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Bristol-Myers Squibb (NYSE:BMY)

Q2 2011 Earnings Call

July 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

Brian Daniels - Senior Vice President of Global Development & Medical Affairs and Member of Management Council

Charles Bancroft - Chief Financial Officer and Member of The Management Council

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

Steve Scala - Cowen and Company, LLC

David Maris - CLSA Asia-Pacific Markets

Christopher Schott - JP Morgan Chase & Co

Gregory Gilbert - BofA Merrill Lynch

Seamus Fernandez - Leerink Swann LLC

Mark Schoenebaum - ISI Group Inc.

Marc Goodman - UBS Investment Bank

Operator

Good day, and welcome to today's Second Quarter 2011 Earnings 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 sir.

John Elicker

Thanks, Brandi, and good morning, everybody. Thanks for joining us to review our second quarter results. With me today are Lamberto Andreotti, our Chief Executive Officer. He'll have prepared remarks, as will Charlie Bancroft, our CFO. As you know, Elliott Sigal, our Chief Scientific Officer, usually participates in the call but sitting in for him today for Q&A is our head of development. Many of you know Brian Daniels. Elliott enjoys these calls and would like to be here, but he recently had some knee surgery and he's recovering well. He enjoys participating, as I said, and he's looking forward to the October call. So with Brian for Q&A, also we have Beatrice Cazala, Senior Vice President of Commercial Operations with responsibility for commercialization, Europe and emerging markets; as well as Tony Hooper, Senior Vice President Commercial Operations with responsibility for the U.S., Japan and rest of world.

Before we get started, I'll take care of the legal requirements. During this call, we'll 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 8-K. These documents are available from the SEC, the BMS website or from Bristol-Myers 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.

During the call, we'll also discuss certain non-GAAP financial measures adjusted to include certain cost expenses, gains and losses and other specified items. Reconciliations of these non-GAAP financial measures to the most comparable GAAP measures are available on our website. Lamberto?

Lamberto Andreotti

Well, thank you, John. Good morning, everyone. While we have just completed a very good quarter and as you have seen, we have raised our guidance for 2011 and confirmed minimum non-GAAP guidance for 2013. Our financial results were strong, with double-digit growth in sales.

Operationally, the execution of the YERVOY launch has already started delivering positive results and from an R&D perspective, we had several global regulatory approvals, including ELIQUIS and NULOJIX. For ELIQUIS, we also announced exciting top line data for stroke prevention in atrial fibrillation. Across all our operations globally, we continue to demonstrate that our bio-pharma strategy is on track, moving forward, and delivering results. Charlie will speak to the financials, work you through the specifics. I will instead focus on some of the other key developments.

Clearly, a highlight of this quarter was the launch of YERVOY. Approved in the U.S. in March, our breakthrough medicine for metastatic melanoma was officially launched early in the second quarter. And already, in its first 3 months on the U.S. market YERVOY sales were strong at $95 million. While some patient demand had been building up pending YERVOY's approval, most of these initial sales were due to one simple and compelling fact: the product is good. And there is a very high demand for the first new treatment in over a decade and the first one ever to demonstrate a significant overall survival benefit in this patient population.

A key driver of YERVOY's strong initial sales was our ability to execute commercially, utilizing the new customer model we talked about during last quarter's call. We have received very positive feedback, both about the level of support we are providing and the materials we are making available to the entire unit of care. Based on the initial success of YERVOY, supported by our new customer model, we'll adopt a similarly thoughtful, holistic and focused approach to commercializing all new products in all countries. The approach we take to thoroughly understanding the patient journey and the needs of all the customers involved, will always remain core.

A few additional notes about YERVOY. Outside of the U.S., YERVOY was approved in Australia in June and it was just approved on July 14 in the European Union. And at the annual meeting of the American Society of Clinical Oncology, we presented the results of the second Phase III study of YERVOY, results that again demonstrated improved overall survival in patients with the most aggressive form of cancer. So taken together, the approval, the launches, the clinical advances, this was an excellent quarter for YERVOY.

More generally, in addition to YERVOY, we had several other global regulatory successes. Most notable were the approvals of our 2 other new products: ELIQUIS and NULOJIX. ELIQUIS (apixaban) was approved and launched in Europe for the prevention of VTE or venous thromboembolic events in adult patients who have undergone elective hip or knee replacement surgery. Soon after, we announced top line results from our Phase III ARISTOTLE trial which demonstrated ELIQUIS' superiority with respect to both safety and efficacy for the prevention of stroke in patients with non-valvular atrial fibrillation compared to warfarin. This data will be presented at the European Society of Cardiology Meeting at the end of August, and we are still on target for submitting regulatory filings in the U.S. and E.U. later this year.

