previous calls, is an important area and investment for us. We are focused really on thinking about how we can embed AI where it makes sense across the entire value chain of the company, everything from early-stage discovery through commercialization, manufacturing, and virtually all of our enabling functions.
Chris Boerner: The way we think about that is setting very specific targets that ultimately can be incorporated into operational plans. We talked previously about the fact that we have put forward a 20% to 30% reduction in drug testing timelines, cutting in half the time from drug target selection to lead molecule identification. Those are just two examples. While we are making AI tools broadly available at the enterprise level, we are also working towards targeted investments where we can articulate an ROI. As it relates to Anthropic specifically, I think that agreement fits broadly into that strategy. But Cristian, do you want to comment specifically on R&D?
Cristian Massacesi: Sure, Chris. Let me start telling that through AI, we are accelerating actually our research and development projects. This is now a concrete factor that we can start to measure. You need to break down your research and development drug journey because there does not exist one solution that can solve everything. So there are specific solutions that are more focusing on research, either from early development and then late development projects. Thinking research and discovery, AI can impact the quality, but also the speed, how you develop drug candidates, and how you bring fundamentally new INDs to the organization. This is very tangible. We have multiple examples, happy to share offline, that we are now have in place. In development, AI can be helpful in increasing your efficiency in terms of optimizing costs, having a pace in the way you run your projects.
Cristian Massacesi: Then there is a second aspect that is increase your probability of technical success. This is something that we are integrating more and more in the way of working. Just the announcement of two days ago with Tempus AI and Pathos AI is an example of it, because we will put together data, large data set in neuroscience, and we will work to have models that can help us to predict outcome. So it is a concrete thing that is happening and is helping in delivering our beautiful portfolio drugs that, of course, require pace.
Chris Boerner: David, do you want to comment in on the BD question?
David Elkins: Yeah. Thanks for your question on BD. Look, we're actively evaluating multiple opportunities across varying deal structures, partnerships, licensing, and where appropriate, acquisitions. Our North Star on this is about strong, sustainable growth late into the decade, and that is what we remain focused on. We are going to be financially disciplined around this approach, but also strategic-aligned. As we have done in the past, it is going to be in the therapeutic areas that we have the scientific capabilities, but as well as the commercial strength to maximize the value of that. So we remain very active, and we are going to stay focused and financially disciplined.
Chris Boerner: Thanks, David.
Chuck Triano: Great. Let's move to the next question, please, Betsy.
Operator: The next question comes from Mohit Bansal with Wells Fargo. Please go ahead.
Mohit Bansal: Great. Thank you very much for taking my question. I want to turn attention to COBENFY, if I may. It does look like this quarter you saw 30% year-over-year growth, but the numbers still appear modest relative to what we were all thinking about how big this asset could be. Maybe this is a question for Adam, like what are you seeing as the largest constraint here? Is it the identification of patients? Or physician willingness to prescribe, tolerability, what exactly is going on? How do you think Alzheimer's may be different than what you are seeing in schizophrenia? Thank you.
Chris Boerner: Thanks for the question. Adam?
Adam Lenkowsky: Yeah, Mo, thanks for the question. We expect COBENFY to deliver continued growth in schizophrenia with significant upside potential from future label expansions. In the quarter, you are right, we saw 30% growth year over year. But what we also saw, quarter-on-quarter, a roughly 3% to 4% growth in total prescription volume. But net sales were impacted by an inventory decrease, which followed an inventory build in Q2, like we see with many products in our portfolio. We expect that this will normalize in Q4, and as such, the growth will continue to track along with the TRX increase that we expect to see. Now we are seeing several positive leading indicators to the brand. We are driving consistent increases in new prescribers with the number of prescribers doubling from last year. We have established differentiation across negative and cognitive symptoms of schizophrenia.
Adam Lenkowsky: However, we have clear areas where we need to make further progress. We need to accelerate new patient starts. We need to improve repeat prescribing. I think one of the bigger challenges that we have seen is we have been educating physicians on the importance of rapidly titrating COBENFY to the effective dose of 125 milligrams. In order to do that is the way physicians will maximize efficacy. They can use antiemetics when needed to help minimize nausea and vomiting, which occurs within the first few weeks of initiation. There are still far too many patients that we see remaining on the 50 or 100 milligram dose. When patients are on an effective dose and the GI toxicity is managed appropriately, we have truly seen remarkable results for this product. As a result, as it pertains to Alzheimer's disease, as you know, this is a much larger market.
Adam Lenkowsky: Roughly 7 million people diagnosed with Alzheimer's disease in the US, with 30% to 50% of patients have psychosis, whether that is hallucinations and/or delusions or agitation. They also have, virtually all patients have cognitive impairment. This is a fundamentally different market than schizophrenia. There are no approved treatments today in ADP. Alzheimer's patients with psychosis have been treated off-label for many years with D2s. Unlike schizophrenia, what you see is PCPs and nurse practitioners and PAs are responsible for treating the majority of patients, with 50% of patients treated in a long-term care facility. Why is that important? In addition, antipsychotics have significant safety limitations. They carry box warnings that are specific to elderly patients with dementia.
