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Bristol-Myers Squibb Company (NYSE:BMY)

Annual Meeting of Stockholder

May 01, 2012 10:00 am ET


James M. Cornelius - Non-Executive Chairman

Sandra Leung - Senior Vice President, General Counsel and Corporate Secretary

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

James M. Cornelius

Good morning, ladies and gentlemen. I'm Jim Cornelius, the Non-Executive Chairman of the Board of Directors. I would like to introduce to you our Chief Executive Officer, Lamberto Andreotti, who's also a member of the Board of Directors; and here with us this morning is our General Counsel, Corporate Secretary, Sandy Leung who will now make a required public statement.

Sandra Leung

Yes, Jim. The fire alarm system in this building is a voice evacuation system. In the unlikely event of an evacuation, please walk to your nearest exit. The exit is located behind me, to my right, to the rear of the room and through the lobby you entered. In consideration of other stockholders, we ask that you turn off all cellphones and similar devices.

James M. Cornelius

Thank you. Now let me introduce -- the other directors are with us here this morning. Director, please stand as I call your name. Lewis B. Campbell, is the retired Non-Executive Chairman of the Board of Textron; Lewis J. Freeh, Chairman and Treasurer of Freeh Group International Solutions, LLC and former Vice Chairman, General Counsel of MBNA Corporation; Dr. Laurie Glimcher, M.D., she's the Stephen and Suzanne Weiss Dean of the Cornell Medical College and Cornell University Provost for Medical Affairs; Mike Grobstein, Mike is retired Vice Chairman of Ernst & Young; Alan J. Lacy, Senior Adviser to Oak Hill Capital Partners, LP; Elliott Sigal, Elliott is M.D., Ph.D. Executive Vice President, Chief Scientific Officer and President of R&D at BMS; and I skipped over Vicki Sato, Ph.D., Professor of Management Practice at Harvard Business School and Professor of the Practice of Molecular and Cell Biology at Harvard as well; Togo West, Chairman of TLI Leadership Group and Noblis, Inc.; R. Sanders Williams is the President and the Robert W. and Linda Mailey Distinguished Professor of the J. Gladstone Institutes and Professor of Medicine at the University of California at San Francisco; and our newest member of the Board of Directors, we are pleased to have him, Gerald L. Storch, who's Chairman and Chief Executive Officer of Toys"R"Us.

Also with us this morning, representatives from Deloitte & Touche: First, Cathy Engelbert, Jeff Black and Rob Poignant are all partners of our independent registered public accounting firm. We have in the audience a number of the company's other executives and officers who Mr. Andreotti will reintroduce later in the meeting.

Sandy, do we have a quorum and this morning?

Sandra Leung

Yes. Jim, I'm pleased to report that a quorum is present, with over 85% of the company's common and preferred stock entitled to vote at this meeting represented here in person or by proxy.

James M. Cornelius

Thank you. Before we continue, I'll ask Sandy to make one other required legal statement. Sandy?

Sandra Leung

Yes. If, during this meeting, any statements are made concerning any projected financial or other forward-looking information, I refer you to the risk factor section of our most recent 10-K report. That document identifies important risk factors that could cause the company's actual results to differ materially from historical or expected results. In addition, there may be discussion of financial measures that were not prepared in accordance with generally accepted accounting principles or GAAP. Reconciliations of those non-GAAP measures to the most directly comparable GAAP financial measures can be found on our website at

James M. Cornelius

Thank you, Sandy. Now let me turn the meeting over to our Chief Executive Officer for the business presentation this morning. Lamberto?

Lamberto Andreotti

Good morning. Thank you, Jim. Thank you, everybody, for being here today. It this with great pride that I stand before you today to provide our Bristol-Myers Squibb annual report.

As shareholders of this company, you have every reason to share the pride and to take comfort in the fact that you own a good, vibrant and successful company. One that is rooted in the firm commitment to innovation. One that is now widely viewed as an industry leader. Financially, we're solid; clinically, we are delivering; and commercially, we're strong. This is good news for our company. This is good news for the patients we serve. Granted, we continue to face many challenges, which are very real and significant. Some of them will intensify over the near-term. Most notably, with respect to the loss of exclusivity of PLAVIX and AVAPRO, as well as a host of global economic and active difficulties.

