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Bristol-Myers Squibb Company (BMY) CEO Giovanni Caforio on 38th Annual JP Morgan Healthcare Conference (Transcript)

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About: Bristol-Myers Squibb Company (BMY)
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Bristol-Myers Squibb Company (NYSE:BMY) 38th Annual JP Morgan Healthcare Conference Call January 13, 2020 10:30 AM ET

Company Participants

Giovanni Caforio - Chairman and Chief Executive Officer

Conference Call Participants

Chris Schott - JP Morgan

Chris Schott

Good morning, everybody. I'm Chris Schott from JP Morgan. And it's my pleasure to be introducing Bristol to kick off the 38th Annual JP Morgan Healthcare Conference. From the company we have Giovanni Caforio, the company's Chairman and CEO. Bristol's announced acquisition of Celgene was clearly the talk of the conference last year. With the deal now closed, very much looking forward to Giovanni's comments on the new company.

With that, I turn it over to Giovanni.

Giovanni Caforio

Thank you, Chris. Good morning, everyone. It's a pleasure to be here. I do remember being here a year ago when we had just announced the acquisition of Celgene. I am actually really proud of what had happened in 2019 and how well we are positioned as a company as we start to 2020. So you will remember that -- I'm sorry, can you go back one? Thank you. You remember that last year I discussed the value of the new company. And today, I can say we are a new company at Bristol-Myers Squibb. Our mission hasn't changed. Our vision is to create the leading biopharma company in the industry. And we've made great progress towards the accomplishment of that vision.

We are a very diversified and differentiated company. We have the scale and resources and global reach of a large company at the same time, as we're investing in exciting science with the agility and speed of a biotech company. We are really focused on our research strategy, which positions us at the center of ecosystems of innovation. And I'll talk to you about the great progress that we've made. Ultimately, we are a great company, because we have great and passionate people. And the execution that we've seen in 2019 is really a demonstration of what our people are doing working together.

One year ago, I did present to you the vision that we had for bringing the two companies together, what we could achieve and the value drivers of the deal. And I am pleased that after one year, we've made great progress on all fronts, and we've executed against all of the key priorities. The performance of our business has been strong. We've made progress on IP for Revlimid. Importantly, there has been great progress with our late-stage pipeline, and we are working on eight launches during the period of 24 months.

We've executed well from a financial perspective, including the $7 billion ASR, a recent 10% increase in the dividend. We did have the need to divest OTEZLA, which was unexpected. But I'm pleased with the speed at which we were able to execute that transaction and the value that we've received. Integration activities are well on track and the strength of the execution of the company in '19 really speaks to our ability to integrate, while we continue to deliver on the value drivers.

In summary, we are a growth company. We are well positioned for the short and the long-term. There are four reasons why I believe we are well positioned; one is the strong execution of our business; the importance of the new launches; the significant late stage and lifecycle management opportunities we have with our pipeline; and finally, the financial strength of the company and our continued focus, not only on funding internal innovation but also on business development. And I'll cover every one of those four pillars.

Before I do that, I just want to mention we've made great progress with integration. Our leadership teams are in place. We have designed the operating model for the new company. We've made great progress towards integrating the companies on the commercial side, on the research and development side. Again, execution in '19 speaks to our ability to do that. We are on track to deliver on $2.5 billion of synergies, approximately one-third this year.

At the same time, there are many areas where we are just at the beginning. We are beginning to look at processes and systems, integrating the companies from an IT perspective, from a financial perspective, in terms of our pricing system, all of those are just beginning today. But I'm really confident with where we are with integration.

So speaking to the strength of our business, you see here the performance of our franchises through the first three quarters of 2019, very strong performance, not only in terms of growth versus prior year but also competitively. And I'd like to mention three of our important franchises; Eliquis, Opdivo and our leading presence in multiple myeloma through Revlimid and Pomalyst.

