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Bristol-Myers Squibb Company (NYSE:BMY)

Q1 2009 Earnings Call

April 28, 2009 11:00 am ET

Executives

John Elicker – Vice President of Investor Relations

James M. Cornelius – Chairman and Chief Executive Officer

Lamberto Andreotti – President and Chief Operating Officer

Elliott Sigal, MD, PhD – Chief Scientific Officer

Jean-Marc Huet – Chief Financial Officer

Analysts

Tony Butler - Barclays Capital

John Boris - Citigroup

Roopesh Patel - UBS

Seamus Fernandez - Leerink Swann

David Reisinger – Morgan Stanley

Steve Scala - Cowen and Company

Catherine Arnold – Credit Suisse

Tim Anderson – Sanford Bernstein

Operator

Good day and welcome to today’s Bristol-Myers’ first quarter 2009 earnings release conference call. (Operator Instructions). At this time, I would like to turn the call over to Mr. John Elicker, Vice President of Investor Relations.

John Elicker

Thanks everybody for joining us this morning. I know many of you are doing back to back calls here. With me for prepared remarks are Jim Cornelius, our Chairman and Chief Executive Officer, as well as Jean-Marc Huet, our Chief Financial Officer. Also joining us this morning on the call for questions are Lamberto Andreotti, our President and Chief Operating Officer, and Elliott Sigal, our Chief Scientific Officer.

I’ll take care of the legal requirements before we get started. During this call, we will make statements about the company’s future plans and prospects including statements about our financial position, business strategy, research pipeline concerning product development and product potential that constitute forward-looking statements for purposes of the Safe Harbor Provisions under the Private Securities Litigation Reform Act of 1995. 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 most recent annual report on Form 10-K, periodic reports on Form 10-Q, and current reports on Form 8-K. These documents are available from the SEC, Bristol-Myers Squibb website, or from Bristol-Myers Squibb Investor Relations.

In addition any forward-looking statements represent our estimates only as of today and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even if our estimates change. Now I’ll turn the call over to Jim Cornelius.

James Cornelius

Good morning everyone! We’re glad you could join us today. This morning, we announced excellent financial results that highlight our strong operational execution for the first quarter of 2009. Also in the quarter, we delivered on two major initiatives that advance our biopharma strategy. I am particularly proud that in the five quarters since December of 2007, when we announced our biopharma strategy, we have methodically delivered on our commitments. Just to name a few, first we’ve recast our business portfolio to focus on medicines for serious disease. We’ve addressed our cost structures to be a leaner, stronger, more effective company, and we’ve accelerated innovation through our string of peals business development execution. Clearly, we’ve established a strong track record of success and continue to build momentum as a biopharma leader.

Looking at the quarter, let’s start with operational and financial performance which was very good, both at the top and bottom lines. At the bottom-line, diluted EPS growth from continuing operations was 23% on a non-GAAP basis or unchanged from a year earlier on a GAAP basis. The topline overall net sales growth was 3%, or 8% excluding foreign exchange impact, compared to the same period in 2008. This reflects a strong operational execution. In particular, we saw sales growth powered by Abilify, Plavix, the virology group, Sprycel, and Orencia.

The numbers show that we are increasing our profitability through flawless operational execution including better expense management. We are making steady progress, delivering the $2.5 billion in cost improvements by 2010 from our 2007 base as part of what we call our productivity transformation initiative, and we’re also improving our cash flow through working capital initiatives. We ended the quarter with $8.9 billion of cash and marketable securities, or net cash of $2.3 billion. As a result of our productivity efforts, we continue to make headway against our goal of improving our gross margins, pre-tax margins, and net income margins, and again in the quarter, we saw improvement in all three.

Based on our recent financial and strategic track record, we’re confident in our future. Today, we’re confirming GAAP financial guidance for 2009 in the range of $1.58 to $1.73, or $1.85 to $2.00 on the GAAP basis. We are also confirming long-term guidance. We continue to project non-GAAP EPS from continuing operations will grow at a minimum of 15% compound annual growth rate. That is from the 2007 base through 2010, without re-basing for ConvaTec. The strategic progress we’ve made in the quarter and over the past five quarters demonstrates strong momentum and ability to fulfill our commitments.

