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Bristol-Myers Squibb (NYSE:BMY)

Q1 2011 Earnings Call

April 28, 2011 10:30 am ET

Executives

Beatrice Cazala - Member of Management Council, President of Global Commercialization and President of Europe Operations

Tony Hooper - Member of Management Council, Senior Vice President of Commercial Operations and President of US Japan and Intercontinental

Charles Bancroft - Chief Financial Officer and Member of Management Council

Elliott Sigal - Chief Scientific Officer, President of Research & Development, Executive Vice President, Member of Management Council, Director, Member of Executive Committee and Member of Science & Technology Committee

Lamberto Andreotti - Chief Executive Officer, Member of Management Council, Director, Member of Science & Technology Committee and Member of Executive Committee

John Elicker - Investor Relations Executive

Analysts

David Risinger - Morgan Stanley

Catherine Arnold - Crédit Suisse AG

John Boris - Citigroup Inc

Tim Anderson - Sanford C. Bernstein & Co., Inc.

Jami Rubin - Goldman Sachs Group Inc.

Steve Scala - Cowen and Company, LLC

Christopher Schott - JP Morgan Chase & Co

Gregory Gilbert - BofA Merrill Lynch

Seamus Fernandez - Leerink Swann LLC

Marc Goodman - UBS Investment Bank

Charles Butler - Barclays Capital

Operator

Good day, and welcome to today's First Quarter Earnings 2011 Earnings Release Conference Call. This call is being recorded. At this time, I would like to turn the call over to Mr. John Elicker, Senior Vice President, Investor Relations. Please go ahead, Mr. Elicker.

John Elicker

Thank you, Celia, and good morning, everybody. Thanks for joining us. We're here to discuss our first quarter earnings release. And with me for prepared remarks are Lamberto Andreotti, our Chief Executive Officer; Charlie Bancroft, our Chief Financial Officer. Also joining for Q&A are Beatrice Cazala and Tony Hooper, both of whom are on our Commercial Operations; and Elliott Sigal, our Chief Scientific Officer.

Before we get started, let me take care of the legal requirement. During this call, we will make statements about the company's future plans and prospects that constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the company's most recent annual report on Form 10-K and reports on 10-Q and Form 8-K. These documents are available from the SEC, the BMS website or from Bristol-Myers Squibb Investor Relations.

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

Lamberto Andreotti

Well, thank you, John. Good morning, everyone. We have just completed a very strong quarter, one that clearly demonstrates that our biopharma strategy is working. Our financials were strong. Our pipeline continues to deliver, and of course, YERVOY was approved and launched in the U.S. Taken together, I am very encouraged with our results.

Before discussing some recent highlights, I just want to note that our operations in Japan continued unabated. Our shipments and sales were unaffected, and most importantly, our colleagues were spared any physical harm. In fact, our first-rate management team and our staff of dedicated employees have demonstrated extraordinary resolve through this entire crisis. Nonetheless, we continue to monitor our operations in Japan, and we'll update as appropriate.

So with that, let me begin with the most exciting development of the quarter, YERVOY. On March 25, the FDA approved YERVOY for the treatment of metastatic melanoma. This was great news for our company and for the many patients who will benefit from this breakthrough treatment, the first such therapy to demonstrate a significant overall survival benefit.

The FDA's decision is a major accomplishment for Bristol-Myers Squibb. It concerns our strong position in oncology and establishes our leadership in immune oncology. It demonstrates the value of our Medarex acquisition in particular, and our String of Pearls initiative in general. And it strengthens our vision of BMS as a benchmark biopharma company. As you know, YERVOY became commercially available in the U.S. in early April, and the response has been overwhelmingly positive. Let me give you a few of examples of this response.

First, the NCCN guidelines, which were updated on April 13, now lists YERVOY as a category one choice for metastatic melanoma. This is important, not only with respect to the speed with which it was done, but also because this will help facilitate reimbursement by the managed healthcare companies.

Second example, we have already met with or are scheduled to meet with most of the key commercial accounts. Third and very important, physician interest has been particularly strong. In fact, our customers grant our people much more time than usual. Well, this is not very common, as you know, nowadays, in the pharma world.

And finally, activity on the website and at the call center has been very busy. Moreover, to improve our ability to execute commercially, we are utilizing a new customer model. One that takes a more holistic, more informed approach to the process by focusing on all aspects of the patient's journey and all of the customers involved, including physicians, nurses, payers, hospitals and of course, patients. This customer model, along with our patient-assistance programs, will help to make YERVOY widely available to the thousands of Americans who suffer this terrible disease.

As you also know, we have announced that a second Phase III clinical trial of YERVOY known as study 024 met its primary endpoint of improving overall survival in previously untreated patients with metastatic melanoma. The data has been submitted to the American Society of Clinical Oncology, ASCO, and we are hoping to present this at the annual meeting in June. And finally, outside of the U.S., YERVOY is currently under review in Europe, where we are expecting a decision later this year, followed by decisions in Australia, Canada and other countries as well.

Let me now discuss a few key regulatory and clinical developments. We have had two positive developments in Europe. For ELIQUIS, apixaban, we also received a positive opinion for the prevention of venous thromboembolism in patients undergoing total hip or knee orthopedic surgery, and are expecting a decision soon. We also received a positive opinion from CHMP for NULOJIX belatacept for kidney transplantation, and are expecting a decision soon, too. On dapagliflozin, we announced the FDA accepted for review the dapa [dapaglifozin] NDA, and so we are on track for a decision this fall. Additionally, the European Marketing Authorization Application was validated, and this marks the start of the release procedure in Europe as well.