And NULOJIX (belatacept), our first-in-class biologic immunosuppressive therapy for the prevention of organ rejection in kidney transplantation, was approved and launched in both the U.S. and Europe.

As you know, we just received a negative opinion on dapagliflozin from the FDA's advisory committee. And while disappointed, I want you to know that we are not at all dissuaded, and that we and AstraZeneca will continue to work with the FDA. I'm saying this not because this is what we are supposed to say, but it's because we do believe in this product and remain firmly committed to its success.

And finally, adding to our overall good operating news during the quarter, we were informed by the FDA in June that the corrective actions we have taken at our Manati manufacturing facility in Puerto Rico has sufficiently addressed the matters identified in a 2010 FDA warning letter. I and my management team remain committed to ensuring the actions we took at the Manati site are maintained and that the Manati site, and all our other manufacturing sites, are in full compliance with both company and regulatory requirements.

Before passing the floor to Charlie, I want to mention 2 business development transactions that we just completed, both of which happened in the end of the second quarter, but I think that they are worth mentioning. First, we announced a global agreement with Innate Pharma S.A., a biotech company in France, for the development and commercialization of a biologic in Phase I development, a good addition to our strong immuno-oncology portfolio. And just last week, we entered into an agreement to acquire Amira Pharmaceuticals, a San Diego-based company that focuses on the discovery and development of medicine for the treatment of fibrotic disease. This is an area of increasing interest for us.

Again, taken together, it was a very good quarter. We delivered solid results across all our operations globally. And this not only increases my pride in our company, it also increases my confidence in our future. And with that, let me turn it over to Charlie.

Charles Bancroft

Thank you, Lamberto. We did had a very good quarter. We delivered non-GAAP EPS of $0.56. Sales growth across our key brands was partially offset by an increase in operating expenses and a higher effective tax rate compared to the same period last year. Included in our second 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 doughnut hole coverage, both of which went into effect in 2011.

I now want to give you some brief highlights from our second quarter financial results before we go to your questions.

We reported second quarter net sales of $5.4 billion, up 14% compared to last year. Volume was strong, providing a 5% favorable impact on sales. Price was also favorable by 5% and foreign exchange contributed 4% to sales. The U.S. healthcare reform coverage gap implemented in 2011, and E.U. measures, together had just over a 1% negative impact on sales.

As I look at the second quarter sales performance, I am very encouraged by the trends in many of our key brands that are important to our future growth. This includes continued strong performance for BARACLUDE, ONGLYZA, SPRYCEL, ORENCIA, and as you've seen, the YERVOY launch has been quite strong. As Lamberto discussed, we are pleased with the performance of YERVOY with sales of $95 million in the quarter. We believe this strong start reflects both the compelling profile of the drug and the execution of our commercial model.

We are breaking YERVOY's sales into 3 categories: a stocking element, a bolus or onetime element, and underlying demand. As expected, wholesalers are holding what we consider normal levels of inventory. Our preliminary estimates are that the bolus accounted for approximately 30% of our Q2 sales. We believe the majority of the bolus was driven by a warehouse effect and patients on current therapy being switched onto YERVOY before disease progression. As we move into Q3, we will get a better sense of the actual size of the bolus and whether it has fully run its course. The largest driver of our Q2 sales was strong demand. New patient starts are split, approximately 40% in first line and 60% in second line, and the majority of demand has been driven by physicians experienced with YERVOY. For the remainder of the year, the YERVOY sales range will be dependent on a few factors: the actual size and depletion of the bolus and the extent to which we can broaden our physician base beyond the current prescriber set and expand the patient pool.

As I move to the rest of our product performance, please remember that foreign exchange did have a positive impact on all of our global brands. Performance, excluding foreign exchange, is available on our website.

BARACLUDE, our treatment for hepatitis B, was up 31% including 33% growth internationally. BARACLUDE's long-term efficacy, safety and 5-year resistance data has strengthened its position as the preferred first-line agent.

The ONGLYZA franchise delivered sales of $112 million, a 38% increase sequentially versus the first quarter. The franchise delivered 22% prescription growth versus 6% for the class. Going forward, we are focused on commercial execution and positioning our data in renal patients and our head-to-head study versus SUs.

SPRYCEL was up 46% in the quarter, reflecting successful commercial execution and the launch of the first-line indication. U.S. prescriptions were up 11%, and our market share in the U.S. increased to roughly 10%, or parity with Tasigna.

ORENCIA was up 28% as we continue to make progress in becoming the IV biologic of choice, highlighting efficacy and durability of response. We are prepared for the expected launch of our subQ formulation with its PDUFA date next week.

ABILIFY was up 12% in the quarter despite the step-down in our contractual share of net sales. The antipsychotic market in the U.S. seems to have stabilized after several quarters of decline, growing at roughly 3% in the quarter, while ABILIFY prescriptions grew at approximately twice the market. European sales were also strong.