In the quarter, we delivered on two key strategic initiatives. First, a very successful IPO of Mead Johnson Nutrition in February, and by the way they had an impressive earnings call this morning, and two the important extension of our US agreement for Abilify with Otsuka which we announced earlier this month. The Otsuka deal gives us improved financial stability in the coming years, and mitigates some of the volatility we would have otherwise experienced leading up to 2014, and by removing the pressures of a near-term financial challenge, we’re now better able to shift our strategy and operational focus to our longer term growth in 2014 and beyond.

Though our operational performance and the transition of our business portfolio, we have achieved financial flexibility. Our priority for our cash and marketable securities in the near term continues to be on maintenance of the dividend and on business development through the execution of our string of pearls strategy. I believe the string of pearls strategy is now part of our day to day business and mindset. Management teams and employees alike are now ready to react quickly and reallocate resources when business opportunities arise. We’ve already completed 7 important string of pearls transactions since the end of 2007, including another two pearls in the first quarter. Those two collaborations with ZymoGenetics and Teijin Nissan add innovation to our pipeline in the important areas of virology and cardiology.

As you know, we presented data to an FDA advisor committee earlier this month for our important diabetes medicine, Onglyza, which we’re commercializing with Astra-Zeneca. Last week, we learned the FDA needs additional time to complete the review of our new drug application. We currently anticipate a regulatory decision at the end of July. We remain encouraged by the advisory committee’s April 1st recommendation, and we are confident in the comprehensiveness of the overall development program and submission for Onglyza.

We’re also excited about the data we plan to present at medical meetings in May and June. At the American Transplant Congress, we’ll have significant phase III data on Belatacept for solid organ transplants. At the American Diabetes Association Conference, we’ll present data for dapagliflozin as an add-on to insulin as well as longer term data on saxa. At ASCO, we’ll present significant clinical data about our rich oncology pipeline which includes more compounds and programs than in any of our other therapeutic areas.

Now we’ll hear from Jean-Marc Huet for some color and detail on the first quarter financials.

Jean-Marc Huet

Let me first review the first quarter results before turning to Q&A. Let me start with revenues. Our total sales from continuing operations were up 3%, or at a very healthy up 8% excluding foreign exchange. Sales for the quarter included a negative 5% impact from foreign exchange, a +4% from price, and a very good +4% increase in volumes. Our biopharma sales were also up 3% or 8% excluding foreign exchange. We had broad-based growth in the first quarter across the entire portfolio driven by Plavix, Abilify, our virology business, as well as our newer products.

Let me turn to some of the specific areas. Firstly within our CV/Met business, US Plavix sales were up 14%. In particular, we are seeing good growth in new patient starts in PAD.

In terms of neuroscience, Abilify was up 30% globally and 38% in the US. Abilify is the fastest growing atypical in both NRX and TRX, and with a 31% US prescription growth, it is approximately 6x the antipsychotic market growth, which reflects good execution against the opportunities in bipolar and the new major depressive disorder indication, supported by a strong DTC campaign. Growth in Europe is supported by the bipolar indication which was launched in mid-2008.

Now turning to virology, Reyataz sales increased 8% globally, or plus 15% excluding foreign exchange, as trends both in the US and Europe remain strong. US sales were up 10%, and US prescriptions grew at +7%. Our International business is also strong, but was negatively impacted due to foreign exchange.

Our Sustiva franchise sales were up 7% globally, or plus 14% excluding foreign exchange behind the strong performance of Atripla. Also and importantly Baraclude sales were at $152 million, which represents an increase of 41% with over $100 million outside the United States, a true global increasing brand.

Now coming to immunology, Orencia sales were $124 million, which represents an increase of 43% as we continue to make good progress in being the firstline biologic of choice in the US.

Now in terms of oncology, Erbitux sales were at $164 million, down 12%, and as mentioned in the prior quarter, this trend is mostly due to lower sales in later lines of treatment for colorectal cancer as uncertainty remains related to KRAS. We do expect and we continue to expect this market to be a growth driver long term, as oncologists are able to identify those patients most likely to benefit based on KRAS testing. Global Sprycel sales were at $88 million with continued growth across the globe both in US and Europe.

In summary, we had quality revenue growth in each business and geography. Importantly, our US biopharmaceuticals business was particularly strong at plus 14% growth.

Now turning to expenses, if you exclude specified items, our gross margin increased by 260 basis points to 72.5% compared to the first quarter in 2008. Favorable mix in the biopharmaceutical business, manufacturing cost improvements, as well as foreign exchange favorability were only partially offset by inflation in the first three months of the year. Excluding specified items, gross margins in the biopharmaceutical business were at 73.8%, which is also an increase of 260 basis points versus the same period last year.

