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Bristol-Myers Squibb Company (NYSE:BMY)

Cowen Health Care Conference Call

March 4, 2014 10:00 ET

Executives

Brian Daniels - Senior Vice President, Global Development and Medical Affairs

Analysts

Steve Scala - Cowen & Company

Steve Scala - Cowen & Company

Well, good morning and welcome to the Bristol-Myers Squibb session of Cowen’s 34th Annual Healthcare Conference. We are very pleased to have Bristol with us again this year. Representing the company is Dr. Brian Daniels, who is Senior Vice President, Global Development and Medical Affairs. Bristol has been and continues to be our top pick in the pharma sector. Honestly, I don’t see how you cannot own this stock. If immuno-oncology really does take off the way, it has the look and feel like it will. This could be a tremendous stock for the next five years. Bristol is a clear leader in the area, but a clear leader in a lot of other areas as well. They have strong franchises in things like rheumatoid arthritis and HIV and targeted chemotherapies. So it’s a standout company, standout management.

And with that, I will turn it to Dr. Daniels.

Brian Daniels - Senior Vice President, Global Development and Medical Affairs

Thanks Steve. Good morning, everyone, pleasure being here. I’d like to thank Steve for having me here again. So as you said, I have the pleasure of leading the development, the medical organization at Bristol-Myers Squibb. And the only information I would add to that is I have had the pleasure of doing that for the last 10 years and it’s been a wonderful 10 years in my current role. And I think hopefully as I figure out, I think I just emphasize here, wonderful 10 years. And I think as Steve perhaps indicated, there is still a bright future for patients in the next period of time. So as fair balance, this is the forward-looking statement to sort of at least indicate what forward-looking statements, the Safe Harbors are supposed to do.

Let me just take a step back and talk a little bit about the evolution of Bristol-Myers Squibb where we are today and where we hope to go in the future beyond 2013. So this story starts 2007, new CEO, Jim Cornelius and a decision made by him, the board to move from a multi sort of a multiple different types of healthcare companies that we had to really a biopharma company, so the best of biotech, the best of pharma, how does it come together to lead to value creation for our patients and value creation for our shareholders. This now is a biologist.

We are just continuing to evolve in that space. And we have been successful in that strategy in this time to become I would say a focused specialty care biopharma, the difference being most obvious to you is our decision to sell the half of the diabetes franchise that we created along with AZ, back to AZ in late part of last year. To us, it really indicates that if innovation is going to be valued, it’s going to be most highly valued in the specialty care space. And that the primary care space, particularly primary care space for things like diabetes is an interesting and important space to be in, but perhaps not really where we felt the greatest value generation really was.

Consistent with that, we have now adjusted our R&D strategy, which is again to sort of think it’s the next line, here it is, we have adjusted our R&D strategy to focus on the certain number of discreet opportunities that we have. And we believe now in the future a leading indicator of success in the development, the discovery, development and delivery space, i.e., the biology, clinical development, regulatory and commercial space is really going to be about being highly focused in the key areas, where you think you can make a difference. So what we have focused on is immuno-oncology and I will talk about immuno-oncology in a little bit on other aspects of other oncology, immunoscience, cardiovascular, particular things like heart failure, virology, HBV, HCV, HIV, I think still have great opportunities, if not necessarily into discovery space in the development, regulatory and commercial space.

And then we have added a few things, because we think that we have taken away some things that we focused on like neuroscience, which still has higher medical need, metabolic disorders essentially diabetes. We need to constantly add new areas where the science is changing and allows us to continue to make meaningful contributions to healthcare.

We have picked fibrosis and other areas of what we call exploratory areas. We have also have a much more broad based sort of druggable platform that we are developing. So small molecules everyone is familiar with biologics, now need to really say we are moving forward in ADC technology as well as in millamolecular which are molecules that are large enough, so several thousand kilodalton, large enough to begin to behave like biologics, i.e. they have sort of the thermodynamic properties of what you would want if you are looking to interrupt protein-protein interactions. And not small molecules which really if you think about it they will do many things are enzyme substrate product inhibitors.

