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Bristol-Myers Squibb Company (NYSE:BMY)

Q4 2013 Earnings Conference Call

January 24, 2014 10:30 AM ET

Executives

Lamberto Andreotti - CEO

Charles Bancroft - EVP and CFO

Giovanni Caforio, M.D. - EVP and Chief Commercial Officer

Francis Cuss - EVP and Chief Scientific Officer

John Elicker - SVP, Public Affairs and IR

Analysts

Tony Butler - Barclays Capital

Tim Anderson – Sanford C. Bernstein & Co.

David Risinger - Morgan Stanley

Jami Rubin - Goldman Sachs

Seamus Fernandez - Leerink Swann

Mark Schoenebaum - ISI Group

Andrew Baum - Citi

Marc Goodman - UBS

Christopher Schott - JPMorgan

Vamil Divan - Credit Suisse

Gregg Gilbert - Bank of America Merrill Lynch

Alex Arfaei - BMO Capital Markets

Steve Scala - Cowen & Company

Operator

Good day and welcome to today’s Fourth Quarter 2013 Earnings Call. Today's call is being recorded. At this time, I would like to turn the call over to John Elicker. Please go ahead, sir.

John Elicker

Thank you, Shannon, and good morning, everybody. Thanks for joining us to discuss our Q4 results. With me this morning are Lamberto Andreotti, our Chief Executive Officer; Charlie Bancroft, our Chief Financial Officer; Francis Cuss, our Chief Scientific Officer and Giovanni Caforio, our Chief Commercial Officer. Lamberto, Charlie and Francis will have prepared remarks and Giovanni is here as well to take any questions you might have.

Before I turn it over to Lamberto, let me cover of the legal requirements. During the call, we'll make comments or statements about the Company's future plans and prospects that constitute forward-looking statements. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Company's SEC filings.

These forward-looking statements represent our estimates as of today and should not be relied upon as representing our estimates as of any subsequent date. We specifically disclaim any obligation to update forward-looking statements, even if our estimates change.

We will also discuss non-GAAP financial measures adjusted to exclude certain specified items. Reconciliations of these non-GAAP financial measures to most comparable GAAP measures are available on our website. Lamberto?

Lamberto Andreotti

Thank you, John. Good morning everyone. Well our fourth quarter completing a year, a good year it was very significant with respect to the evolution of Bristol-Myers Squibb into a specialty care Biopharma Company. We transitioned away from Plavix and Avapro. We continue to grow our key brands. We shifted our strategic focus in early R&D, while advancing nivolumab, the SD portfolio and the rest of our late stage pipelines. We announced our geographical balance and we initiated a sale of our diabetes business.

Taking together these developments and changes, not only the set the stage for 2014, importantly they also represent the foundation upon which we continue to build our future as a specialty care leader. I know well that everybody’s attention is understandably on our immuno-oncology assets and programs. And so Charlie, Francis and I will talk about them. And together with Giovanni we will answer your questions.

But I would like first to take a few minutes to speak about the rest, starting with some of our foundational products all of which are growing in importance and growing in terms of global reach.

Sprycel and Orencia both had a spectacular year. Last quarter they grew by 30% and 22% respectively despite very competitive markets. For the full year, Sprycel sales increased 26% and those of Orencia increased 23%. And for Sprycel, we presented important Phase III data in December at the American Society of Hematology.

Also Baraclude added strong performance with 10% growth for the year and 14% during the fourth quarter. As we move into or we’re moved into 2014, we will continue to invest behind these three assets; Sprycel, Orencia and Baraclude.

We also remain firmly committed -- very committed to Eliquis and together with Sprycel, have decided to increase our resources behind it. We’ve been seeing encouraging trends for Eliquis in the U.S and internationally with strong growth in the last quarter and we’re confident in its potential.

And we’re also hoping to expand the label of Eliquis. In Europe DVT and PE prevention has already been approved and we are expecting approval for VTE treatment as well. In the U.S., we’re expecting approval for both indications this year.

And finally to comment -- to complete my comments on key market brand, our immuno-oncology product, Yervoy had a strong year with 36% growth. Based on the strong performance as well as the long-term survival data we presented last year, we increasingly believe in the transformation of potential of immunotherapy and Yervoy as a cornerstone of that approach.

On the regulatory and clinical development front, I’ve already mentioned the development for Eliquis in the hepatitis C area in Japan. We filed late last year our dual regimen containing daclatasvir in our protease inhibitor asunaprevir. I hope we will soon get trade names here. It’s easier to pronounce its generic names, which we give up the opportunity to bring the first oral hepatitis C regimen to market in Japan.