And with respect to our hepatitis C portfolio at EASL, we just presented encouraging data for our novel interference and our first-in-class NS5A inhibitor, both of which we plan to move into Phase III this year.

Let me now give you an update on Manati, the plant was inspected. We received a letter from the FDA with several observations. We responded to that letter and believe we addressed the points raised. And we are continuing our discussions with the FDA. Manufacturing remains uninterrupted at Manati, and I want to assure you that resolving the issues in Manati is one of our top priorities. As we said before, this could delay FDA decision on NULOJIX and ORENCIA subcu [subcutaneous].

Taken as a whole, our company is in a solid position as demonstrated by this very strong quarter. We delivered on pipeline and we delivered on financials. And the progress we are making gives me confidence that we are well positioned to deliver for the post PLAVIX and AVAPRO era. And with that, let me turn it over to Charlie.

Charles Bancroft

Thank you, Lamberto, and good morning, everyone. We did have a strong quarter. We delivered non-GAAP EPS of $0.58. Strong sales growth in most of our key products and continued focused expense management were partially offset by a slightly higher effective tax rate compared to the same period last year. Included on our first quarter EPS is an incremental negative $0.03 impact due to U.S. healthcare reform. This impact is primarily from the pharmacy and to a lesser extent, the donut hole coverage, both of which went into effect in 2011.

I now want to give you some brief highlights from our first quarter financial results before we go to your questions. We reported first quarter net sales from continuing operations of $5 billion, up 4% compared to last year. EU measures had a negative impact of 1% and foreign exchange had a 1% favorable impact on sales.

As Lamberto mentioned, our operations in Japan were largely uninterrupted and we did realize a slight increase in wholesaler purchases of approximately $10 million. As I look at the first quarter sales performance, I continue to be encouraged by the trends in many of our key brands that are important to our future growth. This includes BARACLUDE, ONGLYZA, SPRYCEL and ORENCIA.

BARACLUDE, our treatment for hepatitis B was up 27%, including 30% growth internationally. BARACLUDE has been a real international success story as over 80% of our business is outside the U.S.

The ONGLYZA franchise delivered sales of $81 million, an 11% increase sequentially versus the fourth quarter. We are very pleased with the early trends for KOMBIGLYZE which helped drive a 30% increase in ONGLYZA franchise prescriptions sequentially versus the fourth quarter. Reported sales for KOMBIGLYZE in the quarter do not reflect prescription demand, partially due to inventory work down.

SPRYCEL was up 31% in the quarter, reflecting successful commercial execution and the launch of the first-line indication. U.S. prescriptions were strong and our market share in the U.S. increased to roughly 10% despite our competitors' three-month head start. ORENCIA was up 18% as we continue to make progress in becoming the IV biologic of choice. We now have roughly 30% of the first-line IV biologic market, up from under 25% a year ago. At the same time, we are preparing for the potential launch of our subcu formulation in the U.S. later this year.

The AVAPRO AVALIDE franchise was down 8% in the quarter, but up 15% versus fourth quarter of 2010. The negative impact of the AVALIDE supply interruption in the quarter was $40 million to $50 million. The sales increase versus Q4 was due to restocking as we were able to resupply the market in February with 2 of the 3 dosages. We expect current prescription trends to continue based on lost demand and the fact that we do not have that third dosage form on the market.

Now let me give you a few comments from the rest of our P&L. I will focus my remarks on our non-GAAP results, reconciliations to our GAAP results are available on our press release and on our website. Gross margin improved 20 basis points compared to the same period last year and 80 basis points compared to fourth quarter of 2010. The improvement from Q4 was primarily driven by foreign exchange.

Advertising and promotion expenses were basically flat at $214 million for the quarter, less spending on the promotion of PLAVIX and AVAPRO, products at the end of their life cycle was offset by increased investment spend on our new products and indications. We expect A&P spend to soften in the second half of the year as we further manage PLAVIX and AVAPRO towards the end of their life cycle.

Marketing, selling and administrative expenses increased 4% due to the pharma fee of $61 million. Excluding the pharma fee, MS&A would have been down 3%. R&D was down 3%, mostly due to timing of portfolio investments. R&D spend is expected to increase through the year as we begin Phase III studies for elotuzumab, our HCV portfolio and YERVOY in lung cancer. You may have noticed an increase in equity income sequentially versus the fourth quarter of last year. This is primarily due to order timing, reduction in discovery royalties and improved profitability as we and sanofi, our JV partner, manage expenses. The effective overall tax rate on earnings from continuing operations was 26% in the quarter. The pharmacy had a negative 1% impact. As I mentioned on the January call, I would expect quarterly variability in the tax rate based on timing of certain discrete items. Finally, we have confirmed our 2011 GAAP and non-GAAP EPS guidance with no changes to our line-item guidance.

I would now like to turn it over to your questions.

John Elicker

Thanks, Charlie. And Celia, we're ready to go to Q&A. And I just would remind everybody that in addition to Lamberto and Charlie, we have Beatrice, Tony and Elliott here for any questions you might have. Celia?

Question-and-Answer Session

Operator

[Operator Instructions] And we'll go first to Jami Rubin, Goldman Sachs.

Jami Rubin - Goldman Sachs Group Inc.