Thanks to our good efforts, despite all challenges, 2011 was a productive year for us, and we kept establishing a strong foundation for long-term growth. In 2011, executing our -- against our biopharma strategy, we increased sales, we expanded our portfolio, we moved forward with business development and we made significant clinical advance. We also took our corporate citizenship to a new exciting level. The recognition of our success in the financial world, the press and the scientific and medical community confirm the good work of our more than 27,000 Bristol-Myers Squibb employees.

Our 2011 shareholder return was 39.5%, one of the best in the industry, reflecting both our results and our growth prospects. Our net sales increased by 9% to more than $21 billion. This was largely made possible by double-digit growth in several markets, as well as double-digit growth in some of our key products, namely: BARACLUDE, ORENCIA, SPRYCEL and ONGLYZA. We also launched 3 new products: YERVOY for metastatic melanoma; ELIQUIS for the prevention of venous thromboembolic events, VTE, after orthopedic surgery; and Nulojix, to prevent organ rejection after kidney transplant. Along with our continued success and focus on productivity, our sales results allowed us to deliver 6% growth in earnings per share, and we ended the year with over $11.6 billion in cash and marketable securities. We maintained a strong focus and discipline in capital allocation. This included another increase in our annual dividend and a continuation of our $3 billion share repurchase program. It also included an added emphasis on our 3 business development initiatives with, over the past year, has provided us with several exciting opportunities, ranging from relatively simple technology agreements to outright company acquisitions. Each adds growth to our company, potential products, great science and skilled people. Each represents a very important and significant component of our long-term vision.

Our most recent transaction involved the purchase of Inhibitex, a clinical stage biopharma company best known for its work in infectious diseases, most notably hepatitis C. The unmet medical need for patients with this often chronic infectious disease is significant. The lead hepatitis C asset of Inhibitex expands our hepatitis C portfolio and provides us with increased opportunities to develop the right regimen for diverse patient populations.

The list of the most important developments of last year, at it's top, the regulatory approvals of the 3 new medicines that I already mentioned. Taken together, these 3 products, along with others in late-stage pipeline, not only add to our increasingly innovative and diversified product -- portfolio. They also represent the Bristol-Myers Squibb future.

YERVOY was the big story of 2011. Launched last March, this breakthrough medicine gave patients with metastatic melanoma something truly special, hope. For the first time in many years, they had a treatment with proven overall survival benefits. Indeed, prior to YERVOY, no single standard of care existed. And while its launch was followed by another new melanoma product on the market, YERVOY's reach has continued to grow.

Nulojix, another new product launched last year, is a breakthrough medicine for the prevention of organ rejection in adult patients receiving a kidney transplant. Nulojix was the first new mechanism to be approved for kidney transplant in more than a decade, and provides patients with an improvement of the function of the transplanted kidney. It makes long-term renal kidney health more likely. This has been a major challenge in the treatment of kidney transplant patients.

And finally, ELIQUIS. ELIQUIS is another big story. It was approved last year in Europe for the prevention of thromboembolic event after hip or knee replacement surgery and was launched in a number of countries. Most significantly, however, we announced, last summer, the results of a major Phase III clinical study that demonstrated the superiority of ELIQUIS to warfarin, the standard of care in stroke prevention for patients with atrial fibrillation. Atrial fibrillation is a common heart arrhythmia that affects an estimated 10 million people worldwide and greatly increases the risk of stroke. Stroke is the third leading cause of death in the United States. This study was a triple win in that it demonstrated a significant reduction in the risk of stroke, major bleeding and mortality in patients with atrial fibrillation. We are expecting regulatory decision on this atrial fibrillation indication in the U.S. and Europe this year, and we have also filed the same indication in Japan.

To drive our sales and to make sure that our medicines get to the patient who need them, we have implemented a completely new approach to customers. Called Customers at Center [ph], our novel, more holistic approach focuses on all aspects of the patient's journey and all of the customers and other stakeholders involved in this journey. It includes physicians; nurses; payers; health care; practitioners; hospitals; and of course, patients. With a deeper and better understanding of each patients' journey. We are now able to deliver a superior customer experience, one that increases the impact our products have on patient lives, by speeding access and facilitating understanding of how to use our product.