So that’s our evolution of our R&D focus. We went through that in ’13. We went through that with the knowledge of not so much what’s going to happen to the diabetes commercial business at that point, but with the knowledge of where do we create the greatest value for patients and by creating the greatest value for patients, the greatest value for society and our shareholders. So this is our development portfolio as we have traditionally somewhat traditionally displayed it. Left to right, Phase 1 to marketed products. I will say marketed product development just want to focus is really only things that have ongoing major R&D investments associated with this. So that isn’t the fullness of our marketed products, it is just a communication tool for us to talk about what do we spend our R&D money on, our research and development money on.

I want to start with marketed products first of all to make sure that you realize that though you would see what primary care, what about Eliquis, what about certain drugs. There is a laser focus on Eliquis, so I have my next slide on that to talk about the value of Eliquis. The role of the practicing cardiologists and the value of us to maintain the presence in the cardiology space as we think about bringing new solutions forward in things like heart failure or maybe vessel wall diseases, vessel wall disease inflammation i.e. for atherosclerosis. So that’s the focus on Eliquis as an enterprise and with Pfizer has not changed. The value we believe Eliquis can bring to patients has not changed as well.

So I will talk also about our immuno-oncology platform, so I will have some more comments on that later as well. So just to briefly sort of touch on things here is sort of the highlight just immunology which is in this slide. It looks like I am trying to get right color for you. It looks like a pink color is that we are very proud of the presence of Orencia and Nulojix, co-stimulatory blocks in the marketed space. We are having a series of Phase 1 assets which I am quite excited about CD40, CD40 ligand potentially CD40, eventually CD40 ligand, CD28. CD28 was essentially undruaggable target and we are using domain specific antibody from a company called Domantis. It was eventually purchased from GSK. And I think there is really potentially real utility.

In the cardiovascular space already we have talked about an early focus on from – of things like heart failure with our PEG-Relaxin molecule in Phase 1 testing, soon hopefully to go into proof of concept as well. I talked about Eliquis just from the R&D side we literally believe that the data and particularly as real world data becomes more and more available, we will see – we will potentially see an agreement what was developed in the clinical development space of a profile of enhanced stroke prevention compared to warfarin as well as a reduction in bleeding. So an overall improvement in the overall risk benefit of Eliquis as an anti-thrombotic, anti-coagulant for patients with AFib.

We have moved forward other indications such as DVT prevention in patients who are undergoing orthopedic surgery in the U.S. as well as a broader indication worldwide for the treatment and prevention of deep venous thrombosis and pulmonary embolism people have who present with DVT and PE.

Hepatitis C, we have been in this space for quite a while coming to fruition with our daclatasvir and asunaprevir filed that in Japan hopefully the first approval will be this year in Japan. Japan is a unique market though this is a genotype 1b red all-oral ribavirin-free, interferon-free regimen. 95% to 97% of all genotype 1 patients in Japan are genotype 1b. So it’s anonymous. That’s different than it is in the United States, where a little bit more than half of the genotype 1s are genotype 1a or in Europe, where it’s slightly the other way around, little more 1b to 1a.

Our first U.S. submission for daclatasvir asunaprevir is targeted in the first half of this year. And I think we just recently – you also gave notice that we received breakthrough designation through the dual as well as the breakthrough designation that exists for our current for our triple. And our triple is in Phase 3 testing and we will be seeing that top line data later part of this year in our triple. So that’s other ways in which daclatasvir will be used and I have already sort of talked about our triple and our submission is on target for the first half of 2015.

Immuno-oncology, so as Steve sort of indicated and as my meetings this morning with some people have indicated, there is a lot of interest in immuno-oncology, it doesn’t necessarily come as a surprise to me. It does come as a surprise to me as an immunologist, where I was 8 years ago when we did our first deal with Medarex, which I approached is as a highly skeptical scientist at about 30 years of failure of immunotherapy and oncology. And as I said, we weren’t there to predict what ipi would do, but to design the best experiment, so let ipi tell us what it could do, ipilimumab, that became Yervoy and Yervoy today is successfully helping manage patients with metastatic melanoma. And we hope to present some adjuvant data for melanoma with Yervoy at ASCO this year as well from our EORTC study. So clearly, immuno-oncology in our minds has ability to be transformative not just in tumors that are immuno-sensitive, but I think in a broad range of tumors. And I think that’s what is unique here.