Lamberto, I'm wondering if you -- or Beatrice, you, I'm certain could answer this question as well, if you could help us to think about the uptake of YERVOY, given what was already in existence, a very large expanded access program, existing clinical trials with the BRAF inhibitor. I mean, if you could just sort of give us a sense for how quickly you expect the uptake to be and who will be available, the size of the available patient population. And secondly, with respect to the 024 study, help us to think about how if this trial is approved and incorporated in a label, help us to think about how the dynamics of this label might change if it were to incorporate the frontline study, just given that the indication already includes frontline.

Lamberto Andreotti

Yes. Let me start, Jami. And then I suggest that Tony speaks about the uptake and Elliott speaks about 024. As I said before, we are extremely encouraged by what we are seeing in the marketplace. And before that, we were extremely pleased to have the label covering both pretreated and untreated metastatic melanoma patients. This gives us the possibility of making the product available to a much broader number of patients than those that were treated under protocol [ph] 020. Tony, why don't you give Jami and the others an update on where we are and answer her question on uptake.

Tony Hooper

So Jami, obviously, we are very pleased with the broader label and the indications for both pre-treated and untreated patients that we now receive from the FDA. As we look at the marketplace, we always said that between 15,000 and 20,000 patients of metastatic melanoma in the U.S. and about 10,000 newly diagnosed patients per year. And these tend to come across -- fairly evenly across just under 1,000 patients per month being diagnosed. The EAP program had at its peak about 2.6 or 2,600 patients in it for the U.S., and patients do have the option of either continuing on the EAP program or converting to the commercial plan. We're seeing about a 50/50 split between those completing the EAP versus those going to the commercial plan. So we see the uptake being a combination of the 1,000 new patients indicated or diagnosed per month, together with second-line patients who are failing on other indications that they can't afford, and that's where we see the growth and uptake of the marketplace. The initial response in terms of ordering of vials has been fairly positive, but I'd obviously like to see this in a few more weeks to make sure that we can lock it down. We've launched the product, as we've said, with a unique different customer model. It's a model that takes a much more holistic approach, more informed approach to the process by focusing on all aspects of the patient journey and all customers involved including the physicians, the nurses, the payers and the hospitals. As Lamberto said, our initial response has been great with physicians actually granting us we 2x to 3x the amount of time they normally give us, and in fact the so-called no-see physicians proactively reaching out to us and asking to spend some time with us. Metastatic melanoma is treated, as you know, by medical oncologists, and about 1/2 the patients are treated in academic or hospital institutions, which represent about 600 physicians, and the other 1/2 of the patients are treated in the community, representing about 5,000 community oncologists. We have about 23 well-trained specialists melanoma individuals looking after the academic institutions, and one of our oncology teams of close to 100 people looking after the community oncologists. Another 50 trained MSLs looking after physicians across the country, 18 dedicated reimbursement specialists backed up by our third-party vendor destination access. The model itself is unique in that because of the distribution model, as an order is placed, it triggers immediately the BMS team response, which allows us to instantaneously have an MSL reaching out to the practice to make sure that the practice understands how to use the product and some important safety issues. But at the same time, it mobilizes the BMS team, which consists of the melanoma cell specialist, the reimbursement specialist, the MSL with assistance from the medical support center and the entire unit of care comprising each of the critical roles and the treatment team of each practice. They work with a person or the people that acts as the patient's prescriber, the side effect manager, the dosing administrator, the patient educator as well as the practice's reimbursement or financial lead together with the patient and the patient's caregivers. So far, we think the model is working exceptionally well. We know exactly where sales are going, and the responses from physicians have been outstanding. The discussions with our payers, as Lamberto said, the NCCN guidelines have got there as quick as they did have been very beneficial. In all our discussions, about 80% of our top payer clients to date, all of these discussions have gone exceptionally well. They focused around the medical discussion, and all the medical organizations within the payer groups have identified the important innovation this drug brings together with the important overall survival.

Elliott Sigal

Jami, this is Elliott. You asked about the impact and significance of 024, the first-line study. And I can say, there's an immediate impact. And then we'll be able to talk over time about its evolving impact. Obviously, we've only been able to say that it's positive. That immediate impact is very significant. We'll be talking about the full study at ASCO in June. You noted correctly that the study was in first line, and essentially we already have that broad indication in the label. But the immediate impact of two positive studies in metastatic melanoma, which has seen no positive survival studies, is important. This is an important data. When you look at this study presented at ASCO, one of the things you'll focus on, no doubt, will be any consistencies between the two studies in both efficacy and safety and the uniqueness of the Kaplan-Meier survival curve, which characterizes duration of response. And so I think, at this point, I would say, that I think this is a very important information to make available. We'll see it in full in June. We are currently in discussions with the health authorities, the 3 milligram dose for now is our dose in the label and we can't speculate about future labeling on approved dosage regimens. But this information of the study, we will have a filing decision on after complete conversations with health authorities.

Operator

We'll go next to Tony Butler with Barclays Capital.

Charles Butler - Barclays Capital

I appreciate the broad discussion, Tony, on YERVOY. Elliott, really, just a brief comment around the pipeline. We often talk about the late stage products. But I'm just curious, I had expected the gamma secretase inhibitor to complete its Phase II program, and I think, I found on your website that the 013 study did conclude in January. And I'm just curious where you are in your thinking about potentially moving that forward. I recognize the 038 study still requires some time, but is there any change in your outlook there especially given the previous company failure?

