Bristol-Myers Squibb Company Q4 2009 Earnings Call Transcript

| About: Bristol-Myers Squibb (BMY)

Bristol-Myers Squibb Company (NYSE:BMY)

Q4 2009 Earnings Conference Call

January 28 2009, 10:30 am ET


John Elicker - Vice President of Investor Relations

Jim Cornelius - Chairman and Chief Executive Officer

Jean-Marc Huet - Executive Vice President and Chief Financial Officer

Lamberto Andreotti - President and Chief Operating Officer

Elliott Sigal - Executive Vice President


John Boris - Citi

Tony Butler - Barclays Capital

Jami Rubin - Goldman Sachs

David Risinger - Morgan Stanley

Steve Scala - Cowen

Seamus Fernandez - Leerink Swann

Keyur Parekh - UBS.

Chris Schott - JPMorgan

Tim Anderson - Sanford Bernstein


Good day and welcome to today’s fourth 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. Please go ahead Mr. Elicker.

John Elicker

Thank you and good morning everybody and thanks for joining us. The purpose of the call this morning is to review our fourth quarter results and outlook for 2010. With me today are James M. Cornelius our Chairman and Chief Executive Officer, Lamberto Andreotti our President and Chief Operating Officer, Elliott Sigal, our Executive Vice President and Chief Scientific Officer and also for the first time, Charlie Bancroft, Senior Vice President and our Acting CFO. Jim and Charlie will have prepared remarks and then Lamberto and Elliott will be here for Q & A as well.

I will take care of the legal requirements first. During the 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 the 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 10-K, and our reports on Form 10-Q, and current reports on Form 8-K. These documents are available from the SEC, the Bristol-Myers Squibb website, or from Bristol-Myers Squibb Investor Relations.

In addition, any forward-looking statements represent our estimates only as of today. It 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. Jim.

James Cornelius

Thanks John. Good morning everyone. It was three years ago in January 2007 when I first had the privilege of announcing and try and explain results of Bristol-Myers Squibb. I am very pleased every quarter we have delivered on what we said we do. Fourth quarter this last year is no exception to that. Before reviewing our fourth quarter performance which was very strong both strategically and operationally I want to step back, highlight some of the key steps we took in 2009. The most recent in December, we split off our remaining ownership in Mead Johnson Nutrition Company, making us a fully focused Bio pharma company.

As you know this strategic decision and complex transaction was very well received and has created significant shareholder value in a tax efficient way and lower the number of Bristol-Myers Squibb shares outstanding as we go forward.

Also of importance, we extended our Abilify agreement with Otsuka giving us 29 additional months of Abilify contribution to our sales and earnings. Just as a reminder, we expect that extension will be accretive by at least $0.30 per share in both 2013 and 2014, probably when we need it the most.

We acquired Medarex, our largest Pearl to date, in our String of Pearls. In addition to full rights to the [inaudible] oncology compound, ipilimumab, we gained access to novel technology platforms, scientific knowledge, and outstanding research people.

We launched ONGLYZA in six countries, including the US and UK as we advanced our robust innovative pipeline. The past year was truly transformational for Bristol-Myers Squibb. I can now say definitively, that we gone from becoming Bio pharma to being Bio pharma.

Within that as a background, let me turn to our fourth quarter results, which is excellent execution across the company. In the fourth quarter our revenues grew a 11%, or if I adjust those for the retail and our foreign exchange a 7% growth rate globally, as compared to the same period a year ago.

Our key drivers, Plavix and Abilify, continue to have double digit global growth. BARACLUDE, Sprycel, ORENCIA all grew 30% or more in the quarter, indicating how customers positively pursue the value of these recent launches. In our HIV portfolio, REYATAZ and Sustiva franchise both had solid growth of nearly 20%.

All the top line growth remained focused on executing our productivity initiatives and we are seeing improvements in our operating and pre-tax margins as well as in net income. Our non-GAAP operating margin improved by 300 basis points and our pre-tax margins are up over 200 basis points compared to a year ago.

By executing at both the top and bottom line for the fourth quarter, we have realized an 18% increase in our non-GAAP diluted earnings per share from the continuing operations.

We also grew up full year non-GAAP EPS from continuing operations by 24%. Financially, as you know, we have focused on cash flow management and that is reflected by our year-end cash position of approximately $10 billion in cash and marketable securities, which is competitive among our peer group.

Translating that into a net cash that is a positive $3.5 billion and very strong. As a result, we continue to pursue acquisitions, licensing deals, and partnerships through our String of Pearls strategy.

