Bristol-Myers Squibb Company — 2024 Q1

Jeff, I'll let David answer that.

Yes. Thanks, Jeff, for the question. The majority of the savings come from the historical BMS. As we talked about, the main drivers of the $1.5 billion savings really came into three buckets. First was really looking at the portfolio, obviously, with the Mirati, Karuna and with RayzeBio, we have really important portfolios that we're bringing into the overall portfolio. That gave us the opportunity to look at that and maximize the ROI of -- in totality of the portfolio as well as adjusting for some updates on new data and the competitiveness.

Okay. Chris, I'll take that one. And I think there, embedded in that question, maybe two things. First is how we're thinking about how we're going to guide around this trough and then there's maybe a second question in there, which is when we think we'll see that trough and what's the timing of it.

Thanks, Chris. Let me just say a couple of words and then I'll turn it over to David for the first part of your question, then Adam can come in on the back end. First, as David mentioned, when we thought about these efficiencies, we were really thinking along three lines: the need to invest in the pipeline; ensuring that we had adequate investment for our growth products; and then needing to be more agile and focused as an organization. In terms of how we think about allocating those redeployment opportunities, I would say, generally speaking, they're in that order with the majority going back into R&D.

And yes, Chris, thanks for the question. The way to think about it, about 2/3 of the savings associated in the R&D area and about 1/3 is in MS&A. But importantly, if you really think about the acquisitions that we've just done, if you think about Mirati and Krazati, in particular, really important development programs in first-line lung, both the doublet as well as the triplet.

Yes. Chris, thanks for the question. So we're making good progress across the totality of our growth portfolio. As David shared, we saw strong year-on-year demand growth across the majority of our growth products. And we continue to be focused on accelerating our key brands. And we're doing what we said we would do as we continue to drive our growth portfolio.

Thanks, Evan. We'll have David start, and then Samit.

Yes. Thank you, Evan. As I said in my prepared remarks, we're looking at our operating margins as we previously communicated in that 37% range. So that $1.5 billion of savings that we'll achieve by the end of next year, that's being reinvested both in the portfolio as I described earlier, particularly with the acquisitions that we did. But we've also had good progress like Opdualag lung where we're going to continue those clinical studies as well. And all of that put together, as I was saying, really strengthens not only the ROI, but the growth profile of the business in the second half of the decade. And I'll turn it over to Samit on the assets that we're looking at to externalize.

Yes. Thank you, David. And just to build on what David said, from a pipeline perspective, we took a very thoughtful approach to see -- from our rich pipeline, what are the assets that we are not going to be continuing on our own. So first thing that we looked at is the evolving science from the ongoing exploration of our clinical assets. An example over there where we look at CTLA-4 in our pipeline that we were developing, we had set the bar with ipilimumab, which is already a high bar to then look at the data and then we decided that if the data are not going to be better than ipilimumab, we shouldn't be continuing that program, so we decided not to continue with that.

Thanks for the question, Seamus. Maybe I'll start, have Adam weigh in a little bit more on IRA. With respect to the ongoing discussions with CMS, we're not going to be commenting. As I said earlier, we will have the outcome of that public in September and we'll be able to provide more insight at that point. But Adam, you can speak to some of the other aspects of IRA and then Samit.

Yes. Thank you, Chris and Seamus, thanks for the question. As it relates to IRA, there are obviously multiple components to it. There's the negotiation. There's also the change in the Part D benefit design. So in 2024, we don't anticipate significant impact across our portfolio, across Eliquis, Revlimid or other brands. We do expect, though, more substantial changes to the Part D benefit next year since the products are impacted by the redesign. We are carefully evaluating each product individual dynamics now and we'll see into the future. And we're monitoring very closely to understand the impact of, for example, out-of-pocket caps and other shifts that are happening in the system.

Thank you, Adam. And then thanks, Seamus, for the question. For Opdualag, let's just take a step back and understand what we were planning to do and try to do. So for Opdualag, we conducted a study of Opdualag plus chemotherapy in first-line non-small cell lung cancer. At first, we wanted to define the dose. So we tested a couple of doses in the first part of the study. And in the second part of the study, then we randomize the patient to receive Opdualag plus chemotherapy versus nivolumab plus chemotherapy.