We also recently announced the filing of daclatasvir in U.S and we expect to file in the U.S by mid year. Francis will talk soon about our good achievements and exciting plans in immuno-oncology where we want to achieve and maintain a leadership position.

Taken as a whole, I’m optimistic about our business and the opportunities we have. We will manage the diabetes transition and all the other many changes we’re implementing while executing against a number of operational priorities, namely building on the launch of Eliquis and on the double-digit growth of Yervoy, Orencia, Sprycel and Baraclude.

Continuing the good performance of our other in-line brands such as Reyataz and Sustiva, investing to deliver our late stage immuno-oncology and SD pipeline and launching new products, and continuing to date a disciplined approach to capital allocation.

In so doing, we will continue to pursue the balanced approach that is at the center of Bristol-Myers Squibb success, a balanced approach of delivering today was setting the stage for tomorrow.

So with that, let me turn it over to Francis to talk about immuno-oncology.

Francis Cuss

Thank you, Lamberto, and good morning everyone. Today I will provide an update on immuno-oncology. During the fourth quarter, we presented some early, but encouraging data in lung cancer at the World Conference on lung cancer. Long-term follow-up results from the lung cancer cohort of expanded Phase I dose ranging monotherapy study that’s 003 showed sustain activity in heavily pre-treated patients with non-small-cell lung cancer with one and two-year survival rates of 42% and 24% respectively, across dose cohorts.

These early data support our approach and belief that durability of response and long-term survival are important measures for patients and a key in characterizing the benefits of immuno-oncology agents. We expect to present updated data for lung cancer and other tumor types at ASCO this year.

Let me broadly review our strategy in lung cancer. Our approach in lung cancer is to include multiple lines of therapy, different histologies, the use of biomarkers and potentially therapy with monotherapy and combinations, all of which together resulted a very comprehensive development program. We expect to have data in the first part of 2014 from our third line Phase II study in squamous non-small-cell lung cancer for which there is no defined standard of care.

As we’ve said before, if the results of the study demonstrate a favorable benefit risk profile, we plan to discuss the data with the FDA and other health authorities. We expect to have data later in 2014 from two ongoing second line Phase III trials in non-small-cell lung cancer, one in squamous and one in non-squamous.

And finally, as many of you seen, we recently posted on clinicaltrials.gov a first line Phase III trial with Nivolumab monotherapy in lung cancer that will start soon. With regard to the Phase I combination trial of nivolumab and ipilimumab, its worth noting that this is a Phase I trial that’s still ongoing in multiple cohorts of patients and with several dose combinations being evaluated to determine how we could move forward with a combination regimen for lung cancer.

Based on our assessment of the preliminary data that we now have in-house, we will continue to cohort patients with lung cancer treated with ipilimumab and Nivolumab combinations before beginning a registrational study. Our next steps include waiting more mature data from additional cohorts in the study and potentially exploring different doses and regimens and specific patient populations.

In summary, in lung cancer, we continue to progress a very comprehensive program that will generate important data from three potentially registrational trials during 2014. In addition, we continue to explore combinations as well as initiating the first-line Phase III monotherapy study that I mentioned earlier.

Our melanoma program is ongoing with three potentially registrational trials currently underway, one in Yervoy failures and the other two in previously untreated patients as monotherapy and in combination with Yervoy with a focus on demonstrating value through survival benefits.

In renal cell cancer, our Phase III trial is focused on metastatic disease comparing Nivolumab to everolimus in patients who have received prior therapy. Earlier trials are exploring the potential role of biomarkers in this tumor type as well as ipilimumab combinations in first-line renal cell cancer. We have some initial data through Phase I study of Nivolumab and Yervoy. We're encouraged by the results which we plan to present at ASCO, and we believe that we are close to determining a dose and schedule to use in registrational trials.

In addition to Nivolumab programs I've already highlighted, we continue to explore to use an additional solid tumor types and in hematological malignancies. As you may have seen in ClinicalTrials.gov, we're initiating large Phase II trials from glioblastoma and in both follicular and diffuse large B-cell lymphoma.

We also have a broad portfolio of exploratory immunotherapeutic agents with varying immune mechanisms of action that allow us to explore multiple combinations, including our anti-LAG3 antibody which entered the clinic in the last quarter.