Excluding specified items again, marketing, selling, and administration was down 8% or 3% excluding foreign exchange. G&A was down 11% or 2% excluding foreign exchange. We’ve said that continuous improvement would be key to our performance, and I think these trends are a good reflection of these efforts. Advertising and promotion was up 2% or up 6% excluding foreign exchange again.

Excluding specified items, R&D expense increased 2% to $778 million, or +5% excluding exchange. Please note that productivity plays a very important role here, enabling us to invest more in R&D and fund key business development opportunities such as Kosan and Exelixis.

Our effective tax rate from continuing operations before non-controlling interest and income taxes and excluding specified items was 25.8%. We still expect our full year tax rate to be around 24% for the year.

Our financial condition continued to improve in the quarter as our cash, cash equivalents, and marketable securities increased to approximately $9 billion as a result of strong operating cash flows and importantly the proceeds from the MJ IPO that took place in February this year.

Our net cash position as of the March increased to $2.3 billion versus a net debt position of $3.8 billion this time last year. Improving cash flow remains a key initiative for the company. While we recognize the need to maintain a strong balance sheet, we are also, as Jim mentioned, in a very strong position to continue pursuing business development opportunities.

So just in general, strong sales, improved gross margins, and effective expense management has driven the improvements in non-GAAP pre-tax and net margins of 510 and 310 basis points respectively. Non-GAAP EPS from continuing operations grew double digits at 23% to $0.48 from $0.39 in Q1of 2008. Our GAAP EPS from continuing operations was at $0.32. The full reconciliation of GAAP to non-GAAP EPS adjusted for ConvaTec is posted on our website.

Now turning to guidance, we are confirming our full year 2009 GAAP and non-GAAP guidance. Our non-GAAP EPS guidance is $1.85 to $2.00. As Jim mentioned, we are also confirming our three-year minimum 2007 to 2010 15% EPS compound annual growth rate on a non-GAAP basis without rebasing 2007 for ConvaTec.

Highlights for our 2009 non-GAAP guidance remain the following: Firstly revenue growth in the low single-digit range, assuming foreign exchange rates similar to those seen in Q4. Excluding foreign exchange, revenue would be up in the mid to high single digit level. We expect gross margins to improve slightly based on mix as well as productivity improvements from this vantage point today. Thirdly, A&P should increase in the low to mid single digit range as we continue to invest behind growth and potential new product launches. Fourthly, SG&A should be down in the low to mid single digits driven mostly by productivity. R&D should be up in the mid single digit range, and we expect our effective tax rate to be approximately 24%.

In summary, our first quarter underlines operating performance that was very strong. We saw very good sales growth, along with improved gross and pre-tax margins, resulting in a 23% increase in non-GAAP earnings per share. The company remains focused on execution against our strategy and continues to deliver topline growth, improved operating leverage based on product mix and continuous improvement against our productivity initiatives.

John Elicker

Thanks Jean-Marc and thanks Jim. I think we are ready to go to questions, and I would just remind people that in addition to Jim and Jean-Marc that Lamberto and Elliott are here as well to take any questions you might have.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Tony Butler - Barclays Capital.

Tony Butler - Barclays Capital

Two questions; one is Plavix internationally in the areas in which you marketed continues to decline fairly precipitously. Is this again principally due to Germany or is this spreading elsewhere into countries where you market the product, and then secondly for Elliot, you’re characterized your filing strategy around Belatacept in previous calls. Would you like to update that given the data certainly near-term?

Lamberto Andreotti

I’ll take the Plavix question, Tony. No, the sales of Plavix are not declining precipitously as you said. Of course, we book sales of Plavix only internationally, only in very few countries where we co-market Plavix with Sanofi-Aventis. The countries where we co- promote Plavix, they book the sales, and therefore one of the few countries being Germany where we have generic competition, you would see a decline of our reported sales. In Germany, also the results are not as negative as they could be after many months of generic competition there. We believe that clopidogrel still holds approximately 70% of the total market, and therefore the generic competition is obviously affecting our sales and the sales of Sanofi, and is affecting the comparison of our first quarter results of this year with first quarter of last year, but that generic competition is not as aggressive as you put it, and then remember that the FX component is affecting all our internationally reported sales. I think that when Sanofi announces their results, you will see the international results of Plavix in their totality and you will get confirmation of what I am saying.