Elliott Sigal

Yes, Tony. This is a very important area for us and for a lot of people, Alzheimer's Disease, and really being after disease modification. And let me say first that the beta-amyloid hypothesis remains a leading one in the area, and we continue to pursue it. We're diligently moving forward on our Phase II program. As you mentioned, we have completed one Phase II to be presented soon. But the one in pre-dementia is ongoing. And our thinking has moved to having the most complete characterization of that study later in the year or early next year before beginning our Phase III. We are -- have an eye to move into Phase III as the science dictates. With this mechanism, it is important to show selectivity for Abeta inhibition relative to Notch, and we believe our compound has accomplished this more than any other compound in the field. We're hoping that this selectivity will provide the therapeutic window that will allow efficacy with acceptable side effects. But it's going to be very important to select the right dose and the right patient population for Phase III. To that end, we have two Phase II studies, as I mentioned, and you referred to one being completed. That 013 study, six-month study performed in patients with mild to moderate is completed, results to be presented in July at the International Alzheimer's Meeting. The second study, 018, is an ongoing two-year trial performed in patients with pre-dementia. We have decided to wait for the results of an interim analysis of the pre-dementia study slated for the fourth quarter of this year. Prior to making a decision on Phase III and pending the results of the study, we could move into Phase III sometime in '12.

Operator

We'll go next to Seamus Fernandez with Leerink Swann.

Seamus Fernandez - Leerink Swann LLC

This question is actually more on the financial side. Just wondering where we are in terms of the potential to continue to converge to a different cost structure, heading into more of the specialty business, and perhaps how much the cost structure could evolve with the patent expirations of PLAVIX and AVAPRO.

Lamberto Andreotti

Well, it's obviously, Charlie, that will give you the details. But I want to just say that we have not stopped our productivity initiatives even though we do not have branded them as under a productivity transformation number 3 program. And this is throughout the corporation. The evolution of our portfolio is one of the reasons why we are looking at different structures and different types of organization. But also, the evolution of the entire marketplace. We just completed, Seamus, a very important and significant simplification process at management level. So we have eliminated a number of management positions, and by increasing the span of control and decreasing the number of layers. So the work is ongoing. We never stopped, we continue. And Charlie, you want to go into more details?

Charles Bancroft

Yes. I mean, historically, we finalized basically in 2010, the full $2.5 billion productivity cost savings and cost avoidance. But we still have additional opportunities. Lamberto had mentioned the biopharma simplification, which is looking at primarily spans and layers, but overall governance in the organization. We continue to identify additional outsourcing and procurement opportunities. And as Tony was mentioning, as it related to your point, some of our other products, as we see going forward, improving our go-to-market performance and our customer model. We have been, when we look at PLAVIX and AVAPRO, we have been doing some very significant life cycle flexing on those brands over the last several years concluding in the back half of 2011, where we will have essentially taken down a significant amount, if not of all of the expenses related to those products as we transition to some of our newer products, including how we think about ELIQUIS, dapagliflozin, which do have a primary care audience as well. So I think we've done a lot. I think, we can always continue to do more. But what we're really focusing is balancing those kind of short-term productivity medium-term productivity with how do we think about the long-term growth and investments we need to grow the business.

Operator

We'll take our next question from John Boris with Citi.

John Boris - Citigroup Inc

First, just a real quick financial question, Charlie. It seems as though the share count was a little bit lower than we had projected. Did you repurchase any shares in the quarter? And can you remind us what's remaining there? And then one for Elliott, on the hepatitis C front, you obviously presented a fair amount of data on your own portfolio at the EASL meeting. Can you help us understand at least what some of the positives were that you felt came out of your own portfolio? And then certainly on the Interferon side, do you still believe that Interferon Lambda can be a backbone, especially in light of some of the liver functionality that we've seen there? And then just one last question on the HCV portfolio, as you look at the paradigm for HCV and where it's going, do you think, from a competitive analysis standpoint, you're optimally positioned in HCV?

Charles Bancroft

John, I'll take the first part of your three-part question. As it relates to share repurchases, you're right, we did have a lower amount compared to the previous three quarters, but for various business reasons. We had longer blackout periods in the first quarter compared to earlier quarters of last year. Moving forward, we do expect to repurchase shares, primarily through our 10b5-1 programs, as well as opportunistically in the open market as we deem appropriate.

Elliott Sigal

Yes, John, with regard to our hepatitis C portfolio strategy, this is an exciting time for providing new therapies to patients with hepatitis C, which is a significant worldwide problem. And as we speak, the FDA is moving towards approval of what we think of as the first-wave improvement over standard of care that's existed for over a decade. In our HIV experience, we have been cognizant of the fact that this virus will require a combination therapy and that there will be more of a personalized approach for patients. What that means is we think the market will evolve into a stratified set of patient populations based on different genotypes, polymorphisms of the host and geographies. And therefore, we have from the beginning, sought a broad-based portfolio that has multiple mechanisms for combination therapy and for selecting the right regimen for the right patient population in the right part of the world. We have the first-in-class NS5A inhibitor. We have perhaps a second-wave protease inhibitor targeted at the unmet need that should still exist once the current drugs down at the FDA are approved. We have a polymerase inhibitor and we have a novel interferon. Many people are trying to replace interferon alpha. Not totally clear that, that's going to be possible at all cases. We do protect a need for this important medicine. However, the goal of improving safety and tolerability, we think, can be achieved by this genomics-derived form of interferon that uses the same inter-cellular mechanism but a different set of target receptors, targeted to the liver and sparing the side effects by not targeting elsewhere. I am not highly concerned, but obviously studying any side effects such as the liver side effect at high doses that you mentioned, with regard to that interferon. We will be transitioning into Phase III, but without the highest dose. It is a common issue in interferons even including alpha interferons to have elevated LFTs. So this is not too surprising, but picking the right dose and the right management scheme will be our approach, as we transition into Phase III. Just to conclude before Beatrice adds her important perspective, out of Berlin, we were very excited at that international conference to be the first company to show that 2 small molecules can cure patients as measured by sustained viral reduction at 24 weeks after therapy, without interferon. We've been able to progress to which patients can be selected for 2 drugs. We have shown that 2 drugs on top of standard of care can treat patients that are no responders, do not respond to current standard of care, can achieve, with small numbers now in early studies between 90% and 100% cure. And this is even a far advanced improvement over the new medicines currently being considered under regulatory review.