Now let me give you just 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 in our press release and on our website.

Gross margin was 73.1%, down 70 basis points compared to second quarter last year. The decrease was primarily driven by the impact from certain manufacturing variances year-over-year.

Advertising and promotion expenses were down 4%, or 6% excluding exchange, at $253 million for the quarter. Less spending on the promotion of PLAVIX and AVAPRO, products at the end of their life cycle, was partially offset by increased investment spend on 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 16%. This is due primarily to the pharmacy, which is recorded in G&A, and the negative impact from foreign exchange. Excluding the pharmacy, MS&A was up 9%, with approximately half driven by foreign exchange. We did have increases in investment spending behind YERVOY, NULOJIX and ELIQUIS.

R&D increased 8%, driven by overall portfolio spend and the ZymoGenetics acquisition.

The effective overall tax rate was 27.9% in the quarter. Earnings mix had a negative impact in the quarter and the pharmacy had a negative 1% impact. As I mentioned on the January call, I expect quarterly variability in the tax rate based on the timing of certain discrete items, which we expect to occur later this year.

As Lamberto mentioned, we raised our 2011 GAAP and non-GAAP EPS guidance. Our non-GAAP guidance for 2011 is now $2.20 to $2.30. Overall, we are seeing good sales trends for our key products, including YERVOY. At the same time, we are selectively increasing our investments in these products as we look to maximize the value of our portfolio.

As I update our line item guidance, let me point out that this guidance assumes current foreign exchange rates remain constant for the balance of 2011. We now expect sales to increase in the high single-digit range. Advertising and promotion is expected to decrease in the mid single-digit range. MS&A is expected to grow in the high single-digit range. And we expect our effective tax rate to be approximately 26%. Please note that this includes the impact of certain tax discrete items expected to occur in the fourth quarter. We have also confirmed our 2013 non-GAAP floor EPS guidance of $1.95.

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

John Elicker

Thanks Charlie and thank you Lamberto. Brandi, I think we're ready to go questions, and please remember that in addition to Lamberto and Charlie, with us for your questions are Brian Daniels, Tony Hooper and Beatrice Cazala. Brandi?

Question-and-Answer Session

Operator

[Operator Instructions] And we will take our first question from David Risinger with Morgan Stanley.

David Risinger - Morgan Stanley

I had a couple of questions. First, the YERVOY sales ramp has obviously significantly exceeded expectations, and Charlie talked about some of the drivers, but I just had a couple of questions about the ramp. First of all, were there more patients that converted at the time of approval to paying patients than you had expected? Second, what percentage of real-world dosing is at 10 milligrams rather than the labeled 3-milligram dosing? And then third, on YERVOY, how should we think about third quarter sales sequentially? Should we expect them to be up or down from what you reported in the second quarter? And then just to change gears, could you just frame for us the disclosure plans on the apixaban data at ESC, including whether we should expect a publication that weekend?

Lamberto Andreotti

So I would suggest that, Tony, you take the first 2 questions on YERVOY and, Charlie, maybe you can think about Q3 sales versus Q2.

Tony Hooper

Okay. Thank you. So as Charlie said, when we look at the Q2 sales, they're broken down into 3 buckets. And when I look at the bolus bucket itself specifically, which is about 1/3 of the business, we estimate -- and I have to remind you that the data is fairly thin, so we're doing an assumption upon assumption that we have. But our extrapolations show that only between, probably, $3 million and $5 million of our sales were the evolution of patients from the EAP program to a commercial supply. So very much in line with what we had projected. We were surprised at the number of patients that were moved, i.e. stable switched patients. That was more than what we had expected. And then lastly, the warehouse of patients we saw was much larger in terms of patients that have been brought in on both first-line and second-line. So when we look at the dosing, we don't have accurate data yet, but in general and the feedback we're getting from physicians, that in the majority they're using the 3-milligram dose. And last but not least, as I look into Q3 I think the bolus will, by definition, roll into Q3 to an extent because of the dosage being 12 weeks. And we see a continued increase in the usage in both first line and second line as we go into Q3.

John Elicker

Charlie, you want to go ahead?

Charles Bancroft

Yes, maybe just a little more specifically on Q3. As Tony mentioned, it will depend on the actual size, going in, of the bolus and in the rate of depletion, but we do expect the bolus to carry over into the third quarter. But then from a demand basis we do expect demand to increase, and that is the extent in which we can broaden, not only our physician base, but also expansion of the patient pool.