Elliott Sigal

Yes, Tony, Belatacept is our next major submission. It’s a biologic, as you know, under development as a replacement for calcineurin inhibitors in solid organ transplant rejection. Our first indication of that we’re after is in renal transplantation, and the program is designed to replace cyclosporine-type agents because they do cause nephrotoxicity. As you refer to our Phase III data, I’m very encouraged by our phase III data and look forward to its presentation at the American Transplant Congress in Boston in late May and early June. The results and there are some abstracts that are published, there’ll be about 9 abstracts at the American Transplant Congress, show that Belatacept is a promising new option for kidney transplant patients. After Belatacept regimens demonstrate superior kidney function and similar patient graft survival versus cyclosporine in a general transplant population despite an increase in treatable acute rejection episodes in the early post-transplant period.

Belatacept regimens also demonstrated better kidney function with comparable patient graft survival and acute rejection compared to a cyclosporine-based regimen in recipients of higher risk extended criteria donor kidneys or high-risk kidneys from donors. These kidneys come from suboptimal donors who often have less renal function to begin with and may be more sensitive to the nephrotoxic affects of calcineurin inhibitors. Belatacept treated patients also experienced an improved cardiovascular and metabolic risk profile including a lower risk of developing diabetes, better blood pressure control, and an improved lipid profile compared to cyclosporine. So these two phase III studies in two important populations will be presented at the end of May. The field has shifted to a focus on long-term renal function. We are on track to submitting in the US our application in the middle of the summer as we have talked about before. As of now, we will be submitting, I believe, towards the end of the year in Europe as well, and I hope you get to see the presentations at the end of May.

Operator

Your next question comes from the line of John Boris with Citi.

John Boris – Citi

One question for Jean-Marc—just an update on the progress on improvement in working capital, and then one for Lamberto on Abilify and potential competitive threat from Seroquel XR post their panel review. How should we be thinking about the growth trajectory of Abilify especially in the depression indication following the review on Seroquel?

Lamberto Andreotti

Just on working capital, I think the people sitting around this table are all very encouraged with the trends, and this is very much driven by the focus that we’re putting on inventory levels, which were much better in the first three months as well as a continued effort by general managers across the globe on managing receivables which is a risk management issue as well as payables and the terms around those given that we have a newly installed chief procurement officer and an organization which is increasingly focused on that part of the business. So in general, much more focus, a lot of internal training. It’s an important part of our compensation metric, and so it’s receiving all the focus, and you’re starting to see that actually in the numbers, and again a little difficult to go through trade working capital and single it out, but as we’re looking at our KPIs internally, we’re actually seeing a very significant progress, and hope and expect that to continue.

Elliott Sigal

I will make a couple of comments on Abilify. Obviously, we cannot comment on if and how Seroquel XR will be approved. What we can say is that what we’ve seen so far as far as Abilify in that indication is concerned is very positive and we’re very happy. Since we launched Abilify in that indication, and we’re the first and only atypical approved for that indication, we have seen the total market growing. Atypical penetration in MDD has grown more than a full percentage point since we launched, and it’s now 10.6%, and our share in that expanded market has gone up to 21.7%. This is the last data point I have, and it’s as of December 2008. Now, we’re speaking about a huge market. There are 10 million patients treated and diagnosed for depression in the US, and there are 6 million patients in second line and beyond, so this is a huge market, and we believe that there is space also for a competitor in this market, especially given the different profiles that the two products have. Let me add that every time we launched a new indication for Abilify, we also see important halo affects on the other indications on that product, and this is why we have been aggressively and seriously working on a large clinical development plan for this product. Therefore, what we see is that since we launched the MDD indication, the growth in the other indications has continued to be significant and important, and as a reminder, there is a population of up to 2 million patients with bipolar disease with manic or mixed symptoms. This is the target of Ability, and there is an additional 1.5 million patients treated and diagnosed with schizophrenia. Our growth comes not only from MDD, but comes from all the indications.

Operator

Your next question comes from the line of Roopesh Patel – UBS.