In the fourth quarter, we entered a global agreement with Alder for another Pearl ALD518, promising monoclonal antibody for rheumatoid arthritis. You will also note from our press release that we are going to collaborate with our partners in Indianapolis that is the Eli Lilly Company to co-develop and co-commercialize, what was used to be called ImClone 11F8, a Phase III cancer compound. We hope to leverage our share earnings, working on other tax to help bring this novel biologic innovations.

Few weeks ago, we submitted the filings to the FDA for a fixed dose combination among Onglyza Plus metformin extended-release tablets. We believe this represents a future opportunity to further demonstrate the value of Onglyza. We are currently executing plans with our partners at AstraZeneca to improve Onglyza’s growth trajectory. We are working to ensure patients and positions under stent and Onglyza an important treatment option for type 2 diabetes. Looking ahead in 2010 we are confident we can sustain our operational performance. We are providing a 2010 GAAP EPS guidance range $1.94 to $2.04 and a non-GAAP EPS guidance range of $2.15 to $2.25 per share. Importantly, this guidance excludes the potential impact of comprehensive U.S. Health Care Reform.

On a near term horizon, we have our novel kidney transplantation biologic [Belatasa]. We also expect to submit an application in the EU for the approval of Apixaban for the prevention of venous thromboembolism in the first half of this year. Our R & D continues to be very productive and is preparing our company for leadership in a number of areas, all unmet medical need.

With strong operational results, disciplined financial management in a robust pipeline, we have what we need to we need to execute our strategy. With that, I am going to turn over to Charlie Bancroft, our Acting CFO. Charlie, as you know, is a 25-year veteran of Bristol-Myers Squibb. He knows more than all of us combined. Welcome him to his first opportunity to address Wall Street, Charlie.

Charlie Bancroft: Thanks Jim and good morning everyone. I will review our fourth quarter results and our 2010 guidance before we go to your questions. As Jim mentioned we successfully completed the split off with Mead Johnson during the fourth quarter. As a result we are recording Mead Johnson as a discontinued operation. Therefore, my comments will focus on our continuing operations for what is now solely, our bio pharma business. And please report our fourth quarter performance as strong, non-GAAP EPS from continuing operation increased 18% versus last year followed operational performance, reflected by sales growth in our bio pharma business along with continued focus on productivity resulted in yet another great quarter. The company pursued fourth quarter net sales of $5 billion. Compared to last year this is an increase of 11% or 7% excluding impact of foreign exchange.

Our fourth quarter net sales include a positive 3% impact from price and a 4% increase in volumes. US net sales grew 11% to $3.1 billion, compared to last year and internationally our net sales were %1.9 billion, which represents an increase of 11% or 2% net of foreign exchange.

Our underlying business is strong and we have had consistent sales growth this year. Let me walk you through some highlights of our products. In our cardiovascular franchise, Plavix sales were up 10% globally or 8% net or foreign exchange. In the US our fourth quarter sales for Plavix were up 11% versus last year. This increase was driven by price and volume gains as prescription growth in the US was up 4%. To date, [Efient] has had minimal impact on Plavix sales. At the end of December, generic clopidogrel was available in 14 European countries and we have seen significant share, on price erosion in certain markets, notably France and the UK.

In our P&L this is primarily reflected an equity net income of affiliates. In nearest times, Abilify worldwide sales were up 17% in the quarter, for 15% tax cutbacks. About two third of our sales growth in the US comes from our indications for bipolar and major depressive disorder.

Our strong clinical program for Abilify has led to the broadest set of indications for any atypical. As part of the extension agreement, we signed in April last year, reported reliance revenue is lower by $16 million this quarter and that reflects the amortization of a $400 million, upfront payment to Otsuka. Our virology portfolio has global sales of 21% versus prior year, and that is lead by Baraclude, which is up 39%, the Sustiva franchise which is up 19%, and Reyataz which is up 18% or 13%. Reyataz global sales growth is steady in the face of tough competition from new Protease inhibitors launched in 2009.

Nearly, 7 out of 10 needle treatment patients are prescribed either Sustiva or Reyataz as part of their initial anti-retroviral regimen. Baraclude global sales were $212 million in the quarter and Baraclude has market leadership in E.U., China and Japan. ORENCIA sales were $168 million in the fourth quarter that is an increase of 30% or 28% excluding FX. In the U.S. the ORENCIA sales grew 19% and that was driven by an increase in total patients for ORENCIA although the market for I.V. patient moved down slightly. We plan to submit the subcutaneous administration of ORENCIA later in 2010.

