|TRANSCRIPT SPONSOR |
Bristol-Myers Squibb Company (NYSE:BMY)
Q2 2007 Earnings Call
July 26, 2007 10:30 am ET
John Elicker - VP IR
James Cornelius - CEO
Andrew Bonfield - CFO
Lamberto Andreotti - EVP, COO of Worldwide Pharmaceuticals
Elliott Sigal - Executive VP, Chief Scientific Officer and President, Research and Development
David Risinger - Merrill Lynch
John Boris - Bear, Stearns & Co.
Jami Rubin - Morgan Stanley
Roopesh Patel - UBS
Barbara Ryan - Deutsche Bank
Seamus Fernandez - Leerink Swann
Good Day and welcome everyone to this Bristol-Myers Squibb second quarter earnings 2007 earnings release conference. Today’s conference call is being recorded and at this time for opening remarks, I’d like to turn the program over to the Vice President of Investor Relations, Mr John Elicker. Please go ahead sir.
Thanks Millicent and good morning everybody. Thanks for joining us this morning on our conference call to review our Q2 results. As you have seen from the release, we have also issued ’07 and updated ’07 guidance and ’08 guidance as well.
With me this morning for prepared remarks are Jim Cornelius our Chief Executive Officer and Andrew Bonfield, our Executive Vice President and Chief Financial Officer and then also joining us for Q&A are Lamberto Andreotti, Executive Vice President and Head of our Pharmaceuticals Business and Elliott Sigal our Chief Scientific Officer.
And before we get started I’d just like to cover the legal requirement. During the call we may make various remarks about the company’s future expectations, plans and prospects that constitute forward-looking statements for the purposes of the Safe Harbour provisions under the Private Securities Litigation Reform Act 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 10K and in our periodic reports on 10Q. These documents are available from the SEC, our website or from our Investor Relations group. 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 day. Though 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. With that, let me turn the call over to Jim.
Thanks John and good morning everyone. I’m going to make a few brief comments about the quarter and then talk about how we see the rest of the year and 2008 shaping up. I also want to update you on the strategic review process we have been engaged in for the last several months.
Overall, I’m pleased with our performance in the quarter. Sales were strong, thanks in large part to the recovery of our PLAVIX® business as well as the continued robust growth of ABILIFY®, the SUSTIVA® franchise and other key products. Major brands in the healthcare group were a solid contributor to sales profits and cash as well.
Regarding PLAVIX®, we were very pleased that our and Sanofi’s intellectual property rights were upheld in the US Federal Court. This decision is significant, not only to Bristol-Myers Squibb but to the entire research based pharmaceutical industry. We’re looking at PLAVIX® to continue as an important growth driver over the next few years.
On the earnings side we deliver earnings per share of $0.36 on a GAAP basis, and on a non-GAAP basis earnings per share of $0.37. Earnings growth was driven by strong sales of key products along with a focus on managing costs which is enabling us to continue investing in our new products and R&D while becoming more efficient in other areas. John mentioned, as a result we’re raising our full year 2007 GAAP and non-GAAP EPS guidance the range of $1.35 to $1.45 earnings per share.
Looking ahead, we will continue to execute successfully against our ’07 plan. We are focused on building out our growth franchises in Cardiovasculars, Oncology, Virology, Psychiatric Disorders and Immunoscience. We are also spending the necessary money to advance our robust pipeline. You will notice we are providing EPS guidance for 2008 based on expected solid revenue growth. Guidance is in the range of $1.60 -$1.70 earnings per share subject to certain assumptions. We’re providing this guidance much earlier than usual and it’s directly related to our confidence in our ability to grow revenues as well as control cost.
This is probably a good place for me to update you on the strategic review process. You’ll recall that we’re looking at our business in four strategic clusters. First CV and metabolics, second, specialty medicines, thirdly our mature or well established brands and finally the healthcare group. We have active strategic initiatives in each cluster. Our overall goal is to increase shareholder value by growing revenue, expanding our profit margins and improving cash flows. We are committed to doing this and hold ourselves accountable as a management team. As part of this review process, we are looking to transform and streamline infrastructure and decision making in the company over the next three years.
