David Elkins:

Thank you, Chris, and good morning, everyone. As Chris highlighted, we're off to a good start to the year with top line growth as shown on Slide 10. As a reminder, unless otherwise stated, all comparisons are made from the same period in 2023 and sales growth rates will be discussed on an underlying basis, which excludes the impact of foreign exchange.

Timothy Power:

Thanks, David. Can we go to the first question, please?

Geoffrey Meacham:

Just had one for Chris or maybe for David. On the cost savings, how much would you say was legacy Bristol, either workforce or facilities versus optimizing integration of all your recent deals? I guess I'm trying to get a sense for whether you think there's further optimization to come as you guys focus on the new launch portfolio.

David Elkins:

Yes. Thanks, Jeff, for the question. The majority of the savings come from the historical BMS. As we talked about, the main drivers of the $1.5 billion savings really came into three buckets. First was really looking at the portfolio, obviously, with the Mirati, Karuna and with RayzeBio, we have really important portfolios that we're bringing into the overall portfolio. That gave us the opportunity to look at that and maximize the ROI of -- in totality of the portfolio as well as adjusting for some updates on new data and the competitiveness.

Chris Shibutani:

Obviously, a lot of moving parts operationally, strategically. I think investors have been keen to get a sense for how you're thinking about potentially a trough level of earnings. I think the notion that there might be some visibility into where you could begin to see some growth, and I know in your vocabulary, you mused about exiting the decade and into the next. Help us with where you are with that thinking since we haven't had that clarity with all the moving parts. But how are you thinking about the potential to communicate that kind of timeline and model?

Christopher Schott:

Just a two-parter, coming back to the restructuring. I guess the first part is, is the redeployment of savings going to be mostly focused on the R&D side or on SG&A? And just related to that, in terms of investment in the growth drivers, it seems like elements such as payer dynamics and competitive launches are impacting uptake of some of the new launch assets. So I'm just interested in which products do you see having the greatest potential for improvement with further investment, and how you, I guess, balanced SG&A versus either further R&D or just dropping some of those savings to the bottom line as you're considering kind of how to redeploy that $1.5 billion.

Evan Seigerman:

Kind of a follow-up to what we've been talking about. So when you talk about the cost savings being reinvested, do you mean that you're going to manage your margins by titrating the reinvestment of the cost savings? Are you going to deploy the $1.5 billion kind of informed by the science or potential for growth?

Christopher Boerner:

Thanks, Evan. We'll have David start, and then Samit.

Samit Hirawat:

Yes. Thank you, David. And just to build on what David said, from a pipeline perspective, we took a very thoughtful approach to see -- from our rich pipeline, what are the assets that we are not going to be continuing on our own. So first thing that we looked at is the evolving science from the ongoing exploration of our clinical assets. An example over there where we look at CTLA-4 in our pipeline that we were developing, we had set the bar with ipilimumab, which is already a high bar to then look at the data and then we decided that if the data are not going to be better than ipilimumab, we shouldn't be continuing that program, so we decided not to continue with that.

Operator:

Our next question comes from Seamus Fernandez with Guggenheim Securities.

Adam Lenkowsky:

Yes. Thank you, Chris and Seamus, thanks for the question. As it relates to IRA, there are obviously multiple components to it. There's the negotiation. There's also the change in the Part D benefit design. So in 2024, we don't anticipate significant impact across our portfolio, across Eliquis, Revlimid or other brands. We do expect, though, more substantial changes to the Part D benefit next year since the products are impacted by the redesign. We are carefully evaluating each product individual dynamics now and we'll see into the future. And we're monitoring very closely to understand the impact of, for example, out-of-pocket caps and other shifts that are happening in the system.

Samit Hirawat:

Thank you, Adam. And then thanks, Seamus, for the question. For Opdualag, let's just take a step back and understand what we were planning to do and try to do. So for Opdualag, we conducted a study of Opdualag plus chemotherapy in first-line non-small cell lung cancer. At first, we wanted to define the dose. So we tested a couple of doses in the first part of the study. And in the second part of the study, then we randomize the patient to receive Opdualag plus chemotherapy versus nivolumab plus chemotherapy.

Terence Flynn:

Maybe a two-part for me on the CAR-T franchise. David, I think you mentioned something about Abecma ex-U.S. pricing dynamics, some change there to help boost access. Can you just provide a little bit more detail if that was a one-off in a specific country or what's going on there?

Christopher Boerner:

Thanks, Terence. I'll let Adam take both of those.

Adam Jolly:

This is Adam on for Tim at Wolfe Research. So just on SOTYKTU, can you give us some updated market share metrics, things like new-to-brand share or versus Otezla in the oral category percent use in first-line versus later lines, that sort of thing? And also, any details on when the free drug program might begin to wind down?

David Risinger:

And thanks for all of the detailed perspectives that you're sharing. So I'm hoping that you can help with other income prospects in the future, including the look for AstraZeneca, other incomes, run rate and the anticipated step down in coming years.

David Elkins:

Yes. So this year was the big step down in the PD-1 rate. And then the other thing impacting that is the diabetes that will step down next year as well.

Operator:

And our next question comes from Mohit Bansal with Wells Fargo.

Christopher Boerner:

Yes. So maybe I'll start and then David can chime in if he has any additional -- anything else that he would like to provide. I think the way we're thinking about the trough guidance, and again, it's something that we have been engaged with investors for the last number of months. I think the way I would think about it is, first and foremost, probably the underlying question on guidance right now is what is the impact of IRA on Eliquis. We will, as I said earlier, be in a position in September when the price for Eliquis coming out of the IRA process is known and public, at that point, to talk about what that price is and the impact of -- on Eliquis on both the top line as well as on EPS.

David Elkins:

I think you covered it, Chris.

Carter L. Gould:

I wanted to dig into Camzyos for a second. You did have data at ACC and sort of the current rate or the one with that seemed very positive. And just when you think about that REMS registry data and the potential to potentially get the REMS modified down the road, should we be reading into that data? Any level of confidence or anything on that front you want to message?

Christopher Boerner:

Yes. Thanks, Carter. Maybe Samit can start and then Adam. .

Adam Lenkowsky:

Yes. Thanks for the question. We're pleased with Camzyos' performance in the quarter. And we saw a nice acceleration in new patient starts. We saw about a 25% increase in patients added to commercial dispense, but that was offset as you mentioned, by approximately $25 million inventory work down from Q4 to Q1. And we saw a slight gross to net impact as well from copay restart that happened at the beginning of the year.

Operator:

And our next question comes from Steve Scala with TD Cowen.

Christopher Boerner:

Just adding one thing, Steve. Around Revlimid, we had seen some volatility in generic dispensing in the quarter, including some generic supply shortages. And so Revlimid and our legacy portfolio continues to be a strong source of cash flow for the organization.

Trung Huynh:

Trung Huynh from UBS. Two from me, if that's okay. Just one on the cost saving program. How is that $1.5 billion split between this year and 2025? There's no change to your OpEx guide, but I think you noted savings were absorbed by the deals. Is 2024 the main year you'll see most of these costs realized?

Christopher Boerner:

Thanks for the question, Trung. David, then Adam.

Adam Lenkowsky:

Yes. Trung, as it relates to Abecma, we're certainly pleased with the regulatory approvals of KarMMa-3 in a triple class-exposed setting in the U.S., in Europe and in Japan. This will remain a very competitive space with multiple products and modalities available. Our focus is on educating physicians on the KarMMa-3 data, Abecma's differentiated and predictable safety profile as well as the manufacturing reliability that we've had with Abecma.

Operator:

Our next question comes from Matthew Phipps with William Blair.

Samit Hirawat:

And thank you for the question. If I think about KRYSTAL-12, remember, this is a study with a primary end point in progression-free survival. And you will see the data being presented at ASCO. Overall survival data remains immature at this time, so I will not be able to comment on the specifics of that. But really excited for the confirmation of the single-arm study previously done now with the randomized study here.

Olivia Brayer:

What does the commercial rollout strategy look like for KarXT as we look past that September PDUFA? And any thoughts around Medicaid negotiations?

Christopher Boerner:

Adam?

Operator:

Our next question comes from James Shin with Deutsche Bank.

Samit Hirawat:

Certainly, I can take that question. Look, obviously, I can't comment on what others have seen. All we know is they've seen six patients worth of data. Hard to compare six patients worth of data with more than 200 patients treated with Opdualag plus chemotherapy in the first-line setting.

Operator:

Our next question comes from Kripa Devarakonda with Truist Securities.

Christopher Boerner:

Well, let me start and then I'll ask Samit and Adam to speak. Let me just at a high level, though, say, that we continue to be incredibly excited about radiopharmaceuticals as a platform. It's one of the fastest-growing platform in solid tumor oncology. We believe we have a best-in-class asset that we've acquired with Rayze.

Samit Hirawat:

Yes. Thank you for the question. For Rayze, as Chris just mentioned, the platform is absolutely exciting and very encouraging data that we have seen emerging from the first program that is already in Phase III for the SSTR directed radioligand therapy. And that Phase III program is right now enrolling in the GEP-NET indication as well as the small cell lung cancer Phase I studies ongoing, and we are looking to see a couple of other indications added over there, and we're designing those trials as we speak and conduct those. So it holds a huge amount of promise because of the specificity of the directed radiation to the tumor itself.

Adam Lenkowsky:

Yes, I'll just add just a few things. RayzeBio was an important strategic acquisition that we believe continues to diversify our oncology portfolio. It's -- as Chris mentioned, we see this as a modality that's going to continue to grow over time. It will be a competitive space.

Timothy Power:

And maybe we could go to our last question, if you don't mind, Rocco?

Siyue Wang:

This is Ivy on for Akash. We just have two quick questions. The first one is a follow-up for KarXT. So do you think patients on the drug will develop tardive dyskinesia? If not, how will that help position KarXT in the schizophrenia market?

Christopher Boerner:

Samit?

Christopher Boerner:

Thanks, Samit. And maybe I'll just close by saying, first, thank you all for joining the call today. I know it is a very busy day for all of you. So maybe I'll just leave you with a few things. First, we're off to a very good start in 2024. Our performance this quarter reflects execution and actions that we've taken to strengthen the company's long-term growth profile. Our business out remains unchanged from the beginning of the year. And of course, we look forward to sharing our continued progress on future calls.

Operator:

Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.

Tim Power:

Thank you, and good morning, everyone. Thanks for joining us this morning for our fourth quarter 2023 earnings call. Joining me this morning with prepared remarks are Chris Boerner, our Chief Executive Officer; and David Elkins, our Chief Financial Officer. Also participating in today's call are Adam Lenkowsky, our Chief Commercialization Officer; and Samit Hirawat, our Chief Medical Officer and Head of Global Drug Development. As you'll note, we've posted slides to bms.com that you can use to follow along with for Chris and David's remarks. Before we get started, I'll read our forward-looking statement. During this call, we'll make statements about the company's future plans and prospects that constitute forward-looking statements. 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 SEC filings. These forward-looking statements represent our estimates as of today and should not be relied upon as representing our estimates as of any future date. We specifically disclaim any obligation to update forward-looking statements even if our estimates change. We'll also focus our comments on our non-GAAP financial measures, which are adjusted to exclude certain specified items. Reconciliations of certain non-GAAP financial measures to the most comparable GAAP measures are available at bms.com. And with that, I'll hand it over to Chris.

David Elkins:

Thank you, Chris, and thank you all again for joining our call today. As Chris mentioned, this is an important time for BMS, as we embark on our next chapter, transforming our portfolio. Our performance in 2023 reflect a continued strong growth of our inline and new product portfolio and the ongoing erosion of Revlimid. Let's get started with our top-line performance on Slide 12. Unless otherwise stated, all comparisons are made versus the same period in 2022 and sales performance growth rates will be discussed on an underlying basis, which excludes the impact of foreign exchange. We delivered sales of approximately $45 billion in 2023, which reflected 8% growth from our inline and new product portfolio, offset by unfavorable impact of generic entries. During the year, we saw continued strong demand for our key inline products such as Eliquis and Opdivo, while newer products gained traction in the respective markets. If you turn to Slide 13, you see our 2023 sales split between legacy and growth portfolio that Chris spoke about earlier. This is how we will report our business as we move forward. What I can tell you is the transition of the business is already well underway from our legacy to our growth portfolio. For 2023, our growth portfolio delivered approximately 15% growth. This supports our strategy that Chris discussed earlier. We see our legacy portfolio providing a solid foundation for cash flow generation in near term, while the products within our growth portfolio grow in significance. Let me dive deeper into our fourth quarter and full-year sales performance starting with our Oncology portfolio on Slide 14. We are pleased with the robust demand for Opdivo, which achieved strong global sales growth for the year. In the fourth quarter, U.S. sales grew 12%, primarily driven by increased volume and core indications, including first-line lung, upper GI and adjuvant bladder cancer, partially offset by optilized growth in first-line melanoma. During the quarter, U.S. and international markets each benefited from approximately $50 million of favorable stocking. Internationally, sales grew 4%, led by increased demand for lung and gastric cancer indications and from expanded reimbursement. Turning to Opdualag, which more than doubled its full year sales in 2023 and is now a standard of care treatment first-line melanoma. In the fourth quarter, U.S. sales grew 80% versus the prior year, and 15% sequentially, benefiting from its strong market share position. With respect sales of Augtyro in the fourth quarter, we launched in late November and upon U.S. approval and Q4 sales reflect the initial wholesaler stocking. During 2024, we look forward to bringing this important medicine to more patients. Let's turn to our Cardiovascular on Slide 15. Eliquis generated over $12 billion in sales in 2023 and continues to be the number one oral anticoagulant globally. In fourth quarter, sales grew primarily driven by demand in the U.S., as we continue to gain market share from competitors. Internationally sales in Q4 were broadly flat, driven by generic entry in several European markets. Sales of Camzyos in the fourth quarter and full year were strong, including $88 million in Q4. As of December 31, we had roughly 4,500 patients on commercial drug. And on average, we have been adding roughly 1,000 patients to commercial drug per quarter. The momentum in the U.S. for Camzyos is expected to continue in 2024, and internationally we expect modest near-term sales contribution based on timing of reimbursement in newly launched markets. Turning to our Hematology portfolio performance on Slide 16, starting with Revlimid. Global sales for the full year were approximately $6 billion. Looking forward, we anticipate continued variability in Revlimid sales quarter-to-quarter based upon historic patterns and specialty pharmacy dispensing. We anticipate an additional volume of U.S. generics to enter the market in March. We continue to forecast a step-down in Revlimid revenues in the range of $1.5 billion to $2 billion this year. Now moving to Reblozyl. Global sales grew 40% in 2023, surpassing $1 billion on an annualized basis for the first time. For the quarter, Reblozyl generated 60% sales growth, driven by strong demand and supported by a broad U.S. first-line label. Sales grew 75% in the U.S. in Q4. Internationally, Reblozyl continues to be launched in different markets across the globe, including recently in Japan. Turning to our cell therapy portfolio. Starting with sales of Abecma in the U.S., we continue to experience competitive impacts, while ex-U.S. demand remained strong in the quarter. We remain focused on demonstrating the benefits of the product profile to our customers in anticipation of expanded use in the U.S. upon the potential approval of KarMMa-3 data in third-line plus setting. Abecma was recently approved in Japan in the third-line setting based on KarMMa-3 data. And last week, we received positive CHMP opinion. Moving to Breyanzi. Global sales doubled year-over-year, reflecting the strength of its clinical profile and an improved manufacturing capacity. We are pleased to have received FDA priority review for all three of our expanded indications for Breyanzi, and look forward to the PDUFA date in March for Chronic Lymphocytic Leukemia and additional PDUFA dates in May for Follicular and Mantle Cell Lymphoma indications. Looking to this year, we expect to see strong sales growth starting in the second quarter, driven by improved supply capacity and the potential for these new additional indications. Moving to Immunology on Slide 17. Global sales of Zeposia in 2023 grew 72% to $434 million, driven by increased demand in multiple sclerosis and ulcerative colitis. We remain focused on driving growth across both indications. For 2024, keep in mind the typical impact of U.S. Zeposia sales in the first quarter due to copay assistance for commercially insured patients whose benefits reset. With Sotyktu, our goal continues to be driving demand and broadening access. We made good progress on both fronts in the fourth quarter. Fourth quarter sales in the U.S. also benefited from a clinical supply purchase of $17 million. When you strip out the one-time purchases in Q4 and Q3, we showed strong underlying sequential sales growth of approximately 40%, reflecting good pull-through from CVS and increased demand. Going forward, the way to look at our progress in the U.S. is through commercially paid prescriptions. As we build volume and improve access, we will be subject to higher rebates, which is something to keep in mind as you model Sotyktu for 2024. Of course, Adam can talk more about this in the Q&A portion of our call today. Internationally, we expect Sotyktu to gain additional country regulatory and reimbursement approvals over time. Switching gears to our fourth quarter P&L on Slide 18. Having just covered sales performance, let me walk through a few non-GAAP key line items. Gross margin as a percentage of sales decreased approximately 150 basis points to 76.4% compared to prior year due to product mix and lower hedge settlement gains. Excluding acquired in-process R&D, fourth quarter and full year operating expenses decreased primarily due to timing of expenses in 2022. The fourth quarter decline was partially offset by increased investments in Camzyos, Sotyktu and the timing of pipeline investments. Acquired in-process R&D in the quarter was $600 million, which was partially offset by licensing income, resulting in an unfavorable net impact of $0.20 of EPS. The fourth quarter effective tax rate was approximately 14.9%, driven primarily by earnings mix. Overall, earnings per share was $1.70 in the quarter and $7.51 for the full year. Now moving to the balance sheet and capital allocation on Slide 19. Our financial position remains strong, with approximately $12.6 billion in cash and marketable securities on hand as of December 31, as we generate cash flow from operations of $4.3 billion in the fourth quarter. Through our strong financial discipline, we have been able to invest in our business and further expand our portfolio, maintain strong operating margins, pay down debt and return significant cash to shareholders through share repurchases and dividends. Over the past three years, we've returned over $30 billion in shareholder distributions, including the dividend, which we have increased annually for 15 years in a row. As you know, we're going to be taking on additional debt this year to finance our planned acquisitions of Karuna and RayzeBio. However, with our strong financial position, we plan to utilize our cash flow to pay down our debt as we've demonstrated in the past. Our plan is to repay approximately $10 billion of debt over the next two years to improve our leverage profile. Before turning to our line item guidance, let me close with our 2024 non-GAAP guidance on Slide 20, which includes Mirati, but excludes the future impact of pending transactions, SystImmune, Karuna and RayzeBio. As we did in 2023, we were providing revenue guidance on a reported basis, as well as on an underlying basis, which assumes currency remains consistent with prior year. We expect 2024 revenues to increase in a low-single digit range, reflecting our confidence in the growing momentum of our growth portfolio. Excluding foreign exchange, we expect revenues to increase in the low-single digit as well. Driving our momentum this year will be increasing the sales in our growth portfolio from products like Opdivo and our recently launched products. As we said previously, we expect a more modest pace of growth than last year for Opdivo, with the potential for acceleration in the back half of the year from new indications. And while our legacy portfolio includes assets that are maturing, we expect strong growth from Eliquis in the U.S. this year. As it relates to quarterly progression of our sales, a few reminders. For products like Revlimid, Pomalyst and Camzyos, keep in mind the typical impact on sales in the first quarter due to patients entering the Medicare coverage gap early in the year. And for Eliquis, the coverage gap dynamic works in the opposite direction, where we expect sales in the first half of the year to be higher than in the second half. As it relates to our line item guidance for the year, we expect gross margin to be approximately 74%, which reflects an evolution of our sales mix and the non-recurrence of hedging gains from last year. Excluding in-process R&D, we expect our total operating expenses to increase in a low-single digit range, reflecting the additional costs of Mirati and the reallocation of costs and efficiency initiatives in MS&A, as we continue to invest in our new product launches. This aligns with our previous operating margin target of at least 37%. This means we will remain focused on driving operational efficiencies across the organization, including portfolio prioritization, to enable us to invest for growth while maintaining high productivity. We expect OI&E to be approximately $250 million of income, reflecting the PD1 royalty step down in January from 6.5% to 2.5%, as well as the financing costs related to the Mirati acquisition. We project our tax rate to be approximately 17.5%, reflecting an increase due to the non-recurrence of one-time tax benefit that occurred in the third quarter of last year, plus the anticipated impact of Pillar 2. Finally, we expect to deliver non-GAAP earnings per share within the range of $7.10 and $7.40. For clarity, our 2024 guidance excludes the three pending transactions. As a reminder, SystImmune is expected to add about $800 million in in-process R&D. Karuna is expected to be about $0.30 dilutive to earnings relating to financing costs as we plan to absorb the OpEx. And RayzeBio would be approximately $0.13 dilutive to earnings with half in financing and the other half in OpEx. When we report in Q1 in April, we will update our guidance to reflect the deals that have closed at that time. Before we move to the question-and-answer session, I want to thank all of our colleagues around the world for their hard work and dedication in 2023. This is an exciting time for BMS as we rewrite a new chapter and maintain a singular focus on improving our growth profile over the course of the decade. I believe that our focused financial discipline coupled with a strong cash flow generation are key advantages that will enable us to further diversify our portfolio and invest in growth opportunities to deliver for patients and our investors. I'll now turn the call back over to Tim and Chris for Q&A.