So in closing, let me reiterate our excitement about the possibilities in immuno-oncology. I believe that we are well positioned with a broad and comprehensive program. I'm looking forward to seeing more data as the year progresses. We'll certainly know a lot more about Nivolumab a year from now. At the same time, we'll continue to invest significantly in the multiple opportunities we see across our broader immuno-oncology portfolio.

Now, let me turn it over to Charlie.

Charles Bancroft

Thank you, Francis. Good morning, everyone. Overall, we had a solid fourth quarter which gives us the strong foundation for our future as a specialty care biopharma company. Let me provide a few highlights.

Yervoy sales grew 23% to 260 million. In the U.S., quarterly demand reached its highest level since launch and we are seeing encouraging and weekly trends as well. Despite the multiple clinical trials enrolling melanoma patients, U.S. sales rose 14% from the previous quarter to 148 million.

We are seeing particularly strong growth in the community setting which represents about 60% of Yervoy sales in the U.S., as a growing number of physicians appreciate Yervoy's long-term survival benefit.

In Europe, we are seeing strong uptake particularly in France, Italy and Germany. We expect a November EU approval for the first-line use in advanced melanoma to allow a broader set of patients to benefit from this innovative medicine.

Eliquis sales were 71 million. We continue to make significant progress among cardiologists. Overall, in the U.S. access [ph] is in a much better position as we entered 2014 for both commercial and Medicare Part D plans.

Eliquis also performed well outside the U.S. with international sales reaching 23 million in the quarter. Following several key reimbursement decisions in Q4, Eliquis is now available and reimbursed in every major market in Europe.

Our increased medical education activities and DTC advertising which will continue in 2014 are helping us educate physicians about Eliquis' differentiated profile. We will be making additional investments this year as we prepare for potential expanded indications in VTE prevention and treatment.

Orencia sales grew 22% to 397 million. Orencia continues to perform well in the U.S. and Europe even as the RA market becomes increasingly crowded. Growth in the SubQ formulation has been strong for several quarters and we are also investing appropriately to continue driving the IV business.

Orencia SubQ is now the third most lively prescribed SubQ agent in the U.S. with sales up 51% versus the prior year's quarter. Sales growth to Europe was also strong as we continue to build on the SubQ launch.

Baraclude sales grew 14% to 412 million. Sales were strong across the globe. Despite growing competition, Baraclude remains the standard of care in naive patients in chronic hepatitis D and is particularly important in Asia, due to the epidemiology. Our success with Baraclude demonstrates our ability to leverage our expertise in virology to develop and commercialize innovative medicines at a global level, a capability that is important in establishing our hepatitis C portfolio.

Sprycel sales rose 30% to 365 million. We continue to see sales growth being driven by the same adoption in first-line setting as well as by our leading share in the second-line segment.

In addition to the solid sales performance of our key brands, revenues benefited from several one-time items, including a 38 million adjustment to our managed Medicaid approval, mostly for Plavix as well as a 30 million year-end true-up of our share of (indiscernible).

To wrap up sales, you are all aware that we expect this will be the last time we report a full quarter of sales for the diabetes franchise, due to the expected closing of the diabetes divestiture to AstraZeneca later this quarter. Moving forward we expect that substantially all royalties we receive will be included on the other income and expense line.

Now, let me highlight a few items from the rest of our non-GAAP P&L. Gross margin was 73.6% during the quarter which is down 280 basis points compared to the same period last year. This is mostly due to the change in our contracted share of Abilify revenues in the U.S. and to a lesser extent product mix.

Gross margin also benefited from some of the one-time items that impacted revenues as well. Marketing, selling and admin expenses were about 1.1 billion, down 7%, as our increased investments in Eliquis, the diabetes franchise and pre-launch assets in immuno-oncology and hep C were offset by steeper declines in the pharmacy, our share of expenses for Abilify and lower spending on more mature brands. Our non-GAAP tax rate was 17.9% during the quarter.

Moving to guidance, we are confirming our non-GAAP EPS guidance range of $1.65 to $1.80. Both our GAAP and non-GAAP guidance assume that the sale to the diabetes business to AstraZeneca closes during the first quarter.

We are not able to provide line item guidance at this time but expect to be able to do so once the diabetes transaction has closed. This will happen during our Q1 call in April. Qualitatively, as I've indicated previously, while total commercial costs in 2014 are expected to decrease compared to 2013 due to the diabetes transactions, we will be making significant incremental investments behind our key and future growth opportunities, including immuno-oncology, Eliquis and hep C.

Now, we'd be happy to address your questions.

