Celgene Corporation (NASDAQ:CELG)
Q4 2015 Earnings Conference Call
January 28, 2016, 9:00 AM ET
Patrick E. Flanigan - Corporate Vice President of Investor Relations
Robert J. Hugin - Chairman and Chief Executive Officer
Peter N. Kellogg - Chief Financial Officer
Mark J. Alles - Chief Operating Officer
Jacqualyn A. Fouse - Global Head of our Hematology & Oncology franchise
Scott A. Smith - Global Head of our Inflammation & Immunology franchise
Eric Schmidt - Cowen & Co LLC.
Alicia Young - Credit Suisse Securities LLC
Cory Kasimov - J.P. Morgan Securities Inc.
John Miller - Evercore ISI
Matthew Roden - UBS Securities LLC.
Matthew Harrison - Morgan Stanley
Michael Yee - RBC Capital Markets
Geoffrey Meacham - Barclays Capital Inc.
Ying Huang - Bank of America Merrill Lynch
Yatin Suneja - SunTrust Robinson Humphrey, Inc.
Christopher Raymond - Raymond James Financial, Inc.
Nicholas Wunderlich - Wells Fargo Securities, LLC
Brian Abrahams - Jefferies & Company, Inc.
Brian Skorney - Robert W. Baird & Co.
Good morning and welcome to Celgene's Earnings Conference Call. All participants will be in listen-only mode, until the question-and-answer session at the end of the conference. I would like to remind you that this call is being recorded.
I would now like to turn the conference over to Patrick Flanigan, Corporate Vice President of Investor Relations at Celgene.
Patrick E. Flanigan
Thanks, Karen and welcome everyone to our Fourth Quarter and Year-End Earnings Conference Call. The press release reporting our financial results in addition to the presentation for today's webcast can be accessed by going to the Investor Relations section of the corporate website at www.celgene.com.
Joining me in the room today with prepared remarks are: Bob Hugin, our Chairman and Chief Executive Officer; Peter Kellogg, our Chief Financial Officer; Mark Alles, our Chief Operating Officer; Jackie Fouse, who's Global Head of our Hematology & Oncology franchise; and Scott Smith, Global Head of our Inflammation & Immunology franchise.
As a reminder, during today's call, we will be making Forward-Looking Statements regarding our financial outlook in addition to regulatory and product development plans. These statements are subject to risks and uncertainties that may cause actual results to differ from those forecasted. A description of these risks can be found in the most recent 10-Q on file with the SEC. These statements speak only as of today's date, and we undertake no duty to update or revise them. Reconciliations of the adjusted financial measure to the most comparable GAAP measures are available as part of the earnings release.
I would now like to turn the call over to Bob.
Robert J. Hugin
Thank you, Patrick and thank you everyone for joining us this morning. As we reported, 2015 was an outstanding year for Celgene. We appreciate the opportunity to review with you these exceptional results, important strategic developments and our near and longer-term outlook.
Our operating momentum and advancement of high potential programs have us well positioned to produce market leading growth in 2016 and beyond. Very importantly, during 2015, we advanced a number of key strategic initiatives that will drive significant growth over the next decade.
We enhanced and provided greater clarity on the potential of REVLIMID. We firmly established the value proposition of OTEZLA, while significantly expanding our I&I franchise. We strengthened the long-term growth potential of our Hematology & Oncology franchise through strategic immuno-oncology collaboration and by advancing important late stage clinical programs.
And we broadened and deepened our research and development pipeline as the investments we made in internal and integrated collaborative research programs advanced. These significant accomplishments combined with our strong finish to the year, generates excellent momentum in our businesses as we head into 2016.
Later in the call, Peter, Jackie and Scott will more fully review the outstanding results of the year and the strong commercial momentum across geographies and products that has us well positioned to achieve for products with sales over $1 billion each expected to grow by double digit percentages in 2016.
Mark will conclude with his perspective on strategic initiatives and upcoming milestones. These milestones position us to sustain high growth for the long-term. And as I hope you can tell, this is an incredibly exciting time at Celgene, and our people are critical to maximizing our enormous potential.
Earlier this month we announced management changers that leverage the talents and experience of our exceptional leaders while expanding and strengthening our team. These changes provide Mark, Jackie, Scott, Peter and Rupert, all outstanding leaders, the opportunity to have an even greater impact on our organization.
Since announcing these changes, our teams across the globe are energized and even more focused and committed to producing exceptional results. I could not be more excited about the of Celgene, together with Mark, our entire leadership team and all of our employees around the globe, we look forward to continuing to deliver exceptional results and turning the great promise of Celgene into reality.
Thank you. Let me now turn the call over to Peter.
Peter N. Kellogg
Thank you, Bob, and good morning everyone. 2015 was another great year for Celgene. Our teams around the globe delivered robust financial results, while also advancing and acquiring further next generation growth drivers. In fact, 2015 was an exceptional year of significant strategic investments.
We've strengthened our portfolio in several key focus areas including immuno-oncology and epigenetic, in addition to laying the foundation to be a future leader in inflammatory bowel disease. While delivering strong commercial results, we made critical investments now; so that we are set up to deliver sustainable high growth performance well into the next decade.
Now let's discuss the financial results for the quarter and the year. The fourth quarter total net product sales grew 24%. Our four key products, REVLIMID, THALOMID, ABRAXANE, and OTEZLA, grew 28% driven by continued momentum in core indication, label expansion and global launches. Now, while Jackie and Scott will provide more color on the underlying market dynamics for these products later in the call, I would like to highlight just two items.
First, full-year product sales grew 21% and were supported by greater diversification. Now, as you have seen REVLIMID continues growing 14% to 16% per year and it now represents 63% of product sales versus 67% in 2013. We expect this performance as well as diversification trend will continue right through 2020 and beyond.
Secondly, U.S. ABRAXANE sales and international REVLIMID sales were positively impacted during the quarter by buying pattern. For ABRAXANE, contract optimization led to a customary buying during Q4 as we’ve seen before and that is often followed by sell through during Q1. As we mentioned on our Q3 conference call, 2015 was the first year of REVLIMID sales in Russia via a tender. These occurred in Q2 and in Q4 and we now expect a similar buying pattern going forward.
Product sales growth for the quarter and the year remained volume driven. The foreign exchange markets remains volatile throughout the year resulting in an unfavorable net ForEx impact of $16 million to revenue during Q4 and $109 million for the year. Now our treasury team really did an excellent job mitigating this headwind.