Beatrice Cazala

So from the competitive standpoint, you're asking if we're well positioned, and what we believe is that we will have multiple option as we move into Phase III across our portfolio, which will allow us to take into consideration all the data emerging from the competition in the evolving marketplace. We will be monitoring extremely closely the uptake and the real-world performance of the wave one. We don't know yet how those compounds will behave in different genotypes, in different patient population, in different geographies. So with our breadth and depth of portfolio, we believe with the flexible strategy that you have been described many times we will be able to take advantage and react. Obviously, we are not in the wave one but we'll be there monitoring and adjusting one-off strategy. So we feel very comfortable that when we start looking at what extent the pool of currently diagnosed patients will flow into the first wave, we will identify further opportunity to develop our portfolio.

John Elicker

So if I could just conclude what Beatrice and I are working closely together on, it's the fact that the evolving unmet needs is still significant to increase cure rate beyond this first wave set of compounds, to improve tolerability and safety and therefore, allow more patients to enter therapy around the globe.

Operator

We'll go next to Tim Anderson with Bernstein.

Tim Anderson - Sanford C. Bernstein & Co., Inc.

I have three questions all on YERVOY. The first question is if the rate of uptake is very fast, do you have adequate manufacturing capacity? The second question is can you give us an update on where anyone is with a biomarker for this product? It seems like a perfect candidate for biomarker. And then the last question is an updated perspective on YERVOY's potential to work on other tumor types, what's the scientific evidence for and against this, and what's the timing of seeing some of these other studies?

Lamberto Andreotti

Okay. Very quickly, Tim, yes, we have enough manufacturing capacity. And so we don't have any concerns about supplying the market in adequate quantities. And Elliott, why don't you take the other two questions?

Elliott Sigal

So the research on biomarkers continues around the world. This is an interesting issue, and we are heavily involved in this. We would like to understand more the mechanisms of response and prediction. I don't believe there's any clear evidence of a biomarker yet. We will be pursuing it. But I'm also cognizant of the advice I received directly from the physicians that are taking care of these patients and running the trial. And that is at least equal attention ought to be paid into increasing the number of patients that do respond as to trying to figure out a marker to predict the 20% of the patients that have a very significant durability. And we have those options at hand today. We have potential combination therapy, that is standard chemotherapy, sequential chemotherapy and new targeted agents that we and others have in their pipeline. So our effort here is to take immuno oncology to a place where ipilimumab is foundational in a variety of tumor types and it's response can be improved upon by other therapies, both targeted and otherwise. The evidence that other tumor types -- first of all, the theory that this ought to be applicable is the basic mechanism that this is unleashing the immune system that has been put in check by the cancer, and in so doing, activates T-cells to attack the evading cancer. This should be more of a general mechanism. Classically, immunogenic tumors that have been thought to be melanoma and kidney cancer. So those are the first two applications. However, we now have a probe to prove or disprove that and broaden the number of tumor types with our early data in prostate. We are conducting Phase III programs in prostate cancer with our data presented last year and Phase II lung cancer. We are encouraged to begin a Phase III program this year in lung cancer and more data about lung cancer will be presented at ASCO.

Operator

We'll go next to David Risinger with Morgan Stanley Smith Barney.

David Risinger - Morgan Stanley

I stepped off the call briefly, so I apologize if either of these two questions have been asked. But Elliott, I was hoping that you could review the design of ARISTOTLE and your aspirations when you designed the study. And then second, with respect to the conversion of ipilimumab EAP users, just so we can understand that, I think the comment was that 50% will convert to paying customers. What is the number that we're talking about in terms of EAP patients?

Tony Hooper

Well, let me handle the EAP patients first. At the time we got approval, the number of patients running on the EAP program was about 500. So not a large number of patients left to be converted, remembering that a lot of the patients were on the 4-dose regimen. The majority of patients really are outside the EAP program itself.