And finally, in 2011, we built upon our strong tradition of corporate responsibility and good global citizenship. A tradition that is the very core of the Bristol-Myers Squibb story. Through our BMS Foundation, we continue our work to address HIV/AIDS in Africa, cancer in Europe, hepatitis in Asia, and mental health and diabetes in the United States. In fact, our -- together on diabetes, initiative in the U.S. is already provided, $32.5 million in grants to organizations working in 27 states and Washington, D.C. Organization that are working to develop and test new and innovative ways to provide care and treatment at the community level to some of the most at-risk populations with diabetes. We also deepened our involvement with the United Nations Global Compact, a strategic policy initiative for businesses connected to a series of social and environmental principles. We pursued our internal Go Green environmental sustainability initiative at company sites throughout the world. And when an earthquake and tsunami devastated parts of Japan, our foundation and many of our own employees from all around the globe rose to the challenge by providing support for coworkers and others affected by the crisis.

Without question, this is a very exciting moment in the life of Bristol-Myers Squibb. We see it in the numbers. We see it in the products. We see it in the engagements of our own employees. We see in the lives of the patients we serve. And I have every reason to believe that we can continue to see it this year and the years to come. Again, we have some significant challenges ahead. We must work through this year's loss of exclusivity for PLAVIX and AVAPRO which, together, contributed over $8 billion in revenue last year, as well as an increasingly uncertain global and regulatory and environmental -- and economic environment. But I'm firmly committed -- confirmed in our future. We have a healthy pipeline, a solid financial position, a strong management team and a commitment to innovation that runs throughout every part of our organization. Our long-term potential and ability to deliver is real. To that end, we will continue to seize opportunities and navigate challenges. We will continue to balance short-term results and long-term investments. And guided by our firm commitment to the highest business standards and ethics, we will continue to discover, develop and deliver innovative medicines that help patients prevail over serious disease. This is what we do. This is who we are. This is what it means to be the benchmark biopharma company. Thank you.

James M. Cornelius

Thank you, Lamberto. Now proceeding on to today's business. You should have all a copy of the agenda and the meeting procedures. I ask that you read and follow the procedures.

Here's how the rest of the meeting will flow. First, we will vote on the 7 matters to be presented at this meeting, 4 items are being presented by management and 3 by stockholders. After each proposal is presented, we will refer to the board's recommendation in the proxy statement. I ask all speakers to limit their comments to 3 minutes to allow other stockholders who wish to speak and have the opportunity to do so. After the voting, we will have a general question-and-answer period, which Lamberto will lead. The preliminary results of the vote will be announced after the Q&A period. Stockholders or proxies of stockholders who wish to address the meeting should raise their hand, so an usher can bring a microphone over and wait to be recognized. When recognized, please state your name. If you are representing another stockholder by proxy, you should also identify that stockholder. Again, we ask that our speakers be brief and limit their comments and questions to the specific items being considered at that time during the meeting. General comments and questions should be held until the Q&A period.

Sandy, do you have some documents to present before the meeting?

Sandra Leung

Yes, Jim. We have on the registration table outside the cafeteria, an alphabetical list of the stockholders entitled to vote at this meeting. This list has been available for inspection, by the stockholders at the site for over 10 days prior to meeting and may be inspected by stockholders during the course of the meeting. We also have here at the front table copies of the notice of the 2012 meeting and proxy statement, the proxy card and 1 copy of the company's 2011 annual report signed by the independent accountant, which was provided to all the company stockholders of record as of March 9, 2012. In addition, we have a signed affidavit attesting to that mailing. All these documents are available for inspection by of stockholders present. The affidavits, proxy materials and annual report will be filed as exhibit to the minutes of this meeting. We also have available here for inspection by stockholders, both during and after the meeting, the minutes of the 2011 Annual Meeting of Stockholders.