And just as referenced in just for perspective, if we did not have a benefit of our hedging program, the ForEx impact would have been approximately $100 million during Q4 alone and approximately $450 million for the year. You can see that ForEx is a large factor that has been well managed in 2015.
Adjusted earnings per share in Q4 was $1.18 which include a $0.07 per share impact from a milestone to our partner OncoMed that we announced earlier. As a reminder, after entering into a collaboration, we include milestone payments and other collaboration expenses within our adjusted financial measures. Now of course we are pleased with how our partner programs are progressing and the potential contributions they could have on our long-term outlook that’s good news.
For the full-year, adjusted earnings per share was $4.71, a strong 27% increase over the prior year. And even more impressive considering that it includes a $0.17 per share diluted impact related to business development activities and of course that includes the $0.14 per share diluted impact related to the Receptos acquisition this past summer.
As we discussed on the Q3 call, we expected a significant ramp in R&D spend during the fourth quarter and in fact, this happened and resulted in 25% of Q4 sales being reinvested in R&D. This is due to increased clinical trial activity for our important high potential late stage programs, and the collaboration related milestone expense that we just discussed.
And please note Q4 was the first full quarter with Receptos operations as part of our organization. All these investments are critical to creating our long-term growth profile that extends well into the next decade. On the other hand, as we also discussed last quarter, after investing in our global commercial capabilities over the past few years to support the global launches for ABRAXANE, POMALYST and OTEZLA, we are now achieving meaningful leverage on the SG&A line.
Our earnings quality remains exceptional with growth for the quarter and year driven primarily by adjusted operating income, further underscoring the momentum in our commercial business. During the quarter we experienced the full impact of last year's $8 billion debt offering which adds an incremental $310 million of interest expense per year. Accordingly, on an annual basis, we continue to expect total net interest expense will be between $480 million per year and $500 million per year going forward.
We ended the year with approximately $6.6 billion in cash and marketable securities and throughout the year, we assertively utilized our balance sheet and cash flow to invest in next-generation growth drivers, while simultaneously repurchasing approximately $3.3 billion of Celgene shares. This is the largest annual level of repurchase in the history of Celgene, an impressive fact given the numerous other key strategic investments made during 2015. And it reflects our continued confidence in the company's future and our continued support of shareholders interests.
Now, earlier this month, we provided 2016 guidance that calls for continued strong top-line performance and a leveraged bottom-line outlook. This positions us to continue as a leader in growth among large biotech. We expect total net product sales between $10.5 billion and $11 billion, a 17% increase from 2015. This range incorporates an approximately $120 million net ForEx impacts to predominantly affect international REVLIMID sales.
While we do not provide total revenue guidance, I would just like to highlight the royalty-bearing sales of Ritalin and Focalin by Novartis had decreased significantly over the past few years due to generic competition in certain markets and we expect that trend to accelerate further in 2016.
Turning to the adjusted operating margin, we expect 150 basis point improvement, driven by meaningful leverage in SG&A and a slight improvement in the product gross margin due to mix. Of course, we'll continue to invest in the commercial launches of our key products just to maximize their global potential and in particular, as we build out our I&I commercial capabilities in Europe to further capitalize on the growing momentum of OTEZLA.
We also expect to increase our level of R&D investment as we initiate 50 new clinical trials across the pipeline and expand a number of Phase III programs, included in adjusted research and development expense, our milestone payments to partners. These are projected to range between $130 million and $140 million for the year.
Moving to the bottom line and for the full-year, we expect adjusted earnings per share between $5.50 and $5.70, a 19% increase in 2015. Now we are off to a very strong start this year and we anticipate Q1 adjusted earnings per share between $1.27 and $1.30. This is a 20% year-over-year growth and this represents earning 23% of our full-year EPS guidance.
A better start versus historical Q1 performance as a percentage of the full-year than we've seen. Now this guidance does include two items in the quarter, first as you know, during Q1, we typically have higher growth to net adjustments which REVLIMID and POMALYST due to early Medicare doughnut hole and other ACA payments.
In addition to the potential sell through of inventory for vaccine in U.S., we expect these same pattern during the 2016. And second, we now expect several potential partner milestones soon to be achieved in the first quarter, resulting in between $50 million and $75 million of milestone to partner. Building on this great 2015, we look forward to another strong year in 2016 as our operating momentum continues and we advance to next-generation of growth drivers that has the potential to maintain our growth profile into the next decade.
Thank you. And I will now turn the call over to my colleague Jackie.
Jacqualyn A. Fouse
Thank you, Peter. Good morning, everyone. Our Hematology & Oncology teams around the world and across all of our activities delivered another excellent quarter to finish 2015 with strong momentum. The franchise grew 18% year-over-year in Q4 and 16% for the full-year to reach just under $8.7 billion of product revenues, a record year. And our strong growth trajectory will continue in 2016 and beyond.
In 2016, we will see the first full-year revenues following launches for REVLIMID and newly diagnosed myeloma in the U.S., Germany, Spain and other countries and we expect reimbursement approvals of launches in France, Italy, Japan and others. We will see the first full-year revenues for POMALYST in Japan following the June 2015 launch there. In addition, demand is being fueled by increasing durations of treatment across all lines of therapy in myeloma. ABRAXANE growth outside the U.S. is very solid with nice momentum post launch in pancreatic cancer.
2016 will also be a year that kicks off a steady multiyear flow of clinical data across a number of our late-stage program with the first readout from our Phase III REVLIMID lymphoma program coming in the middle of the year for the remarks to see us largely cell lymphoma trial. We continue to build our hematology pipeline with programs currently enrolling for the novel compound luspatercept, AG-221 and durvalumab and the program for AG-120 is advancing.
Finally, a number of trials are ongoing for new indications for ABRAXANE as well as for ABRAXANE in immuno-oncology combination therapy. REVLIMID's year-over-year growth accelerated in Q4 with 18% growth for the quarter, including negative foreign exchange of about one percentage point. REVLIMID's full-year growth reached 16.5% including two percentage points of negative foreign exchange, this growth is primarily volume driven.
The ongoing launches of the newly diagnosed myeloma indication in U.S. and across several markets in Europe are in the early stages and are fueling volume growth. REVLIMID is the market leader in first line myeloma in the U.S. and in Q4 we hit another new all time high for number of unique patients treated. REVLIMID’s share in second lion myeloma in the U.S. was stable throughout 2015.