Roopesh Patel - UBS

Firstly on FX, I am curious as to how much of an impact foreign exchange had on first quarter’s EPS. Secondly, on Orencia if you could just elaborate on the trends in the rheumatoid arthritis market? Again in the US, several companies have highlighted either an impact from lower wholesaler stocking or impact on prescriptions due to the economy, and I’m curious as to what you’re seeing from Orencia’s standpoint, and whether or not there has been any impact this quarter, and then lastly on business development, I thought that given the pullback in valuations, the company had stated in recent months that they would look for acquisitions of later-stage compounds, even potentially companies with a revenue and profitability stream. We haven’t heard anything in terms of an announcement. I’m just curious as to whether or not that’s a function of there not being enough opportunities or whether or not companies are still holding up on valuations.

Jean-Marc Huet

So maybe I’ll just take the first one on foreign exchange. The short answer to the question is that the bottomline impact in Q1 due to FX has been minimal. It’s a penny or less, so a minimal impact on the bottomline, but maybe as you asked this question, it just also raises the overall topic of our gross margins and where we are, and let me just make two or three comments on that point. The first one is that mix and pricing are probably the most important drivers behind our gross margin development of compare Q1 of this year with Q1 of last year. Foreign exchange has had a favorable development and that will not continue throughout the year, and it’s driven by favorable hedging contracts that we signed up already a year ago as well as natural hedges, and so that’s just to provide you with some color in terms of the benefits of FX within our gross margin.

Lamberto Andreotti

As far as Orencia and its reference market, the RA market grew in the last 12 months. I speak about the rheumatoid arthritis market only, and the number of total patients that we see grew market wise 3%. The number of total patients in Orencia grew 54%, so we have a performance trend much better than the market performance. In the last few months, we have seen the market slowing down and Orencia slowed down with the market, and we have different interpretation of what goes on. There might be some economic factors that are affecting the slowdown of the market. In patients receiving a biologic, co-pays or co-insurance are increasing, so there is a financial burden on the patient. When we speak about Orencia, yes, as I said, we have seen some softness in our performance going with the performance of the overall market, but at the same time, we have launched a very important program that we call the Promise Program, and in this program, we help patients who need our assistance in dealing with their co-pays for their initial period of therapy, and we go as far as paying their fixed co-pay if they decide to switch to another product, and I think in this particular moment, a program like this is very important to support Abilify. We’ve also reinitiated and intensified our DTC advertisement and therefore we believe that we have in place a number of right programs to support the product. Obviously then there is the efficacy of the product and the durability of response that are the base of our belief in the future performance of our product.

Elliott Sigal

With regard to your question on business development, yes, our goals and our activities remain exactly the same as you stated, and we stated before, we have a large intense group and senior level management involved at looking at not only pipeline, but where possible pipeline plus earnings. We have a significant amount of cash. We will execute financial discipline. There are more and more opportunities that we’re sifting through. When we progress, you’ll hear more about that. One of the major guideposts is to find pipeline to strengthen even further an exciting 2011 and 2012 late stage clinical pipeline. String of pearls will come in different forms including traditional licensing, strategic partnerships, or acquisitions, and we’re looking at all three of those with an eye towards pipeline and where possible pipeline and earnings.

Operator

Your next question comes from the line of Seamus Fernandez - Leerink Swann.

Seamus Fernandez - Leerink Swann

The questions are for Elliott and then general questions in terms of strategy. Elliott, can you tell us with Belatacept do you have an SPA in place with the FDA? I am a little bit confused by the magnitude of the difference in acute rejection, and despite that fact, at least in the more intensive arm, you still showed non-inferiority, so I was just wondering if you might be able to help us understand the non-inferiority margin and whether or not you have an SPA in place with the FDA for Belatacept on those issues. Separately, there was a deal structured between GlaxoSmithKline and Pfizer with regard to their HIV pipeline. I’m just wondering if Bristol is thinking about those types of partnerships in the industry. I’m not asking specifically about HIV, but about the potential for incremental risk-sharing type deals that combine later stage product situations with earlier stage pipeline opportunities and whether or not Bristol sees that as an opportunity for the industry overall.

Lamberto Andreotti

I will take the joint product question first. We believe that we invented that type of agreement and that type of product joint venture. Our agreements with Astra Zeneca on two diabetes products and our agreement with Pfizer are clearly there to share the risk, cost, and the possible opportunities behind important products. As far as HIV concerned, we have successful joint PD program with Gilead on Atripla where Sustiva is one of the three products of that combination, and we continue to look at other potential associations with other companies to support one or more products in our and their portfolios. As far as HIV is concerned, we believe that we are in a very competitive position. With Sustiva and Reytaz, we are market leaders. By far the market leader in the third agent market, and therefore we’re probably in a position of relatively bigger strength than the two companies that combined their efforts now for HIV drugs.