Elliott Sigal

So the ARISTOTLE program tests apixaban head-to-head with warfarin in patients that have atrial tribulation and some risk factors for stroke in an effort to prevent stroke against the standard of care, oral warfarin. This is part of a larger program, as you know, that includes the unique program of AVERROES that read out last year very favorably, where patients that can't take warfarin because of frailty or bleeding risk were compared with standard of care. It's important to know the comparison with Coumadin, given the evolving landscape, and so we have designed an 18,000-patient study with patients that had atrial fibrillation and at least one risk factor for stroke. The CHADS score, the average CHADS score was about 2. This compares with what dabigatran had for RE-LY, as well as quite similar to AVERROES. And that means that on average a patient had either two risk factors for stroke in addition to a fib or had a prior stroke. The endpoint is the time to -- the dose is our 5 milligrams BID, which we think in multiple studies, has given us positive benefit to risk versus warfarin, where we try to keep the INR in the 2 to 3 range. The endpoint is the time to first occurrence of confirmed stroke or systemic embolism, the time to major bleeding and treatment or follow-up. It's an event-driven trial. We hope to have the results in the coming months, and we hope to present the results in Paris in September at the European Society of Cardiology. And we are working on a filing that combines AVERROES and ARISTOTLE should the results dictate.

Operator

We'll go next to Steve Scala with Cowen.

Steve Scala - Cowen and Company, LLC

Two questions. Just to clarify, how many patients have received the dose of YERVOY commercially since approval is it closer to 50 or 300? And secondly, for Elliott, are you more or less confident in the outcome of apixaban's ADOPT trial post results of XARELTO's MAGELLAN, given the less-sick patient population in ADOPT?

Tony Hooper

This is Tony. Let me just respond. I mean, obviously, we understand how much is moving in terms of vials from us to our wholesalers and how many vials have moved from the wholesalers to physicians or academic institutions. We don't have clear numbers yet of how many patients have been infused. And obviously we'll have that in the next couple of weeks.

Elliott Sigal

So you're referring to the competitor in the field has had a study in medically ill patients where we like to-- anticoagulate them because an immobilized sick patient is at great risk for clot formation. And their current therapy of either subcu Heparin or Coumadin has its disadvantages. And the first trial, I don't know that we've seen full results yet, but with regard to what the FDA requires is a 30-day read and then a follow-up, had some at 30 days in good efficacy, but there was increased bleeding. Our approach from the beginning has to pick the dose of apixaban and the regimen that balances efficacy with bleeding. We have focused on benefit risk being a quotient of efficacy and bleeding. And that is a stark contrast to some of the competitor programs. So our ADOPT trial is in the same type of patient population with a very similar design but with a different approach to benefit risk. But we must wait until that Phase III data matures later this year, and perhaps we'll be able to present it then.

Operator

Our next question comes from Greg Gilbert with Bank of America Merrill Lynch.

Gregory Gilbert - BofA Merrill Lynch

I have a few. First on Manati, we certainly recognize that those two products you mentioned could be delayed, but given that you've had a dialogue with the agency, do you expect those products to be delayed based on what you know today? Secondly, for Beatrice, how has your thinking about European pricing pressures changed, if at all, over the past few months? And how do you think the European payers will react to YERVOY's price when you get to that point? And lastly for Elliott, I know it's early, but can you frame your collaboration on the OPKO Alzheimer's blood test and how that fits into your longer-term R&D strategy? Or is it more of a commercial question?

Lamberto Andreotti

So let me start with Manati. And to answer to your question very directly, we cannot speculate on what the final outcome will be on ORENCIA subcu and belatacept. On the other hand, as I said, I want to repeat it, following their inspection by the FDA, they should have a Form 483 letter, there were several observations. The observations related to manufacturing processes and maintenance to procedures relating to our manufacturing investigations to the process for following up on product supply. We have submitted a big response to the 483 letter to address each of the observations. Now the potential -- the range of potential next step from the FDA, and we hope that the matter will be finalized as soon as possible. We take this matter very, very seriously, Greg. And what is important to note is that so far, there has not been any impact to production or supply of the products produced at the Manati facility. And another important factor is that the FDA recently conducted an inspection of our other manufacturing facility at Humacao in Puerto Rico. And the FDA concluded we with no observations. So the matter is under close monitoring, and we hope that will be finalized as soon as possible. Beatrice?

Beatrice Cazala

Yes, regarding the European pricing, as you were asking our views on it. We have not changed our view of previous quarters. We have historically budgeted at 2, 2.5 impact of price in Europe, as the environment has been challenging for several years. We now consider that the numbers we have put in which is mid single-digit negative impact on new sales will be the case for the whole year. And we feel comfortable with what we see this quarter, that remains the case at this stage. If you talk about the reimbursement piece, which is slightly different, there is still a path forward to recognition for innovation in Europe. Regarding YERVOY specifically, you'll know that we are expecting our approval, so we don't have our final label yet, final indication and scope of the product. So based on that, you know that we are looking at numbers of factors as a company when we price, we look at the value we deliver to patient, the scientific innovation we represent. We feel comfortable that Europe can recognize the innovation of the product. We will look at specific market dynamics. They are very important consideration. And like in the U.S., we will look at the context of each one of the market and the patient who will need YERVOY for this medicine. So clearly, pricing is a challenge. However, recognition for innovation is important. And remember the data on YERVOY, we feel extremely comfortable, that with overall survival, we are meeting the definition of innovation in Europe.

Elliott Sigal

Greg, if I understood your question right, I think you asked for the significance of the relationships, some of the relationships we've been announcing in the area of biomarkers for Alzheimer's disease. This is a very important area. This is an area, where our information about how to select patients, how to diagnose patients and how to follow patients is all very significant. It's changing and it's very relevant to clinical trial design. I'm proud that our team is at the forefront in defining Prodromal as a patient group to study. And experimenting with a variety of biomarkers like Abeta fragments, Tau, phosphorylated Tau, as well as PET scans, not only to get the right patients and a more homogeneous set of patients into the trial but the type of patients that we think would respond to gamma secretase inhibition and the best methods to augment the clinical testing as we follow these patients. So you will see more of that, and you'll see that incorporated in our Phase III design.