In Oncology, Erbitux sales in the U.S. were $163 million, which is down 9% from prior year. Erbitux sales in colorectal cancer has become stabilize despite a continued decline in the overall colorectal cancer market place. Sales in head and neck are down driven by a slowing market. Global Sprycel sales were a $119 million that is up 38% or 29% except FX. We expect to present the results from the Sprycel first line study later this year. And finishing with metabolics, Onglyza was approved in the U.S. in July and then in Europe in October. We, along with our partners in AstraZeneca have launched in the U.S., Mexico, and several markets in the E.U. We look to launch in a number of additional key markets in the near future.

Fourth quarter sales in the U.S. were impacted by stocking orders in the third quarter. We are making steady progress in our launch. Positive signs include improved access, Doctors reimbursement and increase in division and positive trends in physicians' intent to prescribe Onglyza. Now let me move to the rest of [team] now. Our non-GAAP gross margin went down a 110 basis point to 72.2% compared to fourth quarter 2008. Improvements in nets and productivity were more than offset by unfavorable foreign exchange hedging year over year. Full year non-GAAP gross margin was up though, a 190 basis points to 73.3%.

For the quarter, we reduced over non-GAAP total SG&A as a percentage of sales by 400 basis points. From 31% a year ago to 27% in Q4, 2009 and this is primarily reflecting our continued productivity efforts. Non-GAAP R&D expenses increased 10% to $935 million. R&D as a percentage of sales which was relatively flat at 18.6% for the quarter. This was accomplished even with the investment in new Pearls with Medarex having the biggest in [inaudible].

Our effective overall company non-GAAP assets and earnings from continuing operations was 15.7% for the fourth quarter, as compared to 13.4% in 2008. Remember though that our fourth quarter of 2008 rate was favorably impacted accounting for the full year the tax credit in that quarter. In 2009 fourth quarter tax rate is lower than expected based on various items that in part impacted the total year rate but were only fully accounted for the fourth quarter.

We don’t expect most of these items to carry forward into 2010. A few words on our cash we continue our focused on cash flow and our employees have fully embraced this in our culture. We have excellent operating cash flows and continue a great progress on working capital initiative. This is clearly reflected by our full year trade working capital improvement of over $800 million and added against the good growth in our business. As Jim mentioned we currently have $10 billion in cash in market as securities and this provides us the financial flexibility we need to invest in potential business development opportunities to improve the company’s earning profile in 2012 and beyond.

Now let me turn to guidance. Our 2010 GAAP EPS guidance is $1.94 to $2.04 that reflected expected milestone payments from existing partnerships and other specified items related to restructuring. Our 2010 non-GAAP EPS guidance from continuing operations is $2.15 to $2.25. This guidance excludes any potential impact of the U.S. healthcare reform.

The key assumptions for 2010 non-GAAP guidance include revenue growth of mid-single digits. We expect gross margin to be relatively flat decreased in the mid to high single digits and should be relatively flat. We expect our investment R&D to be up in the mid to high single digit range and our full year effective tax rates should be in the 23% to 24% range.

Now this is simply the extension of sub-product in the R&D tax credit in 2010. Let me close by re-stating what has been the case with our past several quarters. Our fourth quarter performance was solid. Strong sales growth with the continued focus on productivity resulted in 18% increase in non-GAAP EPS from continuing operations. Across all organization, we are dedicated to delivering our strategy and our commitment. Thank you. Now we are happy to take your questions.

John Elicker: Thanks Charlie and [Tuhin] I think we are ready to go to Q&A. I would just remind everybody in addition to Jim and Charlie, both Lamberto and Elliott are available to take any questions you might have. Tuhin.

Question-and-Answer Session


Thank you, the question and answer session will be conducted electronically. [Operator instructions] At this time we will go ahead and take our first question from the line of David Risinger of Morgan Stanley.

David Risinger - Morgan Stanley

Yes, thanks you so very much. Looking ahead, I have a couple of questions. First, with respect to your upcoming analyst meeting on March 4, could you just characterize what type of long term guidance you will be providing, just so we have a framework for what to expect on March 4th and then second, with respect to ipilimumab, Eliott, I was hoping that you would be able to comment on the outlook for the conclusion of the study, obviously it's event driven, but I am just trying to get my head around the notion that, well on the positive it could be that the trial is taking longer to report because ipilimumab may be keeping melanoma patients alive longer, but on the other hand it might also make sense that the study could be held early by the DSMB for ethical reasons, if ipilimumab is substantially outperforming control. So, if you could help frame that for us as well I would appreciate it?