The challenge is to reduce costs while at the same time continue in investing in growth areas. AS part of this there will be workforce reductions in some areas of the company by year end and the continued rationalization of facilities. This intensified focus on costs is essential to our future. However, with a promising R&D pipeline, we plan to invest further in R&D and the business including specialty medicines and biologics where we see tremendous growth potential.
In this way we’ll continue to address serious unmet medical needs while helping even more patients prevail in their fight against serious disease. The strategic review process is now in high gear and we’ll provide an in-depth briefing on it at our investor meeting on December 5th.
Now, I’d like to turn the call over to Andrew for a more detailed review of the quarter.
Thank you Jim and good morning everybody. I’d like to briefly discuss our second quarter results and our guidance for 2007 and 2008 before we go onto your questions. As you have seen from our earnings release, we recorded earnings per share of $0.36 for the quarter negatively impacted by $0.01 of specified items. Excluding specified items for the quarter, fully diluted earnings per share on a non-GAAP basis were $0.37. As usual, the full reconciliation of GAAP to non-GAAP earnings per share is posted on our website.
Total company sales were $4.9 billion up 1% compared to last year. Overall we saw a 1% impact on price, a 2% benefit from foreign exchange and a negative 2% impact from volume. Worldwide pharmaceutical sales were flat at $3.9 billion including a 2% benefit from foreign exchange. Volumes were impacted by generic clopidogrel and increased generic competition for PRAVACHOL® in the US and Europe. Our healthcare group generated sales of $1.1 billion up 6% including a positive 3% benefit from foreign exchange. Sales in our US pharmaceutical business increased by 2% to $2.2 billion excluding the estimated impacts of the Apotex launch, US pharmaceutical sales would have been up roughly 4-6%. Sales in our international pharmaceutical business were down 3% to $1.6 billion negatively impacted by generic competition from PRAVACHOL® and TAXOL®.
For PLAVIX® you will probably have seen that earlier this week, IMS corrected a reporting error which overstated PLAVIX® prescriptions going back to the generic launch. Based on the revised data, we estimate the impact from the generic to be between $50 million and $100 million for the quarter and between $250 million and $350 million for the year-to-date. We noticed a potential issue with the data and notified IMS early in the second quarter. The updated script growth trends for the molecule in the second quarter were up 11% which is in line with our original planning assumptions for the year and the guidance we gave you on the first quarter call.
As the generic inventory is substantially depleted, we will be watching sales and script trends in the upcoming months and we’ll be able to match closer ex-factory sales to underlying scripts. Script growth trend for the other key products were also strong. ABILIFY®, REYATAZ® and the SUSTIVA® franchise all had double digits script growth and sales growth for the quarter. Sales for ABILIFY® were up 21% in the US behind 13% script growth. International sales were up 58%. Sales of REYATAZ® in the US were up 13% with 13% script growth as well.
Quarter-on-quarter, sales were negatively impacted by significant [adap] purchases in the first quarter of this year. SUSTIVA® franchise sales were up 28% in the US behind the strong performance for ATRIPLA™. ORENCIA® generated sales of $53 million in the US and we are in the process of launching in the European Union. Global SPRYCEL® sales were $35 million and while early, we are encouraged by the results in Europe.
Excluding specified items in both periods, the gross margin increased by 60 basis points to 68.8%. The positive impact arose from the strong sales for PLAVIX®, our Virology business, ABILIFY®, SPRYCEL® and BARACLUDE®.
This is also the final quarter we will see the impact from the reclassification made in the second quarter of last year.
Marketing, selling and administration expenses increased by 2% for the quarter due to the reclassification I mentioned a moment ago. Advertising promotion spend increased by 5%. This reflects increased investment in our international pharmaceutical business and [Lee Johnson]. Excluding specified items research and development expense for the quarter increased by 3% to $761 million. This reflects the cost sharing impacts from our partnerships with AstraZeneca and Pfizer.