Operator

We'll go next to Chris Schott with JPMorgan.

Christopher Schott - JP Morgan Chase & Co

Just had a couple here. Maybe starting off with BARACLUDE, you continue to show pretty impressive growth here. You're now over $1 billion run rate. If so much business is x U.S., particularly Asia, can you just talk about the opportunity from here? Just how much more room do you see to grow the business? What type of peak sales opportunity do you see for the product? Second question was a financial one. Just can you quantify a little bit how much spend is left on PLAVIX and AVAPRO at this point? I know you talked about coming down to effectively zero by year end, but can you just give us a sense of where that stands at this point? And then finally, on YERVOY, I know I appreciate all the information you provided on the call so far. Just if I can throw one more out there, just based on the initial feedback you had from physicians and payers, what do you see as the hurdles, if any, at this point, that you're most focused on to get broad uptake? Has there been any surprises in areas that you've to maybe retool the program so far? I know it's early, but just any feedback on that front will be appreciated.

Lamberto Andreotti

Chris, let me thank you for asking a question about BARACLUDE. Finally, we get one about a great product and the fact that only 20% of the sales in the U.S. have kept this program a little bit less monitored than others. And Beatrice, why don't you answer the question on BARACLUDE?

Beatrice Cazala

Yes, as you understand, we are very pleased as a company with our strong sales performance, driven mainly by the preference of BARACLUDE for many our patients as first-line therapy. We have everywhere increased awareness. We have acceptance of the long-term efficacy of the product. We continue delivering long-term safety and resistance data over time. So this product is clearly recognized as a market leader, which is helping us also on a worldwide basis, with the pathologist and [indiscernible] which will help us in the future for our [indiscernible]. So obviously, a very important product, not just BARACLUDE but the link to pathology in the future. We look at the various region internationally. And you see very strong growth in Europe, about 42% value market share. We have a continued fueling of that growth in the [indiscernible] segments, it's not just a one-line product, it's also a first-line. We see that in all the region in Asia, very strong success in Japan. We also have very strong growth in Asia and Japan of 38%. We see basically the preference of that product both by of patients and physicians driving the growth. So now we have challenges. If you take China, where we are growing. We have also generics coming now onboard. But the value of the compound and the people that are using it and the physician, keep a very strong branded genetic growth behind that compound. So far we see some continued growth in that region outside of the U.S. The U.S. is still growing, let's not forget that. Also a growth product in the U.S. so very, very interesting for us long-term. It's a good success for the company, it's also good success for the patient, and is also serving us as a base for image in the pathology in general.

Lamberto Andreotti

I would add something on BARACLUDE. I think that this is a demonstration that our approach to a number of emerging markets based on innovative products can work and work very well. I mean, BARACLUDE has become our pillar of our China expansion, and the fact that we have other products that we are developing for our key emerging markets is a confirmation that we will continue with the strategy of not going with mature brands or semi-generics or generic products there, but with innovative products. And when they are properly developed for those markets they're properly supported in the marketplace. They can generate success.

Tony Hooper

If I can just add to Lamberto, in a country like South Korea, BARACLUDE has become the #1 product in the country. With a very sophisticated execution of both a strategic marketing strategy, a medical strategy and a patient assistance program itself. And then in a country like Japan, where we have 64% growth, we hold about 65%, 68% of the market share about 98% of all newly diagnosed patients are actually initiated on BARACLUDE. So we continue to show very good growth there. Let me move into the question on YERVOY in terms of the hurdles. Obviously, the first question that we are asked is what is the price of the product and then we spend a huge amount of time discussing the value proposition this drug brings, those combination of overall survival and mean survival, and we'll have no pushback from the medical organizations over there. The question, of course, is really around the temporary J code [ph] in the beginning, which is around the time it's going to take before institutions and hospitals are reimbursed. So we spent quite a bit of time working with our distributors to ensure that we have sufficient days, that we are granting to our distributors, which they pass it on to the hospitals to give them your 120, 130 days to really get their money before they are paying us. So at this stage, we are seeing no major hurdles in terms of the use of the drug, and the supply is going slightly better than we would have expected it to be, yes.

Christopher Schott - JP Morgan Chase & Co

And on PLAVIX and AVAPRO?

Tony Hooper

PLAVIX and AVAPRO, if you look at PLAVIX and AVAPRO, you will see that the A&P spend on these drugs is about 1/3 of what it was 18, 24 months ago. On PLAVIX specifically, we've taken the primary care sales force down by about 64%. And we have maintained presence in the institutions. We of course -- we are defending our business against some competition there.

Operator

And we'll go next to Marc Goodman with UBS.

Marc Goodman - UBS Investment Bank

Yes, the first question is on ABILIFY. It looked like end markets sales seems to be a little lighter, and I was just curious if there was some de-stocking in the quarter. Second, you started to talk about the emerging markets, can you talk about what are some of the key products that will roll out over the next say, two years that will drive the emerging markets? And then the third question is on SPRYCEL. I was just curious, I would've thought that SPRYCEL would be ramping up a little bit more with the first line, and I was curious what your thoughts are there, why we're not seeing higher revenues.