John Elicker

Thanks David, this is John, just a real quick comment on our meeting on March 4. I think, you know, the intent is to provide, both the business and an R&D overview and really at this point, it's not, wouldn’t be appropriate for us to go into any more details than that. Eliott.

Elliott Sigal

Yes, David this is Elliott and the question was on ipilimumab, which, we are excited about, from the date that we presented it last year at ASCO is a very important pioneering effort in immuno oncology and our first application we think could be in melanoma. The trial you referred to is O24, I believe the survival study that is ongoing as first line in advance melanoma and that is on top of Standard of Care. About 503 patients primarily and points to overall survival since it is event-driven to achieve the type of statistical significance, we are hoping to achieve, I can't predict the exactly our latest calculations or on average we may have the information internally in the fall.

It could go into the next year. It could be earlier in the summer, so the average is in the fall. We do have an independent [DSM-V], where the charger is one of the safety. I don’t expect necessarily an early determination. We did feel that we should run the study out and we very clear in characterize the effect of this agent. I will mention however, that we have another survival study and this is in second line and that is maturing earlier and we will present that data I believe at ASCO this June.

In addition, we have Phase II study along we should mature in time for that and in March fourth we will outline our thinking about immune oncology and very different and various opportunities in this area in addition to that. Thanks David. To the next question please.


We will go to our next question from a line of John Boris from Citi.

John Boris - Citi

Thanks for taking the question. My specific question for Lamberto. When we look at all of the changes, Lamberto that have gone on to the U.S. sales force model and in particular on the GP side of the equation. It seems although we are looking at materially flatter launch curves for new product opportunities since -- it may be partly because of more vigilant FDA and formula that seem to be so much difficult, you know unlike most European countries it certainly does seem like the U.S. model is still very attractive model from a pricing standpoint but, you know, is it just a new era that we are in on the commercial model side and how we should would be thinking about product’s launch going forward?

Lamberto Andreotti

Yeah, this is a very good question, and obviously it is a question that we have been asking ourselves on a regular basis. I believe that there is good space for good products for unmet medical need and difference between what we had in the past and what we have now, is probably the speed of the uptake is not where the products can stand and I think that your question is also related to Onglyza and probably it's good that if I make a comment about Onglyza, which is a good example of what we are talking about.

I think we should not spend and nobody should spend too much time on the sales of Onglyza in 2009. This was what we could see as the beginning of a long journey that we believe will be successful in a way that is in the line what I was describing before. Slower uptake than what we would have had for similar products in 10 years ago.

There is a still big significant unmet medical need in diabetes. 40% of type 2 diabetes patients are not controlling current therapy and Onglyza has a good efficacy and a good tolerability profile. So, Onglyza and the other DPP-IV can help these patients. You see, despite the overall non-insulin anti-diabetic market remained flat in Q4 versus Q3 and despite this DPP-IV markets grew only modestly at [80%] we believe that the class, DPP-IV class will grow and become a large and meaningful class. So, we had a great product in that class and we are confident that we will deliver results with that product.

The remainder, the benefits of the clinical trial program is demonstrative that the benefits of Onglyza are there and in achieving comprehensive glycemic control. So we believe that Onglyza in particular, not to give our DPP-IV in general or Onglyza in particular will play important role as effect add-on to either metformin or SU. Now, we have a number of key indicators that are encouraging, the brand awareness which is now over 65% and when we launched in the U.S., it was zero.

And we have made a strategic decision at that moment or until that moment not to pre-market during the regulatory review. So, we are moving, we move from zero band to 65% now. The number of physicians that are trying Onglyza continues to increase week over week and those physicians who have prescribed Onglyza generally continue to prescribe. And one of the key focus area is that we have to increase a number of physicians to try because when they try they continue.

And we have made good progress in active reimbursement with over 75% of target and over 40% now in tier 2. So, in a world that is different than the world we knew 20 years ago, we are challenging our clients at all times. We are always identifying new opportunities and we do it in a very flexible and aggressive way with AstraZeneca. New ways to optimize the marketing mix and our goal is to drive awareness, try it, and repeat it.

So, going back to your, yeah the DP market in the US is not the same market than we knew, but we believe that when you have a good product like this one, in a good class where the bigger unmet medical needs is a good space for growth and AstraZeneca is totally convincing.

Elliott Sigal

Thank you John, the next question to him please.


We will go to the line of Tim Anderson form Sanford C. Bernstein.