With respect to Eliquis, this is the leading new oral anticoagulant globally. It's the leading oral drug in the U.S. It is a growing brand in a growing market. There are significant incremental opportunities for Eliquis. By continuing to erode the use of warfarin but also because many patients are not yet diagnosed, or not yet treated. On this slide, you see the opportunity that still exists in the U.S. market and clearly the difference between new brand shares and total shares in the U.S. for warfarin speaks to the incremental opportunity that exists there.

For Opdivo, I'm really proud of what we've accomplished. We've established a leading franchise with 19 indications approved in the U.S. across 11 tumor types. Performance in '19 was strong, driven by really good commercial execution. What's important we'll continue to make progress. We had two first-line lung cancer studies positive in 2019 for the combination of Opdivo and Yervoy, and our broad lifecycle management program continues to expand, both in the metastatic setting and in the adjuvant setting.

For multiple myeloma, Revlimid and Pomalyst truly have transformed the treatment of this disease. The teams remained focused in '19. Growth was strong. We had one year indication approved. And I think that's really an important area for us. We made progress on the IP front. Most importantly, pipeline opportunities and coming to fruition. There is a very broad effort to continue to address the unmet medical needs in multiple myeloma. And we're working across multiple modalities and multiple mechanisms of action. We have continued to progress our CELMoD program, made great progress on the BCMA front, both for cell therapy and our T-Cell Engager. So a lot happening in this very, very important field.

Moving to the second pillar, which is the eight launches we're working on. This is an unprecedented opportunity for us across solid tumors, hematology and immunology. In solid tumors, as I mentioned, the combination of Opdivo and Yervoy. We already have established that regimen as a standard of care in melanoma and in renal cancer. In 2019, we had two positive studies in first-line lung cancer. What we are hearing from physicians is that they actually value the long, durable and deep responses they have seen in study 227. They do value in a very competitive market we recognize the opportunity to offer the combination of two immune-oncology agents to some patients.

Study in 9LA will be an important study. We will present data later this year. And what physicians will be interested in looking at is whether by adding two cycle of chemotherapy, we are able to address the needs of rapidly progressing patients in first-line lung cancer. This is a very competitive market. But I am confident that given the strength of the data and our commercial expertise, we will be able to play a role in first-line lung cancer.

In hematology, we have an unprecedented set of opportunities. Four launches, these are best-in-class, first-in-class medicines. They address areas of high unmet medical need. They can evolve the standard of care in their diseases. This is a field where we have a leading presence, significant medical and commercial expertise. And our teams are hard at work preparing for exciting launches.

I am also really happy that the combination of our two companies in the new Bristol-Myers Squibb gives us the opportunity to be an important player in immunology. We have, as you know, a PDUFA date for ozanimod in multiple-sclerosis in March. We have an opportunity to establish these assets as an asset with compelling efficacy and differentiated safety and play a role in the multiple-sclerosis market. What's most exciting is data readouts we are expecting this year.

For ozanimod, the Phase 3 program in ulcerative colitis and for our TYK2 program, the first of our two Phase 3 studies in psoriasis. I am particularly excited by the TYK2 program. This is a very selective pathway. We have an extraordinary selective molecule within that pathway. We have seen some really interesting data in Phase 2. And as I said at the beginning -- at the end of 2020, we will have an opportunity to see the first of the Phase 3 studies in psoriasis. In both molecules, for both medicines, we have significant lifecycle management opportunities and importantly the opportunity to get into inflammatory bowel disease.

So when I look at the eight launches that's very exciting. It's over a short period of time. But the lifecycle management opportunities that exist for those assets are very significant. Here you see some of the most important data readouts that we are expecting this year; in addition to what I just mentioned, the PDUFA date for luspatercept in MDS in April; important data readouts in immunology and for Opdivo and Yervoy, continued progress with our lifecycle management program.

In the metastatic setting, I would point to study 9ER, which is the combination of Opdivo plus Cabo in first line renal. And on the adjuvant setting, three studies that are going to be the first readouts of a broad and deep program in the adjuvant setting. There are more data readouts coming in the future beginning in 2021.