European overall non-stem cell transplant newly diagnosed myeloma share reached around 15% at the end of 2015 with Germany at over 20%. Across Europe, REVLIMID held or gained second lion’s share. Duration and treatment trends are positive across all geographies supported by an ever-growing body of clinical data in favor of continuous treatment with REVLIMID.
With the momentum of the newly diagnosed myeloma launch in Europe and reimbursement in Russia, our REVLIMID European region year-over-year volume growth accelerated and reached 26% in Q4 and 19% for the full-year. That excellent volume growth was somewhat offset by negative price and foreign exchange impact.
The future growth outlook is strong as 2016 will include the first full-year of revenues post the newly diagnosed myeloma launch for REVLIMID in a number of markets including the U.S. across Europe and Japan and we expect to continue to obtain reimbursement approvals in more countries in 2016 and REVLIMID’s future looks right for a long time to come.
In the U.S., the NNCN in guidelines were recently updated and now include the RVD triplet regimen as a category one preferred treatment for first line myeloma patients in both the stem cell transplant and non-stem cell transplant settings. In 2016, we will see the read out of the REMARC trial in diffuse large B-cell lymphoma and our overall program for REVLIMID in lymphoma will continue to advance.
Finally, within the FUSION program under our collaboration with AstraZeneca MedImmune, the REVLIMID durvalumab combinations for newly diagnosed myeloma will begin enrollment in a Phase I, proof-of-concept trial that will inform next steps for advancing durvalumab in newly diagnosed myeloma combination therapy.
POMALYST/IMNOVID achieved strong sequential and year-over-year growth to finish 2015 up 45% for both Q4 and the full-year and 95% of POMALYST/IMNOVID’s 2015 growth came from volume. POMALYST third line in greater share in the U.S. showed an upward trend in the second half of 2015 and duration of treatment increase.
IMNOVID overall EU market share in both third and fourth line myeloma has now reached about one third and durations of treatment are increasing in Europe as well. We look forward to the first full-year of POMALYST revenues in Japan during 2016 after a strong launch in June of 2015 and strong demand uptake.
Emerging data for POMALYST/IMNOVID triplet combination support longer durations of treatment and a number of combination trails with POMALYST/IMNOVID and novel agents are ongoing including immuno-oncology combinations for Phase I data presented at ASH were highly encouraging were relapse refractory myeloma patients with higher overall response rate versus today’s standard of care therapies. Our POMALYST durvalumab combination trials for relapse refractory myeloma has initiated and recently enrolled its first patient.
ABRAXANE had a very good quarter in Q4 and finished 2015 strong with 15% year-over-year growth for the quarter and 14% for the full-year. Importantly, volume growth was 18% and 16% respectively and was achieved despite a highly competitive landscape in some indications and geographies. The ABRAXANE gemcitabine combination continues to hold the standard of care position for pancreatic cancer in the U.S. and is moving to that position in Europe with strong uptake and ongoing launches in various markets.
During the second half of 2015, ABRAXANE U.S. shares in lung and breast were stable and the launch of the lung indication in Europe is in its early stages. Emerging data is providing signs that ABRAXANE’s future in immuno-oncology combination therapies will be exciting. We have now seen promising early data for both lung and breast, and we expect significant data flow beginning in 2017 with two Phase III readouts in lung, and then triple negative breast readouts to follow in 2018.
Other programs for ABRAXANE also continue to advance across adjuvant and locally advanced pancreas, both triple negative and early stage breast and a number of patient segments in non-small cell lung cancer. We are optimistic about ABRAXANE’s future growth prospects and the potential of the product in immuno-oncology combinations.
Building on the strong momentum created by our teams during 2015, we look forward to another year of both excellent sales growth and advancement of our clinical programs in 2016. We expect REVLIMID sales to grow to $6.6 billion to $6.7 billion, up 15% at the midpoint of the range and driven by volume again this year.
POMALYST/IMNOVID and ABRAXANE are both expected to officially reach blockbuster drug status by each surpassing the $1 billion revenue mark this year and volumes will also contribute the majority of their growth. Our regulatory and clinical teams are very full agendas this year. On the submission side, we expect to submit REVLIMID for post stem cell transplant maintenance in both the U.S. and EU. POMALYST/IMNOVID updated label with renal impairment data in both the U.S. and EU and ABRAXANE for early stage breast cancer in the EU.
On the clinical side, we expect data from the REMARC, CONTINUUM, ETNA and TENACITY trial. In addition, we expect proof-of-concept data for CC-122 in non-Hodgkin's lymphoma and for the VentiRx TLR8 agonist in solid tumors. Furthermore, we are advancing a number of clinical programs, including the Phase III trials for luspatercept, AG-221 and AG-120. Our broad program across multiple hematological indications for durvalumab and our novel BCMA program for myeloma.
We're excited about both our short-term growth outlook and near term clinical and regulatory catalyst as well as the significant promise of the mid to long-term based on a number of key milestones to come.
Thank you. And I will now turn the call over to Scott.
Scott A. Smith
Thank you, Jackie and good morning. 2015 was a great year. A year full of accomplishment and advancement for Celgene I&I. In 2015, we saw revenues accelerating throughout the year in the U.S. We had approvals in the EU for both psoriasis and PsA and launched in the early EU reimbursement countries. We also significantly advanced the development pipeline for Celgene I&I with the acquisition of Receptos in lead molecule Ozanimod as well as taking major steps forward in the GED-301 development program.
We now look at global sales; we can see 2015 Q4 net sales were $183 million leading to full-year sales of $472 million. The majority of revenues in 2015 were from the U.S., but we are seeing very encouraging metrics in the early launch countries in the EU as well as Canada. Overall, we are pleased with how the global launch was executed in 2015, the first full-year commercialization for OTEZLA and we believe it provides the tremendous pace as we move into 2016 and beyond.
Now looking specifically at the U.S., physician and consumer campaigns are driving increases in brand awareness, patient requests and trials. The launch of DTC campaign in late Q2 corresponded with an inflection of the OTEZLA TRx trajectory. It is important to note that OTEZLA continues to lead all other therapies in new to branch here with approximately 40% in both psoriasis and PsA. Additionally, OTEZLA total market share in the large psoriasis market has surpassed Enbrel and now stands at 21% of the total branded market.
Now turning to Europe, we received regulatory approval for OTEZLA early in 2015 and have already launched in Germany, Switzerland, Austria, The Netherlands, Scandinavia and Scotland. We look to launch in the remainder of the significant European markets in 2016. As I stated earlier, we are seeing very encouraging trends in all the early launch markets and are particularly pleased with our progress in Germany.