John Elicker

Thanks, Charlie, Francis and Lamberto for the remarks. Shannon, I think we're ready to go to Q&A now. I'd just remind everybody that in addition to Lamberto, Francis and Charlie, Giovanni is here as well. Shannon?

Question-and-Answer Session

Operator

Thank you. (Operator Instructions). We'll go first to Tony Butler with Barclays.

Tony Butler - Barclays Capital

Thanks very much. I'll leave immuno-oncology to others and ask about elotuzumab, Francis, and would we anticipate that Phase III readout in relapsing patients in multiple myeloma to occur at ASCO? Second question is actually around, and I apologize for the second question [Technical Difficulty] margins, Charlie, and is there anything that you could say about that in the post diabetes world? Thank you.

Francis Cuss

There will be an update to that, I believe, on the Phase II study (indiscernible) on multiple myeloma at ASCO, but we’re expecting data on the Phase III study later of course.

Charles Bancroft

Yes, I think I understood your question Tony regarding gross margin moving forward. Gross margin is always dependent on product mix and you recall that the diabetes business was a relatively low gross margin business because we paid the share of margin through the cost of goods lined to AstraZeneca. So we therefore expect our 2014 gross margin rate to benefit going forward. But again depending upon the timing to close that may impact it, but I would imagine it's going to be in the neighborhood of slightly above 75%.

John Elicker

Thanks Tony for the questions. Can we go to the next question, Shannon?

Operator

We’ll move next to Tim Anderson with Sanford Bernstein.

Tim Anderson – Sanford C. Bernstein & Co.

Thank you very much. In the past you’ve kind of described PDL in expression of maybe not in relevant partly because the combination of Nivo with other agents might make that assay not clinically meaningful, and at the same time in October at World Lung your data showed no real difference based on biomarker expression. Yet here you are now starting CheckMate 026, I am trying to kind of square why you’re initiating this new trial. And then, can you tell you what percent of non-small cell patients are high expressers of PDL-1 using your cutoff criteria. If I look at the Merck and Roche data it suggests maybe it's 25% and then building on to that if PDL-1 expression ends up being a predictive biomarker wouldn’t it be reasonable to assume that this could end up limiting the number of patients that would be deemed eligible for therapy?

Francis Cuss

Thank you Tim. So, let me say that, first of all to say that us starting up the first line study non-small cell lung biomarker rich is very consistent with our overall very broad lung strategy that I just articulated. In addition, I think we’ve always said in terms of a biomarker strategy that we would look very carefully at all patients and we collect tumors from all patients and we do PDL-1 expression on that. And our goal is to better understand the impact of PDL-1 expression not just on the overall response rate, but on overall survival. And while I think that has been this directional data that shows the PDL-1 expression tends to be related to higher response rates. It's certainly by no means clear to all of us, all the time that we just don’t have the data about whether that will hold for all lines of therapy and all in different tumors. But I think in the case of this first line, it's very important for us in this study to enrich the patient population for this particular study. And as you're well aware we have second line studies ongoing where we were also collecting PDL-1 expression data and it's very important for us to try and offer opportunities for patients who aren’t just PDL-1 positive, so of course that will provide the data for that also. I am not going to comment on our particular percentages. Obviously different biomarker, even Histochemistry maybe slightly different between different companies; but again I want to reiterate that our long-term aim in our lung cancer program is to offer if the data supports it, the opportunity for all patients whether PDL-1 positive or negative to have the opportunity of immuno-oncology treatment whether it's smaller therapy or combination. Thank you.

John Elicker

Thanks Tim. Next question please, Shannon.

Operator

We’ll move next to David Risinger with Morgan Stanley.

David Risinger - Morgan Stanley

Thanks very much. So, I have a question on PDL-1 for Francis. I am just hoping to better understand the assessment process you’ll go through with CheckMate 012 and so I guess two specific questions on that. First can you talk about the addition of the lower dose Nivo plus Ipi one milligram plus one milligram cohort last fall, and whether you really need to see those results before you can start Nivo plus Ipi Phase III combo in lung at some point down the line. And then second, what data should we expect as ASCO from CheckMate 012, and also in other cancers beyond lung?

Francis Cuss

So David, let me say that we added the additional 1mg and 1mg cohort back in September to ensure that we would have the full compliment of safety and activity data across multiple doses. And as I said we will be assessing that dose together with the potential other regimens and patient populations before we determine how to proceed into registrational studies with the combination. Regarding the data at ASCO there will be data in CheckMate 012 which on this combination of the different cohorts depending on how it matures, and I’ll just remind you of course that this is an ongoing Phase I trial where we’re going to continue the cohorts to collect data. So we will be updated at ASCO and there will also be data at ASCO on the 003 study, the update on that. There will also an update on 004 which is the combination in melanoma as well as data on the renal cell carcinoma both our Phase II study and the data on the combination that I just talked about. So it will be a considerable amount of information at ASCO across many of our ongoing trials and some you’ll be hearing for the first time.