James M. Cornelius

Thank you. Now pursuant to the company's bylaws, I hereby appoint Bill Marsh, inspector of election for this meeting and any adjournments thereof off. Mr. Marsh is an employee of IVS Associates, a professional services company specializing in independent tabulation and certification of voting results for corporations.

Now let me call on Sandy.

Sandra Leung

Jim, the inspector is present and has taken the required oath and presented it for filing with the records of this meeting.

James M. Cornelius

Ballots were available to all stockholders as you entered the meeting. If you need a ballot, please raise your hand now.

Gentleman here in row 2. Help that gentleman in the second row.

However, please remember that you do not need a ballot if you've already voted, unless you wish to change your vote. The polls will be open until the end of the business portion of the meeting, at which time, the ballots will be collected. I now declare the polls open for voting on the items to be presented at this meeting, and note for record, that it's May 1, 2012, at 10:21 a.m. In the interest of ensuring there is sufficient time to address general questions, I again ask that questions or comments be limited to the specific item as we consider the proxy proposals. Sandy, will you present the 4 management proposals?

Sandra Leung

We will now move to the first item listed on the agenda, the election of directors. All 12 directors are elected for terms expiring at the 2013 annual meeting. The board's nominees for directors are listed on Pages 13 to 19 in the proxy statement that has been provided to all stockholders. Biographies of the nominees are also included in the proxy statement.

Are there any questions or comments on this item?

Seeing none, we'll move to the second item, the ratification of the appointment of the Independent auditor. The Board of Directors, on the recommendation of the Audit Committee, has appointed Deloitte & Touche, LLP as the independent registered public accounting firm for the company for the year 2012 and is seeking ratification by the stockholders. The Board of Directors' position concerning this item appears on Page 62 of the proxy statement.

Are there any questions or comments on this item?

Seeing that there are none, we'll now move to the third item. Advisory vote to approve the compensation of our named executive officers. The Board of Directors recommends the stockholders approve an advisory vote to approve the compensation of our named executive officers. The Board of Directors' position concerning this item appears on Page 65 of the proxy statement.

Are there any questions or comments on this item?

Seeing that there are none, we'll now move to the fourth item, which is the approval of the 2012 stock award and incentive plan. The Board of Directors recommends the stockholders approve that 2012 stock award and incentive plan. The proposal on the approval of the 2012 stock award and incentive plan begins on Page 66 of the proxy statement, and the Board of Directors' position concerning this item appears on Page 74 of the proxy statement.

Are there any questions or comments on this item?

Seeing that there are none, I now hand the meeting back over to Jim for the presentation of the 3 stockholder proposals. Jim?

James M. Cornelius

Thank you, Sandy. We're now ready for the fifth item on the agenda. Mrs. Davis does not appear to be here to present her proposal. She does not appear to have appointed a qualified representative to present her proposal. Under SEC proxy rules and the company's own bylaws, since neither the proponent nor a qualified representative of the proponent is present, the item will not be placed before the meeting.

We're now ready for the sixth item. Please move your proposal before the meeting. Is Mr. Manuppello here?