Charles Bancroft

So I'll take the one on ABILIFY. From a prescription standpoint, scripts are actually up in the U.S. 5%. Remember though that our contractual arrangement with Otsuka is there's a step down in up sharing on net sales going from 58% last year to 53% in 2011.

Marc Goodman - UBS Investment Bank

Right. So there was no de-stocking at all, end market sales?

Charles Bancroft

I think there was also some slight de-stocking.

Tony Hooper

Yes, we see about $20 million that was put into the market the end the fourth quarter, which has now been worked during the first quarter of 2011.

Lamberto Andreotti

Tony, why don't you speak about SPRYCEL and then Beatrice will speak about emerging markets.

Tony Hooper

So SPRYCEL, we're very pleased with SPRYCEL performance in the U.S. for quarter one. We're particularly proud of our commercial execution, following the approval of our first-line indication in CML in October, which is about 4.5 months after Tasigna. Our sales for the quarter were up about 59% about $61 million. And RXs themselves continue to grow on an ongoing basis. At the moment we hold about 10% of that market, and I think, the challenge is how the second-generation TKIs can consistently move and take over market share from Gleevec, yes.

Beatrice Cazala

On emerging markets, you're asking the question of what are we focusing on in terms of potential launch in a few years. Obviously, we have prioritized, this is our portfolio, but the three main areas where we're focusing on, one is diabetes. You see there is such a large epidemic out there. We believe our ONGLYZA franchise, with recent launch like in India of ONGLYZA, and with the launch in '12 for China, going to be very strong. We see those two in great deals. So ONGLYZA and the franchise of ONGLYZA is going to be followed by dapaglifozin later on. So diabetes is a huge investment for us. We do it obviously, with our partners, AstraZeneca. The second area is looking at cancer and starting with brivanib, which probably would be one of the first coming. As you know, AGC [ph] is a key disease and again 70% of the case are in Asia Pacific. So it will represent a big opportunity for us in the liver franchise and as we discussed earlier, we have also been very successful in the past. So we know the field of liver disease pretty well there. And more recently, we have SPRYCEL, which has been rolled out and launched in the various geographies, which we are continuing investing and growing. So those are the two big areas, diabetes, oncology, liver and later on, obesity. But obesity will be our next wave of the focus on the emerging markets.

Operator

Our final question comes from Catherine Arnold with Credit Suisse.

Catherine Arnold - Crédit Suisse AG

Hopefully last but not least. As far as my questions for Lamberto, I'm wondering if you could talk about the most important variable towards revisiting your trough guidance for 2013. I'm wondering over the next year as you see how YERVOY ramps up, if it might be fair to say that, that would cause you the greatest chance of potentially increasing your guidance for that trough year? And then for Beatrice, I'm wondering if you could comment on dapagliflozin and talk about how you see that product, assuming it gets approved in the fall, would you see that as ramping up faster than perhaps you've seen with ONGLYZA given the first-in-class status? And if you've begun to work on oral combinations for dapagliflozin?

Lamberto Andreotti

Okay. Let me confirm that you are last but not least, Catherine. And second, let me confirm that we are not going to look again at our guidance for 2013 until we review our plan. Just as a reminder, when we confirmed our guidance in January, we had gone through an exercise that considered the present portfolio and gave a certain degree of risk to the different products in the portfolio itself. Obviously, at that point, we had a strong belief in the importance of YERVOY. So again, what we are seeing -- and again, we are only at the very beginning of the launch of YERVOY. What we are seeing for YERVOY, we do not consider as a surprise. And again, we are not going to update our guidance until planning time. Beatrice?

Beatrice Cazala

So regarding dapagliflozin, as you know, there is still a lot unmet need in Type 2 diabetes and the prevalence is huge. It's a progressive disease. It's often requiring multiple medication to provide long-term comfort. We know that more than 40% of the Type 2 diabetes patient are not achieving treatment goal on current therapy. So the patient management today is pretty straightforward, but there is a lot of financial. And we need to mobilize more around treatment guideline diabetes. And as we provide new options for treatment, to further improve quality of diabetes care, the segmentation of the way the patients are treated depending on their profile, depending on their comorbidity level. So we are very excited by dapagliflozin's unique and certainly independent mechanism because it's not only first-in-class, it's first in a very different class. It acts independently from insulin, and therefore, offering a very different type of option from existing therapies. So we believe it could have also, a meaningful effect on addition to glucose control, on parameters such as weight and blood pressure. And in a disease like diabetes, those attributes could be extremely important and valued by the patients themselves, not just the physician with the ability of increasing compliance for the patient. So we feel extremely encouraged by what we see with dapagliflozin. We have launched more and more, and we continue learning about the diabetes market and what the levers will be. So we are working on those, and hopefully, we will be able to get a fair share of what market we will access at the time of our launch.

Elliott Sigal

I'll just add, Catherine, with regard to your question on fixed-dose combinations, to what Beatrice said, given the importance of these combinations in the marketplace, we have a dapagliflozin metformin fixed-dose combination in development and plan to explore other combinations.

Lamberto Andreotti

So let me close this call. Thank you again for your questions, and I would like to say that I'm very proud. We are very proud of the number of high-quality products that were discussed during this call. And I would like to reiterate one key point, Bristol-Myers Squibb has had a very good first quarter of 2011. One that confirms our focused biopharma strategy and our ability to deliver strong financial results, while at the same time, making progress on our innovative pipeline. Thank you very much, everybody.

Operator

And that concludes today's conference. We thank you for your participation.

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