John Elicker

Thanks Dave. Can we go to the next question please?

Operator

We’ll move next to Jami Rubin with Goldman Sachs.

Jami Rubin - Goldman Sachs

Thank you. Francis is there any question in your mind as to whether or not you move combo lung into a Phase III trial or it just you’re still assessing what you have to multiple cohorts in that trial and at some point you’ll make the decision. But I am just curious to know is there a risk that you don’t move forward at all with that. And then secondly on the hematological indications, I noticed you just started two Phase II studies. Can you give us some sense as to your confidence level on that new indication I suppose that’s based on the Phase I trials that you started last year, and when do you think we will see data in hematological indications; will it be some time this year? And maybe if you could comment to on, the market has been very focused on renal lung and melanoma. What other tumor types are you guys most excited about there?

Francis Cuss

I’ll see if I make sure I get to all those. So, just to be clear; I don’t think the data we are indeed assessing the data before we can decide how to proceed into registrational studies. I don’t think the data to date changes our belief of the potential for combination somewhere in a broad lung program. I don’t think it has a data to be sure exactly where that is at the moment, but that’s evolving. As far as the hematological studies, the data that we will presenting data at ASH later in the year on those exploratory hematological studies and I think there’s the …

Lamberto Andreotti

The other tumors.

Francis Cuss

Yes. So beyond those other tumors, as you know we have a lot of exploratory studies at the moment. I think I would say that we are very encouraged by the hematological less the fact that we have studies and larger Phase II studies reflects I think our interest in that area. And of course the unmet need around glioblastoma multiforme again is reflected going forward with the study both looking at, seeing if mono therapy or combination there. Thank you.

John Elicker

Thanks Jami. Can we go to the next question please, Shannon?

Operator

We’ll move next to Seamus Fernandez with Leerink.

Seamus Fernandez - Leerink Swann

Thanks for the questions. So, again I’m not going to continue on immuno-oncology but it is pretty important. As we sort of think about this, the kidney cancer opportunity particularly in combination, the bar in the front line setting seems to be relatively high at least in terms of response rate and even the durational effect. So, given the fact that your communication on the combination in kidney cancer appears to be a little bit better formed than your conclusion in lung cancer, can you just update us and maybe give us a little bit of your thoughts on the kind of benefit that you would hope to see from a frontline kidney cancer combination given the current standard of care?

Francis Cuss

Let me say that you'll have the opportunity to see the data when we share it in ASCO. Clearly, the bar is high for first-line treatment but we are encouraged by the data that we've seen and in due course will be initiating a trial in a potentially registrational trial in renal cell. And obviously we're going to be very thoughtful about which line of therapy that will be applicable to. So I'd suggest you should wait and see what we saw at ASCO, because I think that will be very informative.

John Elicker

Can we go to the next question please, Shannon?

Operator

We'll move next to Mark Schoenebaum at ISI Group.

Mark Schoenebaum - ISI Group

Hi, guys. Thanks a lot for taking the question and thanks for tolerating all of us pounding on immunotherapy. I think I might do the same. I appreciate it. Are you able to tell us in any qualitative sense, Francis, whether or not you saw an enhanced efficacy in one or more of the Yervoy plus NEVO arms in the '012 trial, just any kind of qualitative sense? I interpret your continuing those arms as an optimism – as a remark reflecting some optimism, but I just wondering if you could just confirm that there was to some degree enhanced efficacy and obviously we'll wait to get the details. And then on the World Lung data – this will be the last question for me, on the World Lung data, I know it was a while ago now but I'm not sure I've ever got your perspective on this but the one-year 42% survival, but especially the two-year 24% overall survival, what is your view on that 24% number in particular versus what one would expect typically? Thanks a lot. I really…

Lamberto Andreotti

Mark, while Francis gets ready to answer your question a little bit on that, let me tell you that this morning, John and others have asked me to keep quiet during this call and be very understanding, the importance of the immuno-oncology in the number of questions which will be asked today. So, it is important – we understand the value of immuno-oncology and the value of immuno-oncology to Bristol-Myers Squibb. So we are very open to answer questions, but obviously we cannot always go into the many, many details that you would be interested in knowing but that it is probably premature for us to disclose. And again, we will continue to make available as many comments as possible but we will decide to stay away from commenting on bits and pieces of information. We remain very, very proud of the breadth of our program and the importance of what we are doing here. Now, Francis, back to you.