What we really mean is truly transformative in nature, not necessarily just additive to existing therapies, what’s a real example of that? Well, we recently started a trial of first line non-small cell lung cancer, metastatic non-small cell lung cancer of PD-L1 positive patients, so using a biomarker in this case of Nivo versus the platinum containing doublet. And platinum containing doublets have been in development and reflect the best scientific thinking and development over the – starting the 80s and sort of was ratified in the 90s as really effective chemotherapy doublet for cancer, whether that’s platinum containing a taxane mainly in the United States or site being in Europe. But I would say having (audio break) that trials 80s and BMS being participants in that both with Taxol and Paraplatin in the 90s and early 2000s, I would say you really – it isn’t necessarily a satisfied market.

And we are really looking to transform that market in saying why are still people using doublets as we first line therapy for some of your patients with metatstatic non-small cell lung cancer. And that’s the type of transformation we are talking about. We are talking about tumors that are historically not considered immuno-sensitive and also saying how do we displace the existing treatment paradigms per sizable patient populations? And we do that by showing response rates that are meaningful, but also the potential or when ipilimumab’s real data that shows that the responses are durable and lead to long-term treatment successes for certain percent of your patients, which is something today with someone with the metastatic non-small cell lung cancer can’t really count on. You can count on some responses and some of the responses are being durable, but eventually most people do succumb. So this is all about the transformative nature of the immuno-oncology and whether that has a monotherapy, a biomarker driven monotherapy or in combination with other immuno-oncology agents, I think each tumor type will have its different points in which you can tell to demonstrate.

It’s also important I believe to show it is not just about response rates, but that this is about what are considered the most valuable endpoint, which is improvement in survival and that we have maintained I think not just a broad, i.e., the number of tumors we are in, which is about 11 right now, a deep which is five – over 35 studies underway in a variety of tumors, but also flexible, which is an ability to say don’t know today how important biomarker selection is in all tumors with all treatments with Nivo, but let’s make sure we have the data so that we can represent that to regulators if we need to enter into that discussion.

This was the data I was talking about with Yervoy and this is the data that we represented last year in September. So the important thing is that this is an aggregation of a lot of our clinical trial data, some of these patients now going out to 10 years, so that 120 is not weeks and its not days, it’s months, so its 10 years of survival curve here. And what it demonstrates in my mind is that though ipi has a low overall response rate in melanoma, so these are like 2000 melanoma patients you start with 1861 to be exact you start with. So it has a low overall response rate clearly. Ipi does lead to long-term durable responses that can look like cures. So this tailing of the curve, which is always been seen with many immuno-oncology agents, but at a lower level, so interferons also demonstrate this, but at a much lower -- my mind, at a lower level. This tail end of the curve we are here in the all-in rate is about 22%. If you look at first line and those treated with what we think are effective doses of 3 milligrams or above you get about 1 and 4. So that’s 1 and 4 patients by three years still having, still alive. And we think this is really changing how we treat melanoma. And we believe that this kind of information when extended to other tumor types will fundamentally change how people think about treating those tumors as well.

We believe we are well positioned here at Bristol-Myers to participate in some of that evolution and disruption to the marketplace. And this is just a sort of a Phase 1, Phase 2 registration improved indication of all of our ongoing work in just immuno-oncology, so this is not just oncology, this is a subset of oncology, immuno-oncology of what we are doing, what’s publicly available for you to see and know about. What it reflects is a variety of molecules, a whole suite of molecules in first line, for in Phase 1 testing. They are either being used in monotherapy or in combination with our more mature molecules like Yervoy or nivolumab, so that’s like LAG3, that’s like what I call anti-KIR, which here is anti-KIR is Lirilumab. And that’s we are working with Innate Pharma on that or Urelumab, anti-CD137 as well. So very excited about this depth and breadth of our portfolio in immuno-oncology, we clearly also understand that part of the success may be partnering with other companies and with their assets and we are actively thinking about who would make the best partners with Nivo as well.