Brian Daniels

All right. Yes, thanks. David, I think you asked what to expect at ESC. SO ESC is -- the meeting I think is in Paris in the last week of August. At that time, we will be presenting top line results from ARISTOTLE and -- as well as some additional analysis from AVERROES, our accompanied study in stroke prevention in A-fib in patients who are intolerant to that, and we do also -- this external steering committee is working very diligently to try to ensure simultaneous publication at the same time as the ESC plenary discussion.

John Elicker

Thanks for the questions, David.

Operator

And we will go next to John Boris with Citi.

John Boris - Citigroup Inc

First question for Lamberto, and really specific to YERVOY and ELIQUIS. Quite frequently, as you forecast products for the long term, you have optimistic, pessimistic and base-case scenarios. One would assume that -- and was looking if you can confirm whether you've moved from a base-case to an optimistic scenario, and if you have what that means from a potential sales trajectory over the long term for those assets. And then also, what does that mean for the level of investment that's required to get -- or to reach those targets over the longer term? So any commentary around that. And then I just have one follow-up on ORENCIA.

Lamberto Andreotti

Clearly, the YERVOY results are in line with our best projections and most optimistic projections. I think that the important thing to underline here is that the uptake is faster, probably, than what we had in our base case. And I think this is -- as I said before, a demonstration of both the quality of the product and the validity of our commercial execution. Now when we look at ELIQUIS and we look at the data that we are seeing, and we expect to have more understanding of the data in the next few weeks, and the publication of data As Brian was saying -- obviously, we have moved our expectation for ELIQUIS from a base case to a high case, given the results of ARISTOTLE and given the importance of the full package of ARISTOTLE and AVERROES at the same time. You're asking about resources. We are allocating the right resources to both products and it's clear that, for ELIQUIS, we have underway a good analysis of whether additional resources are needed, because of the different profile that we now have from what our base case was projecting. Pfizer and Bristol-Myers Squibb are working together on this very diligently and very effectively.

Brian Daniels

John, I don't know if you're still on the line.

[Technical Difficulty]

Operator

We will take our next question from Catherine Arnold with Crédit Suisse.

Catherine Arnold - Crédit Suisse AG

I wondered if you could give us a little bit more color on YERVOY. There's been a lot of questions asked. But I know, at ASCO, there was some commentary from the podium about using the drug as monotherapy first-line instead of with the Carbazine, and the thought being that the toxicity would be lower so the number of cycles may actually be greater. I'm wondering what you're hearing from the field, if you can give us any color on that. And then if you could give us an update on YERVOY and the other solid tumor programs, particularly prostate and non-small cell lung cancer.

Tony Hooper

So let me respond first. As I said, the data is based on some preliminary discussions with physicians, and we are seeing a usage of the drug across the board in different situations, but there's no clear feedback from physicians at the moment. From a cycle perspective, or number of doses, I think we're going to be looking in the rear-view mirror and really understanding how many doses the patients have. We're hoping to have that data within the next couple of months to really lock it down. We do see about 600 physicians, a large number of them being experienced in YERVOY who are using the drug in a fairly large number of patients. And the feedback is consistently -- the reason why they do that is based on the long-term efficacy data that they're perceiving. Brian?

Brian Daniels

Thanks, Tony. So, Kevin, I'll just follow-up on the life cycle management opportunities that we see for ipilimumab or YERVOY. Just to remind you, we have an ongoing adjuvant study in melanoma, which we're working with the European trial group with, that we're diligently enrolling and then waiting for data. So that would be in the melanoma space for the continuation of the development of the profile and its potential benefits in a different patient population. If you then move to other tumors, we've already started an extensive Phase III development program in hormonal resistant prostate cancer that has 2 studies. We're looking to begin our Phase III program in non-small cell lung cancer with a study in the squamous histotype histology starting this year. Also interested in following up is in our data in small cell lung cancer as well and we have a large variety of Phase II, what I would call signal detecting studies in a diverse set of cancers, many of which have not historically been thought to be immunologically sensitive. But from those studies we'll make the right Phase III investment decisions based on the data that we see as it rolls out over the next few years.

John Elicker

Thanks, Catherine.

Operator

We will go next to Seamus Fernandez with Leerink Swann.

Seamus Fernandez - Leerink Swann LLC

Just actually 3 quick questions. First, just can you update us on the situation with the dual eligibles and if you think there is possibly any changes coming with regard to healthcare reform? Just what you're hearing from Washington in that regard. Second, the share repurchase came in a little bit below our expectation, despite that you obviously had a great quarter. But just wanted to get a little bit of an update in terms of the sequence, Charlie, of what you saw or mentioned to us previously with regard to M&A first, followed by other capital allocation decisions. Maybe you can just give us an update on that. And then last, with regard to next year, can you just update us on how we should think about the PLAVIX erosion, given the fact that there's no exclusivity for the generics in that time frame?