Tim Anderson - Sanford C. Bernstein

Thank you, a couple of questions for you, with John Marqued's surprise departure, I am wondering if Bristol still plans on sticking with the exact same String of Pearls approach or could we see Bristol change its approach to -- in any way. And on -- if ipilimumab, what I think about how big that drug might be, I mean the initial indication, I kind of come up with may be a mid-sized product I am wondering if you can help us think through, how big you guys think that the drug might be in the melanoma setting. And then quick question on Belatacept what is your confidence level as you progress through regulatory review.

Jim Cornelius

So Tim this is Jim, you know Elliott and I have started this String of Pearls long before I met John Marqued, we will miss him, but we have a guy with a different accent and 25 years of service. So, he generally the rest of our team has committed to the String of Pearls as it were three years ago. You know, we are trying to reconcile with either we need a dozen Pearls or 10, depends on how you count them, more importantly the big ones like Medarex have really helped the overall strategy, so that set of strategic activities continues. Elliot or --Lamberto your comments on the String of Pearls or..

Lamberto Andreotti

My comment on String of Pearls, I can only repeat what you just said, I mean Jean-Marc was one of the team players behind String of Pearls, but that is it and we continue to be very committed and, you know take Medarex that happened because of the interest and the passion a lot of us and I think that you will be and we will be -- what is coming out and what will come out of Medarex. Inspite of you, I think the second question was on ipilimumab.

I think ipilimumab is one of these important products that a manager like me would have been working oncology for many years has been dreaming of handling in the marketplace. It is a great product for a very severe disease, we have almost nothing in terms of present standard of care very, very inadequate standard of care. And if pre-clinical results are going to be there, we believe there is a big space of that product in melanoma in different stages of melanoma. And then there are the data that are coming out in lung and in other in prostate and in other solid tumors and so, we are all committed to ipilimumab and you will really have more about ipilimumab when we meet in March and later on.

Jim Cornelius

So Tim, you asked about Belatacept’s regulatory review, we are heavily engaged with the FDA at the same time we are preparing our submission in Europe. We are very active in the regulatory review and preparing for the advisory committee which has been announced to occur on March 1st. We expect the advisory committees for all new molecular entities and the conversation will be on benefit risk as it commonly is. This is a novel immuno-suppressant and we and the FDA both want to make sure that we have characterized both the benefits and the risk adequately and that we are approaching the market in the most appropriate way.

So we will be discussing the benefits of what is needed. In this area, our goal is to replace calcineurin inhibitors where possible in order to achieve long term improved renal function graft and patient survival. That’s the major medical need in this area and the CNS’s the standard of care are nephrotoxic and elevate risk factors in cardio vascular disease. We presented our one year data last year in May at the American Transplant Congress. You will no doubt see our two year data at the advisory committee and that will also presented in May at the American Transplant Congress again.

We are presenting and advocating as we do with many of our medicines a risk management plan and enhanced pharmaco vigilance to appropriately and responsibly follow in the specialty area. Any risks, the risks of PTLD that we have talked about in the CNS infections will be discussed and their balance against the benefits. In this particular area launching a product in a specialty group, I think lends itself to the new tool of the FDA has and the sponsor can avail themselves of, to ensure appropriate use and the maximum benefit and that is what we intend to layout launch first.

Lamberto Andreotti

Thanks Tim. Next question to him please.


We now go to Jami Rubin from Goldman Sachs.

Jami Rubin - Goldman Sachs

Thank You, Elliott a couple of questions with respect to SPRYCEL, can you can help us to frame the opportunity in first line TMO specifically, just curious to know your thinking on the Gleevec, Gleevec adoption especially patients who are well controlled. And then secondly, wouldn’t [Signa] be the right competitor at this point instead of Gleevec just given the superior results over Gleevec.

So if you could help us to think about that. And then, my other question relate to ONGLYZA. Just curious to know your thoughts on how you think that DPP forecast will grow in the space of a once weekly DLP-1. I think, we are all surprised that how slow this launch has been, just given, how quickly to [moving around] and the size and opportunity for the DPP-IV market. May be, you could talk a bit about how, what you are telling doctors in terms of differentiation from Januvia? Thanks.

Elliott Sigal

Jami, first of all, with the largest price sale, we are excited to be going through our first line data, and first line CMO against Gleevec. Our competitor’s data was just announced at the end of the year. So, I would anticipate if this were positive data that we would go into review around the same time. These trials are somewhat different. I think, since our competitor is suggesting that there can be improvements, on the standard Sprycel by running the study that they ran. This is an important opportunity for patients and for us to present options as Gleevec drawbacks perhaps become more in focus. And I don’t feel that it is purely an opportunity of the new diagnosed patients. It is the opportunity to redefine what is developing resistance or inadequate treatment till to Gleevec and that is the reason we included in our studies, both complete side of genetic response head to head with Gleevec for which we have so much experience and therefore, is the only approved treatment and therefore the only approved and reasonable competitor right now and why we also took advantage of looking the major molecular response and when we see the data and we will present the data at ASCO this year, I think people will get excited about the evolving treatment in this area and there may be one or two new opportunities against Gleevec.