Operator:

The first question will come from Luisa Hector of Berenberg. Please go ahead.

Chris Boerner:

First, we'll have Samit to answer and then go to Adam.

Adam Lenkowsky:

Thanks, Luisa, for the question. So we do expect growth in 2024 for Abecma. Commentary is a key catalyst for growth this year. And as Samit said, we do look forward to the ODAC to reinforce the benefits of Abecma in a triple exposed patient population. As you can imagine our commercial teams have been launch-ready for some time and we're also seeing continued strong international performance. And we'll launch both Abecma and Breyanzi in a number of new countries this year. We've stated that, we're seeing continued impact from additional BCMA agents. This is a highly competitive market and putting some pressure on Abecma growth. But our teams are squarely focused on opening new accounts, expanding our site footprint, not just internationally, but also in the U.S. And coating the gap on efficacy perception, including solidifying any misconceptions around Abecma's efficacy and reinforcing Abecma's safety profile, particularly as it relates to CNS neurotoxicity. So taken together, we're confident in Abecma's profile, looking forward to the ODAC, and I'm confident that will be more competitive this year.

Operator:

The next question comes from Chris Schott of JPMorgan. Please go ahead.

Chris Boerner:

Thanks for the question, Chris. Maybe I'll just start very quickly and then I'll turn it over to Adam. As we had mentioned, not going to be providing individual product-level guidance, and I think we had alluded to that when we met at JPMorgan three weeks ago. But we did give, and we'll continue to give company line item guidance, as we did today. And then you'll see, as we report it today, we're going to be talking additionally about the growth portfolio that we have, which is going to be important as we think about the business going forward. Adam, do you want to talk about the new launches?

Tim Power:

Right. Andrea, could we go to the next question, please?

Unidentified Participant:

Good morning, everyone. Thank you for taking our questions. This is Charlie on for Chris. We had a question on the subcutaneous Opdivo strategy for a potential launch there. We heard from one of your competitors yesterday on their potential for a subcutaneous CPI, where they were considering -- what sort of like a careful pricing strategy in the context of potential intravenous biosimilars that could be on the market at the same time. So just wondering how you're thinking about pricing on a potential subcutaneous Opdivo? Thank you.

Adam Lenkowsky:

Yeah. Thanks, Charlie, for the question. So we're not going to comment on the pricing of subcu, but what I can say, as you know, we announced positive results of our subcu Opdivo study in the quarter, and we anticipate a launch early next year. As a result, we have the opportunity to potentially benefit thousands of patients well into the next decade with subcu Opdivo. I think an important thing to keep in mind, remember, subcu has the potential to address the treatment burden for both patients and physicians due to less than 5 minute infusion time. And we've talked about our ability to convert roughly 30% to 40% of the overall U.S. Opdivo business into subcu. And that's why we would expect to see this franchise endure into the next decade. So we certainly look forward to bringing this important formulation both to patients and physicians.

Operator:

The next question comes from Andrew Baum of Citi. Please go ahead.

Chris Boerner:

Adam?

Tim Power:

Thanks, Adam. Andrea, let's go to the next question, please.

Seamus Fernandez:

Thanks very much. So just a quick one here. On Reblozyl, the continued strength of the brand and the acceleration that we're starting to see. Can you just talk about what's driving that incrementally? And maybe give us a little bit of a sense of how we should be thinking about the international opportunity for Reblozyl, in particular? Thanks.

Adam Lenkowsky:

Yeah, Seamus. Thanks for the question. The first-line MDS launch is progressing very well in the U.S. with strong demand, supported by our broad label in an RS-agnostic patient population. Just take you back, we launched in late August, and initially after the launch, we saw rapid switches from ESAs to Reblozyl. But we're now seeing strength in first-line use across the RS-positive population and we're steadily building momentum in the RS-negative patient population, particularly in the community setting, where the majority of patients are treated. We also have, after the ASH presentation, we've heard feedback from both academic and community physicians recognizing the durability of response and the ability to remain transfusion independence as key features of the brand. So we're very pleased with the launch as you know, we're seeing strong sales performance. We expect that to continue this year. And Reblozyl was also approved in Japan in mid-January. We're seeing, nice uptake there and we expect European approval in the first half of this year.

Operator:

The next question comes from Tim Anderson of Wolfe Research. Please go-ahead.

Adam Lenkowsky:

Yeah, Tim. Thank you. So as I mentioned, we've secured additional access at ESI and now Cigna in a one-step position. And so that really is regardless of the product. So that could be a step after Otezla or it could be a step after IL-17s or the IL-23 agents in the market. But what's important is that that adds another 40 million lives to complement our zero-step edits in CVS. So taken together, that's 65 million lives today. And we're continuing to actively negotiate with payers. And we will update you on additional progress, over the coming months.

Operator:

The next question comes from Trung Huynh of UBS. Please go ahead.

Chris Boerner:

Yeah. Thanks for the question. I'll take that. So, as it relates to IRA, we do expect an improvement in patient affordability as the patient out-of-pocket changes for patients this year and into next. We'll see this more acutely next year as out of pocket max is capped at $2,000 and then the patients have 0% liability thereafter. More broadly, though, we largely don't expect Medicare Part D design changes to impact our portfolio because that'll largely take effect in 2026 when branded Revlimid will be fully eroded. As it relates to commercial spillover, I think it's important -- we always look at multiple planning scenarios, including the risk of spillover, but also the potential opportunity, as I just shared, around patient affordability. So there are pushes and pulls there with changes in the benefit design. We are going to have to continue to manage potential spillover risk to commercial with the transparency of the MFP price on September 1. But we also do that today as we manage both books of business. And we'll need to continue to remain disciplined across our commercial payers. And at the same time, just because a payer wants to include this in negotiating mix in commercial, it certainly doesn't mean that we have to agree there. So we expect continued strong performance this year for Eliquis in the U.S. and expect significant growth through the end of 2025.

Operator:

The next question comes from Geoff Meacham of Bank of America. Please go ahead.

Chris Boerner:

Thanks for the question, Geoff. I'll take that one. So, as we've discussed previously, as we think about capital allocation business development continues to be a top priority for us. Obviously, we've just executed a number of deals towards the end of last year, and we've got to stay focused on executing those deals. Having said that, we certainly are going to continue to be interested in bringing innovation into the company that makes strategic and financial sense to do so. I would characterize those a bit more as bolt-on opportunities at this point. We're also, of course, continuing to look at partnerships and licensing deals as well. But that's how I would characterize it. Business development is still a priority.

Operator:

The next question comes from Matt Phipps of William Blair. Please go ahead.

Chris Boerner:

Samit?

Tim Power:

Let's go to the next question, please, Andrea.

Steve Scala:

Thank you very much. I believe Milvexian's Afib trial right around now is at the point where Bayer stopped its Factor XI Afib trial. Can you reassure us that events in the Milvexian Afib trial are progressing as expected? And Samit, based on everything are you very confident in Milvexian Afib? The trial has been underway for approaching a year. So I would imagine some sort of look has already been taken. Thank you.

Samit Hirawat:

Thank you, Steve for the question. Very thoughtful as always. What we can tell you is the trial is continuously progressing -- on all three trials of Af, secondary stroke prevention and ACS. Enrollment is going very well. And certainly, the DMC continues to oversee the trials, and we do not have any indication from the DMC otherwise. We will continue to look at the data from a perspective of safety, as well as the DMC will continue to look at the data. There's nothing more to report at this time. I would say one thing, though, that assuming just because a competitor trial failed for whatever reasons and the doses that they picked, we don't have that same philosophy. We actually did conduct two very well designed studies. We picked differential doses between atrial fibrillation versus SSP and ACS, and those are the reasons to believe. And we will certainly be looking forward to the readout of these trials in '26 and '27.

Operator:

The next question comes from Terence Flynn of Morgan Stanley. Please go ahead.

Chris Boerner:

Adam and Samit?

Adam Lenkowsky:

Yeah. Thanks for the question. So we're pleased with Breyanzi performance in the quarter. We saw a double-digit growth quarter-on-quarter. We also expect to continue to make good progress with Breyanzi in 2024, supported by strengthening of our vector supply. In fact, we will see supply materialize even further in Q2 and expand to support our new indications for Breyanzi starting with the plan CLL indication in March, where Breyanzi will be the first and only cell therapy agent to have this indication. As Samit alluded to, we're making good progress in reducing turnaround time out of spec and drug product capacity. So now, as we move through the course of the first half of the year with this broad label and LBCL, and now with three FDA prior reviews in the first half of the year, Breyanzi has the potential to treat the broadest array of B-Cell malignancies of any CAR-T. And these indications, we believe, will double the addressable patient population for Breyanzi. So we're very pleased with what we're seeing, the progress that we're making. We are seeing increases in outpatient use because of the best-in-class safety profile that Breyanzi brings, and we expect strong demand growth this year.

Operator:

The next question comes from Evan Seigerman of BMO Capital Markets. Please go ahead.

Chris Boerner:

Samit will start and then I'll turn it to Adam to get some feedback from KOLs on this product.

Adam Lenkowsky:

Yeah. Thanks, Evan. Thanks for the question. So we're excited about, as Samit said, the platform of protein degradation and as it relates to ARLDD in prostate cancer. This diversifies our IO portfolio even further to complement some of the recent deals. We had a number of KOL and community feedback coming out of the ASCO Gu presentation. And appeals have been enthusiastic about the profile, particularly around the efficacy of the asset, the durability of response. And when we asked community physicians, they were reassured around the safety profile as well, stating that it was a manageable safety profile. And they were enthusiastic about moving this into Phase 3 registrational studies, and look forward to having the opportunity to treat patients with late-line prostate cancer.

Operator:

The next question comes from Carter Gould of Barclays. Please go ahead.

Chris Boerner:

Adam?

Tim Power:

Let's go to the next question please, Andrea.

Unidentified Participant:

Hi. This is Serena on for Mohit Bansal. Thanks for taking our question. So I wanted to ask about the Phase 2 Opdualag readout coming out early this year in first-line lung cancer. I was wondering how meaningful you think this data could be considering that the comparator arm is Opdivo Chemo versus Opdivo Yervoy being the approved regimen. Thank you.

Tim Power:

Perfect. Thanks, Samit. Let's go to the next question, please.

Unidentified Participant:

Hey, guys. Thank you so much for taking my question. This is Kuban (ph) for Robyn. I have a follow-up question on Camzyos. Just wondering if you can talk a little bit about, how you think the recent data from a competitor might broadly impact the landscape in HCM. Obviously, the drug is not approved yet, but do you see these data improving awareness? And based on that, do you expect to see any sort of inflection points? And also can you talk a little bit more about your efforts ex-U.S.? And if we should continue to see steady growth or any sort of inflection points based on the reimbursements that you expect? Thank you.

Samit Hirawat:

Yeah. Thank you for the questions. The way we would look at it is that the competitor data actually further strengthens our confidence in Camzyos. And within the Camzyos clinical trials, we now have three Phase 2 trials that have read out with amazing transformational data. You've seen the data for Explorer, you've seen the data from Weller, and recently we had the readout of a Phase 3 trial in Japan as well, which replicates the results that we've already seen for the first two trials. As Adam would tell you, we've treated now thousands of patients and that data also continues to showcase the efficacy of the drug as well as maintains the safety of the drug. As you will see when the data are presented from the real-world setting at ACC, what the overall safety profile of the drug is. So in general, what I would say is that Camzyos lives up to its promise of a transformational potential for the patients. And any patient who goes on that drug usually doesn't want to come off because of the benefit that they're achieving.

Adam Lenkowsky:

Yes. Thanks for the question. So certainly when we look at the top-line data from SEQUOIA is consistent with our internal expectations, we'll obviously need to see the data set, but ultimately we don't see any clinically meaningful differences in the data. In fact, when we spoke to many TLs after those data were shared, they have stated that apocampton (ph) data appears similar and undifferentiated from Camzyos. They also, of course, want to see the broad data set. They also talked about the difference in PVO-2 being not a clinically meaningful endpoint. And likely any differences are due to differences in patient populations across the two studies. I can show you we will certainly be prepared for apocampton (ph) when it comes to market with our leading cardiovascular organization and we have maintained a consistent view that we will remain leaders in this space. I've also said though, that important thing to keep in mind with this class is we do see that another competitor could be a net positive to help drive awareness for patients with symptomatic OHCM and increased diagnosis rates, which is also really important. Finally, as relates to expansion outside of the U.S., we're just starting to see expansion outside of the U.S. We've launched in Germany, we'll prepare to launch in Japan, in China in mid-year, and a host of other markets. So we'll start to see those sales manifest in the back end of the year and into 2025.

Operator:

The next question comes from James Sheehan of Deutsche Bank. Please go ahead.

Adam Lenkowsky:

Yeah. Thanks for the question. So overall we're seeing solid and continued quarterly and year-on-year growth. As David shared, we showed 66% growth versus prior year. And I think Zeposia has been really tail of two launches. MS performance amongst the oral competitors is solid. We expect continued share growth there. And we're growing in the face of a declining oral market in favor of B-Cell agents. We continue to have an opportunity for continued growth in UC, which as you know, is a very competitive know. We're making progress as volume and share are increasing. We are focused on expanding the breadth of prescribers. We're continuing to position Zeposia earlier in lines of treatment and the opportunity for additional indications like Crohn's disease, the data read out later this year will also add to the sales for Zeposia. So again, we do expect to see continued growth for Zeposia as patients continue to accumulate and physicians continue to gain experience with the product.

Operator:

Okay. The next question is from Akash Tiwari of Jefferies. Please go ahead.

Chris Boerner:

Samit?

Tim Power:

And let's go to our last one please, Andrea.