Francis Cuss

So, I won't comment on the – anywhere on the (indiscernible) combination in CheckMate '12, but to your point about the World Lung data, I think because of the time and I'll say it again we were encouraged about that survival date, the landmark survival data of two years particularly because it was across all doses. I missed the end of your question but I think what you were asking was how that might relate to other studies we have ongoing and I think it's sad to say that it is very difficult to extrapolate simply because the patient populations are quite different. So let me stop there.

Giovanni Caforio

This is Giovanni. The only thing I would add is clearly lung if you compare it a little bit with melanoma is a much larger population of patient, very diverse population of patients, young medical need is very high and you know all of the data and combination approaches that have sales over the last many years or so, we see that as a very significant opportunity and given the size and complexity of the disease, there is a significant commercial opportunity when looking differentially at different segments in line with not only first-line but also later lines of therapy, different histologies in different patient groups that are all very meaningful commercial opportunities even when you look independently.

John Elicker

Thanks, Mark. Can we go to the next question please?

Operator

We'll move next to Andrew Baum with Citi.

Andrew Baum - Citi

Good morning. A couple of questions. To what extent do you see emergent in the diagnostic enable you to select out a group of patients for whom the combination makes sense both from a safety point of view as well from an efficacy point of view? Second question is perhaps you could give us some timelines on when you think you may be able to initiate a Phase III trial for the combination? And then finally, with regard to the choice of a PDL1 population for your Phase III, to what extent does PDL1 expression increase after subsequent lines of therapy, i.e. you need to enrich in the frontline because treatment by patients may have lower levels of PDL1 expression compared to patients that have got chemo, radiotherapy, is there any evidence for that in lung?

Francis Cuss

So to just go back to your first question is about the – how we selected the combination based on the diagnostic, I think as I mentioned we are collecting information in both PDL1 positive and PDL1 negative patients, and of course that's part of the assessment at least in these preliminary studies to try and understand where the safety and efficacy goes as far as that's concerned. I'm not going to talk about the timelines of the potential progression in the combination of the lung simply because, as I said, the trial is still ongoing. We're still assessing the data and of course it will depend on that data as to what we do next. I think it's a good question about what does line of therapy do to the PDL1 expression and certainly we are collecting that data to try and understand that better. I don't think we have that information laid out at the moment, but I do think it will be important to see. And of course we do have the opportunity because we are looking very broadly, first of all, across lung but actually against many other tumors as well to try and begin to understand some of the kinetics of PDL1 expression focused with other non-IO therapies and with IO therapies.

Andrew Baum - Citi

Thank you.

John Elicker

Thanks, Andrew. Can we go to the next question please, Shannon?

Operator

We'll go next to Marc Goodman with UBS.

Marc Goodman - UBS

Good morning. First on Eliquis in the U.S. and obviously a big jump from last quarter to this quarter, I was just curious is that all demand or was there anything else going on in the quarter? Second, on Sprycel, obviously very strong growth there. Can you give us a sense of what's going on behind the scenes with market share? Is that where the growth is coming from or what would you contribute it to? And then on hep C in Japan, you had mentioned – obviously we know that you filed already. What is your expectation for when that will be approved in Japan and start to have sales? Do you assume sales in your guidance for this year?

Lamberto Andreotti

Giovanni, why don't you take all three questions?

Giovanni Caforio

Yes, let me start from the performance of Eliquis. We had a strong quarter in Q4 that was clearly through in the U.S. We had good developments outside of U.S. as well. With respect to the U.S. what you saw in terms of the numbers broadly reflects an improvement in performance and demand. And when you look at TRx, growth in the U.S. in Q4, our TRx volume grew by 66%. Our NBRx volume grew by 50% versus the previous quarter and we saw a good increase in shares, particularly in the cardiology setting. So I would say that the performance is really related to demand and it is the result of the acceleration plan that we put in place beginning in August which we discussed before, which was really centered on strengthening and focusing our strategy and messages, significantly increasing our investment in medical education and third, initiating in September a very broad DTC campaign in the U.S. All of those things seem to have had an impact on performance in Q4 was a good quarter. With respect to Sprycel, we do have very strong performance and good trends across the world, in the U.S., in Europe. We had a very, very good quarter in Japan as well. And that is coming from two things. First of all, from a total market perspective, we continue to see a decline in the use of Gleevec and the growth of the second generation TKIs. Among second generation TKIs particularly in the U.S., in the last quarter Sprycel was the fastest growing agent and we continue to have a leadership position in first line and second line across among the second generation TKIs. We have a strong presence in second line, but a lot of our growth is really coming from increased penetration and increased market share in first line. With respect to Japan and hepatitis C we communicated where we are with a -- from a regulatory perspective. All I can say from a commercial perspective is that we are working as a priority to be ready for launch when we get approval, obviously we will be executing very rapidly the launch in Japan.