Joseph Manuppello

Good morning, members of the board and fellow shareholders. My name is Joseph Manuppello and I am here on behalf of People for the Ethical Treatment of Animals. Our resolution is to promote transparency and minimize the use of animals by requiring the board to issue an annual report to shareholders disclosing procedures to ensure proper animal care, as well as specific plans to promote alternatives to animal use. Our company posts a number of public policies on its website, specifically, data regarding air emissions, water use, waste, energy and transportation are reported as are filings for safety violations, spills and remediation investigations. In contrast, our company's animal testing policy is included in a random product stewardship list and provides no specific information despite touting the virtues of reducing animal use. Other international companies provide detailed information such as animal use numbers and specific efforts to incorporate replacement methods. In the last 3 years, our company used more than 20,000 animals in-house. This number includes more than 2,600 dogs and 3,400 primates. Nearly 12,500 of these animals were used in painful experiments, a staggering 62%. These figures do not include animals used in Bristol-Myers Squibb experiments in contract laboratories nor the vast number of animals who are most commonly used in experiments. And though they are not legally required to be counted, suffer as well. Animals used in laboratory experiments experience pain, fear and stress. They spend their lives in unnatural settings, caged and deprived of companionship and are subjected to painful experiments. Undercover investigations have exposed atrocities at accredited institutions and footage shows animals being beaten, tormented, abused and left to suffer from illness and injury without veterinary care. Our company's animal testing policy states, we evaluate each contractor animal care and use program for conformance to published regulations and standards for the humane care, treatment and use of all animals. Yet in one contract laboratory used by our company, Covance, Inc., an undercover investigator videotaped workers striking primates and throwing them against cages. Primates circled frantically in their cages, pulled out their hair and chewed their own flesh. In other instances, a primate became trapped in his cage bars, unable to reach food or water for days, while others suffer from frostbite from inadequate weather protection. The government has cited and fined Covance for improper care and failure to provide pain relief to suffering animals. Given that 92% of drugs deemed safe and effective when tested on animals fail in human clinical trials, our company has an ethical and physical obligation to ensure that a minimum number of animals and the best science possible are used. Our company must incorporate recommendations from the National Academy of Sciences, use scientific advances to transform toxicity testing from a system based on whole animal testing to one founded primarily on in vitro, nonanimal methods. These approaches will improve efficiency and reduce cost and increase speed and predictivity to humans. We urge shareholders for this socially and ethically important proposal. Thank you.

James M. Cornelius

Thank you, Mr. Manupello. The Board of Directors' position concerning this item appears on Page 79 to 80 of the proxy statement.

Any comments?

Thank you. We're now ready for the seventh item. Please move your proposal before the meeting. Is Mr. Horvolis [ph] here?

Unknown Shareholder

This proposal was submitted by Kenneth Steiner, 14 Stoner Avenue, 2M, Great Neck, New York. Resolved: shareholders request that our Board of Directors undertake such steps, as may be necessary, to permit written consent by shareholders entitled to cast the minimum number of votes that would be necessary to authorize the action at a meeting at which all shareholders entitled to vote, thereon, or present and voting to the fullest extent permitted by law. This includes written consent regarding issues that our board is not in favor of. This proposal topic won majority of shareholders support at 13 major companies in 2010. This included 67% support at both Allstate and Sprint. Hundreds of major companies enable shareholder action by written consent. Taking action by written consent in place of a meeting is a means that shareholders can raise and important matters outside of annual meeting cycle. A study by Harvard Professor, Paul Gompers, supports the concept that shareholder disempowering governance features, including restrictions on shareholder ability to act by written consent are significantly related to reduced shareholder value. For some reason our company pushed the notion in 2011, that contacting all shareholders regarding written consent is somehow important for shareholder democracy. But it's insanely expensive, requiring all shareholders to be contacted, basically, deters all but the most aggressive and well-heeled and the devolved Delaware process already contains a procedure for giving notice of an action to shareholders who did not give written consent to the action. In other words, Delaware's own corporate law contemplates that not all shareholders will be contacted in a written consult solicitation. Please encourage our board to respond positively through this proposal to support improved corporate governance and financial performance. Thank you.

James M. Cornelius

Thank you, Mr. Horvolis [ph]. Board of Directors position concerning this item appears on Page 81 and 82 of the proxy statement.


Thank you. Now, has everyone voted on all items? The floor attendants will now collect ballots and the inspector of election will tabulate the vote. Please raise your hand if you have a ballot or proxy that you would like to submit at this time.

Thank you. About row 5.

Has everyone now submitted his or her ballot?

If so, I now declare the polls closed for voting on the items presented to this meeting. And again, for the record, note that it's May 1, 2012, and the time is 10:32 a.m.

Now I'd like to turn the podium back over to Lamberto to answer any questions you have. Lamberto?

Lamberto Andreotti

Thank you, Jim. Before moved to the Q&A session, I'd like to ask that, out of respect for your fellow stockholders, questions be kept short and to the point so we can respond to as many of them as possible. I also wanted to do some of the executives in the audience in addition to Sandra Leung and Elliott Sigal, who have already been introduced. Let me introduce Charlie Bancroft, our Chief Financial Officer; John Celentano, our Senior VP, Human Resources, Public Affairs and Philanthropy; and Francis Cuss, our Senior VP Research -- in charge of research.