Rajesh Kumar:

Hi. Good morning. I appreciate that you can't obviously you know give any color on Eliquis price negotiations. But when we look at your margin guidance this year, I'm assuming that you have made an assumption and that is implicit in that guidance, an outcome of this negotiation, or should we expect, as we get more clarity, to adjust your guidance from what you learn?

David Elkins:

Just overall, as we guide it, we anticipate gross margins to be about 74% this year. And that's really driven by the LOE brands coming down. But as the growth portfolio continues to increase, obviously that'll help offset longer term where those gross margins are going. We also said that our operating expenses grow in the mid low-single digit range. And with that, really, there's a lot going on there that, as we said on Karuna, we're going to find savings and efficiencies in order to cover those expenses. But also, as Adam indicated, and I said in opening remarks, we're increasing our investments in Camzyos and Sotyktu. So with that, we're finding from our legacy brands, refundling those resources into that. And all of that said, we'll be able to deliver a margin greater than 37% for the year, which we feel very confident about.

Operator:

The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.

Tim Power:

Thank you and good morning, everyone. Thank you for joining us this morning for our third quarter 2023 earnings call. Joining me this morning with prepared remarks are Giovanni Caforio, our Board Chair and Chief Executive Officer; Chris Boerner, our Chief Operating Officer and CEO designate; and David Elkins, our Chief Financial Officer. Also participating in today’s call are Adam Lenkowsky, our Chief Commercialization Officer, and Sarnit Hirawat, our Chief Medical Officer and Head of Global Drug Development. As you’ll note, we’ve posted slides to bms.com that you can use to follow along with Giovanni, Chris and David’s remarks. Before we get started, I’ll read our forward-looking statement. During this call, we make statements about the company’s future plans and prospects that constitute forward-looking statements. 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 SEC filings. These forward-looking statements represent our estimates as of today and should not be relied upon as representing our estimates as of any future date. We specifically disclaim any obligation to update forward-looking statements, even if our estimates change. We’ll also focus our comments on our non-GAAP financial measures, which are adjusted to exclude certain specified items. Reconciliations of certain non-GAAP financial measures to the most comparable GAAP measures are available at bms.com. With that, I’ll hand it to Giovanni.

Chris Boerner:

Thank you, Giovanni. Before I dive in, on a more personal note, I want to recognize Giovanni for his tremendous impact on the organization. He is consistently focused on ensuring that we are strengthening our company while delivering for patients, and I wish him every success in his next chapter. Let’s start with our third quarter overview on Slide 5. As Giovanni said, we delivered continued top line growth for the in-line and new product portfolio during Q3. We also advanced our pipeline and announced an important business development transaction with the planned acquisition of Mirati. You’ll have seen that we are increasing our non-GAAP EPS guidance for the year. We also updated our target for our new products to grow to more than $10 billion in 2026 and for our operating margin to be above 37% while reaffirming our other 2020 to 2025 guidance. I will give you more color on our outlook in a moment, so let me step back and provide some context. Let’s turn to Slide 6. As I told you last month at our R&D day, my objective as incoming CEO is to continue to position our company for sustainable long-term growth. Three levers I outlined there were commercial execution, R&D leadership, and strategic business development. I’d like to take a minute to tell you where we are on each of these, starting with commercial execution on Slide 7. David will provide more details in his remarks about our commercial results, but let me describe how I think about our performance and outlook. Let’s start with our key in-line products, where we are seeing good growth. Eliquis demand growth in the U.S. is strong with continued opportunities for growth going forward. Consistent with previous years, revenues in Q3 were impacted by gross-to-net adjustments. We expect these to normalize through Q4 as we’ve seen in previous years. Opdivo continued to see good demand growth in Q3. Importantly, we’ve delivered a number of important future growth drivers with new data and approvals during the quarter, that I will describe momentarily. David will provide highlights for the remainder of the in-line and LOE portfolio. Turning to the new product portfolio. Overall, our new products continue to perform well, providing confidence in the portfolio’s growth potential and ability to diversify our business over the long-term. I would characterize the performance of these products in three categories. First, we are seeing strong performance for a number of products, including Reblozyl, Opdualag, and Breyanzi. Specifically for Reblozyl, we’re seeing strong growth with a broad label for Commands. As Adam can discuss further, we are seeing encouraging trends in both first line and second line. We are also very pleased to see that the NCCN guidelines recognize the importance of Reblozyl as an important treatment in first line MDS for both RS-positive and RS-negative patients. For Opdualag, growth was also robust for the quarter and the product is on the path to become the new standard of care in first line melanoma. This product has considerable growth opportunity remaining in its existing indication and we are continuing to study its potential in future indications, which Sarnit can speak to. Breyanzi performance was strong for the quarter and we expect strengthening performance for this product heading into 2024 as manufacturing performance and supply continue to improve. Second, there are a couple of products, notably Camzyos and Sotyktu, where performance is strong but growth has been slower than expected. For Camzyos, we continue to see steady increases in use and all feedback metrics from customers and patients continue to be very strong. At the same time, getting cardiovascular accounts on-boarded and the pace of getting patients onto therapy, as patients may see their cardiologist only one to two times per year, has resulted in a longer adoption curve. As we have shared, we expect consistent and steady growth akin to a cardiovascular launch for this important product, and we remain confident in our long-term projections. For Sotyktu, the profile continues to be strong and we’re seeing nice increases in share. Access continues to be the main constraint for this brand, and while we will see broad and meaningful access improvements in 2024, getting to zero step edits will take a bit longer than anticipated for some key plans given emerging payor dynamics in the immunology market. Importantly for both of these products, our peak expectations remain unchanged, though the time to peak will shift. Finally, I would highlight Abecma and Zeposia, where performance has lagged expectations. For Abecma, in-class competition and dynamics with bi-specifics in late line multiple myeloma have impacted performance. At the same time, real world data generated by a consortium of KOLs demonstrates that our efficacy, safety and reliability are quite competitive. This has been further strengthened by recent data in triple-class refractory patients who receive bridging therapy, presented at the IMS conference. Our focus will be on ensuring our teams are fully leveraging this breadth of data to effectively reinforce the profile of this important treatment. For Zeposia, performance remained strong in MS. In UC, access has been a constraint that will require continued focus to unlock future growth. Again, Adam can provide additional context. Taken together, we now expect sales from this portfolio to be $3.5 billion in 2023. This is slightly lower than we had expected at the start of this year. Looking forward, we see continued growth. In the medium term, we do expect to achieve greater than $10 billion in sales for this portfolio in 2026, rather than 2025. The commercial team is laser focused on building on the momentum of performance in the quarter and, importantly, accelerating performance where necessary. We are also further increasing our investment behind selective brands to ensure performance accelerates. Finally, I would highlight that our new product portfolio will expand this quarter with the addition of repotrectinib next month and, upon completion of the Mirati transaction, Krazati. Turning now to our R&D engine on Slide 8, as I mentioned last month, we have exciting opportunities to strengthen our pipeline and deliver more important medicines to patients across therapeutic areas, including expanding our registrational pipeline from six to 12 assets over the next 18 months. Since our R&D day, we’ve continued to make progress. In oncology for Opdivo, we’ve delivered several growth drivers, including U.S. approval in stage 2 adjuvant melanoma, presentation of positive data for peri-adjuvant lung with CheckMate -77T and for first line bladder cancer with CheckMate -901, and importantly we’ve met the co-primary endpoints for the sub-cutaneous nivolumab trial, CheckMate -67T. This has the potential to open a regulatory approval in indications that constitute approximately 65% to 75% of today’s Opdivo business in the U.S. and extend franchise durability into the 2030s. You may have also seen that Mirati presented encouraging PD1 combination data in first line lung cancer at ESMO. These data further strengthen our conviction in the potential of Krazati and the value it will add to our oncology portfolio. This builds on the previously granted fast-track designation from FDA for the idiopathic pulmonary fibrosis indication. These actions reinforce the potential importance of this asset in these diseases with high unmet medical need. Importantly, our CD19 NEX T cell therapy is making progress. We have started dosing patients in our LPA study and today I can disclose that we have now achieved clearance from the FDA to begin our MS trial. These are important milestones that illustrate our strategy of rapidly advancing cell therapies into immunologic diseases and becoming leaders in the space. We are moving forward with other assets in our pipeline. You can expect to hear more about our hematology assets at ASH later this year and about ARLDD at a medical conference early next year. Turning to business development, a key priority for capital allocation on Slide 9. As you know, BD has been a key component of our strategy to supplement our internal innovation. Our recently announced planned Mirati acquisition is an excellent example of a transaction with great strategic fit, compelling science, and financial soundness. Through this acquisition, we’re strengthening and diversifying our oncology portfolio with the addition of Krazati and potentially PRMT5, along with a pipeline of future KRAS inhibitors and enabling programs. We maintain significant cash flow to support continued investments in business development, and this will remain a top priority for capital allocation for the company. Turning now to our scorecard on Slide 10, I’ve already discussed many of the positive recent milestone achievements noted here. While we recently learned that the second line HCC study for Opdualag did not support moving forward in a registrational trial for this indication, we have a second study underway in first line liver cancer that we expect to read out next year. In addition, as discussed already, we’ve seen a number of important accomplishments not included on this slide, notably first line bladder and subcu Opdivo. All of this speaks to continued strong pipeline execution and the progress of programs that will become important catalysts for future growth. Turning to Slide 11, when you add everything up, as we discussed last month, we have numerous levers to drive growth into the back half of this decade and beyond. I’m confident in our ability to transform our portfolio both organically as well as through business development, and to deliver new medicines for patients. With that, I’ll turn it over to David to walk you through our product performance and financial results in more detail. David?

Tim Power:

Thanks very much, David. Before we go to the first question, we know it’s a very busy morning. We want to get to as many questions as we can, so if you can try to keep to just one question per person, that would be very much appreciated. Keith, can we go to the first question, please?

Chris Schott:

Great, thanks so much. Just maybe for me, just a bigger picture question. You’re lowering the 2025 targets. It sounds like there’s a couple of the products that adoption is just taking longer than expected. I guess, what gives the company confidence that this isn’t kind of a different dynamic with some of these products that isn’t going to enable maybe some of those longer term targets as you look out to 2030, that you’ve announced before. So maybe just kind of elaborate a little bit more on how much of -- how do you make sure the company is positioning itself to hit those longer term peak sales? And do we need to maybe just rethink some of the peak sales potentials of some of these assets, given what we’ve learned from the launches over the last year or so? Thanks so much.

Adam Lenkowsky:

No, I think you covered it very well.

Tim Power:

Thanks Chris. Keith, can we go to the next question, please?

Geoff Meacham:

Good morning, everyone. Thanks for the question. You have recent data for sub-cu Optivo. I guess the question is, what’s the incremental benefit here, and maybe how strategically important is this approach, just given IRA implementation and potential opportunities to extend the LOE? Thank you very much.

Tim Power:

Thanks Chris. Keith, can we go the next question, please?

Luisa Hector:

Oh, hi, thank you for taking my question. Still on the medium term outlook, can you confirm that there is no contribution from Mirati in that guidance, and then perhaps some comments around the lower margin expectation, is that purely linked to new product revenue guidance or are there other factors at play? Thank you.

Tim Power:

Thanks, David. Keith, can we go to the next question, please?

Seamus Fernandez:

Thanks for the question. So just trying to get a little bit of a better sense on the 37% margin guidance. Is that something that we should anticipate is a potential floor in 2024 as you lose the Keytruda royalty, or is it really sort of a sequential floor for margins in 2025 as you lose Sprycel and Pomalyst, following the loss of the Keytruda royalty? Just trying to get a sense of kind of the path to 2025 as we move through the balance of this year and next year. Thanks.

Tim Power:

Thanks, David, and thanks for the question, Seamus. Keith, can we go to the next question, please?

Chris Shibutani:

Thank you very much. You’ve made some comments about Sotyktu and the reimbursement environment as that is evolving, and the constraints that you have. Perhaps for Adam or whomever would be appropriate, could you comment further about what you’re seeing there and how we should be thinking about the cadence? I think the set-up had been that ’24 would be an opportunity, and that seems to be slightly different.

Tim Power:

Terrific, thanks Adam. Could we go do the next question please, Keith?

Steven Scala:

Thank you very much. Regarding the midterm guidance changes, I’m a bit puzzled as to why now, particularly when you had a major meeting last month and time to go through the specifics - I’m sure these changes were evident at that point, or wait until Q4 when you have to set the stage for 2024 and beyond. I think the answer will be that that was an R&D meeting last month, but still, Chris, you opened the meeting by kind of setting the stage and tone for the company, so I’m just wondering why you’re setting these changes in on a Q3 call. Thank you.

Tim Power:

Thanks Chris. Keith, can we go to the next question, please?

Terence Flynn:

Hi, thanks for taking the questions. I guess Chris, maybe for you, just the launch reboot strategy for some the drugs that have come in below your expectations, maybe you could just walk us through each of those and some of the steps you’re taking, and why you’re confident that that’s going to have success. Thank you.

Adam Lenkowsky:

Yes, thanks Chris, and thanks Terence for the question. Let me just add a little bit more color. As you heard, we have said that we’re seeing continued impact from additional BCMA agents pressuring Abecma growth, and so our teams are focused on, number one, expanding our site footprint both in the U.S. and internationally. We’re differentiating and contextualizing Abecma real-world data for physicians, which really look very similar and consistent with our clinical trials, and we’re educating on sequencing and some of the emerging data that the use of self-therapy ahead of bi-specifics is ultimately better for patient outcomes. We’re also very pleased with the progress we made on manufacturing around our predictability and low out-of-spec rates, so that’s what we’re really doing around Abecma. As it relates to Zeposia, as Chris mentioned, and then I’ll shift to the others, we continue to see quarterly demand growth. MS is really driving that growth, and so we’ve made a lot of progress on the MS front even in a declining oral market in favor of B-cell, and so we continue to expect growth in the MS market. Now, we have certainly an opportunity for continued growth in UC. We’re making progress, but our access challenges there, they remain, and we’re working to improve our access position. But we’re also seeing progress in Zeposia in the first line setting post ASA as physicians are identifying Zeposia really as a good treatment option based on its efficacy and safety profile, so we’re focusing there on expanding breadth of prescribing and continuing to really drive adoption across a broader use of physicians. For those reasons, we do expect to see continued growth and uptake for Zeposia. Now as it relates to Camzyos and Sotyktu, as Chris opened, he talked about the importance of those two products and really not a matter of if, but a matter of when, and that’s why we made that decision. For Camzyos, we are pleased with the uptake there. The focus on Camzyos remains to continue to increase our breadth in our COEs, go outside of the COEs to the non-centers of excellence to expand utilization. We’re seeing doctors are much more comfortable in using, and the patient response has also been very, very strong there, and continuing to bring patients out of the hub. Remember, these patients are going to be on treatment for a very long time. Then finally, again I’ll just close on Sotyktu, I mentioned some of the key areas that we’re focused on around access, and David talked about pulling through those patients through the hub, but we also continue to drive breadth of prescribers, where we’re making really meaningful progress and reinforcing our superior efficacy profile compared to Otezla.

Operator:

Sure, and that comes from Evan Seigerman with BMO Capital.

Adam Lenkowsky:

Yes, thanks Evan for the question. We’re very confident in Krazati’s significant commercial opportunity as we believe this is a best-in-class KRAS G12C. The real opportunity for Krazati is in the first line setting, in lung cancer, and so we have--you know, Mirati has started their Phase III study in combination with PD1. We’ll also see data around the triplet, so PD1-chemo-KRAS. I think that’s another significant advantage of Krazati, where it can combine with multiple agents, including PD1. We’ll obviously need data to understand the potential of that opportunity, but Evan, we think this could bring significantly greater upside to this opportunity. Then also, we’re very excited about the other assets that Mirati has - PRMT5, KRAS G12D, and the SOS1 inhibitor which we think also are showing very promising early efficacy. Taken together, we do believe that this is a really exciting deal for the company and will be a strong catalyst of growth in the back end of this decade.

Operator:

Certainly, and that comes from Carter Gould with Barclays.

Sarnit Hirawat:

This is Sarnit. Let me just start off with the KarMMA-3 part first. As you know, we have a PDUFA date in December, and that’s all pretty much we can comment on as we continue to work with the regulatory agencies to bring it forward.

Tim Power:

Thanks Adam. Can we go to the next question, please?

Andrew Baum:

Thank you. A question for Adam - many of your predecessors have been scarred trying to get off the bridge onto reimbursed plans. Are you still confident that you’re going to be able to, by the end of this year, get 60% of your CVS insured patients off the bridge onto reimbursed status?

Tim Power:

Thank you Adam. Keith, could we go to our next question, please?

Tim Anderson:

Thank you. You gave product-specific peak sales targets out to 2030 - I think you did that for almost 10 products. Are any of those trending ahead of what those prior targets were - we’ve heard several things it sounds like where it might be trending below that, and are we going to get updated 2030 targets on that same list of products at some point? Thank you.

Adam Lenkowsky:

Yes, thanks for the question. I think when we look at the totality of the portfolio, we obviously see some products that are ahead where we projected them to be at peak, and some are tracking behind, but taken together, we don’t see any changes in what we had discussed, which was on a non-risk adjusted basis that the new product portfolio could exceed that objective by 2030. Chris talked about some of the pushes and pulls. I would just add Reblozyl is certainly a product that we’re seeing that is tracking at or even ahead of expectations with the Commands label. Camzyos, we also see that tracking ahead in the longer term. Yes, it’s taking slower than we initially guided to, but it’s tracking very similar to a very, very strong cardiovascular launch, and so we expect that adoption to continue with sustained growth into the near term. Chris mentioned Breyanzi - you know, Breyanzi has been seeing--has the best-in-class self-therapy agent, and coming into next year, we’re going to be in a much better supply position and that is going to help accelerate and catalyze that product, and also Sotyktu as well, because if you think about Sotyktu, once we are able to secure access early next year, we’ll see accelerations in PSO but we also have important data read-outs, as you know, coming in PSA and in SLE, or lupus, which will contribute to having Sotyktu exceed potentially our expectations in the back end of the decade.