John Elicker

Thanks, Marc. Can we go to the next question please Shannon?

Operator

And our next question from Chris Schott with JPMorgan.

Christopher Schott - JPMorgan

Right. Thanks very much. Just two ones coming back on Nivo. First, on the one combo should we think about additional cohorts being added to CheckMate 12 based on this data that you’ve recently received or at this point are we just really waiting for data from the existing cohorts before making a decision on potentially moving that forward. And second question was on Nivo with Avastin, is that something you -- that you have seen at this point and how you’re thinking about the potential of the use of Avastin with Nivo in lung? Thanks very much.

Charles Bancroft

So as far as the lung combo cohorts, it is possible we may add more cohorts Chris, but that’s under consideration. And I think I will say just a general comment about combination -- while obviously we focus very much on immuno-oncology combinations, we haven't certainly ruled out having combinations where we feel it's appropriate and there could be some benefits.

John Elicker

Thanks, Chris. Can we go to the next question please, Shannon?

Operator

We will go next to Vamil Divan with Credit Suisse.

Vamil Divan - Credit Suisse

Yes, thanks for taking the question. Just to clarify one thing for me. In terms of the CheckMate 063 data, is that something you have? And I'll say this point and I know – I think you mentioned before because it maybe registrational and we get a top line press release on that? Would you do a top line whether you do or do not decide to file that, just trying to get a sense of expectations on that? Thanks.

Lamberto Andreotti

So just to clarify, you’re talking about the third line Phase II study in non-small-cell lung squamous, right?

Francis Cuss

Yes, I think that’s yes.

Lamberto Andreotti

Oh sorry, okay. So as I’ve said, but let me reiterate, it’s important, we’re in regular contact with the FDA. We are expecting the data in the first half of this year, depending on the data and we will obviously be having further discussions with the FDA. But the hope would be for a submission assuming the data is appropriate.

Francis Cuss

And I think from a disclosure standpoint Vamil, we have to wait and see what the data looks like, there is a materiality discussion certainly with our General Counsel and legal group, there is a need to preserve the ability to present at ASCO. So there is coordination with ASCO and then there are competitive dynamics as well. So I think it’s premature to commit to any kind of disclosure one way or the other.

John Elicker

Can we go to the next question please, Shannon?

Operator

We will go next to Gregg Gilbert with Bank of America.

Gregg Gilbert - Bank of America Merrill Lynch

Yes, thanks. I have two. First for Lamberto, clearly immuno-oncology is exciting for your Company, but I think it's also fair to say your market cap assumes pretty significant success in future years already. So my question is, do you see as CEO an opportunity to use your significant market cap to diversify into other exciting areas, if the right opportunities come along? And my follow-up for Charlie is about your mature and other products line, obviously a pretty big chunk of business. Any key variables we should think about within that over the next year or so? Thanks.

Lamberto Andreotti

Well, you see we have been saying that business development is top priority for capital allocation. Soon we will receive if at the closing with the deal with AstraZeneca we received significant amount of money here in the U.S. from AstraZeneca, well there is an upfront payment plus the milestone related to the approval of our figure in the U.S. So, we would have additional cash available for business development as you correctly said. We have shares that are valued say nicely, and therefore we could use those shares also for BD. We will continue to -- we continue, its not something about the future, we continue today at looking at various opportunities and various opportunities are in both, immuno-oncology and outside of immuno-oncology. So, when you think about our priorities, the priorities in business development are in the same areas where we are developing our own programs. What I guess, I’m very close to both areas. Charlie, on the mature brands.

Charles Bancroft

Yes, so Gregg on mature brands it is a catch-off for all of our non sort of core promoted brand’s and we have the normal older sort of off patent as well as some OTC brands particularly in Europe and the markets there is France. But we also have some growth products relating in that form in China, for example. We record SYMLIN sales there which will go away with the diabetes business. And we also recorded things like our Medarex royalties that we get from that acquisition. And then also we have a couple of collaborations with rackets for some OTC brands in Latin America and medicines' company which was our (indiscernible) business. They have their own lifecycle and some go as those deals come to a close. That will have a more significant impact on the mature brands. But generally this is a declining business.