Lamberto Andreotti

Yeah, I am Lamberto, Jami and I am continuing on Sprycel. The way we see it is that obviously Gleevec is a well established product, but still there is more than it can be delivered in terms of efficacy also there and therefore in the last season, sales of Signa and we, with Sprycel believe that there is a space not only to compete with Gleevec but to displace it.

What we don’t have that comparison with Signa what we see is that in the indications that we both have now, we especially in the US we are doing much better than Signa in which the ratio of us to them is 2 to 1 and, my understanding is this Signa is more and more a third line product, after failure of Gleevec and failure of Sprycel. Now first line data that they have announced need to be analyzed. We will have our own first line data. We would know that direct comparison but I think that we will be able to position Sprycel for what it is, a very effective drug, we have an important role and any easy use of administration once a day and without any foods. So, there is a good space for Sprycel also in first line if the data we will see and we will make public and confirm what we expect. As far as the Onglyza positioning, we are not against Januvia. We were not trying to get patients out of Januvia. Our goal is to establish a good product with a great profile in both efficacy and safety.

I repeat both safety and efficacy in the marketplace and, you know we can say Januvia has done a good job so far in establishing in the DPP-IV class, but we can do a good job too in establishing that class more. When we speak to doctors, we don’t speak about Januvia, we speak about glycemia control, safety and, I think that we think we talk to them about their understanding that metformin and I feel, I am not always with the possible single solution to the progress of diabetes.

And I concur with that Jami, I will say that one of the big drivers in the long term value will be the growth of the DPP-IV category in general and we will have to see how that evolves. We remained very confident in that growth, with regard to clinical data flow on Onglyza this year, as you know late in ‘09, we did submit our fixed dose combination for the first once-a-day DPP-IV metformin combination and we need to hear from the FDA with regard to the producer date and acceptance to the filing. But this is an opportunity if it were to be a 10-month review for a launch of this first in kind product by the end of the year. We are also planning an European submission for the fixed dose combination and we have several studies being put out this year, we will have a publication of head-to-head data with Januvia that was announced last year. Hopefully sometime this year and at the ADA we will have more safety data than renal impaired patients and importantly, head-to-head against sulfonylurea on top of metformin. So it's going to be another exciting year I think, for Onglyza.

Elliott Sigal

Thanks Jami. The next question please to him.

We will now have Stephen Scala from Cowen.

Stephen Scala - Cowen

Oh, thank you, may I ask Lamberto, how do you view IXEMPRA as a potential competitor to Orencia, now that we have a IXEMPRA's label, sourcing profile and its price? And secondly, two question on filings for Dr. Sigal. First, your outlook for DBT filing for Apixaban in the U.S., is that likely or unlikely? And also, the latest status of discussions with regulators on seven. Thank you.

Lamberto Andreotti

Let us take that every time the competitor come into the market, we get ready for it. But obviously, we can understand the size and importance of that competitor only when we see the label that they get. And, as you know, the bill product was approved on January. In January, only for use only after T&F failure and include their ranks and from what I understand they also have a black box we have on the risk of serious infections, so, there is competition obviously coming from IXEMPRA in our second and later line businesses, where we have market share, but we have a profile. We have got ORENCIA, a profile of safety, and long term sustained efficacy of 7 years whereas, the data published at [inaudible] last spring, that positioned well ORENCIA. So, serious competitor, but having seen there label and having seen their positioning, I think that we are very confident that ORENCIA can continue to do well in the market for all rheumatoid arthritis.

Elliott Sigal

Yeah, Mr. Scala, this is Elliott, with regard to the OASIS 7 trial of the cult to enter the high dose trial for Plavix. We are still in discussions with the FDA and with our partner. I don’t have any particular news on that with regard to Apixaban and DVT, we will be submitting in Europe, our applications sometime in the first half. We are planning discussions with the US with regard to the data that we have on advance 1, 2, and 3 in preventing clots and complications with DVT. We may have more of the updates to on March 4 on the overall plans for Apixaban and other programs. Great. Thanks, Steve. Can we get a next question please.