Lamberto Andreotti

Okay, I will start with the first. The answer is very fast. I think nobody knows what's going on in Washington right now. I think the people in Washington themselves do not know it. So we, obviously, are supporting our industry association in making clear to the Congress, the White House, the importance of innovation in this country, the importance of our industry as an employer of qualified people. And we are also continuing to explain to people what Medicare means, especially from the point of view of the drugs. Now, what will happen? Well, nobody knows. And hopefully, what will happen will happen soon and will be not detrimental to the pharmaceutical industry. Charlie?

Charles Bancroft

Yes, just briefly on the share repurchase. We basically do our share purchase through a systematic 10b5-1 program. We don't do -- we do very little opportunistic-type purchases. And our -- it's subject to a bunch of different things, the share count. It's how many shares we've repurchased. Do we -- are we in a blackout period? And then if there's any option exercises and clearly the price of the stock, because the 10b5-1 is based on dollars, not on shares. So that should give you a sense of how we implement our share repurchase program. As it relates to capital allocation, I think we've been very consistent on this. We look across the board at capital allocation as it relates to business development and shareholder distributions. We try to have a balanced approach. We think, at this stage, our best return on our capital is business development, but we will remain disciplined. We look at all deals that have to make strategic sense for Bristol-Myers Squibb, but also have to make sense financially. And we continue to look at a lot of different opportunities. Lamberto mentioned a couple that we executed in July, and we continue to be very active in that field.

Tony Hooper

So -- this is Tony. So let me then respond to your question on PLAVIX and the loss of exclusivity. When we lose the patent on May 17, 2012, we do expect generic erosion to occur very quickly. I think we've run a model with about the last 7 generic erosions, but I probably believe that the recent case with Cozzar provides a useful data point. In that case, they lost about 85% of their demand in the first 2 months with only 2 generics, and as you correctly say, we will not have the 180-day exclusivity period and therefore, we anticipate multiple generics coming at the same time. I'd like to also remind folks that in the marketplace, both the wholesalers and the retailers hold a fair amount of inventory. Our data shows the wholesalers holding between 0.4 and 0.5 a month and retail holding as much as a month. So if you're selling about $550 million a month, that's about $750 million of stock, and therefore we expect that the actual x factory sales are going to be dramatically different to what the end market demand will be post loss of exclusivity.

Lamberto Andreotti

So both lower demand -- much lower demand and we have the inventory here now.

John Elicker

Thanks, Seamus.

Operator

We will take our next question from John Boris with Citi.

John Boris - Citigroup Inc

Just a question for Beatrice on ORENCIA. On the subQ opportunity do you have, first off, launch quantities ready to go and the sales force trained? And how would you characterize that opportunity? And then from Brian, just an update on the lupus nephritis opportunity and how enrollment's going there?

Lamberto Andreotti

Oh, yes. We launch first in the U.S. Tony, you want to speak about...

Tony Hooper

So one, we're pretty delighted with the performance of the IV solution at the moment, as we continue to grow market share in the market, becoming what we believe to be the drug of choice in IV. We're also looking forward to launching ORENCIA in the subQ market, which is the other 2/3 of the market where we haven't been able to compete to date. We do believe the patients and their physicians who prefer subQ, who value a medicine with an alternative mechanism action to the anti-TNFs. And we do expect, initially, that we'll see adoption from existing ORENCIA users. The team are trained, our PDUFA date is next week, and the manufacturing organization is running and we don't expect any problems with product supply. I would point out that our commercial model for this launch, again, is designed to provide a high level of customer service to both patient and the end of care. And in particular, it is intended to support patient initiation and retention while on ORENCIA subQ. It will include customer services offerings dedicated to helping individual patients with logistics issues such as sourcing, shops, containers and getting reimbursement support.

Brian Daniels

So John, let me just briefly update you on where we are with lupus nephritis. So if you think about it lupus and lupus nephritis does represent sort of the touchstone on how we think about developing novel drugs for Bristol-Myers Squibb. An area of very high medical need without a lot of, today, innovation particularly for lupus nephritis available to patients. So we've had a long program in lupus with ORENCIA and we will be presenting our Phase II lupus nephritis trial at ACR, which is in November of this year. We're looking at that data and under evaluation, both internally as well as series of external lupus experts, as to what our potential steps in the Phase III might be. It's a very challenging area to do clinical research and it is taking -- we're taking our time to make the right decisions for the medicine and for patients.

Operator

We will go next to Greg Gilbert with Bank of America Merrill Lynch.