Tim Power:

Thanks Chris. Can we go to the next question please, Keith?

David Risinger:

Yes, thanks very much. I just wanted to pivot to 2026. Considering that you extended the new product portfolio revenue guidance to ’26, could you please comment on both the in-line product segment and the recent LOE segments for ’26, specifically how you’d frame the magnitude of potential declines for Eliquis and Revlimid, given the pressures that they are set to face? Thank you very much.

Tim Power:

Thanks David. Let’s go to the next question, please, Keith.

Robyn Karnauskas:

Hi. I think all the questions are focused on near term, but I have gotten a lot of bullish indicators on your launches, thinking more longer term, like next year. We’ve heard from KOLs that LVEF drops in the real world for Camzyos seem to be better than what we’re seeing in the clinical trials. Maybe you can provide some color on what you’re seeing and how that’s impacted uptake, and I think big picture, do you see any potential for changes to REMS because of what you’re seeing? Thanks.

Tim Power:

Thanks Sarnit. Can we go to the next question, please?

Mohit Bansal:

Great, thank you for taking my question. My question is regarding--my question is related to Sotyktu, because it seems like in the prepared remarks, you mentioned that Sotyktu contracting to zero step edits may run to 2025, and you mentioned because there are some changes in the immunologic contracting market. Can you please help us understand that a little bit better - what are these changes, and how should we think about the long-term net pricing for this category? Thank you.

Tim Power:

Thanks Adam. Let’s go to the next question, please.

Olivia Brayer:

Hey, good morning, and thank you for the question. M&A has obviously been something that you guys have leaned into, so does that strategy change at all after the Mirati deal, and if there is still an appetite for midsized deals, are there certain areas that maybe best fit your growth strategy going forward?

Tim Power:

Great, thanks. Keith, can we go to our last question, please?

Sean:

Hi guys, this is Sean [ph] on for Dan. Thanks for taking the questions. Maybe we can get a little bit more color on those Camzyos script trends. It does appear that the number of patients entering the hub may be slightly slowing, so just any further color on what you’ve been hearing from physicians on how burdensome the REMS program is and what you expect for further growth. Thanks.

Chris Boerner:

Maybe I’ll close, so first, thank you all for joining the call. I know it’s a very busy day. What I would just say to summarize where we are is, look, this team continues to be fixated on driving the growth profile of the company. How we go about doing that is, as we’ve discussed on the call, we’re going to continue to drive in-line product performance. The new product portfolio, we have continued very strong conviction in the long-term potential of this portfolio. Our focus is going to be continuing to drive where we have momentum today and accelerate those products where we need to accelerate, and that focus on execution transcends across the entire portfolio, including continuing to drive execution in R&D and continuing to find and source really attractive assets externally. With that, we’ll close the call, and as always, the team is available to answer any questions following today’s discussion. Hope you all have a good day and rest of the week.

Timothy Power:

Thank you. Good morning, everyone, and thanks for joining us this morning for our second quarter 2023 earnings call. Joining me this morning with prepared remarks are Giovanni Caforio, our Board Chair and Chief Executive Officer; and David Elkins, our Chief Financial Officer. Also participating in today's call are Chris Boerner, our Chief Operating Officer; Adam Lenkowsky, our Chief Commercialization Officer; and Samit Hirawat, our Chief Medical Officer and Head of Global Drug Development. As you'll note, we've posted slides to bms.com that you can follow along with for Giovanni and David's remarks. But before we get started, I'll read our forward-looking statement. During this call, we will make statements about the company's future plans and prospects that constitute forward-looking statements. 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 SEC filings. These forward-looking statements represent our estimates as of today and should not be relied upon as representing our estimates as of any future date. We specifically disclaim any obligation to update forward-looking statements even if our estimates change. We'll also focus our comments on our non-GAAP financial measures, which were adjusted to exclude certain specified items. Reconciliations of certain non-GAAP financial measures to the most comparable GAAP measures are available at bms.com. With that, I'll hand it over to Giovanni.

David Elkins:

Thank you, Giovanni. And thank you all for joining our second quarter earnings call. Let's turn to Slide 12 to discuss our top line performance. Unless otherwise stated, all comparisons are made versus same period in 2022 and sales growth rates will be discussed on an underlying basis, which excludes the impact of foreign exchange. Total company sales in the second quarter were $11.2 billion, driven by continued strength of our in-line and new product portfolio. Offset by the Revlimid decline that Giovanni discussed earlier. At the same time, we continue to be pleased with the strong growth of our new product portfolio, which grew 79% in the quarter. Moving to our new product portfolio on Slide 13. I'm incredibly proud of the strong momentum in the quarter and pleased with the growth. The portfolio generated $862 million in sales in the quarter, already annualizing approximately $3.5 billion. New products grew significantly in the quarter and year-to-date with 79% and 91% growth, respectively, versus last year. This strong performance was driven by several of our key products across the portfolio, including Opdualag, Reblozyl, and our cell therapies, Breyanzi and Abecma, as well as Camzyos and Zeposia. Moving to our solid tumor performance on Slide 14. Global Opdivo sales year-to-date were strong, growing 11% versus prior year, primarily driven by continued demand for our newly launched and core indications. In the US, Opdivo grew 2% in the quarter versus last year, driven by demand in first line lung, gastric, and adjuvant bladder cancer indications, offset by customer buying patterns. Sequentially, we estimate these buying patterns to be about $50 million to a $100 billion. Importantly, year-to-date revenues were up 9% versus last year, with continued growth expected this year. Outside the US, second quarter revenues increased 10%, driven by demand for recently launched indications and expanded access. Moving to the strong launch of Opdualag. Sales in the quarter grew significantly over prior year, with revenues of a $154 million. This also represents 31% growth versus prior quarter. We're extremely pleased with the launch of Opdualag in first line melanoma with market share approaching 25% and continuing to be primarily sourced from PD-1 monotherapy. Positive experiences are driving repeat and expanded use across patients. This momentum gives us confidence in the ability for Opdualag to become the new standard of care in first line melanoma. Transitioning to our cardiovascular portfolio on Slide 15, beginning with Eliquis. We continue to be pleased with our leading [indiscernible], which generated sales of $3.2 billion globally, largely driven by the US, where sales grew 7% year-over-year, driven primarily by demand. Sequentially, as is typical in the second quarter, we start to experience unfavorable gross to net adjustments as patients enter into the [indiscernible]. As a reminder, these dynamics are more acute in the third and fourth quarters, with the second half revenues being lower than the first half as we see each year. Outside US, sales continue to be impacted primarily by generic entries in Canada and the UK, as well as government pricing measures we've mentioned in the past. Turning to Camzyos, which generated sales of $46 million in the quarter, we are pleased with our continued progress. We are seeing healthy increases in patients being treated week over week with approximately 38,000 patients in our hub, of which, approximately 25,000 patients are on commercial drug at the end of the quarter. We continue to make great progress with centers of excellence and broadening our prescriber base into the community setting. Patients have highlighted significant improvement in symptoms, which has resulted in strong adherence and minimal drop off. We are delighted to have updated the label for Camzyos based upon the VALOR study, which reinforces a strong data seen in EXPLORER study and further strengthens the clinical profile of Camzyos. Outside of the US, we're excited to have received European approval last month and look forward to making this fist-in-class medicine available to more patients once we secure reimbursement. Now turning to our hematology portfolio on Slide 16. I won't go into details on Revlimid and Pomalyst since Giovanni already discussed them earlier. I'll turn to Reblozyl. We had a strong quarter with revenues of $234 million, growing 35% versus prior year, primarily driven by demand. In the US, revenues grew 24%, primarily due to continued total prescription share growth driven by longer duration of treatment. Internationally, Reblozyl roughly doubled as we continue to secure reimbursement in additional countries. We have a strong foundation in place and look forward to the upcoming PDUFA date for Reblozyl in first line ESA-naive MDS patients on the COMMANDS data, which will further accelerate growth of the ban upon anticipated approval at the end of next month. Moving on to our transformative cell therapy products of Abecma and Breyanzi, we continue to make progress at expanding capacity which has enabled robust sales of $232 million, growing 81% versus prior year, driven by strong demand. Abecma booked sales of a $132 million globally, growing 48% versus last year, primarily due to demand and an increase in manufacturing capacity. We expect third quarter revenues to be lower than second quarter revenues due in part to planned manufacturing maintenance in June with growth expected in the fourth quarter. Having said that, we continue to be pleased with the [reusability] (ph) of our efficacy and safety data in the real world and the reliability of our manufacturing processes which were reinforced at ASCO. We also look forward to the upcoming PDUFA date in December for Abecma in early alliance based on the KarMMa-3 trial. Turning to Breyanzi, which generates sales of a $100 million globally, more than doubling versus prior year and 41% sequentially primarily driven by demand and second line and third line large B cell lymphoma, and the increased manufacturing capacity. We are pleased with our success in increasing supply. While vector constraints will result in third and fourth quarter revenues being largely similar to second quarter, we are further building out our capacity for growth next year. Outside the US, we are excited about the EU approval of Breyanzi in second line large B cell lymphoma and look forward to bringing this treatment to early aligned patients in Europe. Now let's turn to our immunology portfolio on slide 17. Global sales of Zeposia in the quarter were a $100 million, growing 52% compared to prior year and 28% sequentially. In the US, growth was primarily driven by demand in multiple sclerosis and expanding contribution from ulcerative colitis. Outside the US, sales increased year-over-year, primarily due to demand in multiple sclerosis and securing reimbursement in additional countries. And lastly, turning to Sotyktu. We are extremely pleased with the launch and progress we've made to date. Since launch, we have a greater than 23,000 script equivalent across bridge and commercial drug, nearly doubling volume in Q2 versus Q1. Sotyktu share of the oral market is now approaching 40%, continue to source more business from systemic naive patients as well as Otezla and biologic experience patients. I'm also very pleased to report that we've made progress accelerating access. Most notably, half of CBS plans with zero step edits effective mid-July. CBS indication based plans account for approximately 30 million people or roughly 15% of the commercial covered lives and we look forward to securing broader formulary access in 2024. Outside the US, we continue to be pleased with the strong launch performance in Japan, and are working with the various countries across Europe to secure reimbursement. Now moving to our second quarter P&L on Slide 18. I’ll focus my remarks on a few non-GAAP key line items having just covered the $11.2 billion of sales in the quarter. In the quarter, gross margin of approximately 75% was primarily impacted by product mix. Operating expenses of $4.2 billion excluding acquired in-process R&D, increased approximately 2% versus last year, largely driven by an increase in spend to support our new product portfolio. Acquired in-process R&D in the quarter was a $158 million, which was partially offset by $20 million of licensing income. Overall, second quarter earnings per share was $1.75. Turning to the balance sheet and capital allocation on Slide 19. Cash flow generation on our balance sheet remains strong. Cash flow from operations in the quarter was approximately $1.9 billion, with over $8.7 billion in cash and marketable securities on hand as of June 30th. Cash flow from operations in quarter was primarily impacted by a $3 billion tax payments in the quarter, which is dynamic as we've seen in previous years. Our priorities for capital allocation remain unchanged, our business development continuing to be a top priority and a focus on balance sheet strength, as well as returning capital to shareholders. In the quarter, we repaid approximately $240 million of debt and $1.9 billion year-to-date, with an additional $2 billion maturing this year. Additionally, as Giovanni mentioned, we intend to execute a $4 billion ASR in the third quarter of this year with approximately $2 billion remaining in our share repurchase authorization after the ASR. Turning to our updated 2023 non-GAAP guidance on Slide 20. Our updated guidance reflects the decline of Revlimid into a lesser extent Pomalyst revenues, Giovanni mentioned earlier. We now expect 2023 revenues to decline in low single digit range on a reported and ex-FX basis, and gross margin is expected to be approximately 76%. Excluding the impact of acquired in-process R&D, we continue to expect low single digit decline in operating expenses, which reflects efficiency initiatives in MS&A as we continue to invest in our new product portfolio. For the third quarter, we expect total operating expenses to be largely similar to the second quarter at approximately $4.2 billion. Our tax rate is now expected to be 17.5%, reflecting changes in product mix and our earnings per share is now expected to be in the range of $7.35 to $7.65. Lastly, turning to Slide 21, despite Revlimid dynamics this year, the future of our company were driven by our in-line and new product portfolio. Importantly, the robust growth of this business remains unchanged. We continue to expect the new product portfolio to roughly double versus prior year. We are continuing to diversify our business and have become less concentrated as a result. As you can see, and as Giovanni mentioned earlier, in 2025 greater than 90% of our business is expected to come from our in-line and new product portfolios. We continue to expect low to mid-single digit CAGR from 2020 to 2025 and reaffirm our midterm outlook. Before we move to Q&A, I want to reiterate and recognize the strong execution of our teams to accelerate momentum of the future of our company, our new product portfolio. We remain laser focused on bringing these transformational medicines to patients around the globe. I'll now turn the call back over to Tim and Giovanni for Q&A.

Operator:

Ladies and gentlemen, we will go to the question-and-answer session. [Operator Instructions] Our first question today comes from Chris Shibutani from Goldman Sachs. Please go ahead with your question.

Christopher Boerner:

Hey, Chris. It's Chris. I'll start and then I'll turn it over to Adam to provide some specifics. But since you mentioned the new product portfolio, let me just highlight a few things at a macro level. First, we continue to be very confident in the progress of the new product portfolio. As you heard in the prepared remarks, we remain on track to roughly double the revenue of that portfolio. We're very much on track toward the $10 billion to $13 billion in 2025. And as Adam will highlight, I think we've made some very good progress really across that portfolio, not just Camzyos, but certainly Adam can provide additional details on Camzyos. So Adam?

Chris Shibutani:

Thanks, Adam.

Operator:

Our next question comes from Evan Seigerman from BMO. Please go ahead with your question.

Giovanni Caforio:

Thanks, Evan. This is Giovanni. So first of all, the decision to execute the $4 billion ASR and as you know, we had a $6 billion authorization outstanding is really driven by the great confidence we have in the future of the company. And importantly, the strong financial position we are in and the financial flexibility we have. So we remain in a position in which we are investing in the future of our company and that's in terms of supporting a great pipeline that we have internally, but also continuing to be committed to business development as the central pillar of the capital allocation strategy. I think as David has mentioned many times, we are in a strong position and the capital allocation strategy of the company remains very balanced. But given the confidence we have in where we are and the future of the company, we made a decision to execute the ASR of $4 billion in Q3.

Operator:

Our next question comes from Geoff Meacham from Bank of America. Please go ahead with your question.

Giovanni Caforio:

Thank you. Sure. Thank you, Geoff. Let me take the first question and then we'll move to Sotyktu. So we do expect the dynamics that I discussed for Revlimid and to a lesser extent for Pomalyst to be limited to this year. And our confidence is based really on two factors. First of all, we are seeing that three drug applications to the BMS Patient Assistance Foundations have been returning to normal level. And second, remember there are significant changes to the Part D design next year which will improve patient affordability. In fact, patient contributions to the catastrophic phase are eliminated and there is an expansion to the pool of patients that qualifies. And so, as a result of that, we see this one being very much of a -- we expect this one to be very much an issue that has impacted this year for Pomalyst and to lesser degree -- sorry for Revlimid and a lesser extent Pomalyst. Adam?

Timothy Power:

All right. Thanks very much, Adam. Jamie, can we go to the next question please?

Terence Flynn:

Great. Thanks so much for taking the question. Maybe two for me. I was just wondering if [Samit] (ph), if you can talk about your confidence in Reblozyl securing a broad label in first line MDS. I know there been some discussion here post the ASCO presentation. And then, I was wondering if there's any update on the Opdivo Hodgkin's lymphoma indication in the frontline setting for NCCN guidance -- guideline updates? Thank you.

Samit Hirawat:

Thank you, Terrence. Thank you for the question. For Reblozyl, of course, we cannot comment specifically on the label and discussions with the regulatory agencies. But I just want to remind again on how this study was conducted with the intent to treat principles apply to this study where all comer population was engaged in the first line setting comparing versus ESA for RS positive and RS negative patients and you saw the data in all comer patient population as well as in the subset analysis and we repeatedly certainly tried to convey that if you think about the efficacy of the drug, what is most important for the patients is to stay half of transfusion. And in all subsets, you see that consistently across the board that patients who benefit, benefit, as well as they offer contributions for a long duration. So we are confident in our data. But of course, we will continue to wait for when the label is finalized and is able to share -- and we are able to share that. But Adam, do you want to add something?

Timothy Power:

Thanks very much, Adam. Let’s go to the next question please, Jamie.

Chris Schott:

Great. Thanks so much. Just two for me. Maybe first on the sales guidance, just so I'm clear, did anything else change in your revenue outlook beyond this update for Revlimid and Pomalyst or is that really the only change in the overall top line numbers? And then my second question was just on Breyanzi and Abecma. I'm just trying to get a sense of how to think about the capacity ramp from here. You've obviously had a nice kind of build in the first half of the year, but it seems like the guidance is pointing to sales kind of flattening out in the second half. So I guess, when can we think about the next kind of leg up for capacity for these products and how much of a ramp can we think about as we look out to 2024? Thanks so much.