In 2016, we should see continuing flow of data for OTEZLA. As mentioned earlier in the year at the JP Morgan Conference, we recently received the two year radiographic data from the Phase III Ankylosing spondylitis study. Although, the study did not meet its primary endpoint, we are very encouraged by the data which show a lack of progression of disease for a majority of patients. In addition to seeing these data in the major medical meeting in 2016, we also hope to get data from the Phase II proof-of-concept studies in atopic dermatitis and also colitis as well as data to support our QD formulation.
We are aggressively advancing all pipeline programs, including GED-301 and Ozanimod. Specifically looking at GED-301 in 2015, we initiated the endoscopic study CD-001 in Crohn's disease as well as the large pivotal Phase III Crohn's disease trial CD-002 and the Phase II proof-of-concept study in UC.
During 2015, we also acquired Receptos with a lead molecule Ozanimod, a potential best-in-class next-generation S1P receptor modulator. Post acquisition, we were able to work closely with the talented people of Receptos to accelerate both the MS and UC programs. The radius of funding Phase III MS clinical trials are now fully enrolled and ahead of schedule. We expect to file for MS in the second half of 2017. We've also initiated a pivotal Phase III UC trial to north and a Phase II proof-of-concept study of Ozanimod in the treatment of Crohn's.
2015 was a year of tremendous progress for Celgene I&I. The execution of the OTEZLA launch has put us in a position to be a blockbuster contributor to the Celgene portfolio in 2016 and beyond. We also moved all major development programs ahead through significant milestones in 2015. These programs should help drive strong growth through 2020 and beyond.
We are very excited and optimistic about the future of OTEZLA and the rest of the I&I portfolio as we move into 2016. Thank you for your attention and I would like to now turn the call over to Mark.
Mark J. Alles
Thank you, Scott. And thank you to all my colleagues for their commitments to patients we seek to serve and for delivering another year of outstanding result. As we transition to 2016, the clarity of our mission, the continuity of our leadership team and our focus on advancing key strategic imperative continues to energize and unify us.
Our robust 2016 guidance and 2020 outlook are built on a strong foundation of global commercial, clinical, regulatory and research operating excellence. The competitive advantages our products and teams have achieved provide us with considerable optionality and multiple strategic drivers to meet and exceed our near-term financial targets.
Longer term we expect significant additional revenue from new data and new indication for our existing commercial portfolio, plus the introduction of several products currently in late stage development to sustain our sales base through the loss of exclusivity for key products. Our long focus on internal research and external collaborations has generated a pipeline of approximately 50 unique molecules, many with transformative first in class clinical profiles and with the potential to be developed for more than 100 indications. These products are expected to fuel innovation and to create significant growth opportunities over the next 10 to 15 years. Moreover, we expect our consistently strong cash flow to provide additional opportunities to fortify our pipeline and enhance our outlook.
Near term catalyst for growth include the availability of data from at least 18 different Phase III trials beginning in the middle of this year and continuing through mid-2018. Strategically these studies also represent the opportunity to expand our hematology franchise to include lymphomas to advance our immuno-oncology programs in multiple solid tumors and blood cancers and the GED-301 ozanimod and OTEZLA to establish clear global leadership in the treatment of serious inflammatory bowel diseases. Other ongoing pivotal programs for AG-221, CC-46 and luspatercept may provide additional opportunities for near-term growth.
And over the next 12 to 24 months, we expect a steady stream of mid stage and proof-of-concept data to begin to establish the clinical profile of molecules generated from distributed and integrated drug development model. Importantly, these products and programs leverage or build on our established therapeutic franchises and may also support the creation of new franchises.
We know that our future begins with delivering on the results and the promise of 2016. We look forward to providing you with more details throughout the year on our progress achieving our top financial and operational priorities, and on our efforts to bring new disruptive therapies to patients in need.
Thank you very much. Operator, please open the call for questions.
Thank you [Operator Instructions] Our first question comes from the line of Eric Schmidt from Cowen & Company.
Congrats on all the continued progress, maybe a question for Peter, I haven’t heard Celgene refer to the 2017 guidance in a while. I think the last update was $13 billion to $14 billion top line about $7.25 in non-GAAP EPS. Is that still intact?
Peter N. Kellogg
Hey Eric its Peter, thanks for the question. So overall as you can see from our performance and the discussions today, we are feeling very good about the business performance. And in fact on a constant currently basis, we are on track driven by our multiple myeloma portfolio, REV, PAM and all the data that’s been generated and all the great things; you are hearing about OTEZLA and the launch and the outlook. So on a constant currency basis, we are on track, maybe the mix is a little different than we originally thought but feeling really good.
That said, ForEx has been volatile since the time that guidance was issued in January 2013 and actually if you went from that time to today, we are probably seeing net of hedges about an $800 million impact on the top line. So we are calibrating on that and we do intend to provide an update as we get closer to 2017 based on where these ForEx rates, look like they are going to land in 2017. So thanks for the question.
I would also add just for what it's worth, we also added obviously in the beginning of 2015 our guidance out to 2020. And clearly we are making a lot of investments to drive towards that and we feel very good. We updated it last summer after the Receptos and the AstraZeneca deal and we have reaffirmed it earlier in this month and it remains entirely on track despite the implied ForEx impact. Clearly, ForEx has been affecting net outlook too but our operating performance in that timeframe we think will overcome that. And just for perspective from the time that we gave that guidance to 2020, there is about $700 million, $800 million headwind as well, but we’re good to cover that. We feel very good about that.
And then obviously in the bottom line, we’re making significant investments in R&D we have to see how those develop and so forth, and as well as some of the milestones that come through. So our feeling is in total we really kind of guide our organization headed towards hitting the 2016 numbers driving towards 2020, and we’ll be updating that 2017 as we get close to the year when it's sort of like the next year ahead of us.
Thank you. And our next question comes from the line of Alicia Young from Credit Suisse. Your line is open.
Thanks for taking my questions guys, and congratulations on the progress over the past couple of years. I just wanted to switch a little bit and talk about OTEZLA, and maybe just understand some of the different European dynamics related with the large kind of country-by-country as you start to get reimbursement there.