And so this is a little bit on just data flow. So forward-looking for the rest of the year, I have talked about the regulatory actions that we are looking forward to on Eliquis to expand the label in the United States and in Europe to other areas of treatment with anticoagulant or Hepatitis C work as well as working Yervoy. I mentioned I think the adjuvant data we are presenting at ASCO as well as additional combination data with Nivo in melanoma, so that’s the ‘04 study in lung and that’s the ’12 study and in renal, which is the ’16 study all of which will be at least have been submitted to ASCO, so we can talk about some submitted, we can. We can’t know yet what’s been accepted. As well as other data at ASCO which would be additional renal data from studies in Phase 2 studies that we had in dose ranging in renal cell carcinoma as well. I just want to make sure I covered everything here. Phase 1 data in hematological malignancies, which is the second to the last bullet here will be presented actually at ASH and not at ASCO.

And I think that’s enough. So, I have 10 minutes and I will take questions here. Steve?

Question-and-Answer Session

Steve Scala - Cowen & Company

(Question Inaudible)

Brian Daniels

So yes, because I was asked to repeat your questions, is that because you don’t have mic. So the question was PD-1, PD-L1, Bristol-Myers Squibb actually has one of each molecule in hand. We made the decision several years ago to advance in the oncology space PD-1, what we can talk a little bit what were plans are on PD-L1 as well and you are asking what was reason why. So what I would say is its quite simple PD-1 was about 15 to – 15 months ahead maybe even 18 months ahead of where PD-L1 was just in the – when there was Medarex molecules, how they came out of this discovery platform. Both molecules seem to be well behaved. We have published our PD-L1 data in Phase 1 studies in cancer. You can make an assessment I would say somewhat similar. Obviously the data sets aren’t as rich and didn’t go for as long. So it’s hard to make conclusive discussions, decisions. So a lot of this was the fact that we thought we had a very good molecule in hand, it seem to have broad applicability to oncology. On the other hand I mean immunologists, rheumatologists, so my background is rheumatology and my wet research biology was in Immunology. I have always been fascinated by the role of immuno-stimulators and immuno-modulators is why I joined Bristol 14 years ago is to work on Orencia and belatacept the second signals of T-cells activation in that case, but the PD-1, PD-L1 engagement in chronic viral infection leading to what used to be called the layman T-cell exhaustion hypothesis of HIV and HBV. And so we are very interested in taking PD-L1 into the chronic virology infection space either potentially and this is really head in the cloud sort of futuristic thinking PD-L1 as an immuno-stimulator in HIV infection to go for cure. We have interesting data about ability to suppress macaques infected with SIV which is an analog to HIV but infecting non-human primates with short-term courses of PD-L1 therapy. And also for potentially Hepatitis B where today with interferon the cure rates are even with Yervoy interferon are around 5%. So there is a role for PD-L1 as a therapeutic within Bristol-Myers Squibb, but we see it much more in the chronic virological infection space. Steve…

Steve Scala - Cowen & Company

(Question Inaudible)

Brian Daniels

Yes. So you are asking about I know I used to call IDO, but I will it – but I guess is called now IDO. So IDO which is an enzyme – so it’s an enzyme system that metabolizes tryptophan in a variety of cells and is consistent with things like Foxp3 to be a marker of immune suppressive state. So if you look at Tregs and just Tregs in general not necessary people with cancer. One way you identify Tregs is high CD4 expression, high CD25 expression but also FoxP3. If you look at them a lot of them have up regulated also IDO as well, because part of the suppressive environment.