We continue to fully invest behind our late stage development projects and we are also focusing our business development efforts at identifying early stage development opportunities to strengthen the front end of the pipeline.
The effective tax rate for the quarter was 22.2% in line with our guidance for the remainder of 2007. Net debt decreased to $2.6 billion from $3.4 billion at the end of the first quarter.
As you will have seen in the release, we are updating our full year 2007 GAAP and non-GAAP earnings guidance to $1.35 to $1.45 per share. This reflects a strong operating performance we saw in the first half of this year. We now expect revenue growth to increase in the 8-10% range for the year which includes some benefit from foreign exchange. As I noted earlier, our estimates for PLAVIX® reflect the revised script growth trends issued by IMS.
Advertising promotion spending should increase in the mid single digit range as we make incremental investments behind key brands and the potential launch of [exibephelone].
R&D spending should be up in the mid single digit range for the year. The remainder of that expense line item and tax rate guidance has not changed. You may have noticed the diluted shares outstanding in the quarter increased by 12 million shares compared to the second quarter of last year. This is primarily a result of increased option exercises. We expect shares outstanding to continue to increase throughout 2007.
We have also provided full year 2008 non-GAAP guidance of $1.60 to $1.70 a share. This reflects a strong operating performance in 2007, the beginning of the streamlining of our cost base and continued investment behind future growth drivers including currently marketed products and our late stage pipeline.
We expect revenue growth to increase in the mid to high single digit range. This includes continued strong growth from our specialty and cardiovascular products, slower growth from the healthcare group and sales declines for our mature brands.
Gross margins should improve slightly compared to our 2007 expectations. We expect R&D spend to increase in the mid single digit range. The rest of total operating expenses should be flat as the initial benefits of our cost reduction program are realised.
The effective tax rate from continuing operations should be in the 22-24% range, slightly higher than this year. We also expect shares outstanding to increase from the 2007 level. Finally, (inaudible) guidance excludes specified items that we have not yet identified.
In summary, our second quarter performance was slightly impacted by the Apotex launch but the base business, including our growth drivers, newly launched products and other healthcare businesses continue to perform well. With the annualising of the loss of exclusivity of PRAVACHOL, the company has entered into a period where exclusivity losses will have significantly less impact on the top line.
The strength of our business is reflected in our increased guidance range. We have also provided you an initial outlook for 2008 and look forward to our investor meeting on December 5th in New York. With that I’ll now hand over to John with the Q&A Session.
Thanks Andrew, and Millicent I think we’re ready to go to the Q&A session and I would just ask everyone for your questions, if you could keep them brief in the interests of us getting as many questions as possible during the call. So Millicent, we’re ready when you are.
Thank you. (Operator instructions) Our first question will come from David Risinger with Merrill Lynch.
David Risinger - Merrill Lynch
Thanks very much. I have two questions. First, the press release stated in the commitment to shareholder value section that the transformation will include a comprehensive cost reduction incremental to current efforts. Should we interpret this to mean that to be announced cost cutting is not yet reflected in your ’08 guidance of 1.60 to 1.70? And then second, there’s been a lot of media speculation about the potential sale of Bristol-Myers. Can you please comment on this and also if you could add some comments on your ability to retain and recruit talent in light of all of the media speculation. Thank you.
David, thank you for the question, it’s a great one. I won’t answer it directly, but when I first arrived in September, the strategic plan did not include any major significant reduction in infrastructure costs. What we’ve been doing over the last six or seven months with almost the entire organization involved is targeting a significant one time readjustment cost structure and we hope to be able to report in December what the impact of that is. This is a multi year program. For the first time it includes head count reductions in addition to cost avoidance and other things that were built in to the work right initiative which is delivering this year by the way. And the second on whether we are going to be sold or not, we don’t comment on those kinds of things. Third one, talent, I’m told by human resource and the other gentlemen in the room with me today, we’ve had an increase in the number of people answering our external searches for jobs, this is on the scientific side and the administrative side, so I think we’re very much becoming back to our normal pharmaceutical company.