Peter N. Kellogg
Thank you for the questions. So, where we are? Approvals was in early 2015 February and we then launched immediately in Germany and then there was a series of other launches mainly in smaller countries as we went through the year in 2015 where we were able to attain early reimbursement including Switzerland and Austria and Scandinavian country, Scotland. And so sort of a partial launch, we should see some very significant countries come online in Europe in 2016.
We should see the UK, France, Italy, Spain and some mid-markets in Europe. So I think I look at it as a very early start really in one of the major countries launch and 2016 will be the real true launch year for OTEZLA in Europe. And the early metrics as I said in the prepared remarks have been very strong in the early launch countries, so we're excited about being able to expand the presence in Europe.
Are there any particular dynamics around like how patients are treated versus the U.S. in some of these countries in Europe, the kind of what changed as feeder rate of uptake in the particular country so we should focus on that?
Peter N. Kellogg
The only country where I think that there were two dynamics, one dynamic applies to all of Europe, there is a little bit less utilization of biologic therapies in Europe than you see on a per patient basis in North America and the U.S. and Canada. So the biologic market is a little bit smaller, there has been less use more use of earlier therapy, so I think that bodes well for our market presence.
There is one market in Germany that does have a substantial oral market already with the fumaric acid ester product and so there is a substantial market, that's lot less a little bit different than the U.S., but we think we have a really nice opportunity in Europe, because of the relative lack of use of biologics relative to the U.S. and Europe.
The demographic patient numbers are very similar when you take a look at psoriasis and psoriatic arthritis, so that's a market which has been even less penetrated, so we're very excited about that forming out over the course of time in Europe. And then hopefully filing in Japan earlier this year and launching in Japan in 2017, which is a very underserved market, so we've got a lot of nice growth coming in the future.
Thank you. And our next question comes from the line of Cory Kasimov from JP Morgan.
Hey good morning guys, thanks for taking the question. I wanted to ask on POMALYST which seem to have a nice peak this quarter. I wonder if there is anything different about 4Q relative to the prior ones? And then maybe more so how you are thinking about how CD38 antibodies potentially fit into the myeloma treatment paradigm and I assume this is something you see as complimentary to your [style as] (Ph) IMiD backbone? Thanks.
Jacqualyn A. Fouse
Cory, its Jackie, thanks for the question. So I think mostly what we're seeing with the POM performance in Q4 is the ongoing impact of penetration in Europe, you probably heard what I said in my prepared remarks where the product now and third and fourth lines in Europe has reached about a-third and that's happened over a period of time. Also, we had the launch of POM that started in Japan in June and we've seen very, very nice uptake in Japan in the first six months or seven months have been on the market there.
I also think that the treatment landscape is starting to maybe settle out a little bit, although we've got [indiscernible] coming in just now and just now starting to ramp up. Within this landscape, the Pom-Dex regimen is very competitively positioned as it's the only regimen that has proven survival after REVLIMID relapse and exposure to [indiscernible] inhibitor. So we're seeing early uptake riding in that fourth line in greater setting and we're seeing the rest of the landscape start to play out as we've got the other combinations that have been approved.
I think it's a bit early to call trends on Triplet adoption broadly in relapsed/refractory myeloma, but with the sequencing of pattern, we're going to see more of that and we think POM is very well positioned to compete there. We're also probably getting a little bit of an impact carfilzomib moving into the second line there. Relative share gains were greater in second line than any other line of therapy as you would expect and I think that creates even potentially more in the third line greater setting for these other therapies to take their place.
Okay. Thanks Jackie.
Thank you. And our next question comes from the line of Mark Schoenebaum from Evercore ISI.
It's actually John Miller on for Mark. Congrats to Mark and Jackie for the new positions. Mark said in this regard he couldn’t join the colleagues, he is at shopping for a new wig to wear in tomorrow’s video. I just had a quick question about the REMARC trial. Do you need OS data for reimbursement and do you have it this year?
Jacqualyn A. Fouse
So our position on that at the time of readout of the trial and first of all, I'm not going to make any comments about what type of wig I think Mark may show up and show us, let’s just see how that one goes. With the trial, what we would expect to see with the readout would be obviously the PFS result and then a trend in OS. I think we believe that if there is a positive trend in OS and it will depend on the strength of the trend that that would be something the regulator could view favorably with respect to the submission.
Obviously, if you had a statistically significant OS the trend right out of the gate that would be extremely positive and that’s not our base case assumption, but we think with the positive PFS readout and some trend on OS that that would put us in a very good position with the regulators. As you know, it's a high unmet medical need, you have got a significant relapse rate in diffuse large B-cell and most of it occurs within two years, the patient prognosis is quite bad upon relapse. There is no currently accepted maintenance therapies, there is no data that support maintenance therapies right now and so a positive readout on this trial would put us in very good position in diffuse large B-cell.
Okay. Thank you very much.
Thank you. And our next question comes from the line of Matt Roden from UBS.
Hey guys, thanks for taking the questions, great job on diversifying this pipeline away from REVLIMID. That said, I do have a REVLIMID question on maybe one of the bigger readouts for the year the REMARC study. So this is a maintenance study following response to R-CHOP upfront in DLBCL. If you think down the road a little bit if the front line R-CHOP center to care shifts to include Ibrutinib then to what extent would you see that shift as potentially impacting the REVLIMID opportunity here? I am just trying to get a sense for whether or not this could wind up in with like GCB subtype? Because it seems like the non-GCB subtype addressed by Ibrutinib might be the smaller subset in DLBCL. Just trying to connect the dots for us in this opportunity if you will, thanks very much.
Jacqualyn A. Fouse
Thanks Matt. Well, let’s see how it goes and let's remember that across the program, we have data coming from the RELEVANCE trial, we have augmented and we have magnified. We have the ROBUST trial as well where we have that GCB, non-GCB and ADC subtype subset. So, I think in the first instant the positive readout on the REMARC trial gives us a nice opportunity. In diffuse large B-cell again you’ve got high unmet medical need and probably going for multiple therapy should others come along and give positive results.
But I guess the REMARC study includes both subtypes. Is that right?
Jacqualyn A. Fouse
Okay great. Thanks very much for taking the questions.
Thank you. And our next question comes from the line of Matthew Harrison from Morgan Stanley.
Great. Thanks for taking the question and good morning everybody. Can you just maybe take a moment and I know in your prepared remarks you commented on this somewhat. But talk to us a little bit about specific trends and duration that you are seeing. How you are seeing that play out in Europe versus maybe lengthening duration in the U.S. obviously for REVLIMID? And then the impact that you are seeing from some of the new triplets that are coming on the market or even the potential for the antibody combinations, and just your expectation around how you are thinking about substantial changes to duration, either this year or over the next couple of years? Thanks.