Adam Lenkowsky: We know that D2s are associated with long-term side effects like sedation, cognitive impairment, and movement disorders that are significant issues for long-term care facilities, where they need to carefully monitor off-label utilization of antipsychotics. Safety becomes increasingly important in elderly patient population. We know COBENFY is not associated with those adverse events, does not carry a box warning. That said, we will take the learnings from schizophrenia, and we are going to need to set appropriate expectations with patients and physicians, build confidence around managing the nausea and vomiting with COBENFY. COBENFY would be the first product approved for ADP, and we believe has the potential to play a really important role in treating these patients over time.
Chuck Triano: Great. Thanks, Adam. Let us go to our next question, please.
Operator: The next question comes from David Amsellem with Piper Sandler. Please go ahead.
David Amsellem: Hey, thanks. Another phase III readout you had recently was RYZ101, and with that in mind, I know it is only interim data, but maybe talk through just the path forward from a regulatory perspective and also contextualize the market opportunity here, the addressable patient population, both US and ex-US, and how you are thinking about peak sales potential. Thank you.
Chris Boerner: Thanks for the question. Maybe start with Cristian and then Adam.
Cristian Massacesi: Thank you, David, for the question. We are truly excited about these readouts because as Chris was mentioning in his opening remarks, it is a first. There are three reasons. The first is alpha actinium-based radioligands are working for lutetium and potentially can work instead of lutetium. This is the first take-home message for me. The second is BMS, the first with this novel modality. The third is the confidence in the platform because this readout in GEP-NETs is very important.
Cristian Massacesi: As you know, RayzeBio is a very important IND engine for our organization. We have programs in We have a backup molecule in this space, a better molecule, and we have programs in liver cancer, GPC3, and in prostate cancer, ACP3, novel target. There are a few others, of course, that are coming up. This is an important outcome that will be presented in terms of the phase III readout next year. Of course, the team started interacting with our authorities. Adam?
Adam Lenkowsky: Yeah. Just to add on to what Cristian said, we are pleased with the positive data readout of RYZ101. This will be the first product launch from our radiopharmaceutical platform. So a positive PFS interim data in SSTR2 positive GEP-NET. It does validate our highly potent actinium-based approach. Just remember, GEP-NET are rare tumors. We estimate the incidence of GEP-NET at approximately 18,000 patients diagnosed annually in the United States.
Adam Lenkowsky: When you look at patients who are progressing from Lutathera, roughly 70% of patients will go on to need a subsequent therapy. While there are no approved treatments today, our focus will be on establishing RYZ101 as the clear standard of care after Lutathera. Commercially, it is a relative modest opportunity. However, bigger picture, we see RayzeBio as a true IND engine with multiple INDs expected in the next 5 years to ultimately enhance our oncology portfolio with unique platform and pipeline.
Chuck Triano: Thanks, Adam and Cristian. Betsy, let us move to the next question, please.
Operator: The next question comes from Geoff Meacham with Citibank. Please go ahead.
Geoff Meacham: All right. Morning, everyone. Thanks for the question. Was curious of the pace of conversion to QVANTIG. Maybe just help us with how far along that transition is today. Then strategically, how much of a priority is that relative to, say, pemetrexed or the RayzeBio program? I am just trying to think of how you guys view the oncology franchise for you over the longer term in the mix there. Thank you.
Chris Boerner: Thanks for the question, Jeff. Maybe Adam, you start with QVANTIG, then I can chime in on the second part of that question.
Adam Lenkowsky: Sure. Thanks, Jeff. We are pleased with QVANTIG performance. Team continues to deliver strong commercial performance and execution. Jeff, we have now converted roughly 17% of IV to subQ to launch to date. We are seeing increasing use across multiple tumors with uptakes in our monotherapy indications as well as in combination. We routinely hear feedback from the community, specifically that QVANTIG improves practice efficiency with a 3-minute in-office subcutaneous injection, and patients prefer QVANTIG when offered the opportunity for this formulation and truly novel technology. So we are tracking well against our expectation that physicians will convert at least 30% to 40% of our IV business to QVANTIG. We are tracking towards the higher end of that range, and we are pleased with the QVANTIG performance and what this means for patients and physicians.
Chris Boerner: And look, the way we think about oncology treatments generally is that we are going to be looking for opportunities to, first of all, bring differentiated platforms and products to market to help patients across multiple tumors, and different lines of therapy, as we talked about to the previous question on small cell. What I am excited about as to where the pipeline is going is what you see playing out is that we have got very exciting platforms that are beginning to produce meaningful medicines.
Chris Boerner: You see that in our CAR T program, which continues to perform very well. We are very excited about subsequent opportunities that we have there with products like arlo-cel. You see that in the CELMoD program with iberdomide and mezigdomide. Of course, that is a platform that is going to continue to produce new INDs as well as new products we have referenced in the prepared remarks, golcadomide.