David Elkins:

Thanks, Chris. The only change to our guidance was related to the Revlimid and Pomalyst that we discussed before.

Giovanni Caforio:

Chris, the only thing I would add is just that the manufacturing investments that Adam alluded to are part of a broader strategy that we have that I think is going to be important for us as we think about this platform more generally. And as you've heard us talk about in the past and we'll talk again about at the R&D Day in September, we've obviously got a very exciting portfolio of cell therapy assets, notably GPRC5D as well as [NEX-T CD19] (ph). And so these investments will be critical for those as well.

Operator:

Our next question comes from Seamus Fernandez from Guggenheim Securities. Please go ahead with your question.

Giovanni Caforio:

Thanks, Seamus. Let me just start maybe with a short comment on IRA, and then Samit and Adam will answer your question on LPA1, which is a really exciting program. So on IRA, I'm not going to comment on litigation and I can't really comment on what may happen on that front. I think we've been very clear with our concerns with IRA as it relates to the negative impact on innovation and in particular, cancer care in the future, but also with the concerns we have with respect to the process, of course, and the mechanisms for price setting. Now with respect to the things that are in IRA, of course, as we've always said, there are positive elements to IRA, which include the improvements we see in affordability for patients. In fact, I mentioned earlier that, obviously, the fact that next year patients will no longer contribute to the catastrophic phase and there is an expansion of the definition for LIS eligibility. These are good examples of things that go very much in the right direction. And of course, the impact parts of our business, including Eliquis, as an example. Samit?

Adam Lenkowsky:

Yes, Samit. Thanks. From a commercial standpoint, we're very encouraged by LPA1 asset. As Samit alluded to, it's a very high unmet need in IPF and PPF. And the prognosis for these diseases are not too dissimilar to some metastatic cancer diagnoses. And so, we generated, as Samit mentioned, very encouraging efficacy and safety data. There was no GI toxin with the current treatments, no liver toxicity that we saw in the early phase. And this gives us confidence, as Samit mentioned, to move into Phase 3. Now the current products have significant limitations in efficacy and toxicity. And I think from a commercial standpoint, awareness and better diagnosis tools are going to really help accelerate the diagnosis rate rates, which are pretty low today. They range around 30% to 40%. And we think when we bring our LPA1 to market, we'll be able to accelerate that significantly and make a significant impact in patients with these serious diseases.

Operator:

Our next question comes from Carter Gould from Barclays. Please go ahead with your question.

Giovanni Caforio:

Sure. Adam?

Samit Hirawat:

And just to add to what Adam has just talked about Opdualag, there is obviously a large program behind the approved indication in metastatic melanoma. We have the adjuvant study in melanoma that will read out as the events come through, as well as the Phase 3 study in colorectal cancer MSS that will also be -- which is an event-driven overall survival primary endpoint study that will read out over 2024-2025. And then, of course, behind that, we're looking forward to seeing the data next year for non-small cell lung cancer as well as for hepatocarcinoma in the first and the second line in 2024. So there is a large program behind the melanoma metastatic disease.

Operator:

Our next question comes from Tim Anderson from Wolfe Research. Please go ahead with your question.

Giovanni Caforio:

Chris.

Adam Lenkowsky:

Yes. Tim, thanks for the question. As it relates to Opdivo internationally, what we're seeing is continued strong growth in our international market. In fact, when you look at year-over-year and quarter-to- quarter, we grew 10% for Opdivo internationally. And that's really due to the continued growth of our core business in first-line lung, in gastric, and we're just starting to unlock some of our new indications. We're very pleased to see our approval of CheckMate-816 in Europe. And when I think about the kind of the decline of price in Europe, any time you get a new indication in many of our markets you start to take slight price decreases. But the volume that we see for Opdivo as we add these tumors and get reimbursement, we look to continue to increase our sales and our volume will certainly offset any price decline.

Timothy Power:

Thanks, Giovanni. Jamie, can we go to the next question please.

Unknown Participant:

Hi. It's [indiscernible] from Citi on behalf of Andrew. Question please on Opdivo, can you talk to the 2% sales growth in the US and give a bit more context there? You mentioned customer buying patterns, can you elaborate on the dynamics? And are there any other factors you would flag competition [indiscernible]? Thanks very much.

Timothy Power:

Thanks, Adam. Let’s go to the next question please, Jamie.

Steve Scala:

Thank you very much. I'd like to ask a question about Revlimid. So you mentioned that you started to see the weakness at the end of Q1, yet the guidance was reiterated at the end of April, presumably because you thought it was temporary. So what was the error in that assumption? You noted that free drug program is expected to return to normal levels in future years. Why then is the expected decline on an annual basis expected to be less than before? I know that you said government support could be an offset, but that seems like a dynamic in which we should not have high confidence. And just to be clear, generic competitors have nothing to do whatsoever with this cut today. And then the second question is Takeda noted weakness in the US GI market this morning, what -- are you seeing this? And if yes, to what do you attribute it? Thank you.

Giovanni Caforio:

And second question for Adam.

Timothy Power:

Thanks, Adam. Let's just try to squeeze a couple more in here, if you don't mind me, let’s go to the next one, please, Jamie.

Matthew Phipps:

Thanks for taking my questions. First, are you still confident in the roughly $4 billion in new product growth guidance for this year for the new product portfolio? It seems about 50% in the second half versus the first half, so what might drive that, especially if cell therapies are flat? And then Samit, you mentioned seeing the Opdualag data in non-small cell next year. But I did notice on Slide 7, the first line non-small cell for Opdualag as a key milestone has officially been added as some of the long-term opportunity. So just confirmed you haven't seen that data in-house yet to make that addition?

Adam Lenkowsky:

I guess just to put a finer point, what we said was, through the first half we are annualizing at $3.5 billion. But as Chris alluded to, we have a number of catalysts to accelerate growth of our new product portfolio in the second half of the year, which we said we would roughly double sales from last year. So just -- and as Chris mentioned, with Reblozyl first line, we're looking forward to the PDUFA date for COMMANDS. As Dave mentioned, we're also pleased with our -- really to pull forward a large PBM this year for Sotyktu, and those patients will shift to commercial product from Bridge over the next two to three months. And also, as Chris mentioned, Camzyos, we expect a continued steady flow patients coming into our hub and then moving out to commercial product in the back end of the year. Remember, that take around eight to 10 weeks for patients to move from our hub into commercial product. And finally, we're continuing to increase supply for Abecma in advance of our KarMMa-3 launch, as well as ramping [indiscernible] for Breyanzi in the back end of the year. And for those reasons, we remain committed to roughly doubling our sales of new products this year.

Timothy Power:

We're really a little short in time. So maybe we'll squeeze a few more in. If you can just keep it one question so that we get to as many people as possible that will be great. Can we go to the next one please, Jamie.

Unidentified Participant:

Hi, guys. One, I guess, on Eliquis total sales decline this quarter for the first time, I think. So perhaps can you talk about some of those dynamics you're seeing with the gross to net in the US and faster EU erosion? How should we think about the price demand for the rest of the year and then into the future?

Timothy Power:

Thanks, Adam. Let’s go to the next one please, Jamie.

David Risinger:

Yes. Thanks very much. So my question is on Revlimid volume expectations. So could you please provide some more color on go-forward generic anticipated volumes, specifically any volume inflections to watch over the next 12 to 18 months? Thank you.

Timothy Power:

Thanks, David. Let’s go to the next one please, Jamie.

Mohit Bansal:

Great. Thanks for taking my question. My question is regarding the in-line portfolio. How confident do you feel about the growth trends you -- or expected outlook you provided in the beginning of the year? Asking because, by our math it was about for 8% growth and if you account for the $300 million down revision for Pomalyst, it seems like 7% growth. And considering you are being growing 2% including FX and 3% excluding FX so far, just wanted to understand if you still feel wondering about that growth outlook at this point? Thank you.

Timothy Power:

Thanks, Giovanni. Next on please, Jamie.

Yihan Li:

Hi. This is Yihan on for Colin. Thanks for taking our question. So we all know like you will have your R&D Day on September 14, so just wondering if we could have a teaser trailer. What should we expect here? Are you going to share any new data on this event? And the [indiscernible], it is on your CAR-T [indiscernible]. So we recently noted you initiated a Phase 1 trial of [indiscernible] CAR-T in SLE, which has a primary completion date in 2028. So you previously noted you would go first on this program, so just wondering if there's any guidance on the timing of the data readout? Thank you so much.

Samit Hirawat:

Thank you, Chris, and thank you for the question. For the next-gen CAR-T CD19 therapy, what you're seeing is that, we have just started the Phase 1 study. There is going to be dose escalation and dose expansion. What you will also see later this year, and possibly we might be able to talk about it in September, we will be adding additional indications. So we are taking that into account and putting the dates into the system in [indiscernible]. But certainly, there will be earlier data readouts and earlier data sharing prior to that date. So, we'll seek to inform as we progress with the study conduct.

Operator:

Our next question comes from Dane Leone from Raymond James. Please go ahead with your question.

Giovanni Caforio:

Yes, David. Thank you, Dane. David, why don't you start and then Adam can answer the question on Sotyktu.

Adam Lenkowsky:

Yes, Dane, thanks. As it relates to Sotyktu, as I mentioned, certainly our objective is to continue to grow market share. As I said it's nearing 40%, we continue to see month-over-month increases. And we feel very good about where our market share is trending towards the back end of the year. Our objective is to surpass Otezla. And so, when you think about where we are today, we have doubled the volume of TRx equivalents from Q2 to Q1, and we expect that also to accelerate. It will take time to move patients from bridge to commercial drug, certainly around, as I mentioned, two to three months. So that ramp will happen in the back end of the year. And as we start to unlock other plans starting in January of next year, we'll also see that start to take place as well, more patients moving into commercial supply. So we feel very good about our continued growth prospects for Sotyktu in the back end of this year and certainly into 2024.

Operator:

Our final question today will come from Olivia Brayer from Cantor Fitzgerald. Please go ahead with your question.

Adam Lenkowsky:

I'll take the first question, Olivia. Thanks for the question. So as it relates to manufacturing and the capacity shutdown. So we're making very good progress to increase our capacity across our cell therapy franchise, both Abecma and Breyanzi. I talked about the two components of that. But as it relates to the manufacturing shutdown, that really is limited to Abecma, because [indiscernible] where Abecma is manufactured. And so, all of our shutdowns are planned, accounted for in our capacity plans. This is routine shutdown to execute maintenance at our site for approximately one month. And the ramp for Abecma is really tied to overall supply plans with KarMMa-3 being one important aspect of that ramp. And that's important because we now have over 90% manufacturing success rates and multiple ramp since launch. So, this routine manufacturing maintenance process are really important for us to continue our strong success rate and build our readiness for increase capacity in advance of the KarMMa-3 launch. So as David mentioned, that will have some impact in Q3, and we expect our Abecma sales to accelerate in Q4 and certainly into 2024.

Giovanni Caforio:

So thank you, everyone. So as I think about the quarter, first of all, I want to say, obviously, we provided an important update to our outlook for the year. We don't take that lightly. At the same time, when I look at the future of the company, we remain and I am very optimistic about where we are driven by the discussion we had about our in-line products, the performance of the launch portfolio and the strength of our pipeline. With that, I want to thank you for participating. Our team, as always, remains available to answer any questions you may have. And wish everyone a good day.

Timothy Power:

Thanks, Scott and good morning, everyone. Thanks for joining us this morning for our first quarter 2023 earnings call. Joining me this morning with prepared remarks are Giovanni Caforio, our Board Chair and Chief Executive Officer; and David Elkins, our Chief Financial Officer. Also participating in today's call are Chris Boerner, our Chief Commercialization Officer; and Samit Hirawat, our Chief Medical Officer and Head of Global Drug Development. As you'll note, we've posted slides to bms.com that you can follow along with for Giovanni and David's remarks. Before we get going, I'll read our forward-looking statements. During this call, we will make statements about the company's future plans and prospects that constitute forward-looking statements. 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 SEC filings. These forward-looking statements represent our estimates as of today and should not be relied upon as representing our estimates as of any future date. We specifically disclaim any obligation to update forward-looking statements even if our estimates change. We'll also focus our comments on our non-GAAP financial measures, which are adjusted to exclude certain specified items. Reconciliations to certain non-GAAP financial measures to the most comparable GAAP measures are available at bms.com. With that, I'll hand it over to Giovanni.

David Elkins:

Thank you, Giovanni. And recognizing this is another busy day for all of you. Thanks again for joining our first quarter earnings call. Turning to Slide 8. Let's discuss our top line performance. Unless otherwise stated, all comparisons are made for the same period in 2022, and sales growth rates will be discussed on an underlying basis, which excludes the impact of foreign exchange. Total company sales in the quarter topped $11.3 billion, driven by strong double-digit sales of our in-line and new product portfolio, offset by Revlimid loss of exclusivity. Sales in the U.S. grew 4%, driven primarily by volume, while international sales were impacted by the annualization of loss of exclusivity for Revlimid. Let's delve deeper into the strong performance of the new product portfolio on Slide 9. As Giovanni mentioned, the new product portfolio generated over $720 million in sales, which more than doubled versus prior year and grew over 11% sequentially. This strong performance in the quarter was driven primarily by demand for Opdualag, Abecma and Reblozyl, which I will touch on further in a moment and provides us confidence in the growth potential for our increasingly derisked and diversified new product portfolio. Moving to our solid tumor performance on Slide 10. Global Opdivo sales were strong, growing double digit versus prior year, primarily driven by continued demand for our newly launched and core indications. In the U.S., Opdivo grew 17%, primarily driven by demand in first-line lung, upper GI indications and adjuvant bladder cancer. Outside the U.S., first quarter revenues increased 18%, primarily driven by demand for recently launched indications and expanded access. The strong execution in the first quarter gives us confidence in the continued growth expected for Opdivo. Now turning to the robust launch of Opdualag. Sales in the quarter were $117 million, growing double digit versus prior quarter. We are very pleased with the launch of Opdualag in first-line melanoma with market share now over 20%, primarily being sourced from PD-1 monotherapy. Now turning to our expanded cardiovascular portfolio on Slide 11 and starting with Eliquis, which generated over $3.4 billion globally, largely driven by the U.S. In the U.S., sales grew strongly, up 19%, driven primarily by robust demand. Internationally, sales were impacted primarily by generic entries in Canada and the U.K. and pricing measures we mentioned in the past. Moving now to our first-in-class myosin inhibitor, CAMZYOS. We continue to be pleased with the progress we are making to bring CAMZYOS to more patients. CAMZYOS generated sales of $29 million in the first quarter. Now with approximately 2,700 patients in our hub, of which 1,500 patients on commercial drug at the end of the quarter, we continue to build momentum with considerable growth expected in the quarter-over-quarter. We look forward to our upcoming PDUFA date for Valor in June, which will reinforce the strong profile of CAMZYOS, as well as the expected European approval having just received a positive CHMP opinion. Now turning to our hematology portfolio on Slide 12. Starting with Revlimid. Global sales in the quarter were approximately $1.8 billion, impacted by generic entry. As we expected, the favorability seen last year reversed in the first quarter, and we continue to expect quarter-to-quarter variability. Now on to Pomalyst, global sales grew 2% versus prior year. In the U.S., longer duration of first-line treatments impacted new prescription volumes. Internationally, revenues grew 12%, driven largely to demand for triple-based regimens as well as some buying patterns. Turning to Reblozyl, which generated revenues of $206 million in the quarter. Sales were strong, up 33%, largely driven by demand. In the U.S., revenues grew 18%, primarily driven by continued total prescription share growth. Internationally, Reblozyl more than doubled as we continue to secure reimbursement in additional countries, including being placed on China's national reimbursement drug list. We are now launched in 25 countries outside the U.S. and expect to launch in additional markets this year. We look forward to presenting the COMMANDS data in an oral presentation at ASCO and EHA to further accelerate the brand by bringing this first-in-class product to first-line ESA-naive MDS patients upon approval. Transitioning to our first-in-class and best-in-class cell therapy products of Abecma and Breyanzi, we continue to make progress at expanding capacity, which has enabled robust sales growth driven by strong demand. With sales of $147 million in the quarter, we more than doubled our revenue for Abecma versus prior year and grew 16% sequentially. We continue to be pleased with the feedback from physicians on the reproducibility of efficacy and safety in the real world and reliability of our manufacturing capabilities. As Giovanni mentioned, KarMMa-3 and triple cost exposed myeloma patients is now under review in the EU, the U.S. and Japan, and we look forward to bringing up Abecma to earlier line patients around the globe. Turning to Breyanzi. Sales in the quarter were $71 million, growing 66% versus prior year and 27% sequentially. Sales were driven by demand in second and third-line plus large B-cell lymphoma. With the broadest label in second-line large B-cell lymphoma and differentiated safety profile, feedback from physicians has been very strong, and we are pleased with the strong demand for Breyanzi. We look forward to bringing Breyanzi to earlier line patients in the EU in the coming months, with the recent CHMP positive opinion. Let's now move to our immunology portfolio on Slide 13. Starting with Zeposia. Global sales in the quarter were $78 million, more than doubling compared to prior year. In the U.S., growth was primarily driven by demand in multiple sclerosis and expanding contribution from ulcerative colitis. Internationally, sales increased primarily to demand in multiple sclerosis and securing reimbursement in additional countries. Lastly, turning towards a strong launch of our first-in-class TYK2 inhibitor, Sotyktu. We're extremely pleased with the launch so far. Just 6 months into the launch, we have over 9,500 script equivalents across bridge and commercial drug. Sotyktu's share of the oral market is now in the mid-30s, sourcing business from systematic naive patients as well as Otezla and biologic experience patients. Internationally, we are very pleased with the strong launch performance in Japan and recent approval in Europe and look forward to working with individual countries on securing reimbursement through 2023 and beyond. We are very excited about Sotyktu with non-risk-adjusted revenue potential of $4-plus billion based on exciting opportunities ahead in moderate to severe psoriasis, psoriatic arthritis and in lupus. Moving to our first quarter P&L on Slide 14. I will focus my remarks on a few non-key line items just covered - as I just covered sales performance. In the quarter, as expected, gross margin was impacted by product mix. This was partially offset by favorable foreign exchange and related hedging settlements that will not repeat in the second quarter. Operating expenses, excluding acquired in-process R&D remained largely consistent with prior year. MS&A declined 4%, primarily due to timing of spend, which we expect to reverse going into the second quarter as we continue to invest in our new launches. Acquired in-process R&D in the quarter was $75 million, which was partially offset by $43 million of licensing income. Overall, first quarter earnings per share was $2.05, growing approximately 5%. Turning to the balance sheet and capital allocation on Slide 15. Cash flow generation and our balance sheet remained strong. Cash flow from operations in the quarter was approximately $3 billion, with over $9 billion in cash and marketable securities on hand as of March 31. As it relates to capital allocation, our priorities remain unchanged, with BD continuing to be our top priority and a focus on balance sheet strength, as well as returning capital to shareholders. In the quarter, we repaid $1.6 billion in debt with an additional $2.3 billion maturing this year, and we remain opportunistic about share repurchases in the future with approximately $7 billion remaining in our share repurchase authorization. Lastly, turning to our 2023 non-GAAP guidance on Slide 16. Based upon the performance to date, we are reaffirming our non-GAAP guidance. We expect 2023 revenues to grow approximately 2% on a reported and constant currency basis, which reflects that our in-line and new product portfolio will more than offset recent LOEs. Revlimid's sales expectations remain at approximately $6.5 billion, and we will continue to monitor variability from generics and other market dynamics through the year. We remain excited about the promise of our new product portfolio and expect the portfolio to roughly double versus prior year. As we continue to launch these assets around the globe, we expect growth to be more back half weighted as we build momentum during the year. We continue to expect gross margin to be approximately 77%, which reflects a shift in product mix. Accounting for the FX favorability in the first quarter, we expect gross margin for the first half of the year to be approximately 77%. Excluding the impact of acquired in-process R&D and our operating expense guidance remains unchanged and expect to decline in the low single-digit range, reflecting efficiency initiatives in MS&A as we continue to up invest in our launch brands. As I mentioned during the results for the quarter, we expect MS&A to increase in the second quarter as we continue to invest in our launches. The operating expenses are expected to be approximately $4.2 billion in the second quarter. Our tax guidance of 17% remains unchanged, and we continue to expect earnings per share to be in the range of $7.95 and $8.25. Before we move to Q&A, I just want to acknowledge the work of our colleagues across the globe for the relentless commitment and execution to transform this company into a younger and more diversified business. I'll now turn the call back over to Tim and Giovanni for Q&A.