Jacqualyn A. Fouse
I think, well everything that we’ve seen and you’ve seen is supportive for continued positive trends in duration of treatment across all lines of therapy, and that includes the data that we’ve been readout so far with the triplet regimens and in particular the RVD data, which as we know was the first triplet regimen to readout for newly diagnosed and really quite impressive PFS results.
So what we’re seeing in the market both in the U.S. and Europe are increasing duration trend for both REVLIMID and POMALYST, those are continuing to go very nicely. Europe is still somewhat behind the U.S. I think we’ve talked about first exposure durations in the U.S. now being somewhere over 17 months, total exposure now over 22 months, continues to trend in a positive direction. The range across the Europe is somewhere now in the 12 to 14 months. So you can see ways to go for Europe to catch up. And now with the newly diagnose approval we should see that trajectory maybe steepen a little bit and continue.
We’re also seeing nice duration gains for POMALYST as well and I think we’ll see those across Europe over time and we’ll see them in Japan. So all these clinical data continues to evolve is supported for early and continuous treatment of myeloma with REVLIMID and then strong role for the image and backbone therapy across any of the triplets that we’ve seen so far including in combination with the monoclonal antibody.
And Jackie are you willing to just make a comment around how long you think it might take for Europe to start looking like the U.S., or if you expect it to ever be as good as the U.S. and just maybe a slightly less?
Jacqualyn A. Fouse
Well, medically there is no reason why it should different. We start in a different place, so it will take a little bit of time to get there, but the trends are very good and I think that we’ll see that happen over a period of time. These numbers that we give you area always averages across I think portfolio of patients so you can expect an average data point, it’s just going to jump up from one day to the next and it will be a cumulative thing.
so every time we get a newly diagnosed patient on drug and then that newly diagnosed patient is staying on drug for a longer period of time. There is accumulative effect of that in the portfolio and that average starts going up and that average data point of course is applied to all the patients in the whole portfolio and it becomes a pretty big number.
So what we saw in the U.S., if we go back to the ASH data that came out, I think it was in 2009 and we started to see more move towards the continuous treatment paradigm, overtime after a few years, duration became the larger driver of growth in the U.S. and at some point that will happen in Europe, but that will play out over a few years
So I think the great news is there is multiple drivers, particularly in Europe and then in Japan, you've got a more relatively higher impact from market share gains in newly diagnosed early on the duration then starts to kick in and then that plays out overtime and so you got multiple factors driving growth and it'll do so for a long-long period of time.
Great. Thank you very much for the color.
Thank you. And our next question comes from the line of Michael Yee from RBC Capital Markets.
Thanks. Just sort of following along on some of the prior questions about duration et cetera, I know there was growing and increase in confidence of operation, partly from the ASPIRE data and the AbbVie data as well as obviously the RVd data, but yet the 2020 guidance wasn’t changed. I know there is a lot of dynamics moving along particularly FX, I mean do we just come away and take away the message that duration continues to get a lot better, but the FX was really a key issue in 2020. Maybe you just walk us through how the duration confidence is but yet 2020 wasn’t really changed and things with that nature? Thanks.
Jacqualyn A. Fouse
Hi Michael thanks for the question. I'll let Peter jump in after and maybe I'll just start. I think I mean we've just think the [SLOG] (Ph) data presented at ASH in December. We've now got the Triplet regimen approved in the relapse setting and this is going to play out over a period of time. We feel highly confident in our long-term growth prospects and what we think duration trends are going to be.
We also have been pleased with the reimbursement discussions for newly diagnosed label expansion for REVLIMID in Europe and now that we've got those countries on board and we'll have the remaining large ones in 2016. We go forward from that in a very good position with respect to having already negotiated REVLIMID price, so as other therapies come to market and all the clinical data supports longer duration of treatment.
So we feel really good about that. Have we fully updated our financial forecast to reflect what the full opportunity of that could be? We have not, because we want to give it a little bit of time to just settle in, see what physicians are saying now with all of the new treatments had come to market, socialize a bit more of that SLOG data and other things.
And we also are in the situation as Peter mentioned with the FX headwind. We got puts and takes in the financial model that might such that we already gave an update on 2020 in the middle of the summer and we increased despite with the FX numbers that Peter put out there. so I think all of these trends and where we are in the market also set us up very well in terms of how we think about development of our next-generation novel agents and molecules and a bit of this also could relate to the evolving non-Hodgkin's landscape as well.
But when you look at CC-122, CC-220, the DCMA, durvalumab and the things that we are moving along. I think we're in an excellent position to not only continue to evolve the treatment paradigms for patients, but to see those result in a very robust portfolio of products that's going to allow us to deliver strong growth for a long time to come.
Peter N. Kellogg
Well said. The only thing I would add is that just to be clear, my comments earlier highlighted in fact the foreign exchange rates have moved to create a little bit of headwind for 2020, but we've got that covered. In other words, right now some of the strengths in our business, all the things that Jackie talked about as well as some of the strengths you're seeing in the I&I portfolio makes us feel very comfortable for 2020. So we confirm out that 2020 guidance. We are recognizing the ForEx impact and we're fine.
And in fact sometimes I'm asked when I talk with investors, if the rates reverse if the dollar weakens a bit, does that help us? And the answer would clearly be, yes, so it works both ways, so but at this point we feel great about the guidance we have in 2020. 2015 what we've seen in the last year both commercially as well as in the pipeline just is very encouraging for that timeframe, so we feel great about it.
Okay. Thank you for clarifying that.
Thank you. And our next question comes from the line of Geoff Meacham from Barclays.
Hey guys thanks for taking the question. I got a couple on ABRAXANE, so I wanted to get a sense for the near term and what if any changes have you seen in the number of cycles out of pancreatic or lung? And then two longer term, what you guys view as the biggest driver? Is it IO combination? Is it pancreatic adjuvant? Is it just executing on OUS launch, et cetera. Thanks.
Jacqualyn A. Fouse
Hi Jeff, thanks for the question. So, in terms of number of cycle I mean I think we’re roughly in line with what we would have expected that’s not a big driver. As you know, we’ve had wins particularly in the U.S. with the launches of the checkpoint inhibitors. In the second half of 2015, it actually felt like that that stabilized a little bit, it did very rapid uptake something new comes to market. So we saw a little bit more stable shares in the second half of 2015, which I think is a good sign.