Gregory Gilbert - BofA Merrill Lynch

Three quick ones. First, Lamberto, as you took a harder look at the $1.95 or better goal, can you talk about some of the upsides versus downsides that have occurred since the last time you went through that process? Obviously some are obvious, some maybe less so. Secondly, Charlie, specifically for 2011, what changed in your outlook other than YERVOY? And third, perhaps a commercial question. What have been the learnings, so far for you guys, from the PRADAXA launch, other than the fact that it's been a pretty good start? Maybe some more nuts and bolts stuff there.

Lamberto Andreotti

Charlie, why don't you take both there. First and second question.

Charles Bancroft

Yes. When we think about 2013 floor guidance, which we gave in March 2010, there was a few unknowns at that point. U.S. healthcare reform hadn't been enacted, there was also additional European government measures that began around actually this time last year. We do feel very optimistic about our future. We remain focused on productivity but at the same time, as we have various opportunities, very exciting opportunities in front of us, we are appropriately investing in the business for the long term. And as it relates to 2011, it was primarily sales-driven, YERVOY in part. But if you look across the rest of our brands, we've also seen very strong performance, particularly, sequentially quarter-to-quarter from Q1 to Q2. So we're very encouraged by that.

Lamberto Andreotti

Beatrice, do you want to take the other question?

Beatrice Cazala

As you can imagine with our coming launch soon of ELIQUIS, we have been looking sensitively at product size and the potential learning with our partner Pfizer. So the first thing I will say is that it's confirmed that there is a huge opportunity beyond what product size already capturing of the market. It's certainly an unsatisfied market with unmet medical need and we see with our launch benefit of working very closely with the cardiologists through a launch that would comprise. It is one that falls away to cardiologist education, as well as patient and physician integration. So that's very important. Well, we learn from them, too, that we need to understand a bit more in that, what's going on between the cardiologist and general practitioners, as well as some internist. Because that's link between the 2 are going to be critical for the speed of adoption of the time, once you have passed the first wave of cardiology prescriptions. So we are looking at that intently. We are preparing with Pfizer on what's the best customer model to bring our profile to the customers as soon as we can do that. And that's important to us to realize that the huge opportunity needs to come with the appropriate customer model, the way we have done with these other products [ph].

Lamberto Andreotti

I think, if I can add something, Beatrice. I think that we are obviously happy for Behringer enzyme [ph]. The results are good, but then we're think that we have a better product, we are very excited about how we can do well in the marketplace and how important our product is. I would like to add another thing. It's interesting to think that our future involves very many products now. So we was thinking about a very differentiated portfolio. We've differentiated products, each in a therapeutic class. So it's an interesting story and that makes us very confident about ELIQUIS obviously, but the entire portfolio.

Operator

We will go next to Marc Goodman with UBS.

Marc Goodman - UBS Investment Bank

Just a few questions. First, can you tell us the number of patients that are actually on YERVOY right now? Second, can you just remind us of the timeline for the combo study with the Roche BRAF win? When does that kick off? And when should we kind of think about seeing results for that? And then third, PLAVIX was very strong in the U.S. Can you just give us a sense of, was there anything unusual there? And should we expect that product to remain at these type of levels? I know you took some price increases, but I guess I was surprised that so much would be able to flow through. So just a little flavor there, because I would have thought that, that also helped you as far as raising your 2011 guidance.

Tony Hooper

So this is Tony. As we look at the YERVOY data at the moment, plan to determine the actual number of patients is kind of tough, because we're not quite sure whether patients are receiving second or third doses at this particular stage. But we've done some calculations, which would put the numbers in excess of 1,000 at least at this particular stage, and we'll keep digging down to try and make sure we understand what the situation is. As we break the data up, it's pretty clear we're getting more usage in second line at the moment, but first line is much higher than we thought it would be at about 40%. PLAVIX itself continues to be a unique success story. It is, without doubt, a wonderful treatment for a broad range of patients. And our sales from the U.S. were up about 17% this year and about 7% higher than last quarter, driven primarily by price and inventory build, as well as some decreased demand and higher Medicaid Part D rebates. If you look at the TRx data, we're down about 4%, but if you look at the volume in terms of actual capital, that's only down about 2%, showing that the prescriptions have actually got slightly longer. The market itself is slightly softer due to a decreased level of stents, but the rest of the business is fairly flat and we are holding out market share quite strongly.

Brian Daniels

Sure, Mark, I will just follow-up. As you are aware, in June we announced our clinical collaboration with Roche to use ipilimumab or YERVOY in combination with their BRAF inhibitor in that subset of patients who have the activating mutation of BRAF. We are just actually 2 weeks ago finished a meeting between the 2 companies, complete the design of that Phase I/Phase II study, which we hope to have first patient dosed in the third quarter this year. As that data evolves we'll obviously, together, look to rapidly, either enlarging the trial or move to a more importance -- more registrational type of work based on what we see. But the first study will be a Phase I/Phase II safety efficacy study, particularly looking at how best to combine the medicines together and manage the toxicity profiles of both.