Thanks, Terence. I'll let Adam take both of those.

So as it relates to Breyanzi, what we saw in the quarter was we were able to stabilize the decline in the U.S. Sales were roughly flat versus last quarter. What you're referring to internationally is we did see strong demand growth, which we expect to continue, but that demand growth was offset by negative pricing skewing reimbursement, mainly in Germany. So that's where that took place.

This is Adam on for Tim at Wolfe Research. So just on SOTYKTU, can you give us some updated market share metrics, things like new-to-brand share or versus Otezla in the oral category percent use in first-line versus later lines, that sort of thing? And also, any details on when the free drug program might begin to wind down?

Sure. I'll take that, Adam. Thanks for the question. So we're continuing to make progress with SOTYKTU, and we're executing our plan. We delivered in the quarter what we said we would do, and that's reaching approximately 10,000 paid prescriptions. That's what we shared in January, and we expect to roughly double that to 20,000 paid prescriptions in Q4. So that's where we're focused on driving today.

Thanks, Dave. David?

Yes. So this year was the big step down in the PD-1 rate. And then the other thing impacting that is the diabetes that will step down next year as well.

Yes. So maybe I'll start and then David can chime in if he has any additional -- anything else that he would like to provide. I think the way we're thinking about the trough guidance, and again, it's something that we have been engaged with investors for the last number of months. I think the way I would think about it is, first and foremost, probably the underlying question on guidance right now is what is the impact of IRA on Eliquis. We will, as I said earlier, be in a position in September when the price for Eliquis coming out of the IRA process is known and public, at that point, to talk about what that price is and the impact of -- on Eliquis on both the top line as well as on EPS.

I think you covered it, Chris.

Yes. Thanks, Carter. Maybe Samit can start and then Adam. .

Yes. Thank you, Carter, for the question. So for Camzyos, we remain obviously very confident in the overall profile of Camzyos. It has been a very transformational therapy for patients. And as you mentioned, the data at ACC clearly showed from the patients that have been treated in the real world that there is transformational outcome. And from a safety perspective, with 80% of the patients being treated, the 2.5- and the 5-milligram dose, the overall outcomes remain really, really positive as well as the impact on the ejection fraction is minimal at best.

Yes. Thanks for the question. We're pleased with Camzyos' performance in the quarter. And we saw a nice acceleration in new patient starts. We saw about a 25% increase in patients added to commercial dispense, but that was offset as you mentioned, by approximately $25 million inventory work down from Q4 to Q1. And we saw a slight gross to net impact as well from copay restart that happened at the beginning of the year.

So Steve, I'll start, and then I'll ask the last part of your question. We've highlighted the issue around the Eliquis price and the negotiations, because that is an important consideration in the midterm as we think about this sort of transition period that we're going through that we've talked about in the middle of the decade. And so we'll have greater insight into what that impact is later this year, and we'll be able to provide more of an estimate for the impact both on top line and on EPS as we get into the back half of the decade at that time.

Steve, on your question around Revlimid, just a couple of comments I'll make on that. One is what I said is that the free drug programs come down to normal levels. So no change in the program there. Just throughout last year, those levels came down in the start of this year. Remember, every calendar year, it starts again, back at traditional levels. So that was in relation to that comment.

Just adding one thing, Steve. Around Revlimid, we had seen some volatility in generic dispensing in the quarter, including some generic supply shortages. And so Revlimid and our legacy portfolio continues to be a strong source of cash flow for the organization.

Thanks for the question, Trung. David, then Adam.

Yes, the vast majority of the savings comes through this year. Because if you think through the actions that we're taking, whether it's positions, the portfolio actions, we made those actions immediately and the third-party spend, we'll receive that. And then you have it annualize fully next year. So that's really the difference between '24 and '25. But it's safe to say that most of all the actions we're taking, 90% of those are being done this quarter.