Outside the U.S., growth is quite solid, mostly driven by the pancreatic ongoing launches, where it's still pretty early days, in some countries we still don’t have reimbursement in all of the top five countries in Europe. So that’s going extremely well, and there are still room for from a share gain standpoint for us to establish ABRAXANE as standard of care in Europe and it take essentially the same place as taken in the U.S.
The lung launch in Europe is in very early days. So in the near-term that stronger growth outside the U.S. is going to contribute to putting us in a solid position with respect to overall global growth, while the rest of these things play out. So, just with respect to the couple of things that you highlighted, I think pretty obviously assuming that IO combination data is positive, you’ve got the potential for ABRAXANE to be the backbone chemotherapy in multiple indications and IO combination regimen, so that would longer term be the more significant upside.
At the same time, the adjuvant pancreas trial is our trial, so that’s fully within our management. And as you probably know that indication could double or potentially more than double the size of the pancreas opportunity for ABRAXANE versus the one that we have today. So those are a couple of things that we are pretty optimistic about and then for the next year or so, until we see some of that Phase III IO data in 2017. We’re holding our own and doing really pretty well.
Thank you. And our next question comes from the line of Ying Huang from Bank of America.
On a high level, you guys have now more than 18 Phase III trials ongoing. Also, just recently you settled with Aragon on the IPO for REVLIMID. Should we expect similar pace of business development activity in 2015? And then maybe questions for Jackie. Can you talk about the contributions of pricing and also volume increase in 4Q 2015 sales or revenue within the U.S. market? Thank you.
Robert J. Hugin
We’re going to break these questions up, and I’ll take the first one of the pace of BD, and obviously the IP settlement. So you are right, 2015 was a very big year for us, we got a lot accomplished when you think about deal with AstraZeneca to get into the checkpoint inhibitor space, with Juno, and then obviously Receptos and then other deals that are equally important. It was a very full agenda for the year.
And quite frankly, we aren’t in way slowing down or backing down at all on that. It's really a question of what opportunities we see there and it's really a question of as they come along and to the right opportunities present ourselves within our sales, but we remain very focused on building the next generation of great assets. We are scanning constantly what the next the generation of technology would be.
And we find that we happen to be very fortunately working between our hematology and oncology space in the I&I area and in therapeutic, or in scientific areas, where science is really opening up and there is a lot of great technology coming through. So we want to make sure we’re positioned against that. But we don’t really work with the pace necessarily or any one budget, we just make sure that we’re availing ourselves to what’s out there.
Clearly, from a financial perspective, we have the financial strength to work with everybody and I think we’ve got a very nice track record of designing these relationships with other companies in ways that work for each company. And we’re very comfortable with that. I’ll pass it then to Jackie for…
Jacqualyn A. Fouse
So just on the price question, I mean what we see in environment within the U.S. where we are for the moment able to continue to take reasonable price increases on notably REVLIMID and POMALYST. We are quite conscious of linking those to the value proposition of the drugs and we think we have a very good case to make in that regards.
For the long term forecast, we have somewhat more moderate assumptions about the level of price increases that we would take in the U.S. over a period of time. What we’ve seen this year is that outside of the U.S. and notably as we made our way to the newly diagnosed label expansion negotiations in Europe, we had price decreases across the portfolio that were pretty much in line with where we expected them to be, but versus a year ago they were a little bit more this year as we made our way through those negotiations.
So globally when you have those things together and Peter showed the numbers on one of his slides for the overall portfolio, we had a little bit of positive impact on the overall portfolio this year. But that includes mix as well and the ongoing growth in IMiD, OTEZLA coming into the portfolio. If you strip that out, the global impact of price all together is relatively modest.
Thank you. And our next question comes from the line of Yatin Suneja from SunTrust.
Hi guys, thank you for taking my question. I have a question on Juno collaboration; I believe you guys have an option on the CD19 program that might trigger sometime in first half. So, could you help us understand what efficacy threshold you need to see in order to exercise that option? And then a quick one for Peter. I noticed that the gross margins were a bit higher than expected; could you maybe give us some color there? How we should model it going forward? Thanks.
Peter N. Kellogg
Let me take the second question first, this is Peter. Hi, good morning. I did indicate that actually gross margin going forward and I'm talking about 2016, you should see a slight margin improvement in gross margin again and it's all mix related. I mean the guys in our operations space do a fantastic job, so they are always very productive, but also we had some benefit from mix. So I did highlight as you go forward into 2016, we will get the basis points I talked about at the bottom-line that would be driven primarily first by SG&A leverage there, but also by improved mix continuing to occur after the gross margin line.
Jacqualyn A. Fouse
Thanks Peter, so just on the Juno opt in. As we know CD19 was the first program to come up for opt in under that collaboration. The totality of what we will see and want to see and under the contract are able to see to allow us to make that opt in decision include a whole package of information that Juno will be providing us and then we'll have the opportunity to evaluate that for some period of time before we make the opt in decision. And as we do that and as the programs move along, I'm sure we'll find the right way to talk a little bit more about all of the things that we're seeing around that that help us evaluate the program.
Thank you. And our next question comes from the line of Chris Raymond from Raymond James.
Just a question on OTEZLA and maybe a follow-up question as well if you don’t mind, but on OTEZLA I think you guys have acknowledged that key barriers you've launched in the U.S. has been accessed. We've got some checks that sort of suggest that's kind of enduring. Can you sort of talk about where you are in the cycle here for improving that dynamic? What sort of changed? And maybe talk a little bit about the details about where in the chain that the biggest barriers might exist, is it sort of the PBM level or at the actual payer level and maybe contrast that to what you might expect in Europe, because you have obviously got sort of a different sort of payer situation there. And then on the business front, how much of a priority is it for you to use ex U.S. cash going forward? It's been an element I think in deals before, but just wondering, how much you think about that going forward? Thanks.
Scott A. Smith
Thanks Chris for the questions, this is Scott. We're very excited about the first year launch that we had for OTEZLA. As a matter of fact, it's the highest revenue first full-year launch in I&I ever, so really-really tremendous first year and momentum that we generated in the U.S. That was as I stated in the prepared remarks the 472 million, the vast majority of that was U.S. We're really launching in Europe this year and Japan thereafter, so we were able to I think very successfully penetrate the market.