Operator

We will go next to Chris Schott with JPMorgan.

Christopher Schott - JP Morgan Chase & Co

Just had 3 quick questions. The first was a follow-up on an earlier apixaban question. When you're thinking about the buildup of apixaban in A-fib, are you thinking about that's something more like ONGLYZA that will start slow and really build momentum over time? Or do you see the potential for a much more dramatic uptake in the market? Second question was on YERVOY and thoughts on European pricing and uptake in Europe. And then finally, with the tax rate now sitting at about 26%, can you just talk a little bit what's been driving that higher currently? And just some color about how we should think about the tax rate trend over the next couple of years for Bristol as you go through some of these patent expirations.

Beatrice Cazala

So we're not seeing a decrease in the uptake, that the work we are currently doing, analyzing how fast the uptake can be. Very different situation from ONGLYZA, because that was a true large unmet medical need and there don't seem to be a treatment in our share, as we saw in the diabetes market. So clearly, looking at what's happening there, we need to understand now the relationship between the cardiologist and the general practitioner, to see how we create the right form for the prescription to grow fast. However, we have here very strong data. We have head-to-head comparison with a standard of care, whether we are depending on the patient profile as it was with warfarin -- or we'll have -- we have data also on aspirin. So we have a broad scope of data. We have work that have been done already to educate by both [indiscernible] here our product staff. So we believe the penetration could be significantly faster than ONGLYZA. And obviously, we are spending a lot of time now trying to optimize that in an even better fashion. YERVOY EU, we are very pleased because we got the approval on the 14th of July, so you can imagine that was an important moment for the team. And we have now launched in Germany, in Sweden and in the Netherlands. So this is early days, because it's only 2 weeks. We are planning to launch in the U.K. as soon as we have final clearance, probably in August. And all what we hear from our investigators and our subscribers of potential interest for the price [ph] are very important. We have worked very carefully with all the governments to look at how to transition that market-by-market, the European access program. As you know, in Europe there are different regulations according to countries and therefore we are moving in that EAP program depending on the market. In the market like Germany where we have launched, we have launched at the similar price as the U.S. It was $30,000 per infusion. It's about EUR 21,000. And as you know, in Europe, we discussed country-by-country over time, so our price will come through the access negotiation on a country-by-country basis. So far it's very early, but we have got very good reception from the value of the products from both the potential prescribers, the patient and very strong patient support and the first discussion we have had with some of government and payers.

Charles Bancroft

Regarding the tax rate. As we entered 2011, one of the drivers that put pressure on the tax rate with the nondeductibility of the pharmacy, and as we look now throughout the full year of 2011, the increment to the high end of that range of our original guidance is primarily due to earnings mix between low and high tax jurisdictions. Moving forward, there are a few items to keep in mind regarding taxes. One is earnings mix will impact our rate. We are constantly evaluating various tax planning opportunities that will hopefully have a positive impact on our rate and also, PLAVIX is a U.S.-based partner product. So the loss of PLAVIX will have a favorable impact on our rate going forward.

Operator

We will go next to David Morris with CLSA.

David Maris - CLSA Asia-Pacific Markets

A few questions. Lamberto, one of the CEOs from a peer yesterday said something that the market for deals has gotten a bit out of hand for development programs. Do you agree with this? And is that reflected in the 2 development-stage deals that you announced in the quarter? Or are you not seeing that? And then separately, on the Express Scripts/Medco deal, what do you think it means, if anything, longer term for the industry?

Lamberto Andreotti

I will answer about the deals and the cost of deals and, Tony, you can think about -- answer the second question. I think that good companies and good deals exist. They are not plenty. I think that our approach to identifying deals and negotiating them is winning, because we really focus on things that are very complementary to our pipeline and very strategic for us. The initial costs of certain deals might -- may look a bit higher than they were in the past, but I believe that we are buying value products and projects at the right price. Charlie, you want to expand in this?

Charles Bancroft

Yes, I would just comment briefly on Amira, where we just purchased in July, because we see fibrotic disease as a strategically attractive adjacency to several of our core disease areas, in particular immuno-science virology, cardiovascular and metabolic diseases. It's our belief by completing this transaction, we were able to advance our capability in this disease area and are getting access, not only to a lead Phase I asset, but also to a platform producing other candidates in the future. And these are diseases with high unmet medical need, so with these considerations in mind, we believe that we paid a fair price for Amira.

Lamberto Andreotti

And I think, Charlie, we should also add we reached the conclusion to move faster into the disease -- into fibrotic disease, not long ago but it's very careful analysis by our team. At the moment, we decided we acted pretty fast and effectively. And this is a sign that our company can be a driver -- much more a driver than we were in the past. I would say much more a driver probably than some of the competitors we have in the marketplace.