David, its Andrew. Just to add on the cost cutting side, as I indicated in my comments, our assumptions for 2008 assume that everything apart from R&D is flat. That includes the initial benefits of the new cost cutting exercise, as obviously we are still planning through that exercise, and we’ll update you with that in December if, as Jim indicated, we make a larger one time change some time later this year. Obviously that will have some incremental potential in 2008 but at this point in time we’re targeting flat.
Thanks David. Millicent, next question please.
Our next question will come from John Boris with Bear Stearns.
John Boris - Bear, Stearns & Co.
My questions have been answered, thanks
Thank you. We’ll move onto Jami Rubin with Morgan Stanley.
Jami Rubin - Morgan Stanley
Thank you, I just have a couple of questions, First, I’m wondering if you could talk about ERBITUX®, clearly in the last six months or so we’ve seen mixed clinical data for ERBITUX® and I’m curious to know what your outlook is for this drug and more importantly, how do you characterize the strategic importance of your ImClone stake to Bristol going forward. My second question relates to SPRYCEL®, Elliott, maybe you could comment on this. I’m curious to know where your volume is coming from in Europe. Is it coming from Gleevec or as Novartis noted on their call, is it coming from your own clinical trials? I’d like to see your color on that.
Unidentified Company Representative
Jamie, let me talk about ImClone and our stake. We are an affiliate of ImClone and have an obligation to file with the SEC. That SEC filing states that the view of the ImClone stake is better as a financial asset, and if we make any change to that viewpoint we will be disclosing that in an SEC document.
I’ll hand it over to Lamberto to talk about the commercial potential for (inaudible)
You’re right, there is mixed data from various clinical trials that was presented at different meetings in recent times. Still in that mixed data there is a lot of good data and also in some of the trials where we didn’t meet the primary endpoint we got very important indications, the secondary endpoint, that make us believe, there are still opportunities to go after the same indication. And we are considering a number of additional cancers that can be started in trial and we are intensifying the efforts there.
Speaking of SPRYCEL®, I don’t know where [Novotnik] got the information that all of our patients were coming from clinical trials. My source of data indicates that this is not true. Obviously we have patients coming from our trials, but we see new patients and what is important is we see patients in the chronic state of the disease. You must remember that the market for SPRYCEL® in Europe is different from the market in the U.S. for two reasons. One is that a generic specialist treats patients with that type of indication and second they have a tendency to move to our dosages much faster than the U.S. On top of this, we have a label in Europe that is more complete that the label we have in the U.S., we have more clinical trial results included in that label, and so our promotion in Europe can be wider than the promotion that we have had so far in the U.S. The same data will obviously be submitted, or has been submitted, to the FDA and therefore we look forward to having the same fuller product label in the U.S.
Jamie, this is Elliott. I think Lamberto clarified the situation. We certainly have a robust clinical program. There are about 1,000 patients being studied, but that’s not the source obviously. I think that was answered by Lamberto. We’re very pleased with the progression of the lifecycle management plan for SPRYCEL®, we just received priority review for this submission that we had earlier this year for the optimal dose. This is a dose that’s lower and provides very important efficacy that’s equal to the currently registered dose but at an improved safety profile. In Europe this has already been recommended for approval, action should be in September, and in the U.S. we’re expecting as a priority review an action in November.
You also asked, and I should say our first line studies are going well and we’ve had great cooperation with the FDA and the European Scientific Advise on how to do a very effective trial in first line comparison with Gleevec. And by the end of the year, we should have some data on solid tutors because SPRYCEL®, unlike Gleevec, has the SARC activity as you know.
You asked about ABILIFY® and Lamberto will mention the commercial opportunity on major depressive disorder. I just want to say how pleased we are with our lifecycle plan that is now yielding significant amount of clinical data. There will be five or six sNDAs on ABILIFY® to help expand the label and the indications. One of them that is medically very important is in major depressive disorders as adjunctive therapy to current treatment such as SSRIs. Our first two studies in this area, and this is significant, we believe were both positive, as we’ve presented in major medical meetings. We’ve just received word that this will receive priority review at the FDA.