So I will now open the meeting for any questions and comments. Please refer to the procedures of -- for addressing the meeting that appear in your agenda card. Questions?

Question-and-Answer Session

Dolly Marting

I'm Dolly Marting from Dallas, Texas. And on behalf of patients around the world, who are benefiting from our extraordinary progress in medicines we produce and on behalf of the shareholders around the globe as well, may I thank you for giving us all a banner year. You have taken our company in a new direction for which we are most appreciative. And certainly, the few future promises to be as bright, if not brighter, than the year we've had. And who in the word does not like a string of pearls. Thank you so much.

Lamberto Andreotti

Well, thank you, Ms. Marting. We work hard and it's very good to get your recognition and be assured that we continue to fight hard to keep this company at the front, as we manage to do today. Are there any other comment or questions, please?

Unknown Shareholder

Mr. Chairman, could you give some conception of what the loss of PLAVIX would mean for you this year?

Lamberto Andreotti

Yes. Address me as Mr. Chairman, I that don't have that honor. I have a great Chairman in Jim Cornelius, but I would reply as CEO. We will, most likely see a very significant decline in our sales immediately after the loss of exclusivity of PLAVIX. You must also be aware that we believe that there is enough inventory of PLAVIX, both at wholesaler and pharmacy levels. And therefore, the loss of the other use of PLAVIX are the prescription supply that we consume those -- that product is already with wholesalers and pharmacists. The good news is that we have significant number of new products. As I said before, we continue to support them and we're very proud of their performance. So both the line products and the launch products will help us react to the loss of exclusivity -- to the consequences of loss of the exclusivity of PLAVIX in this country and in other countries of the world. Thank you for your question. The gentlemen there?

Unknown Shareholder

Frank Ravolis [ph]. I have A-fib. I'm really interested in EQUILIS (sic) [ELIQUIS]. Is that going to be commercially available soon to the patients and will it require blood testing? Because I'm on warfarin right now.

Lamberto Andreotti

Okay. I will be scolded by my General Counsel if I could go anything that could be -- sound promotional, especially in this audience, especially pre-approval. We are confident that we have a solid product. We're supported by very good clinical data, and so we are hopeful that the FDA will consider our application favorably. The due date for their decision is June 28 of this year. And obviously, if I decide favorably, the product will become available in the market soon after that. We cannot, obviously, forecast the final decision of the FDA. In terms of testing, no, there is no testing. And I think it is one of the big pluses. And you will not have to go to your warfarin clinic on a regular basis any longer if we get the approval and if the FDA confirms what we believe for the product. Thank you. Any other questions or comments? If not, I will turn the meeting back over to Jim. Thank you, Jim.

James M. Cornelius

Probably should've done this first, but then, thinking about the great progress made last year and the leadership that Lamberto has shown as CEO, my personal thanks and I'm sure your thanks as shareholder to a job very well done last year. I think we should give him a round of applause.

I see now that the vote is in, so we can announce the conclusions of the vote. These totals are preliminary, because the vote is subject to final audit by the inspector of election, but that will not affect the outcome on any matter. Sandy?

Sandra Leung

Yes. On item number 1, each nominee for director has received a for vote of at least 89%. Item number 2 was approved with 97% of shares voting for the ratification of the independent auditors. Item number 3 was approved with 95% shared voting for approval on advisory basis of the compensation of our named executive officers. Item number 4 was approved with 91% shares voting for the approval of the 2012 stock award and incentive plan. Item number 5 was not presented at the meeting. Item number 6, relating to transparency and animal research received approximately 4.5% cast in favor, 75% were cast against and 20.5% abstained. On item number 7, relating to shareholder action by written consent, approximately 38% were cast in favor, 61% were cast against and 1% abstained. Final voting results will be posted on and will be filed with the SEC on Form 8-K within 4 business days. Jim, that completes the voting tallies.

James M. Cornelius

Thank you, Sandy. Thank you to all shareholders, members of management here this morning. This completes the business of the meeting. The meeting is adjourned. Thank you.

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