Operator:

It comes from the line of Seamus Fernandez from Guggenheim. Your line is open.

Christopher Boerner:

Seamus, maybe I'll start, and then I'll turn it over to Samit. This is Chris. First, the Sotyktu launch, just as a top line message is going very well, as David mentioned, we're seeing very good uptake and feedback from physicians from a demand standpoint, which is, to your question, probably the most important thing that we can stay focused on in order to free up market access, we're seeing very good progress in the quarter. We had over 9,500 TRx Equivalents. We grew new patient enrollments just shy of 40% quarter-over-quarter. So we feel good about those underlying dynamics. And as you allude to, as we continue to build that volume of patients, we'll be able to be in a much better position to negotiate from a payer standpoint. What I would say is that our focus continues to be on where possible, pulling forward access decisions into this year that would mainly occur in the second half of this year. Right now, most of the commercial drug is coming still from those patients who have open plans and had open plans at launch. But from a baseline standpoint, I would still consider 2024 to be the point at which you'll see substantive changes in market access. But we remain focused on doing everything we can to pull that forward.

Timothy Power:

Thanks very much, Seamus. Kevin, could we go to the next question, please?

Andrew Baum:

Thanks, A question for Samit. And a question for Chris or maybe Adam [ph] given the rule change. So Samit, you highlighted the SELECT-T [ph] program, I assume this is a CAR-T against CD19. I just want to confirm that this is - contains the Autolus' side [ph] switch. And more importantly, there are a limited number of companies in this very exciting space given the [indiscernible] last year. How aggressively are you pursuing this in terms of time lines and breadth? If you could talk to where you intend to go with this trial, what constraints the FDA put on you given it's a new sell construct? And then how quickly you can expand more generally some sense of the level of excitement inside Bristol to address refractory autoimmune c disease? And then second for Chris and Adam, the impact potentially - well, the anticipated impact of Medicare price negotiation for Eliquis is likely to be very substantial. I'm curious as to the extent that you can reduce the rebate paid to PBMs without facing punitive action. Obviously, the PBMs tried to speed it from the portfolio some years ago, and they ended up providing access again. So how much leverage do you actually have to mitigate some of that impact on to the PBMs? Thank you.

Samit Hirawat:

And then with respect to Eliquis, Andrew, I'll take that one. So as you know, we do anticipate that Eliquis will be impacted by government price setting. A couple of things just at a high level to keep in mind. First, the timing of that impact will run up against the timing of our LOE in the U.S. And second, of course, remember, we split the economics on Eliquis with Pfizer. That said, we do anticipate that Eliquis will be in the early wave of IRA price setting. With respect to the ability of rebates to address that, as you well know, these are very competitive markets. Within that context, we are always trying to establish a very strong access position with the least impact on the value of our medicines through rebating. And I think we have in our history on Eliquis shown discipline in that regard. As you would expect, we're going to continue to do this in the post IRA role just as we do today. At the same time, it's, at this point, difficult to speculate on exactly how this is going to play out while many of the details that will be necessary to describe that are still yet to be defined. But what I can commit to is that we're going to continue to negotiate commercial and Medicare rates and formulary position separately, we're going to be disciplined as we do so.

Operator:

Comes from the line of Chris Schott of JPMorgan. Your line is open.

Giovanni Caforio:

Thank you, Chris. This is Giovanni. I'll get started and then I'll ask David to comment. So with respect to your question about our capacity for first of all, supporting ongoing launches and potentially looking at business development focused on later-stage assets, I don't see commercial capacity as a factor that would constrain our ability to do that. We have fully resourced organizations across all four therapeutic areas. In fact, several of the launches that are happening across different therapeutic area organizations right now and we've demonstrated our ability to shift resources in support of new launches in new therapeutic areas like dermatology, very effectively in the recent past. So we definitely - as I've always said, look at areas where we have deep research development and commercial expertise first when we look at BD. And there's obviously - there's clearly capacity from multiple perspectives to continue to add assets to the portfolio. So when we look at business development, we look at early deals that strengthen the long-term growth profile of the company. Our pipeline is actually really strong right now with respect to that. And we also look at opportunities that have a meaningful shorter-term impact, like we've done with MyoKardia and turning point, which are definitely models that given the right circumstances, we would be happy to continue to support. And I'll ask David to give you a perspective on capital allocation as it pertains to your second question.

Timothy Power:

Thanks very much, David. Kevin can we go the next question, please.

Unidentified Analyst:

This is Adam on for Tim. Thanks for taking our question. So on Camzyos [ph] it seems like the uptake has been a little slow so far. Is REMS major gating factor? Can you comment on what percent of target prescriber market REMS certified at this point? And should we expect - and how should we expect this to progress throughout the year? Also, at what point will the majority of targeted doctors around certified? Is it too optimistic that things stat could be by year-end 2023? Thanks.

Timothy Power:

Can we go to next question, please.

Steve Scala:

Thank you. I have two questions. First, can you describe the progression of Revlimid in 2023 on a quarter-by-quarter basis? And what are the primary drivers of that? So specifically, was Q1 likely the high quarter in 2023? Or will it be more volatile? And then secondly, if I may, Giovanni given your experience tenure now transition, any thoughts on the outlook for the industry over the next decade on pricing, IP ability to be continually innovative would be helpful. Is the industry just headed for debt [ph] by 1,000 cuts? Or will the future be more like the past? And we know there's a huge unmet need. So we're more looking for what's likely to happen. Many thanks.

David Elkins:

Steve, thanks for the question on Revlimid. Just a couple of things. One, just reaffirming the full year guidance of $6.5 billion on Revlimid. As far as quarter-to-quarter, you should expect to see continued variability because we really don't control how the generics bring product to the marketplace. But as you're thinking about just a couple of points for you to consider. One, remember, we had a better Q4 than we're anticipating. So we think some of that has come out in Q1. Also, the other thing I'd remind you of, Q1 of last year, is, first, we saw generic entry really didn't come in until the February time frame in Europe and in the U.S., it was March. So Q1 of last year is our toughest comp. But look, I think the main takeaway is here is we're still thinking about this as $6.5 billion for the full year. We continue to expect that we're going to have variability, and we'll update you as the year progresses on that.

Operator:

Your next question comes from the line of Chris Shibutani from Goldman Sachs. Your line is open.

Christopher Boerner:

Thanks for the question. I'll obviously take that. So first, let me just say, in terms of the transition, I'm absolutely thrilled with the opportunity. The past 8 years have been really the highlight of my career here at BMS, and I'm certainly looking forward to taking on the broader opportunity and continuing to work with the absolutely exceptional talent that we have at the company across all aspects of the company. With respect to the structure and how that's evolving. First, I think that if you look at BMS historically. We have always evolved how we're organized, where we place our resources, how we allocate those resources across channels to be aligned with, a, the portfolio we have and b, the environment that we're operating in. And I think that just at a macro level, that's how I would think about how we're going to continue to operate going forward. As Giovanni just alluded to in the previous question, there are obviously puts and takes in the industry. There's a lot to be excited about. There are also some headwinds. And so as we constantly are looking at the commercial model, we're staying focused on aligning that model to the world we live in. Clearly, digital is going to continue to play a much bigger role. We do believe that there will continue to be personal interactions required with key stakeholders. Health care is, by its nature, a personal interaction. The size and focus and orientation of those personal interactions will undoubtedly evolve and we're going to continue to stay ahead of all of those trends. As - with respect to immunology specifically, that's an incredibly exciting area for us. As you've alluded to, we have had a presence in that space with Orencia. We're very excited about both Zeposia and the launch with Sotyktu. And as we've talked about on this call, there's considerable opportunity to continue to grow that presence over time. That's required already for us to build additional capabilities in, for example, market access, which is a different dynamic in immunology versus oncology. I mean we're going to continue to make sure that we're allocating resources to ensure that, that particular portfolio is very successful commercially, both in the U.S. and ex U.S.

Operator:

Your next question comes from the line of Geoff Meacham of Bank of America. Your line is open.

Samit Hirawat:

Sure. Thank you, Jeff, for the question. For Opdualag, let's, first of all, review, there is a large program already underway. Number one, already approved in the first-line metastatic melanoma. Number two, adjuvant melanoma. We are looking forward to the readout of that trial. Number three, the registration trial ongoing in colorectal cancer and MSS stable patient population, again, looking forward to that readout in the coming year. Then beyond that, the proof-of-concept studies that are already ongoing in non-small cell lung cancer, we are conducting a randomized Phase II study to generate the data and also to look at the progression-free survival as we compare combination of Opdualag with chemotherapy comparing it to a single agent I/O plus chemotherapy. So that will be a very important data set to define our path forward in non-small cell lung cancer. In addition to that, we have the programs ongoing in hepatocellular carcinoma as well. And there's a large investigator-initiated program that is going in parallel to see where the signals might be generated as we look forward. From the subcu Opdivo perspective, certainly excited about that in terms of looking at the readout. You know that the registration trial was ongoing in renal cell cancer. And as is the general practice, the application, if it is successful and if it is approved, then the application would be good for all other indications where nivolumab today uses a single agent. From a commercial perspective, maybe, Chris, do you want to comment on that?

Timothy Power:

Next question please, Kevin.

Terence Flynn:

Great. Thanks so much for taking the questions. My congrats to Chris as well and best to Giovanni in your retirement. Maybe a two-part one. Just wondering on Reblozyl in first line, I know we'll see the COMMANDS data at ASCO, but just - maybe you could speak to your confidence in a broad first-line label? And then given the recent CARTITUDE-4 data for a competitive product. Just wondering how you think about the competitive positioning here of Abecma once we see supply normalized in the CAR-T space for myeloma. Thank you.

Christopher Boerner:

Just from a commercial standpoint on COMMANDS and then we'll talk about the competitive dynamics you mentioned. I think it's important to recognize that, that COMMAND is a very important opportunity commercially, both in the U.S. and potentially outside of the U.S. It roughly doubles the size of the MDS opportunity. And as Samit just alluded to, it's important to keep in mind the significant unmet need in the space, chronic anemia and transfusion dependence for lower-risk MDS patients across the board is a significant challenge. There's a significant risk of death at roughly 50% greater compared to transfusion-independent patients. And while ESAs are the dominant first-line option for these patients, we need to remember that efficacy and duration of response is very limited. So we view this as a potentially very attractive commercial opportunity. As it relates to the competitive dynamics with Abecma, obviously, data in this space continues to evolve very quickly, both with respect to the CART 2 data and our own KarMMa-3 data. As we think about it, first and foremost, we need to see the data. We need to see the details of these data. But as we've consistently said, as the data progresses with CAR-Ts in hematology, we're seeing real patient benefit. And I think that's very exciting for patients. Across these products, we continue to see the importance of BCMA targeting. And most importantly, as we said from the very beginning, we see the room for multiple competitors to operate in this space, and that continues to be our view. It is, however, important to keep in mind that KarMMa-3 and [indiscernible] have two different patient populations. So it's difficult to compare these two studies. In KarMMa-3, we intended to design a study that reflects the patients that physicians see. We enrolled patients who are more difficult to treat. The vast majority of them are dara [ph] refractory. All of them are triple-class exposed. And so these are patients who you can think about being more third to fifth line patients. So I think it's going to be really critical that we see the full data set and then we take that data set into consideration with respect to how these products are performing in the real world. And what we consistently hear from customers is they want to see efficacy and safety that aligns in the real world to what they saw in the clinical studies, and they want to see manufacturing reliability, and we think those are all going to be important to keep an eye on as the full data sets get presented.

Operator:

Your next question comes from the line of Carter Gould of Barclays. Your line is open.

Samit Hirawat:

Sure. Thank you, Carter. Look, on the first question around the Hodgkin's lymphoma data, we are aware of the data, of course, as you know, that this was a cooperative group that conducted the study. So it is not sponsored by BMS. But as we look at the data and as they are supportive, we will certainly, as appropriate, engage the health authorities, but certainly very excited to see that the data has come out positive. That could be really beneficial for patients in the future. In terms of the next-generation TYK2 inhibitor, we are in the early stages. We've just initiated our program, a Phase I study and then looking into psoriasis right now. But as we evolve with the data, we have our deep expertise and deep knowledge of the TYK2 pathway as well as psoriasis. So we'll be able to contrast and compare and define the clinical development plan as we go to the future for additional indications. And look for differentiation as well. So more to come. But at this time, we are just beginning those steps.

Operator:

Your next question comes from the line of Robyn Karnauskas from Truist Securities. Your line is open.

Christopher Boerner:

So maybe I'll start, and then I'll turn it over to Samit. Look, we're very pleased with the continued uptake of Optolag. As I think was referenced earlier, the shares are now over 20%. Keep in mind, we're also seeing some use in the second line plus setting. There are a few underlying dynamics that we're particularly happy about. First, we're seeing roughly 65% of the utilization coming from PD-1 monotherapy. And remember, that is the lowest hanging fruit for continued growth of this product. And we see monotherapy is still in that 15% to 20% range in terms of use in the first-line setting. So there's still considerable opportunity to grow there. We are seeing some physicians sourced from Opdivo, Yervoy. Those are mainly physicians who have some concerns about Yervoy toxicity, but we would envision that, that will continue as well. So that's an additional opportunity to grow this business. The other thing I would note is that during the first quarter, we actually saw an NCCN update. I mean that update is really important because what it did was it removed BRAC Nec [ph] inhibitors as a preferred treatment in the first-line setting. And so now when you look at preferred treatment options in first-line melanoma, they are all dual IO, either Opdivo, Yervoy or Opdualag. And I think that's a really important recognition on the importance of dual I-O therapy targeted in that first-line setting. Opdualag is going to continue to play a really important opportunity there. And then beyond melanoma, clearly, Samit has already articulated some of the opportunities there. Samit?

Timothy Power:

Kevin, we're running short on time here. Maybe we have time for two more. Can we go to our next one.

Colin Bristow:

Hey, good morning. My congrats to Chris and Adam. And Giovanni, all the best in the future. I guess in terms of the clinical readouts we're going to get from you this year, the main ones that we're getting the questions that stick out are the Phase II in IPF, particularly [indiscernible] lung. I wondered if you could just walk us through your expectations for each of these and maybe even offer which one you're most enthused about? Thank you.