Access is a barrier in this marketplace, it's a highly managed category. There is no question, but we continued to chip away that access environment and I think the important thing to note is that payers have implemented exceptions two biologic step pool, those that have it because they want to be able to encourage patients to be able to get on alternate therapy if the biologic therapy is not appropriate.
And so, the interesting thing is sort of the proof is really in the data, when I take a look at the data, more than 80% of patients in the psoriasis market that are coming on OTEZLA are not coming from a biologic, so the access things are there, but there are exceptions to be able to get around that and we have not found access to be a significant burden on the ability to drive demand.
We would like to evolve that access and maybe be in a preferred position as we go forward, but critical things for navigating the access environment is driving demand, driving volume and as I said earlier the most successful first year revenue launch in the I&I space ever, so we're very pleased with where we're at.
Robert J. Hugin
And Chris, it's Bob Hugin. Just on the business development, so I think we’ve been incredibly sensitive and strategic for a very long time in terms of managing our intellectual property assets, our tax positioning so that we have a financial flexibility to execute any business development deal that we think is appropriate and promising for our long-term outlook and that's been the history to track record.
And as a part of that, our teams have been incredibly successful in terms of using offshore cash extensively on multiple transactions for a relatively long period of time. I think that strategy is one that's proven to be effective. We've never seen ourselves to be in a situation where we have some financial restriction that didn’t allow us to do the kind of things that we want to do and our plan going forward anticipates that same kind of positioning, and I think Peter and his team is doing a great job in managing that.
Peter N. Kellogg
Thanks Bob. And the other thing I highlight is we really are not in a position where we’re constrained in any particular manner in the U.S. In fact as you saw and I mentioned in my remarks, during 2015, we spent $3.3 billion on share repurchase. And where the market is today and where it's been recently, it's a great opportunity going forward. So, we will continue to see ourselves being particularly forceful in the share repurchase area, because we are in great shape on cash and we see the stock in this sector right now great value.
Thank you. And our next question comes from the line of Jim Birchenough from Wells Fargo.
Good morning. It’s Nick on the line for Jim this morning. I just want to go back to REMARC and couple of questions there. And what is the hurdle you’re looking for on the clinicaltrial.gov listing? There is a 60 month improvement in PFS, which seems very aggressive for relatively small trial. So is that a hurdle? And then in the statistical analysis plan, does that include the analysis the data by cell of origin? Thank you.
Jacqualyn A. Fouse
There is a lot of details of our statistical analysis plans that we don’t give out. So we’re not going into that detail. What I would say is in the setting we just filed earlier about the high unmet medical need in diffuse large B-cell. we believe that with the trial design and when we have that data readout and then present the details now that you will have significantly more information obviously. But we believe within this landscape that a positive REMARC trial with in imply clinically relevant benefit for patients for REVLIMID’s maintenance therapy post R-CHOP and would put us in a very good position with respect to regulatory submission and with respect to reimbursement negotiations.
So operator we’re moving past clock now. We apologize and appreciate all the questions. Why don’t we take two more questions if there is still some in the queue, and then we’ll wrap up.
Certain, our next question comes from the line of Brian Abrahams from Jefferies.
Hey guys thanks for taking my question. Question on the long-term opportunity for ABRAXANE in the neoadjuvant breast setting, you mentioned the ETNA study. Wondering if you could talk a little bit about the design there? What we should be looking for in that retail this year? And how that potentially fits into your regulatory plans for that indication alongside GeparSepto? And maybe just from a bigger picture standpoint, how we should be thinking about that overall market opportunity, just given what seem like very high patient numbers, but maybe an unclear standard of care with paclitaxel not necessarily used across the board there? Thanks.
Jacqualyn A. Fouse
Yes, I mean we think it's a nice incremental opportunity. There are other opportunities for ABRAXANE that would more significant. Let me just put the ETNA study into context first. So our discussions with the healthcare authorities so far has been based on the GeparSepto trial and getting feedback from them with respect to what they would want to see for a regulatory submission in the neoadjuvant setting.
So the GeparSepto trial data would be the data to focus on for that. it could be that the ETNA study should it be supportive for their different trial designs would be something that we potentially could consider again as supportive, but not necessary. And we’ve had enough of feedback and particularly we thought the path is clear in Europe and we have said that our plan is to submit based on the GeparSepto data in Europe the fourth quarter of this year.
We need a little bit more clarification from FDA about some of the data that they would want to see before we make a decision about timing in the U.S. So do we want to go through the trial design for ETNA we looking forward up on the clinicaltrials.gov is a slightly different patient population, it's the HER2 negative high risk the population, again potentially complementary to the GeparSepto data but not necessary from the submission standpoint.
Got it. Thanks very much Jackie.
Thank you. And our final question for today comes from the line of Brian Skorney from Robert Baird.
Hey good morning guys, thanks for taking me in. Just a quick question, you put up an interesting slide at ASH showing the breakdown in first line myeloma sharing the non-transplant setting in the U.S. about 30% of the market its Velcade based without REVLIMID. Just give your thoughts on given the efficacy or RVd. What you guys see as the primary roadblock to converting that share over? Is it just an education component or is there a cost component? And maybe should we be thinking of the entrance of Generic Velcade next year as a driver there?
Jacqualyn A. Fouse
So I guess the point that we were trying to make and believe me we do everything we can from education standpoint to make sure there is a clinical data is properly disseminated and well understood. When you look at shares, the point is that given the strength of that RVd data and the current share position, there is room for more adoption of the RVd triplet and we think that even in the current environment the PFS data supports that greater adoption.
You have also potentially seen in smart guideline as one example, get updated where RVd has replaced [indiscernible] for newly diagnosed under those guidelines, so you can already see a positive reception to that data just based on the strength of the data. On a go forward basis, I think that going generic given the strength of the efficacy data for the RVd regimen is going to put the regimen in a very good position in a number of geographies with respect to adoption and I think it's going to be highly competitive for the regimen and we think about the Triplet coming along. They are all going to have to find a way to show their value proposition in that landscape.
Great. Thank you.
Patrick E. Flanigan
So thank you for all the questions this afternoon. We apologize we ran a little bit past 10:00. We are very excited about obviously proud of 2015. The organization did a great job and very excited to get going in 2016. We are off to a good start in Q1 and I think there is going to be a lot of interesting pipeline news flow, as well as great launch, continued success with OTEZLA and expansion of the HemOnc franchise around the world. So looking forward to a very good year in 2016. Thank you very much.
Thank you. Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program and you may now disconnect. Everyone have a good day.
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