This is Lamberto. We have indication that anti-psychotic drugs are used in depression already and we believe that there is a certain, not huge, but certain portion of our [indiscernible 0:04:51] of ABILIFY® in that indication. Obviously we don’t promote that indication because it’s not approved. But there is some use there. We believe at the moment that we will get indication that [both of sales] will expand. How far we’re still effecting.
Speaking of ABILIFY® more in general, I think we are pleased of two things. One is the market in the U.S. is growing again, and our market share within that market is growing too, so this is positive. This combines to our price increases as led, the result of which you’ve seen in the press release, and the second thing is we continue to work in the U.S. There is a lot more that we can do in schizophrenia and bipolar disease. We are intensifying our DTC, we are doing more DTC and we are planning to do more.
In Europe, where as you remember we had some slow uptake at the beginning, we see also there good results, and we see a number of countries where sales had plateaued, sales picking up again. So ABILIFY® continues to be one of our important growth driver and we consider the new indication that we’ve come in depression as contributed to that growth. But we will continue to work obviously on schizophrenia and bipolar as our lead indication for the product.
Our next question will come from Roopesh Patel with UBS.
Roopesh Patel - UBS
Thank you. My first question is on R&D. Notwithstanding the cost sharing with AstraZeneca and Pfizer, can you give us a rough idea of what growth will have been this quarter. And in terms of the full year guidance of mid single digit growth, this implies that second half spending will be in the high single digits versus the first half spending being at 1%. If you could just comment on what’s likely to be different in the second half.
And then separately, in the SGLT2 inhibitor can you just elaborate on the size and duration of the phase 3 programs. Whether it’s going to be initially developed just as mono-therapy or also we’ll have combination therapy and if so, what will be the initial combination that will be studied?
Hi Roopesh, it’s Andrew. There was obviously a small benefit from the cost sharing, it did affect this quarter. If you look at the quarter on quarter, movement within clinical trials and within development spend, for example, there was significant reduction of [saxoglyptin] reflecting the partnership arrangements and also as some of the trials come to an end. As you move into the second half of the year, we do expect a number of trials to continue to ramp up. [Apixavam] for example we’re starting in phase three, we’ll be starting SGLT2 phase three trials in the second half of the year, and that will be driving spending upwards, and therefore we are comfortable with our guidance range of mid single digits.
Roopesh, this is Elliott. You asked about apical flow and the SGLT2 inhibitor, which is the first of a new class of SGLT2 inhibitors. It’s a novel mechanism that works independent of insulin; therefore it is attractive in combination therapy, which is very important for this patient population. Our phase 2A data was encouraging and discussed at the American Diabetes Association. We have later stage 2B data that we have reviewed with our partner, AstraZeneca, and moved the compound into phase three. We hope to establish a safe and effective alternative to existing therapies that has meaningful glucose and weight control and possibly weight loss. As the mechanism is complementary to existing therapies we’re exploring both mono-therapy and multiple combination therapies in an extensive phase three program. And most diabetics will need combination therapy, so to fit those combinations will be part of the plan. We hope December 5, to describe an expanded layout of our clinical program on this exciting new compound.
Barbara Ryan with Deutsche Bank, your line is open. Please proceed.
Barbara Ryan - Deutsche Bank
Oh, good morning. Thanks for taking my question. My question is probably for you, Andrew, and there really are two. One is that if you look at the IMS original data, and I apologize I haven’t had a chance to see what the ramifications are of the changes, but our data would show that the year-to-date PLAVIX® is down about 5% and I guess you reported revenues in the U.S. that were down 2%. So could you tell us was the differential the discounting or inventory, I mean, I would assume that there’s probably some building of inventory. I know you gave us those details. And then the second question is really related to the gross margins. I had assumed 68.4 in the quarter, we did 68.8 but both of those are down from the first quarter and I did that because of the pattern of the prior year and also looking at the cost of goods sold rather than a ratio as a fixed dollar. But I’m just trying to understand why that pattern exists where the second quarter gross margin is seemingly lesser this year, you know, well below the first quarter. Last year I guess you had a drop off in PRAVACHOL®, this quarter you didn’t, so I just want to understand that a little better, thank you.