Tony Hooper

So this is Tony. Let me just respond to your question around Express Scripts. Obviously, it's a personal opinion, but there's no doubt in my mind that the biggest change in the U.S. market over the last couple of years has been the fourth hurdle, being access. Unlike the rest of the world or where the U.S. a few years ago, every single prescription in today's environment has an economic basis to it and therefore, our ability to ensure access as we come to market is very important. With Express Scripts potentially growing to managing between 40% and 45% of the PBM market, they become a much more stronger organization to negotiate and to put into place potential blocks. The whole issue, of course, moves back to your ability within the pipeline to present differentiated products from a clinical perspective, from a patient benefit perspective and the pharmaco-economic perspective, and when I look at our portfolio I think we are well-positioned to ensure decent access as we go forward.

Operator

We will go next to Mark Schoenebaum with ISI Group.

Mark Schoenebaum - ISI Group Inc.

I apologize if I missed this, but on YERVOY, you said inventory is normal. Can you just -- can you give us any indication of what normal is in days or weeks perhaps? And you mentioned there are 1,000 -- roughly 1,000 patients on drug, and I think you said roughly 30% of those are from the bolus, so about 700. What would 700 patients represent in terms of penetration into your target market? And then my second question was around apixaban and the medically ill population. I think you've got a trial that's coming out. I was wondering if you could comment on timing and also the market opportunity, because I know that Lovenox, at least at one point, was doing $2 billion in medically ill and I'm wondering if you see a similar opportunity.

Tony Hooper

So when we talk about inventory, we see about $15 million of the $95 million being inventory, so plus/minus 2 weeks of inventory in the marketplace. Remember, we have an exclusive distributorship model with only 2 distributors, so we know exactly what's in the marketplace. Number two, the bolus being about 30% would mean that's about 300 patients. When I look at the non-bolus market, we are thinking we're in the range of between 20% and 25% market share of the first line, second line patients.

Brian Daniels

Sure. Just to follow-up on the medically ill. So this is a study that looks at the prevention of deep venous thrombosis and pulmonary embolism in patients who are admitted to hospitals with serious medical conditions. So as opposed to the approval we have in Europe, where you're looking at prophylaxis in patients who are having elective orthopedic surgery, this obviously looks at a much different patient population, on with a lot more comorbidity, much higher acuity because obviously they're being admitted to the hospitals for things like multi-lobar pneumonias, strokes and the like, and we will be looking at that top line data sometime this year. And then based on that, look at either supplementing our regulatory approval in Europe with that indication or potentially moving forward with a DVT prevention broader indication filing in the United States. So that will be data-driven and we'll be seeing that data sometime this year. I would say, and this is outside my area of expertise, I'm not sure I've ever seen an estimate that the medically ill DVT prevention market is $2 billion for Lovenox, but it's not my area of expertise.

Beatrice Cazala

We have looked at potential profile in the marketplace and clearly, we are not in that tranche of numbers. So our major indication for us, we remain A-fib and that's what we are focusing on now. And we're waiting for the profile to determine the potential.

Operator

We will take our last question from Steve Scala with Cowen.

Steve Scala - Cowen and Company, LLC

First for Dr. Daniels, regarding dapagliflozin, I would have imagine you haven't had a chance to sit down with the FDA yet as a follow-up. But what is your best guess on the path forward for dapagliflozin? And what is your best guess on the time frame of that path? And secondly, perhaps for Tony, on PLAVIX, what is your view of an authorized generic option for 2012?

John Elicker

Brian?

Brian Daniels

Thanks, Steve. You're correct in your statement and in fact, we internally, with our partner, AZ, are still coming to an understanding of the comments from the advisory committee and how best to address the concerns that were raised by some members. As we continue, I think we're diligently with the FDA on their review of this very important medicine. I would say secondly, because this was a global program, we have reviews ongoing in almost all major countries and regions of the world as well, and so that's also an area that we are focused on executing. Additionally, I think at this point, it won't be -- as in general when we talk about regulatory interactions ,it's inappropriate for me to speculate as to the timing and exact path forward.

Tony Hooper

So on the authorized generic, we are in discussion with our partner Sanofi. We haven't made a decision yet. It obviously is an option, but I'd remind you that with multiple generics in the marketplace, the true dollar value of the authorized generic is much smaller than normal.

John Elicker

Great. So, Brandi, thanks for the questions. Everybody, thanks for your participation. I'd just like to turn it over to Lamberto for some final comments.

Lamberto Andreotti

Well, very quickly thank you for your questions. Again, we had a very good second quarter and across all our operations globally. We continue to demonstrate that our biopharma strategy is delivering the results. Thank you again, and have a good day.

Operator

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

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