That said and it could be a way in which tumors escape immuno surveillances by making tryptophan which is an essential immunoacid limiting to sort of overall the maintenance of protein synthesis. So that’s sort of the hypothesis. I would say inside and I am sure you are referring to is insight which are doing studies with their IDO with Yervoy and has announced doing studies with their IDO with Merck PD-1, it has the most advanced clinical candidate in this space. We have a preclinical program in this we do not have a clinical program. So there is insight and there is a – this is the third time I was asked today about it Steve. And I don’t remember there is another small biotech that has a Phase 2 IDO program. Okay, Steve?

Unidentified Analyst

So, first of all, I have said that regard to plan for Phase 3, 4, and right now (Question Inaudible)?

Brian Daniels

Sure. Yes, so, I mean, let’s talk about lung in particular and then we’ll talk to you specifically on your question. So, you are asking just really where are we in the combination work of Nivo and Yervoy in lung cancer, I think that’s if I had to summarize your question. So, I’ll take this just as an ability to just remind people. We actually have a very broad program in lung cancer. We have two Phase 3 studies, one in squamous cell histology, one in non-squamous cell histology of Nivo monotherapy versus the taxane that has the ability to look at both response rates as well as other endpoints as co-primary endpoints as well. So and they were collecting in all of those patients or as many patients possible, tumor tissue to understand the relevance of the tumor marker to response rates and durable response rates in potentially things like PFS and OS. We have just recently announced the start of a Phase 3 study. Also in non-small cell lung cancer, histology independent using PD-L1 as a biomarker, so as Nivo monotherapy, I made reference to this Nivo monotherapy versus a plan that containing doublet in first line lung cancer.

We also have a Phase 2 single arm study called 063, which is looking in late line squamous cell carcinoma, so in area of disease that has no approved therapies. And most people would tell you that response rates in people who have failed more than two cycles of chemotherapy is in the single-digit response rates. So, that’s about 120% single arm study. We hope to see that information this first half of this year, but if it looks like it meets our criteria or in our criteria, we would use that information a lot with other information like from 003, to I think have regulatory discussions as to the potential benefits of that and risk of that as a pathway to potentially getting market authorization in lung cancer. And then we also have this combination study 012, just for people don’t follow us exclusively. 012 is a true Phase 1 study. There are literally 12 different cohorts of patients, that is asking about Nivo in combination with a variety of different therapies, all the way from doublet therapies to approved, sorry, TKI inhibitors like erlotinib to biologics like Avastin and we also have four or five arms that have looked at combination with Yervoy.

From that wealth of data, so each cohort is small, but from the overall wealth of data we believe we are gaining insights that will allow us to create the right sort of scientific hypothesis that would lead to a Phase 3 study of the combination of Yervoy and nivolumab starting by the end of 2014. And so the data is evolving, the insights we are getting probably will continue to help inform how we want to go forward into Phase 3, but we will have I think a testable, that we will have a testable scientific hypothesis in a Phase 3 trial started by the end of this year ‘14 with Yervoy and Nivo in non-small cell lung cancer. Steve, again?

Unidentified Analyst

(Question Inaudible)

Brian Daniels

Yes, so, you’re right. The first one particularly which is prevention of DVT post orthopedic surgery is not a large commercial opportunity. It would put us on parity where we are in Europe where we already have that approval. The second one which comes later in the year, I think for us in the August timeframe is the PDUFA for DVT treatment is longer. It’s longer for a couple of reasons. One of which is more people suffer DVT and PE spontaneously or for other underlying etiologies. The duration of their therapy is not well-defined and currently the duration of therapy has always been of risk benefit discussion about I don’t want patients on warfarin for a long period of time because there is this bleeding risk that I am concerned about. So, I think our data, particularly our data in our amplify extend, which shows a bleeding rate statistically no different than no anti-coagulant. So just to emphasize that data and 600 patients per arm showing a bleeding rate of apixaban similar to no anti-coagulants, so not aspirin like we did in (indiscernible). I think we will begin to speak to the value of how long you need to anti-coagulate those patients who present with either DVT or PE, PE potentially being a fatal consequence. And my red light is flashing, so….

Steve Scala - Cowen & Company

We move to the breakout room.

Brian Daniels - Senior Vice President, Global Development and Medical Affairs

We move to the breakout room. Thank you, Steve.

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