Samit Hirawat:

Thank you. So since I don't have an 8 ball, I'm enthused about everything. That's why we conduct the studies. Of course, LPA1 data presentation is coming up very soon. That data has given us the excitement and encouragement to be looking forward to initiation of the Phase III trials in IPF as well as in PPF. We've already talked about the Crohn's disease data that it did not have the proof of concept yet for TYK2 inhibition mechanism in IBD and looking forward to that readout, certainly later this year. We'll have - we are looking forward to the non-small cell lung cancer readout late this year, early next year for Opdualag and that will pave the way for the future. But we also have several other readouts. If you think about cell therapy, we might have the ability to look for the data in additional indications for Breyanzi as well, and that will be important. You will also see the data for CLL study being presented at ASCO, which is going to be important in addition to what we talked about for COMMAND as well. So those are all going to be critical, and we are looking forward to adding more and more in terms of our pipeline successes as we look to the future.

Operator:

Your last question comes from the line of Jon Huron from Credit Suisse. Your line is open. Jon Huron from Credit Suisse. Your line is open.

Operator:

Your next question comes from the line of Olivia Brayer from Cantor. Your line is open.

Samit Hirawat:

Sure. Thank you, Olivia. For the first question on subcu, no, so let's clarify that. There are two subcu programs that we had for Opdivo. One was the syringe in vial, which is the one that we talked about before in renal cell cancer of the study that we're looking forward to the readout. The other program that we were initiating was the autoinjector program. And that is the one that we have discontinued. We didn't see more additional benefit of continuing that program at this time. So we will certainly have a readout of the subcu program in the Phase III in renal cell carcinoma. And as I said earlier, if the data are supportive and appropriate, then, of course, discussions with regulators will ensue for applying that to all other indications that Opdivo is used today as a single agent.

Giovanni Caforio:

Thank you, Chris and Sami. Thanks, Olivia, and thanks, everyone. So to summarize, a strong start of the year with double-digit growth of our in-line and new product portfolio on track for the year to grow top and bottom line, as we discussed earlier. And we feel good about where we are after the first quarter. The team will be available after your very busy day to answer any other questions you may have. And I want to thank all of you for participating in the call. Thank you, and have a good day.

Timothy Power:

Thank you, and good morning, everyone. Thanks for joining us this morning for our fourth quarter 2022 earnings call. Joining me this morning with prepared remarks are Giovanni Caforio, our Board Chair and Chief Executive Officer; and David Elkins, our Chief Financial Officer. Also participating in today's call are Chris Boerner, our Chief Commercialization Officer; and Samit Hirawat, our Chief Medical Officer and Head of Global Drug Development. As you'll note, we've posted slides to bms.com that you can follow along with for Giovanni and David's remarks. Before we get going, I'll read our forward-looking statements. During this call, we will make certain statements about the company's future plans and prospects that constitute forward-looking statements. 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 SEC filings. These forward-looking statements represent our estimates as of today and should not be relied upon as representing our estimates as of any future date. We specifically disclaim any obligation to update forward-looking statements even if our estimates change. We'll also focus our comments on our non-GAAP financial measures, which are adjusted to exclude certain specified items. Reconciliations of certain non-GAAP financial measures to the most comparable GAAP measures are available at bms.com. With that, I'll hand it over to Giovanni.

David Elkins :

Thank you, Giovanni, and thank you all again for joining our call today. I know this is a busy morning for all of you. As Giovanni mentioned, 2022 was another solid year of execution for Bristol-Myers Squibb. Let's get started with our top line performance on Slide 11. Unless otherwise stated, all comparisons are made versus the same period in 2021 and sales performance growth rates will be discussed on an underlying basis, which excludes the impact of foreign exchange. We delivered on our full year commitments with sales of approximately $46 billion with growth of 3%. Demand for our diversified in-line and new product portfolio was strong, with revenue growth of 13% for the year, more than offsetting the loss of exclusivity for Revlimid in the first year of generic entry. Let me dive deeper now into fourth quarter and full year performance of our new product portfolio on Slide 12. Global revenues in the quarter were $645 million, up 87%, while full year revenues topped over $2 billion, nearly doubling over 2021. With nine new product approvals and multiple additional indications coming to fruition, we have an increasingly de-risked new product portfolio. This provides us confidence that we are on track to deliver the potential of our new product portfolio with $25 billion of non-risk-adjusted revenue expected at the end of the decade. Moving to Slide 13 to discuss our performance of our solid tumor portfolio. Global Opdivo sales reflect strong demand for our newly launched and core indication with double-digit growth in the fourth quarter and the full year. In the U.S., fourth quarter revenue saw full year sales grow strong, growing 13% and 15%, respectively. This growth was primarily driven by demand for our new metastatic and adjuvant indications, partially offset by declining second-line eligibility as well as some use of Opdualag in first-line melanoma. Internationally, revenues grew 20% in the fourth quarter and 14% for the full year. Fourth quarter revenue growth was largely driven equally by demand and timing of shipments. Demand was primarily driven to new indications, particularly first-line lung and upper GI cancers. As we look to this year, we expect growth of Opdivo to continue. This growth will come from an expanded indications in both early and late-stage cancers. Now turning to our first-in-class LAG-3 inhibitor, Opdualag, which had an impressive first year on the market. Approved in the U.S. in late March, Opdualag generated sales of $252 million in 2022. Sales in the fourth quarter had strong sequential growth of 24% versus quarter three, with first-line melanoma market share now in the high teens. We continue to see room for growth of Opdualag in first-line melanoma, where PD-1 monotherapy share still is approximately 20%. And further potential with pivotal studies in adjuvant melanoma and second-line plus colorectal cancer underway. On Slide 14, let's discuss our growing cardiovascular portfolio, starting with Eliquis, which had another great year. Global revenues in the fourth quarter and the full year grew 6% and 14%, respectively. In the U.S., fourth quarter sales increased 15%, driven primarily by demand and favorable gross to net adjustments. Internationally, Eliquis is the leading OAC in many countries. Given high market shares across these countries, demand growth has been offset by pricing measures as well as generic entry in Canada, the UK and the Netherlands. Now turning to our first-in-class myosin inhibitor, Camzyos. Sales in the fourth quarter were $16 million. We are pleased with the progress we have made since the launch in May of 2022. We laid a strong foundation of REMS certify over 2,600 healthcare professionals and enabled key centers to get operationally ready to make Camzyos available to patients. We also significantly increased the number of patients on commercial dispensed drug, which provides strong momentum heading into this year. We look forward to continuing this momentum as well as bringing Camzyos to European patients with approval expected by midyear. Moving to our hematology portfolio on Slide 15, starting with Revlimid. Global sales for the full year were approximately $10 billion, impacted by generic entry. As we noted last year, we expected variability quarter-to-quarter. And in 2022, we saw slower-than-anticipated utilization of generic lenalidomide in the U.S. With favorability in 2022 and anticipated increase in generic volume this year, we expect Revlimid revenues to be approximately $6.5 billion in 2023. We continue to expect an average $2.5 billion annual step down as a reasonable assumption for 2024 and 2025. Pomalyst global revenues continue to grow in the fourth quarter and for the full year, driven primarily by demand for triple-based regimens in earlier lines of therapy and extending duration of treatment for patients. As usual, in the first quarter, I would like to remind you of the typical seasonality Revlimid and Pomalyst experience due to patients entering the Medicare Coverage Gap early in the year. Now moving to Reblozyl, our first-in-class EMA. Demand for Reblozyl was strong with fourth quarter and full year sales growing over 30%. In the U.S., revenues grew over 20% in both the fourth quarter and full year. We have made great progress since launch by increasing patient adherence, extending treatment durations and accelerating switches when ESAs fail. Internationally, Reblozyl continues to launch in different markets across the globe with launches now in 16 markets outside the U.S. Growth continues to be driven by demand in both MDS and beta thalassemia-associated anemia and attaining reimbursement in additional countries. Turning to our differentiated cell therapy portfolio, Abecma and Breyanzi. Our first-in-class BCMA cell therapy, Abecma, continued its robust performance. Global revenues for the full year were $388 million versus $164 million in 2021. This represents strong growth year-over-year reflecting significant patient demand and the work the company has done to increase manufacturing capacity. We remain focused on continuing to ramp up capacity and believe this will enable us to get Abecma to more patients with highly refractory myeloma as well as preparing to move into earlier lines of therapy. Lastly, moving to our best-in-class CD19 cell therapy, Breyanzi. Global sales for the year were $182 million, more than doubling over 2021. Sales in the quarter reflect strong demand and hard work of our teams to expand supply. Looking to this year, we continue to expect growth driven by demand for Breyanzi in second-line plus large B-cell lymphoma, and we remain focused on continuing to build manufacturing capacity to further support the uptake and prepare for additional indications. Now let's move to our expanded immunology portfolio on Slide 16, starting with our first-in-class S1P agonist, Zeposia. Fourth quarter sales grew 69%, while full year global sales nearly doubled, driven by increased demand in multiple sclerosis and ulcerative colitis. Our strategy to expand volume and to improve commercial access is materializing. We've made progress with several plans with either 0 or 1 step edit, which will meaningfully expand access as we move in 2023. We expect continued growth of Zeposia to evolve primarily from MS today to UC over time. And remember, as with any new immunology medicine heading into the first quarter, the typical dynamics of co-pays resetting each year tend to impact the first quarter performance as additional co-pay supports affects gross to net adjustments. Internationally, we are continuing to focus on securing reimbursement in additional markets to get Zeposia to more patients living with MS and UC. Finally, turning to our first-in-class TYK2 inhibitor for moderate to severe plaque psoriasis, Sotyktu. We're extremely pleased with the U.S. launch so far. Still early days, but physician feedback has been outstanding. As of December, we had over 2,000 script equivalents on Bridge and commercial drug. Since then, we continue to make progress in new scripts and see that the use of Sotyktu is roughly evenly split across systematic naive patients, Otezla switch patients and biologic switch patients. We remain focused on driving demand for this new medicine as the oral choice and ensuring as many patients as possible get Sotyktu to enable broader formulary positions in 2024. Internationally, we are now approved in Japan and in Canada with expected European approval by midyear. Switching gears to our fourth quarter P&L on Slide 17. Having just covered sales performance, let me walk you through a few non-GAAP key line items. As expected, fourth quarter gross margin was impacted primarily by product mix and higher manufacturing costs. For the full year, gross margin was in line with our prior guidance at approximately 79%. Excluding acquired in-process R&D, fourth quarter and full year operating expenses decreased primarily due to reallocation of investments behind our growth opportunities and the impact from foreign exchange and dilution from the Turning Point acquisition. Acquired in-process R&D in the quarter was $52 million, which was partially offset by $16 million of licensing income that benefited OI&E in the quarter. Fourth quarter effective tax rate was approximately 11%, driven by earnings mix and onetime items with the full year tax rate of approximately 15%. Overall, fourth quarter earnings per share was $1.82. From a full year perspective, we ended the year at the upper end of our guidance range at $7.70, representing 8% over previous year. Moving to the balance sheet and capital allocation on Slide 18. Cash flow from operations in the fourth quarter was $3.3 billion. The company's balance sheet remains strong with approximately $9 billion of cash and marketable securities on hand as of December 31. Our capital allocation priorities are unchanged. Business development remains a top priority to further renew and diversify our portfolio and strengthen our growth outlook while also focused on balance sheet strength and returning capital to shareholders. We have executed several early stage business development deals as well as acquiring Turning Point Therapeutics last year. Our strong balance sheet allows us to be size-agnostic on deals. As it relates to balance sheet strength in 2022, we reduced debt by over $5 billion, and we are committed to maintaining a strong investment-grade credit rating. And finally, as it relates to returning capital to shareholders, we have a longstanding track record of paying dividend for 91 consecutive years and recently grew the dividend for the 14th consecutive year. We remain committed to growing the dividend, subject to Board approval and continue to be opportunistic on share repurchases, with approximately $7 billion remaining in our share repurchase authorization. Let me close with our 2023 non-GAAP guidance on Slide 19. Due to unpredictable macroeconomic factors and large swings in foreign exchange last year, we are providing guidance on a reported basis as well as an underlying basis, which assumes currency remains consistent with prior year. We expect 2023 revenues to grow approximately 2% on a reported and constant currency basis. This reflects our confidence that our in-line and new product portfolios will more than offset the LOE impact from Revlimid and Abraxane. We expect Revlimid sales to be approximately $6.5 billion, which assumes additional step-up to generic manufacturers later in Q1 as well as continued variability quarter-to-quarter. With the momentum of our new product portfolio, we expect it to roughly double versus last year and will be approximately $4 billion. As it relates to our line item guidance for the year, we expect our gross margin to be approximately 77%, which reflects a shift in product mix. We do not predict acquired in-process R&D. So excluding this, we expect our total operating expenses to decline in the low single-digit range. This reflects a reallocation of cost and efficiency initiatives in MS&A as we continue to invest in our new launches. R&D expenses are expected to be largely in line with last year due to our dynamic portfolio of studies reading out and new study starts. We project our tax rate to be approximately 17%, reflecting changes to Puerto Rico tax laws and product mix. Finally, we expect to grow our non-GAAP earnings per share with a range of $7.95 to $8.25. This represents growth of approximately 5%. Excluding prior year acquired in-process R&D, adjusted EPS would grow approximately 2%. So before we move over to Q&A, I want to thank our colleagues around the world for the strong performance in 2022. Our strong execution in 2022 and our commitments for 2023 reflects the resiliency of our business and the renewal of our product portfolio. The performance in the year positions us well for long-term growth. I'll now turn the call back over to Tim and Giovanni for questions and answers.

Operator:

Yes. The first question is from the line of Chris Schott with JPMorgan. I'm sorry. It's from the line of Geoff Meacham with Bank of America.

Christopher Boerner :

Sure. Thanks for the question, Geoff. This is Chris. I'll take it. So first, we're very happy with the performance Sotyktu. It's obviously early days, but as is reflected in the remarks that David just had the reception for the product has been very, very good. The feedback that we're getting on the profile coming from customers is good. We now have over 2,000 scripts. As of the end of November our market share for the oral market in moderate-to-severe psoriasis is roughly 35% for new products. And it's roughly 12% if you look at the overall market, and that's just after two full months of launch. So very happy with what we're seeing in terms of the momentum coming out of Q4. And as it relates to whether we can accelerate the access position, I think the way we would characterize it is the base case continues to be 2024 for moving into a better access position. That said, we're doing everything we can to possibly accelerate that. We're obviously having good discussions with payers. And the strategy that we have for potentially accelerating that remains unchanged, which is continue to drive demand as quickly as possible for this product. And the good news is we have the profile, and we're seeing the feedback from customers that we think will enable us to do that. As for the impact of biosimilars, obviously, this is a dynamic environment. You've seen a number of movements just in the last few weeks. What I would say is that our approach to gaining access really doesn't evolve based on what we know about biosimilars. We think 2023 is going to be a transition year for biosimilars. Clearly, the strategies of companies and PBMs will continue to evolve. So it's something we'll stay on top of. But as we said right now, certainly, the strategy that we have for Sotyktu doesn't change.

Chris Shibutani :

With Camzyos, that progress of rolling that out, you have previously talked about the different mix of centers of excellence, and you gave us a patient number. Can you give us a sense for what the relative distribution is of those larger centers versus perhaps maybe smaller practices? Are you seeing momentum with the setup of certifications and essentially the patient flow that you are hoping for at the pace so far?

Operator:

The next question is from the line of Chris Schott with JPMorgan.

Christopher Boerner :

Sure. This is Chris. I'll take both of those. Thanks for the questions, Chris. With respect to Sotyktu, we don't see that the Otezla broader market going into the mild category has an impact on us. And in fact, what we're seeing is very strong momentum with Sotyktu in moderate to severe patients. When we talk to customers, what we hear from them. There's excitement to use the product in the full spectrum of our label, which includes not only the severe patients, but importantly, those moderate patients. And then if you look at the uptake that we're seeing so far, it's reflective of the fact that physicians are going to be willing to use it, really both in moderate to severe. So given the fact that we have two Phase III studies that clearly show superiority across that patient population relative to Otezla, we don't see that being a particular barrier with respect to how we think about the uptake of the product. As for gross to nets for Eliquis, for 2022, as you know, we did see some favorability due to mainly the source of business and channel mix. But as you well know, this space is a very competitive space. It's heavily managed. So we don't see gross to net favorability as we look forward. There will continue to be variability across quarters. As we've talked about many times in the past, you do see late year seasonality with a product like Eliquis and gross to nets. But on a forward-looking basis, we don't see favorability with gross and that's with this product.

Seamus Fernandez :

So my question actually is on IRA and the drugs that are potentially going to be selected for negotiation towards the end of this year. Just wondering how Bristol is going to manage that situation in particular? I know that you do have patent expirations that will limit the impact there. But if that is starting in 2026, given Bristol's current product portfolio, Eliquis, one of the top players there, just interested to know what it is that you feel Bristol can do to temper the impact there? And then also a sort of separate but related question on IRA. We're seeing the sort of free drug launches that are running for at least a full year and maybe not purely free drug, but substantially aided. Trying to just get a better understanding, particularly for oral, it's starting to look like the life cycle there is starting to get truncated to six to seven years. Wondering if you feel comfortable or even confident that there'll be a better alignment of the oral incentives versus biologic incentives inside IRA as well?