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

Seamus Fernandez - Leerink Swann

Thanks very much, just a few questions, primarily questions for Elliott and then some for Lamberto. On Apixaban, just as it relates the trial design, Elliott can you give us your views on, if you see any design advantages over Rivaroxaban, there were clear differences in the choices made between the risks of the patients in your study versus the choice made with the potential competitor, and you chose the broad range of tabs for core patients. And I am just wondering, what you think that might mean relative to leading versus the accumulation of events and if there is any new information along those lines that could help inform our views on that specifically.

And then separately, we did get the specific revenue numbers and have seen the prescription uptake, your comments on Onglyza, if we were to extend them to your competitor Efient would suggest, Lamberto that perhaps we should envision better uptake for Efient in 2010. Is that something that you envision in your guidance and if not, or in your thoughts for the products and if not what feedback are you getting from interventionist with regard to that competitive landscape and then what feedback are you getting from manage care? Thanks.

Elliott Sigal

Yes, first of all this is Elliot on Apixaban, your reference to the atrial fibrillation studies and, I remind you that we are doing two of those, and one is unique for our program [averose] which is a 5,600 patient study for patients that are unable to take warfarin and who are currently treated with aspirin. That will be a superiority study and we may have the results late this year or early next year on that study about 50% of patients with atrial fibrillation are not able or not prescribed for other reasons any anticoagulant. And 20% of these drugs come from this patient population so we thought this was an important area of unmet medical need. Now you reference our choice of patient selection, in Aristotle which is a broader study for head-to-head with warfrin.

It will be about 18,000 thousand patients, and yes we did choose compared to Rivaroxaban study design, a broader patient population because we felt our label would be best served and the patients would be best served if we had experience in a whole range of risk type of patients. So, that was our major thinking. Our -- of course is different to go after a benefit-risk profile that we think will answer the market needs for the most number of patients. That is basically all I can say at this point till we see the data from the different studies unfold over the next year or so.

Lamberto Andreotti

And as far as Plavix and Efient are concerned, I would not change my opinion on that again and I think that the story of Efient and Onglyza are totally different stories, totally different marketplaces and above all totally different profiles. As far as PLAVIX is concerned, we continue to be pleased with growth in all its indications. There is the additional, important information that we got from the current study that indicates that patients that undergo PCI have reduced vein thrombosis and reduced major CB events of basis and another piece of information that is most important in the marketplace is a small part of our total marketplace where Efient is trying to compete with us, so totally different stories. We are very upbeat about Plavix and we continue to work diligently behind it.

Elliott Sigal

Thanks Jamis. Tony, I think there is time for only two or three more questions.

Our next question comes from Tony Butler from Barclays Capital

Tony Butler - Barclays Capital

Thanks very much. I am actually following up on a question that I am not clear was addressed to Jami Rubin asked and that was around the DPP force versus the GLP1s and if he did address this -- pleased to give me but how do you think about a weekly GLP1 and I’ve realized this is not in market maybe today. How do you think about a weekly GLP1 versus an oral DPP4, given the HPA1C reductions favor the injectable and secondly what do you think about that how would you think about re-marketing or pushing on Onglyza even further. Thanks very much.

Elliott Sigal

Well, we will have to see how -- what becomes to the market, what the weekly goes in safety profile looks like against the efficacy. I do think there is definite place for the GLP1s although they are injectable for because of the weight loss that you see and the degree of A1C lowing but I think the both approaches to the DPP4 is very critical and the combinations that are going to evolve with saxagliptin, Onglyza, because of its low mass and its high potency. I think, it still offers significant opportunity, but we going to have to see how this unfolds and we are following that issue note.

Lamberto Andreotti

Yeah, and again obviously the GLP1 will have a role but our focus is more on the overall products and possibility of combining adding on our products saxagliptin, especially to metformin. There is data that we come out in June, I believe Elliott, there is still a few on topo metformin and if that data is interesting, there is more that we can do, behind ONGLYZA in a line with what I was mentioning before, I explained before.


We will go to the next question from the line of Catherine Arnold, from Credit Suisse.

Catherine Arnold - Credit Suisse

Thanks very much, I have three quick product questions. I just wanted to close the discussion with a number in terms of the share. You are guys are experiencing a TNF failures associated with treatment. I give in your label to get us update us on that and then Elliott you had had some of the differences in the Gleevec personal trial versus Signa versus Sprycel, but I wanted, is there you could-- do you get in terms of those escalation protocol for Gleevec in your study versus perhaps what showed and than, I will take this to you now, and I will come back with the third thing.