On the IMS data, the difference between IMS scripts for PLAVIX® and the actual ex-factory sales as reported will probably be due to inventory both at the wholesale level and at the retail chain level as they rebuild because effectively they’d be stopped in 2006, so they’ll be the driver of the difference. One of the things, I just want to make a note is that obviously as we move through the remainder of this year we’ll be able to actually pick up via our ex-factory sales much closer to what actually TRX trends should be and therefore if there is any further discrepancies with the data provided by IMS, we’ll be able to pick it up even quicker than we were able to this year. But again, just to reiterate, this was IMS issue and was not reflected in any of our forecasts as we move through for 2007 or in 2008. The other point on gross margins, the gross margins for the second quarter were down quarter-on-quarter. That reflects a number of things. In the first quarter you do see some revaluation within our technical operations area which has some impact and positive benefit on margins in the first couple of months of the year. As you move through you tend to get a larger trend, negative trends on the factory variances, both from a price variance and so forth and those have (impacts).
Quarter-on-quarter, the major change actually was within those things like revaluations and also on manufacturing cost variances. There were also a couple of right offs in the second quarter of this year which impacted the quarter-on-quarter performance.
With that, let me just let Lamberto talk a little bit about PLAVIX® for the year-to-date as well.
Yeah obviously we were not pleased with the data from IMS, there was a way they calculated them, but what is important is what we have. Total prescription of Clopidogrel in the marketplace grew 11% in the second quarter. We saw the data that was coming from IMS, we were not believing some of that data. We reflected our belief in our projection for the year. The important thing again is that we continue to see Clopidogrel growing at a 11% and this is the combination of many factors, obviously they have an element related to Medicare part B but also there is a big element of extension of the length of therapy caused by a lot of support we’ve given to the product in 2006 and the first part of 2007 and we see an expansion of the PAD indication so PLAVIX is on the right track. 11% increase of total prescription is what we like to focus upon.
Thanks Barbara, can we go to the next question?
We go now to Seamus Fernandez with Leerink Swann. Please go ahead.
Seamus Fernandez - Leerink Swann
Thanks very much. Sp just on PLAVIX®, I just want to get your thoughts on this. Several companies have commented on (stant) and angioplasty procedure volumes slowing down. Can you just give us some sense of how important new procedures are relative to PLAVIX® prescriptions and if we should anticipate a slowdown in the future for PLAVIX® given this change in procedure volumes that perceived by other companies. Separately, this is a broader question but given the high multiples that are being paid for the nutritionals businesses around the world. Can you just comment on how this business fits into your long term strategic plans for the company as well as potential streamlining updates? Thanks very much.
I would take your first question on PLAVIX® and (Stant). 95% of patients dismissed up to a stant procedure get PLAVIX® at the same time though you know that the guidelines are indicating that the user (inaudible) should be expanded and therefore we see a combination of less procedures and longer user Plavix after the procedures that have taken place.
And also we are intensifying the effort to have Plavix used also on those stations that do not go through scan, that go through medical procedures and our growth in that segment of the market is important and this is one of the segments where we have no competition also foreseen in the near future.
James Cornelius. Let me handle the second part about where Mead-Johnson fits in our portfolio of brands. As I mentioned in my introductory remarks, it behaved very nicely for the second quarter, a solid contributor. We’re pleased also to see very high PE multiples being attached to for example, the (Numical) sales that are known. On the other hand we’re leaving no stone unturned and we’re looking at the brands within the non-pharma health care group as we solidify our total strategy and we’ll be back to you in December on what that looks like.
Unidentified Company Representative
Thanks James. Can we go to the next question please?