Elliott Sigal

Seamus, the answer to whether we have special protocol assessment for Belatacept is yes. We have worked very closely throughout this program with the FDA, so do have SPAs in force, and I’m pleased with the phase III results. I do believe that we’ll progress certainly through filing. I’m not overly concerned about the acute rejection that you referred to. Transplant physicians are very experienced in the management of acute rejection which is typically treatable. Its effects on organ function are often largely reversible with prompt diagnosis and treatment. The field initially focused on acute rejection with the prior generations of immunosuppressants, but now realize that the ultimate goal is improved kidney function, and so we worked out our primary endpoints, either as composites or as individual components to deal with measured glomerular filtration rate, as well as graft survival, and we worked very hard to get an acceptable definition of non-inferiority, so I feel that we have met the profile that we were after in terms of comparability in certain areas and superiority importantly in renal function, and I urge you to look at the nine abstracts and presentations with the experts from the outside as we learn more and more about the profile for this new immunosuppressant.

Operator

Your next question comes from the line of David Reisinger – Morgan Stanley.

David Reisinger – Morgan Stanley

Going back to the transaction landscape, you mentioned sensitivity devaluation. Could you please comment on valuation levels in competitive bidding processes and just update us on how the competitive landscape for deals is evolving, and then with respect to Saxagliptin, if you could provide some details on your competitive marketing positioning relative to Januvia in Europe and market uptake?

James M. Cornelius

David, obviously we don’t have a monopoly on the string of pearls strategy. We’ve always said our competitive advantage would be we’ll execute those, we’ll pay full value, and we have a wonderful reputation as a partner, so in situations where we find somewhat competitive, we don’t win them all, but we win the majority of them, so valuations have gone up slightly, but as we demonstrated in the ImClone situation, we don’t overpay.

Lamberto Andreotti

As far as Onglyza is concerned, obviously we’re not going to give a presentation today on our launch program and the profile of the product. We will present that to the market as soon as we get the approval in the US and Europe. What I can say is that we’re ready to launch in both the US and Europe. Astra Zeneca and Bristol Myers-Squibb have worked very effectively to get ready for this launch. We’re confident that we have a profile of the product that is competitive in a market that is characterized by strong unmet medical need, and therefore we go with a product that is supported by good clinical evidence, that is supported by two strong companies, and we’re ready to go as soon as the regulatory processes are completed in the US and in Europe.

Operator

Your next question comes from the line of Steve Scala - Cowen and Company.

Steve Scala - Cowen and Company

First for Elliott, based on the Apixaban data to be presented at ISTH in July, are you still confident in a relatively near-term path to market for VPE, and secondly I have a question on guidance. This may be splitting hairs, but the language describing the 2007 through 2010 non-GAAP EPS guidance has changed slightly. The words ‘attributable to the company has’ were inserted whereas they were not included in the Q4 release. I’m just wondering if Bristol is implying that earnings from partnerships are somehow now less visible than they were three months ago and could impact your ability to deliver your guidance.

Jean-Marc Huet

Maybe I can just start on the last one. Indeed it is nothing material, it just reflects the change in accounting, so there is nothing else to read and the fact is we continue to reconfirm exactly the same as what we have been doing over the last quarter is a minimum of 15% EPS growth between ‘07 and ‘10 without rebasing ’07 for ConvaTec.

Elliott Sigal

Steve, you asked about our Apixaban orthopedic indications. We’ll have more phase III data, two different phase III programs being described this year at conferences. The one you referred to is in July at the ISTH meeting. It is the program designed specifically for the European indication for DVT prevention. I’m very encouraged by that data. I need to see the data that will be presented in December at the American Society of Hematology which is another phase III program, in this instance in preventing clots in the setting of hip surgery, and we’ll make a filing decision when we see both studies together.

Operator

Your next question comes from the line of Catherine Arnold with Credit Suisse.

Catherine Arnold – Credit Suisse

I wanted to ask you about Erbitux and also the Abilify relationship. On Erbitux, Jean-Marc, you mentioned that performance in the quarter was impacted by uncertainties surrounding KRAS, and so two important things I think to know is, one, do you expect regulators to accept the retrospective subset analysis on KRAS in regards to outcome and then secondly I wondered if you were expecting any threat in regards to the Vectibix 203 study prospectively looking at KRAS? On Abilify, I just wanted to clarify the word collaboration and the expectations there. If Otsuka would make a strategic decision to exit the US market either entirely or partially, this collaboration becomes financing from the company or are there expectations about a certain contribution on human resources by Otsuka?