Elliott Sigal

Well let me start with the Sprycel trial we allowed, dose escalation of either agent according to the physician and the clinical need, we now believe, you are referring into the fact that the escalation was not there in that Signa head to head. They did do two doses of Signa, we did one dose of Sprycel. To me the most important aspect of the trial is the difference in the primary end points and the Signa trial used major molecular response and we use complete side of cytogenetic response. We had a secondary endpoint for major molecular had a genetic response that is secondary end point for major molecular and they had a secondary end point for complete cytogenetic, so there may be some discussion on the different interpretations across studies and regulatory impact to that. But I will have to see when we see our large data and we will go to hopefully be presenting this at ASCO in June.

Catherine, I am not sure I have the exact data so John will correct me later, if what I am going to say is not correct, but I believe that in the new patient, the patients on therapy, new to brands, overall we have aspiration renegade 51% and we have the 49% and our position is obviously much stronger in second and third line and I apologize I don’t have the data in front of me. But I know that in first line, we have increased our share and we are now at 25% I believe, versus 75% of Remicade in patient in play. So, good progression in second and third line and some progress, good progress also in first line and you remember our objective is to be the I.V. product of choice in R.A.

So, we are -- so if I could just add, Catherine we are pleased over the market response and our data that we updated the label for in terms of first line and the safety profile and durability that is getting reported back and I think all of these is impacting the uptake of ORENCIA the big leadership ORENCIA that we could deliver although we are still awaiting some of the efficacy data is subcutaneous ORENCIA and we will have potential U.S. submission for the subQ version this year in Europe we are working hard to expand our label to be more like the U.S. label.

Elliott Sigal

Thanks, we must have missed the last part of your question. May be you can give me a call we can follow on that but to end up we are going to the last question please.


We will go to the last question from the line of Chris Schott from JP Morgan.

Chris Schott - JPMorgan

Great thanks I start your questions. First one to Plavix in Europe just update whatever share you are seeing now for the generics in key market say I guess particularly France, Germany, and the U.K. and then you are anticipating significant step downs in quarterly equity income relatively to 4Q levels as we move through 2010 and from just coming back to the String of Pearls, I know you have talked in the past about doing a lot of transactions that helped to build your pipeline by 2012.

I guess the big growing cash balance in the company and as we are inching closer to 2012 does that inherently imply a shift to more later stage in terms of larger deals, like we saw with Medarex last year. Thanks.

Charlie Bancroft

Okay thank you this is Charlie I was getting lonely. I didn’t think I was going to get a question. So let me handle the Plavix in EU. We have seen as I mentioned in my comment significant share [version] in the U.K. in pricing the 80 to 85% range and in France, which is our biggest market overseas we have seen share and price decline from 55% to 65% range and where we co promote with Sanofi in what we call territory 'A' we will record our share of the profits and net income in affiliates in our P/L and that numbers you saw on the fourth quarter has gone down 27% matter of fact and as the impact we continue to say on the business for continuing road that line quarter over quarter. And about how to use the $10 billion in our bank and the future of our Single dose ’s program, we will continue to use our money in a very focused and disciplined way, our priority in using our cash is for sure, in business development and we are focused on two types of deals.

Deals that can build our late stage pipeline in 2011, 2012 and deals that can be accreted in 2012, 2013 to go after the loss of [feasibility] of Plavix and Avapro. Obviously, we also consider other options for the use of cash flows, our focus now is on business development and when we look at companies and products as part of our single dose program, we think what we have done [inaudible] Medarex.

We are looking for similar opportunity. We are studying and assessing a large of number opportunities. We look at small molecules and we look at biologic products in areas that are aligned with our key strategic areas. So, the idea is continuing to be small and mid-price acquisitions that either fit or complement our current portfolio or products that we have in the market or in development.

Elliott Sigal

So, thanks everybody for your questions and attention on the call. I will turn it over to Jim for some closing comments.

James Cornelius

Yeah, I will make these very brief [Paul]. In the way I started here in 2010 we were a 100% Bio-pharma started here in 2010 we are a 100% Bio-Pharma. And what that means very focused, very lean. Our portfolio products were not given up on Plavix it will be a substantial contributor to us until that patent expires in the US in the future, but we do have a very and more balanced portfolio going forward than we had 3 years ago.

No more comments on financial flexibility we are committed to cash dividends, aggressive look for the Pearls, and then let me close with just a short story. My colleagues around the table and myself participated with the top 200 global executives right here in New Jersey last week. And I can guarantee you, this is an impressive group, their understanding commitment to the company is outstanding and we intend to meet all the commitments that we make going forward. Thank you for your attention.


And this concludes today's conference call. Thank you for your participation.

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