I would point to the broadening of our opportunity with our leading cell therapy platform across multiple assets and multiple diseases. The evolution of our development strategies in inflammatory bowel disease for ozanimod and TYK2, progress with our Factor XIa program where we expect the results from important Phase 2 studies in 2021 and the continuation of readouts from our broad lifecycle management program in oncology, both in the metastatic setting and importantly with one of the broadest and deepest adjuvant programs in the industry. I do believe adjuvant is poised to be the next frontier for immuno-oncology. It's where we can really make a big difference for patients by treating them early. We are very well positioned with significant investment in this field.

Going to the next pillar, which is the long term strategy for the company. Our research strategy is based on leading science in therapeutic areas we know well. We have a broad and diverse platform of opportunities, ranging from protein homeostasis to cell therapy, deep expertise in biologics and novel small therapies. I'm really excited that our R&D footprint places the research organization of Bristol Myers Squibb in the most exciting hubs of innovation in the country and around the world. In every one of those sites, we have an integrated discovery, translational early development and business development strategy that will enable us to continue to advance internal innovation, at the same time, as we continue to pursue business development.

This is important and we have built strong capabilities in order to support execution in research and development. Those capabilities span from deep expertise in translational medicine to a significant presence in data and analytics. There is very strong collaboration between our research organization and the early development teams between early development and late stage development for seamless transition of a large number of programs across the development spectrum.

This is important because we have one of the deepest and broadest pipelines in the industry, and the pipeline is continuing to progress. In fact, I'd like to point to just a couple of those programs. We've made continued progress with our CELMoD agents that progress through clinical development. At ASH in December, we presented important early data on our BCMA T-cell Engager, which was one of the really interesting presentation at the conference. We continue to advance the next generation of cell therapy agents. And importantly, outside of oncology and hematology, our Factor XIa program continues to advance. There is a significant focus on advancing this very promising early pipeline in the company.

As I said earlier, our strategy has always been one where we've demonstrated the ability to complement internal innovation with business development. Business development remains a critical priority for the company. It is important to be able to do both and we do have a track record of successfully executing against the strategy. The pillars of our business development strategies are not changing. We are looking for opportunities that are strategically aligned with the areas we know well, whether that is therapeutic areas, platforms, or technologies. We're looking for breakthrough science and the opportunity to develop truly transformative medicines. And we will continue to be disciplined from a financial perspective as we look at opportunities outside.

Our capacity for business development is good today and it will continue to expand in the future. The company has significant financial strength, driven by the cash flow of our strong in line business. Over the next two years, our focus will be on de-levering paying down the debt. We feel comfortable about the commitments we've made to go back to less than 1.5 debt-EBITDA ratio by 2023. As I mentioned earlier, we have executed a significant $7 billion ASR and we continue to be committed to the dividend. In fact, we announced recently a 10% increase in our dividend.

At the core and at the center of our business development strategy remains business development. As I just mentioned, we have the deepest and broadest pipeline we've ever had, one of the best in the industry. We are advancing that pipeline with great energy. At the same time, we're continuing to look at conferences like JPM for opportunities to further expand our reach and focus, and bring even more attractive science and opportunities into the company.

In summary, we are a growth company. We are building the leading biopharmaceutical company in the industry. There is strong momentum in our business as we've entered 2020. Today, we are well positioned as a Company, because of the strength of our in line business. In the near-term, we have what is for us an unprecedented opportunity with eight launches and significant lifecycle management opportunity for every one of those assets.

In the long-term, we're building a strategy for sustainability, which is based on the strength of our pipeline, the financial flexibility of the company, which enables us to continue to invest in research and development. I feel better about our opportunity at Bristol-Myers Squibb today than I felt one year ago when we announced the deal. The company truly is well positioned today and in the future.

And with that, I want to thank you for your attention and wish all of you a very good conference. Thank you.

Question-and-Answer Session