Lamberto Andreotti

Let me take the Otsuka question. I doubt that Otsuka will decide to exit the US market, but it’s their call, their decision, and obviously I’ll never answer on their behalf, but there is a clear commitment to the collaboration, that is a financial commitment from them to the collaboration, and part of that commitment can be delivered in contributing human resources and other activities to the collaboration itself, but if those human resources or those other activities were not available, there’ll still be a financial contribution to the collaboration.

Elliott Sigal

Catherine, in trying to answer your question about KRAS data, certainly there are multiple channels of communication that we appropriately avail ourselves of in communicating information to the medical community. One of the most important is the label, and we’re working very carefully with the regulatory authorities with regard to the appropriate information to put in the label with regard to KRAS, and I think the story will unfold relatively soon. Also there are guidelines. The societies put out their medical education symposiums, and the community is learning a lot about KRAS, and where appropriate, we’re contributing to that education, so that patients can be typed for their KRAS status and the benefit-risk improved even further for this important agent, Erbitux in colorectal cancer, and there is a lot of opportunity even within the current label to increase usage by the guidelines of who would respond and who won’t.

Lamberto Andreotti

Catherine, the way we see it now is that there has been some confusion in the marketplace or at least some uncertainty in the marketplace after the publication of the KRAS status. What we’re seeing is that as of February, the added awareness of KRAS is very high. It’s about 90%, and approximately one-half of the metastatic colorectal cancer patients are being tested for KRAS. Now, the way I think is that Erbitux will benefit in the medium to long-term as the KRAS testing gets adopted more broadly in the US because they are 60% of the patients with colorectal cancer that are with wild type KRAS, and those patients the same indicates can benefit from the use of Erbitux, so obviously, there has been confusion and the need to clarify things, but in the medium to long term, we believe that the role of Erbitux in those wild-type KRAS patients will be significant.

Operator

Your final question comes from the line of Tim Anderson – Sanford Bernstein.

Tim Anderson – Sanford Bernstein

If you said it in your prepared remarks, I’m sorry I missed it, but can you tell us what emerging market sales were in the quarter and the year-on-year growth was, and then on Plavix in Europe, you talked about it earlier, but can you say whether you think that generic situation is just going to be confined to Germany going forward or do you think other countries are at risk of seeing a generic launch like it occurred in Germany, and then the timing of the Oasis 7 results?

Jean-Marc Huet

Very briefly just on the emerging markets, we’ll come back to you on the specifics, but just in general, if there’s any implicit question about impact of the economic environment, as we’re looking at all our different countries, they are continuing to grow in all the different areas of our portfolio including emerging market doing very well in 3 or 4 of the major countries there.

Lamberto Andreotti

For emerging markets, we’ll come back to you on another occasion explaining to you what we define as emerging markets and we plan to do in those emerging markets. In summary, we’re focusing on a very selective number of markets. We’ve a very selective number of global products, and in those markets and those products, we intend to be very present and we want to support our activities with R&D and manufacturing collaboration, but it’s very focused on selective markets and selective brands. We’re not going to be present there with a wide range of products.

Elliott Sigal

Tim, I believe you asked about the Oasis trial, also called the CURRENT trial, the high-loading dose trial on Plavix. It’s an event-driven trial, and therefore the dates are always estimates, but we’re targeting right now the European Society of Cardiology in September.

John Elicker

I’m going to turn the call over now for some closing thoughts from Jim Cornelius.

James M. Cornelius

Let me summarize briefly. Our financial results this quarter reflect continued excellent operating execution. We made important strategic progress in the quarter with the IPO of Mead Johnson and the new collaboration agreement with Otsuka. The Otsuka deal gives us improved financial stability in the coming years and mitigates some of the volatility we would otherwise have experienced leading up to 2014. We’re well positioned for our goal of preparing for future growth 2014 and beyond, and finally with Onglyza, we remain encouraged by the FDA Advisory Committee April 1st recommendation. We are confident in the comprehensiveness of the overall development program submission for this important diabetes medicine, and to paraphrase Lambreto, we’re ready to go.

John Elicker

Thanks everybody for joining us on the call. Obviously, we’re here for followup if you have any questions.

Operator

That does conclude today’s conference. We thank you for your participation.

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