John Elicker

Thanks Gregg. Can we go to the next question please, Shannon?

Operator

We’ll move next to Alex Arfaei with BMO Capital Markets.

Alex Arfaei - BMO Capital Markets

Good morning and congratulations on a great 2013. Francis on CheckMate 026 many experts think that PDL-1 expression is dynamic. So the question is; have there been any advances in being able to reliably identify PDL-1 positive patients. And a follow-up if I may; can you please give us more clarity on the timeline for the LAC-3 data, we know you sort of mentioned it into the clinic last quarter, perhaps more clarity on the timeline for the other immunotherapies to answer this question? Thank you?

Francis Cuss

Thank you Alex. So talking about the first line lung, I think the goal of making a PDL-1 positive is to enrich the population. And of course obviously if that changes subsequently that will be taken into account in terms of what the data is at the end. But I think we have the opportunity here to as I said I’ll go back, there’s a very broad strategy around biomarkers here. There’s a lot we don’t know about biomarkers, we’re learning all the time. I think we have a great opportunity over the next year or two as our data matures, have a much better idea of the kinetics of the PDL-1 expression and how it might relate to overall survival not just response rate. And I want to reiterate, again I think it's important that our aim is to be able to provide if we have the data supported a treatment for patients who are PDL-1 negative also whether in lung, non-lung or any other tumors. So it's a very broad program, we’re generating the data and I think it's rather early yet to speculate too much about what might happen. We want to get the data. Now as far as our other IO combinations, many trials are ongoing. As I mentioned LAC-3 into the clinic last quarter I think that’s very early to make any predictions yet, but obviously it's very exciting. And perhaps more importantly we have combinations of Nivo with L-21 and or anti-care monoclonal antibody. And so I think we will be seeing data over the next year or two on those, but it's too early to give you an exact timing.

John Elicker

Okay, thanks. Shannon, I think we have time for one more question.

Operator

We'll go next Steve Scala with Cowen & Company.

Steve Scala - Cowen & Company

Thank you. And I have two questions. So, Francis, in your prepared comments, you referred to Yervoy as the cornerstone of your immuno-oncology franchise. And I am focusing now on the word cornerstone. I think most immuno-oncologists view PD1 as necessary and fundamental to modulate, and therefore the cornerstone. So it seems to me that Bristol is not absolutely convinced that PD1 is a key component and a cornerstone. I mean, am I correctly characterizing the Bristol view? And the second question is on the settlement with Apotex for Sprycel, can you be more specific on when generics can launch? Thank you.

Lamberto Andreotti

So, Steve, this is Lamberto. My Italian accent should have been recognized by using the expression cornerstone for Yervoy, and it was probably not appropriate to say the cornerstone. I don't know if I said that, but to deem [ph] a cornerstone now. To answer your question more directly, PD1 is a cornerstone for immuno-therapy and we are very committed to it and we are very convinced that we can deliver wholesome data with PD1 in the various tumors that we are starting. Do you want to add anything?

Giovanni Caforio

I would just add that I fully agree with Lamberto's characterization of the promise of PD1, so you shouldn't misunderstand how excited we are. But on the other hand, Yervoy is approved and I think the – I've been in this business long enough to know that a bird in the hand is always worth a lot and so it's very good to have in the hand and it gives us a lot of opportunity to build on that, I think, in terms of the broader IO benefit to patients.

John Elicker

And Steve on the Sprycel, I think we have at least 10 more years of market exclusivity related to that case for Sprycel in the U.S.

So with that, I'm going to turn it back over to Lamberto. Thanks everybody for all your questions and I'm really glad that Francis was able to join us this morning.

Lamberto Andreotti

Yes. Francis will leave now in a couple of hours. All right, and let me close this call by saying that again 2013 was an important year for us because we are evolving into a new leading specialty care biopharma company. I think that the solid performance last year and the development and changes that we have delivered put us in a strong position. We have talked a lot about immuno-oncology this morning. We are very excited about what we have in immuno-oncology. And as I said before, we intend to maintain our leadership position in the area. But we also want to continue to evolve the other important assets that we have in cardiovascular, in hepatitis C, in virology in general and the other areas where we are operating. So, thank you for being with us this morning and have a good day.

John Elicker

Thank you, Shannon.

Operator

That does conclude today's conference. Thank you for your participation.

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