We’ll go now to Steve Scala with [Caling]
Thank you. First for Dr. Siegel, I’m wondering if you would like to make any observations regarding the recently revealed phase III River [Optiban] data in VTE? Any positives or any deficiencies in the data? And maybe for Andrew, could you provide any perspective on the ORENCIA® patent trial which apparently begins next month and the timing of the Plavix patent appeal in the U.S. and/or Canada? Thank you.
Yes, Steve, you’re answer that the recent IFTH meeting, there was a lot of important data on the anticoagulant field. I believe the data presents, first of all on the direct (ph. Tramanin 2:14) inhibition, reinforces in general our belief that factor 10A inhibition is a very good approach. And I think the buyer J & J compound, [ River Octiban] the phase III data long with our own phase II data with the Pixiban presented are both very encouraging for the class of factor 10A inhibitors. We continue to believe that the profile of the Pixiban, which is characterized by lower peak-troth ratio, less dependency upon renal excretion and absence of food effects makes for a potentially best in class compound. Especially in the chronic indications and the data that’s been presented in phase III that you referred to was after two weeks. But in chronic indication, where both compounds are being evaluated at higher doses, we think that the profile for the Pixiban offers great potential but in general this is very good news for the factor 10A inhibition and the whole class of anti-coagulations approach in the future.
Unidentified Company Representative
(inaudible) I presume you’re talking about the [ Reclagin] trial as you know we have already had one trial with them before which is on the base patent, which we actually won, the patent of the, we were told arthritis, and I think that our view is that our patent is valid and so will probably end up going to court with them, but we’ll see how that ends up. We don’t think this is going to have a major impact on the company or the brand.
And on the Plavix appeal, obviously that will go to the federal appeals court and will probably take sometime into next year before that is determined. We are obviously very happy with the outcome in the earlier trial and obviously will make sure and we obviously hope to win again in the federal appeals court. On the [Obsuca ] on the ABILIFY® patent, there are many IMBA’s. [Obsuca] actually have responsibility for that patent and they will be defending it as we move forward.
Unidentified Company Representative
OK, thanks Steve. Can we go to the next question?
Jim Kelly with Goldman Sachs, please go ahead.
Jim Kelly - Goldman Sachs
Good morning. I was just wondering if Dr. Siegel would just review the remaining clinical trial data requirement for [Saxilipton] to be filed and also just update us on the timing please. Thank you.
And first to biologic is increasing and we are at 5% now of the total patients in place so we have a strong case in the US, I’m not diminishing the importance of the EU but we are focusing more in terms of potential on the US than in the EU right now.
Thanks Katherine and Millicent can we go to our last question?
Our final question will come from Jami Rubin with Morgan Stanley.
Jami Rubin - Morgan Stanley
Thank you for the follow up. If the prasugrel data are positive, Elliott, can you give us the sense for what percentage of PLAVIX sales are for acute coronary syndrome?
I’m going to ask Lamberto to comment
Yes, obviously we are focusing a lot on prasugrel and we are not going to make a final assessment on what their launch can mean until we see the data. What we know is that they will focus on a specific indication as you said and we know that we have a much broader type of indication and we have the experience and the understanding that the efficacy and safety balance that one product can have in a specific indication might not be replicated in our indications or the safety and efficacy balance that you have in a particular moment of the disease cannot be replicated later on. So we are taking prasugel seriously but we believe that it will be focusing on a much smaller set of patients and obviously we are going to assess their strengths once we see both their efficacy and safety data. Again, in this type of product, safety and efficacy must be looked at the same time and I’m sure that Lilly is thinking about that. Andrew?
Thanks Jami, and I’ll turn it over to Jim for some closing remarks.
In conclusion, I think that we’re continuing to execute. We believe we can increase revenues and grow earnings as reflected in higher earnings per share targets for this year and next as part of our strategic review. WE are intensifying our focus on cost but at the same time investing in the pipeline and new products and we look forward to meeting you face to face on December 5th when we talk more about our progress on the strategic plans. Thanks for your attendance today.
And with that we’ll close the call and if anybody has any questions to follow up, please contact our IR office.
THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.