Chris Boerner: RYZ101, as you just heard, is the first of what we believe is going to be an important radiopharmaceutical platform. Then if you go beyond platforms and just look at potentially differentiated assets, you have got products like pumitamig, which you referenced. I would be remiss to not mention iberdomide, which showed very good data at ESMO. We have a number of products there, and we would put QVANTIG into that context. QVANTIG is an important new medicine for patients that improves upon the existing therapies that we have, notably OPDIVO, in immuno-oncology. So, we have got a nice pipeline of differentiated products and platforms, and we are excited to continue to bring those forward and help a lot of patients across tumors.
Chuck Triano: Thanks, Chris. Next question, please, operator.
Operator: The next question comes from Trung Huynh with RBC. Please go ahead.
Trung Huynh: Hi, guys. Thanks for squeezing me in. You recently disclosed a patient in your phase I autoimmune CAR T trial died of sepsis pneumonia after zola-cel infusion. You said it is unrelated to the June pause, but the patient had a late onset of non-ICANS motor symptoms. Can you perhaps walk us through your updated thoughts on the path forward for zola-cel in autoimmune and the risk/reward for CAR T in autoimmune? Thanks very much.
Chris Boerner: Thanks for the question. Cristian, do you want to start?
Cristian Massacesi: Sure. Thanks, Trung, for the question. Let me start telling you that we truly remain excited about zola-cel program because when we look at the totality of our data, we had 190 patients treated in phase I. The overall safety and efficacy profile of this product is truly compelling. zola-cel provided a meaningful benefit to patients that have a severe autoimmune disorder, some of them with organ damage already, and many of these patients remaining off the disease-modifying therapies. The potential is all there. As we said, we implementing a voluntary pause to review clinical data across the program. This is the reason why the program is paused currently. But after an extensive analysis of all our data, we identified that the root cause was a change that we made in the selection and activation of the reagent.
Cristian Massacesi: We have now made the proper adjustment of it, and we are working with authorities to restart the clinical program as soon as possible. Going to your question on the Grade 5, that was one fatal, unfortunately, one fatal case of septic pneumonia. It is the only Grade 5 event across all zola-cel program out of 190 patients. So we are fully committed with all our expertise in cell therapy to bring this product, this CAR T, in autoimmune diseases.
Chris Boerner: Hey, Trang, maybe let me make one additional comment on zola-cel. Look, I have the distinction of having been in cell therapy before we thought it would work in hematology, never mind autoimmune diseases like late-line lupus or MS. Remember, the patients that we are enrolling in these studies are patients with very severe, debilitating, and in many cases, life-threatening disease. Our goal here is to achieve immune reset and hopefully by doing so, enable long-term durable remissions. When you are doing drug development, as Cristian alluded to, in very difficult to treat settings with a new modality like this, you are always going to be evaluating the benefit risk profile.
Chris Boerner: The way you do that is the way we have done it, which is to be very rigorous in setting up a strong DMC, working with the best investigators in the field, and engaging transparently with regulators. What I will tell you with zola-cel specifically is we are seeing potentially transformational activity. We are excited to continue this program. What we are going to do is continue to be rigorous in how we conduct the study, be transparent with the broader community. I will tell you, our investigators and we are excited to see the potential of this product and this modality.
Chuck Triano: Thanks, Chris. Operator, let us take our last question, and then Chris will give a quick wrap-up.
Operator: The last question today comes from Evan Seigerman with BMO Capital Markets. Please go ahead.
Evan Seigerman: Hi, guys. Thank you so much for taking my question. I want to ask the BD one slightly differently. There has been a bit of a disconnect in the amount that you have spent in BD over the past 12 months versus some of your peers. Does this difference primarily reflect valuation discipline, confidence in your internal pipeline, or your ability to grow the growth portfolio to fill the LOE gap? Any color would be great. Thank you so much.
Chris Boerner: Sure. Thanks for the question, Evan. Well, first of all, let me reiterate what I said before, which is that BD continues to be a top capital allocation priority. I think David provided a nice view of how we think about the types of deals that we have and will continue to be looking at. We are certainly not waiting for anything. If there is an opportunity that makes sense financially for us, can improve our ability to deliver sustained growth, we have the capacity to be in the mix. What I would say is we continue to be very active in the space. If a deal we think makes sense for us, we are going to be engaged. That has been the approach we have taken over the last number of years, and that is going to continue to be our focus going forward.
Chris Boerner: With that, I want to just say a big thank you to everyone for joining the call today. I know today in particular is a busy day. Let me just say in closing that we are delivering strong performance from an increasingly diversified growth portfolio. As you have seen over the last few months, our pipeline is coming into focus and beginning to translate into new launches. Importantly, we continue to be operating with financial discipline.
Chris Boerner: As we continue to execute, we are well-positioned to deliver long-term durable growth into the next decade. Of course, none of this happens by accident, so I want to give a very sincere thank you to my colleagues around the world for their continued focus and commitment on the mission that we have to serve the patients who need our medicine. Thank you all for joining us today, and as always, the team is available for follow-ups.
Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