Yes. Trung, as it relates to Abecma, we're certainly pleased with the regulatory approvals of KarMMa-3 in a triple class-exposed setting in the U.S., in Europe and in Japan. This will remain a very competitive space with multiple products and modalities available. Our focus is on educating physicians on the KarMMa-3 data, Abecma's differentiated and predictable safety profile as well as the manufacturing reliability that we've had with Abecma.

Yes. I'll start. Thanks for the question. First, I'd say we're pleased with our continued progress as Opdualag has become the standard of care in the United States in first-line metastatic melanoma. We saw over 70% growth versus prior year. And our market share now is above 25% in the U.S., and we still have further room to grow penetrating what's still around 15% monotherapy use.

And thank you for the question. If I think about KRYSTAL-12, remember, this is a study with a primary end point in progression-free survival. And you will see the data being presented at ASCO. Overall survival data remains immature at this time, so I will not be able to comment on the specifics of that. But really excited for the confirmation of the single-arm study previously done now with the randomized study here.

Adam?

Yes. Thanks for the question. So we're very excited about the opportunity to launch KarXT later this year. This is a very important drug with significant commercial potential. As we talked about, KarXT will be the first innovative therapy in schizophrenia approved for decades. And what we've shared is KarXT offers Zyprexa-like efficacy without the significant adverse event that's plagued the D2 such as weight gain, lipidemia, EPS. And we know how compelling this is for physicians. We are rapidly preparing for the launch and the plans are going well, and we will be ready to launch by the summer, well in advance of our PDUFA date.

Thanks, Adam. We're starting to run a little short on time, maybe take 2 or 3 more. Can we go to the next one?

Certainly, I can take that question. Look, obviously, I can't comment on what others have seen. All we know is they've seen six patients worth of data. Hard to compare six patients worth of data with more than 200 patients treated with Opdualag plus chemotherapy in the first-line setting.

Well, let me start and then I'll ask Samit and Adam to speak. Let me just at a high level, though, say, that we continue to be incredibly excited about radiopharmaceuticals as a platform. It's one of the fastest-growing platform in solid tumor oncology. We believe we have a best-in-class asset that we've acquired with Rayze.

Yes. Thank you for the question. For Rayze, as Chris just mentioned, the platform is absolutely exciting and very encouraging data that we have seen emerging from the first program that is already in Phase III for the SSTR directed radioligand therapy. And that Phase III program is right now enrolling in the GEP-NET indication as well as the small cell lung cancer Phase I studies ongoing, and we are looking to see a couple of other indications added over there, and we're designing those trials as we speak and conduct those. So it holds a huge amount of promise because of the specificity of the directed radiation to the tumor itself.

Adam, anything to add?

Yes, I'll just add just a few things. RayzeBio was an important strategic acquisition that we believe continues to diversify our oncology portfolio. It's -- as Chris mentioned, we see this as a modality that's going to continue to grow over time. It will be a competitive space.

And maybe we could go to our last question, if you don't mind, Rocco?

This is Ivy on for Akash. We just have two quick questions. The first one is a follow-up for KarXT. So do you think patients on the drug will develop tardive dyskinesia? If not, how will that help position KarXT in the schizophrenia market?

Samit?

Sure. Thank you. First of all, great profile for KarXT that I think Adam has spoken about earlier from a safety profile perspective and the data has recently been presented also at the SIRS conference where we do not see the same toxicities that are seen with the atypical such as the tardive dyskinesia, the movement disorders as well as many of the other elements that have been spoken about, so I won't repeat. So that's why we are very confident on the profile and looking forward to bring it to the patients with schizophrenia. And then as David said earlier, with other indications as well for AD psychosis, agitation, bipolar disorders and others that we are exploring.

Thanks, Samit. And maybe I'll just close by saying, first, thank you all for joining the call today. I know it is a very busy day for all of you. So maybe I'll just leave you with a few things. First, we're off to a very good start in 2024. Our performance this quarter reflects execution and actions that we've taken to strengthen the company's long-term growth profile. Our business out remains unchanged from the beginning of the year. And of course, we look forward to sharing our continued progress on future calls.