Christopher Boerner :

Sure. Seamus, it's an interesting question on the role that free drug programs play in light of IRAs. As I think most of you know, free drug programs are typical, particularly in markets where rebates require that you have a transition period, particularly for new products to make their way into a more favorable access position. Now there's a dynamic there in that those free drug programs are typically targeted to commercial payers. I mean, commercial patients and IRA, of course, is focused on Medicare. That dynamic notwithstanding, I think that you're right, though, that to the extent that free drugs and free-drug programs play out for extended periods, it could have a negative impact when you look at the restrictions and price setting coming in, in nine years. I think what that reinforces for us though is the importance of very strong commercial execution because clearly, what you want to do is transition from free drugs into a more favorable access position as quickly as possible. And so as we just discussed, for a product like Sotyktu, that's going to continue to be our focus. But I think it's a very important question. It's something that we're going to have to continue to monitor as we learn more about the rollout of IRA.

Stephen Scala :

We noted that Bristol initiated a milvexian SSP Phase III trial with primary completion in November 2026 and that additional Phase IIIs will be started in the first half of this year. But Bayer studies are expected to read out a full year earlier. Is this consistent with your perception that Bristol is a year behind Bayer? I should add that you are not first with Eliquis and ended up dominating, but let me let you answer the question.

Operator:

The next question is from the line of Tim Anderson with Wolfe Research.

Christopher Boerner :

Thanks for the question. So with respect to market access, we think we have about 10% of patients who are in plans that have open or preferred access. And obviously, that's going to continue to increase as we continue to engage with payers. And as we said, our base case for a much more favorable access position at large across the major PBMs is for 2024, but we're doing everything we can to accelerate that. As for the Bridge programs, Bridge programs are typical in this market, and I think we would typically think about keeping those Bridge programs open until we find that we are in a position where we've got the volume to negotiate a much faster access or more favorable access with the big PBMs. The nice thing that we're seeing, Tim, with Sotyktu is that the vast majority of patients are going into our hub. What that enables us to do is monitor the status of those patients with respect to formulary positioning. And so even if that Bridge program is open, we have the ability to transition those patients to commercial drug, the moment we certify that their plans are able to take them on commercial drug. And so it's a more dynamic process than might be indicated just in the discussions that we've had. In fact, we have the ability to look at this on a more real-time basis. But we do anticipate that those Bridge programs will remain open certainly as we get into 2024.

Evan Seigerman :

On Abecma, you went from kind of struggling to meet patient demand in early 2022 to now expanding into earlier lines of therapy. Now how should we think about bridging this gap, really I'm talking about expanding capacity and when we could potentially see more slots come online for both your cell therapies?

Operator:

The next question is from the line of Terence Flynn with Morgan Stanley.

David Elkins :

Terence, thank you for the question. And you're right as it relates to gross margins, we do anticipate them coming down and last year was in line with expectations as what we're guiding this year that 77% due to that product mix as revenue declines. As far as OpEx is concerned, we continue to find efficiencies, operational efficiencies. We learned a lot through COVID with digital technologies, particularly on how we're engaging with healthcare professionals. But also on top of that, reallocating resources from the mature brands to our launch products and making sure they're fully funded. We've been able to do that very effectively. From an R&D perspective, you may recall, as we talked about the levels of R&D spend, it's really driven by our portfolio. That has the single biggest impact on the level of R&D spend, and we just launched nine new products. So we had many late-stage programs coming offline. We have some new ones coming online, but some of those are through partnerships. I think milvexian a great example of that, where we have several Phase III programs that are going to be beginning, but that's shared with our -- those calls are shared with our partners. So that's why we believe, as we look at our business this year, a low single-digit decline in our overall operating expenses is what we're anticipating. But we feel very confident even with the step down in gross margin. As we look at our base, continue to grow the top line faster than our expense base that gives us the flexibility to maintain those operating margins above 40%.

Mohit Bansal :

Maybe if I may ask a little bit more on the guidance side. So from our math, it looks like for in-line products, you are looking at another really good year. So after like 11% growth, we calculate, you're expecting about 8% growth again this year, which seems to be the delta between you and consensus. So could you please talk a little bit about puts and takes there? And where do you see the most robust growth in that in-line portfolio, considering Eliquis OUS challenges there as well?

Operator:

Your next question is from the line of Carter Gould with Barclays.

Christopher Boerner:

Yes. Maybe I'll start and then switch it over to Samit for your questions on COMMANDS. So with respect to Reblozyl, yes, we continue to see good acquisition of new patients on Reblozyl out of coming out of the fourth quarter. And certainly, we would expect to see that continue into this year. But as you note, where we see the potential for the most significant growth with this product is really first is increasing dosing and administration and ensuring that we've got the right titration of patients. We have seen some improvements in that regard over the last year. In fact, duration of therapy is up 6% in 2022 versus 2021, and we would expect to continue to see, particularly as patients titrate up over time, consistent with the MEDALIST study that, that duration of therapy would continue to increase this year. And then the second big area of focus that we have is getting those patients who are no longer responding to ESAs in the first-line setting to move on to Reblozyl. That's has been a big area of focus for us. And again, here, too, we've made good progress. The time on ESAs has decreased since our approval from roughly 18 months to now roughly 11 months. And so those are the two big dimensions that we have as a focus in 2023. And then obviously, the COMMANDS study provides the next large catalyst for growth. And we think that, that indication will roughly double the opportunity that we have with Reblozyl. But in terms of timing, I think Samit can speak to that.

Operator:

The next question is from the line of Matt Phipps with William Blair.

Samit Hirawat :

Yes, sure, Matt. I can take that question, Samit here. Thank you for that. Look, remember, we have always said that as we move our programs forward, we always look at the data and we want to see the differentiation of that data and then, of course, look at the landscape and the competitive dynamics as well in atopic dermatitis, there are several therapies that have recently become available for patients, and they're very effective. And so we had set our threshold quite high in terms of making that difference for the patients for atopic dermatitis. So we have seen the data. We do meet the primary endpoint, but we don't think that it has a competitive advantage over what is available to the patients at this time. And therefore, we are not moving it to the registration trials but it has nothing to do with what we saw for cendakimab in eosinophilic esophagitis, where we not only saw a change in the eosinophil infiltration, but also the dynamics in terms of the outcomes of patients for their dysphagia as well as the fibrosis in the Phase II study. And so that study continues and certainly, we'll share the results when the study is completed.

Robyn Karnauskas :

Great. Thank you for the question. So you have TYK2 in lupus, Sotyktu in lupus, there's going to be a Phase III reading out with Pfizer on JAK plus TYK2 later this year. Maybe frame it on if that trial fails, like what's your thoughts on the biology and how you'll think about potential success of your TYK2? And then a flip question, if it succeeds, how do we think about from a biology standpoint, if you know anything about how much value adding JAK on top of a TYK2 might be for lupus? I know it could influence the safety profile, but anything you could give us on efficacy would be great.

Operator:

The next question is from the line of Olivia Brayer with Cantor Fitzgerald.

David Elkins :

Great. Hi, Olivia, it's David Elkins here. I'll take the Revlimid one. Nothing has really changed in our outlook for Revlimid through 2025. We provide our update for this year, that $6.5 billion, which is a $3.5 billion step-down given better performance this -- last year in 2022. As we think about '24 and '25, on average, about a $2.5 billion step-down is how we're thinking about it. Chris or Samit?

Operator:

Our next question is from the line of Andrew Baum with Citi.

Samit Hirawat :

Thank you, Andrew. So LPA1 certainly, we're looking forward to presentation of the data within this year, within the first half of this year. And certainly, as soon as we have confirmation on the conference, we will be able to share that information. We did see the news from the competitive program, as you're referring to Roche that the Phase III trial was stopped. We do see that our data, the Phase II data that we've seen thus far are very strong. We've talked about the patient population with no background standard of care as well as in combination with the background standard of care therapies, and we are pleased with what we've seen. We are in discussions on the appropriateness of the clinical trial design with the regulatory authorities, and you will get to see that as we launch that and as we make that public. So more to follow on that in appropriate time to come. But really pleased with that. And the last question that you had on the additional fibrosis programs, we're looking at LPA1 from two perspectives right now. One is the IPF program and the other one is the progressive or pulmonary fibrosis. But that Phase II data is going to be reading out later this year. So we're looking at those two things for now.

Operator:

Today's final question will come from the line of Colin Bristow with UBS.

Samit Hirawat :

Sure. Thank you. In terms of your first question around the Phase I that is ongoing with the next TYK2 inhibitor. In general, we always have one or two programs that we look at in terms of having the next generation of molecules in development. And so this is just phases of development of general pipeline that we have additional TYK2 inhibitor. We also have a CNS penetrant TYK2 inhibitor that is in Phase I. So there is nothing special at this time to talk about. But certainly, as the data arises, as the data evolves, we will be able to share those data in the future. For the TIGIT program, remember, this is a trial that was being conducted in patients with non-small cell lung cancer looking at a combination with nivolumab and ipilimumab. And what we have seen thus far, I'm not going into the specifics because those data will be presented at some future conference, but we do see that there is a toxicity that is observed when combined with dual I-O therapy for this particular TGT inhibitor. And so more data to come as we get more insights and more specifics on that and then the presentation will be done. But because of those safety reasons, we have decided to terminate this particular trial at this time.

Operator:

This does conclude the Bristol-Myers Squibb's Fourth Quarter 2022 Earnings Conference Call. Thank you for your participation. You may now disconnect.

Timothy Power:

Thanks, Dennis, and good morning, everyone. Thanks for joining us this morning for our third quarter 2022 earnings call. Joining me this morning with prepared remarks are Giovanni Caforio, our Board Chair and Chief Executive Officer; and David Elkins, our Chief Financial Officer. Also participating in today's call are Chris Boerner, our Chief Commercialization Officer; and Samit Hirawat, our Chief Medical Officer and Head of Global Drug Development. As you'll note, we've posted slides to bms.com that you can follow along with for Giovanni and David's remarks. But before we get going, I'll read our forward-looking statements. During this call, we make statements about the company's future plans and prospects that constitute forward-looking statements. 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 SEC filings. These forward-looking statements represent our estimates as of today, and should not be relied upon as representing our estimates as of any future date. We specifically disclaim any obligation to update forward-looking statements even if our estimates change. We'll also focus our comments on our non-GAAP financial measures, which are adjusted to exclude certain specified items. Reconciliations of certain non-GAAP financial measures to the most comparable GAAP measures are available on bms.com. With that, I'll hand it over to Giovanni.

David Elkins:

Thank you, Giovanni, and thanks again for joining our third quarter earnings call. Let's turn to Slide 10 to discuss our top line performance. Unless otherwise stated, I will discuss sales performance growth rates on an underlying basis, which excludes the impacts of foreign exchange. Revenues in the third quarter were approximately $11.2 billion, consistent with prior year. Our diversified in-line and new product portfolio grew strongly, up 13%, offsetting the impact of our recent LOEs. Now let me touch on our performance of our new product portfolio on Slide 11. Global revenues were over $550 million, up 66% versus prior year, driven by continued demand. Growth over prior quarter was also strong, up 16%. We continue to be very pleased with the performance of our new product portfolio and its future potential. With 3 new launch brands this year and over $2 billion of annualized revenue so far, our portfolio has been largely derisked, increasing our confidence in the potential to generate greater than $25 billion of nonrisk-adjusted revenues in 2029. Turning to Slide 12 to discuss our performance of our solid tumor portfolio, Opdivo sales continue to grow globally, up 13%, driven by demand for our newly launched in core indications. In the U.S., sales were strong. We continue to grow double digits, up 17% versus prior year, driven by demand of our newer metastatic and adjuvant indications, partially offset by declining second-line eligibility as well as some use from Opdualag in first-line melanoma. Internationally, revenues grew 8%, primarily due to growth from new indications, particularly first-line lung and GI cancers. Looking forward, we continue to expect growth of Opdivo from our new and expanding indications in both early and late-stage cancers. Now let's move to Opdualag. We cannot be more pleased with the launch of Opdualag. The launch is off to a great start, being the first LAG-3 inhibitor to launch in fixed-dose combination with our PD-1 inhibitor, Opdivo. Sales in the quarter were $84 million, growing 45% sequentially, and sales of Opdualag are already annualizing to approximately $350 million. At this point in the launch, our share in first-line melanoma is in the mid- to high teens. And as expected, we are seeing use of Opdualag coming from PD-1 monotherapy and Opdivo + Yervoy combinations. Moving on to our expanded cardiovascular portfolio on Slide 13. Our leading OAC, Eliquis, had another strong quarter, up 16% year-over-year. In the U.S., sales increased 31% versus prior year, driven primarily by demand and favorable gross-to-net adjustments. As expected, sequential performance was driven by the typical dynamics we experienced each year from higher gross-to-net payments, as patients enter the donut hole. Internationally, Eliquis has become a leading OAC across numerous countries. Given the success of the product, pricing pressures, as expected, impede growth. Pricing measures in addition to at-risk generic entry in the U.K., Netherlands, affected growth in the quarter. Now turning to Camzyos, a first-in-class medicine to treat underlying disease of obstructive hypertrophic cardiomyopathy. We are continue to be pleased with the progress we are making to bring this life-changing medicine to patients. To date, we have over 2,000 REMS-certified health care professionals, which is a good indicator for intent to treat. And we've received extremely positive feedback from physicians and patients. We are also making progress at large HCM centers to ensure they are operationalized to make Camzyos available to patients. As of the end of Q3, there are over 1,100 patients enrolled in our hub and growing each week. As expected, new patients are generally initiating treatment as part of their regularly scheduled echocardiograms. Based on the time to transition patients to commercially dispense medicine, we expect acceleration of revenue beginning in Q4 and as we move into 2023. Chris can provide more details on the launch during Q&A, but we are pleased with the progress we have made. Turning to Slide 14 to discuss hematology's performance, starting with Revlimid. Sales in the quarter were approximately $2.4 billion. Sales were primarily impacted by generic entry, particularly in international markets. In the U.S., we saw slower than anticipated entry by second wave generics in September. We expect to see generic erosion progressively increasing in the coming weeks. And at this point, we expect Revlimid sales to be at the upper end of our $9 billion to $9.5 billion range for the year. Pomalyst global revenues grew 8% versus prior year, primarily driven by demand for triple-based regimens in earlier lines, extending the duration of treatment for patients. Moving to Reblozyl, which had another strong quarter. Sales were $190 million in the quarter, up 22% versus prior year. In the U.S., revenue growth was impacted by a onetime change in distribution model in the prior year. Excluding the impact from last year, sales would have been approximately 25% versus prior year. This is being driven by continued progress in increasing patient adherence, and extending treatment duration. Outside of the U.S., Reblozyl continues to grow driven by demand in both MDS and beta thalassemia associated anemia. To date, we are now reimbursed in 9 countries, and we'll continue to secure reimbursement in additional countries in the future. Now turning to our cell therapy assets, Abecma and Breyanzi. Abecma generated strong revenues in the quarter of $107 million. This represents growth of 59% versus prior year or 22% sequentially. In the U.S., sales growth was driven by strong demand, offset primarily by timing of patient infusions, which we expect to materialize in Q4. Outside of the U.S., sales increased due to a onetime step-up of slots in select markets, which is expected to be sustained at this level for the foreseeable future. We are very pleased with the manufacturing progress we've made to ensure Abecma gets to more patients, while we continue to work on further expanding our capacity. As we prepare to move Abecma into earlier lines based upon the positive readout of KarMMa-3. Finally, on Breyanzi, sales in the quarter were $44 million, up 50% versus prior year. Demand remains strong, and we continue to work hard expanding capacity in the next year to benefit more patients with large B-cell lymphoma. As we communicated in the past, we expect Q4 sales to be largely similar to Q3 sales. Now turning to our expanded immunology portfolio on Slide 15. Starting with Zeposia. Global sales in the quarter was $69 million, up 83% versus prior year, largely due to the expansion of Zeposia in ulcerative colitis. Sequentially, in the U.S., the sales were impacted by last quarter's favorable gross-to-net and wholesaler buying patterns of approximately $20 million. We continue to see demand growth of 12% over last quarter. Our strategy remains focused on further expanding volume so we can continue to improve access in 2023, and we made progress on improving the quality of access as well. Internationally, we are continuing to make strides in securing reimbursement in additional markets to get Zeposia to more patients living with MS and ulcerative colitis. Now turning to our most recent launch, Sotyktu, our first-in-class selective TYK2 inhibitor for patients with moderate-to-severe plaque psoriasis. We're extremely pleased with the U.S. label based upon the strong data. While early in the launch, we are very encouraged by the feedback we are getting from physicians. Our focus is to ensure many patients as possible get Sotyktu, establishing this medicine as the oral of choice allowing us to secure broader formulary position in 2024. Internationally, we are also pleased to have received Japanese approval in September, and we look forward to European approval next year. Let's now discuss our third quarter P&L on Slide 16. The I've already discussed revenues, so I'll now focus on other key non-GAAP items in the quarter. Gross margins decreased primarily due to product mix, partially offset by foreign exchange and related hedging settlements. Excluding acquired in-process R&D, operating expenses were broadly in line with prior year, and affected by the timing of spend. Acquired in-process R&D charges in the quarter were $30 million related to an upfront payment to GentiBio. This was offset by $73 million of licensing income benefiting OI&E in the quarter. The third quarter effective tax rate was 16.9%, driven by earnings mix. And overall, we delivered another quarter of earnings growth with non-GAAP earnings per share growing 3% versus prior year. Moving to the balance sheet and capital allocation on Slide 17. Cash flow from operations in the quarter were $3.7 billion. The company's balance sheet remains strong with approximately $9 billion in cash and marketable securities on hand as of September 30, which also accounts for the $3.3 billion we paid for Turning Point Therapeutics. Our capital allocation priorities remain unchanged. Business development continues to be a top priority, and we continue to execute on this strategy with the closing of Turning Point Therapeutics acquisition as a recent example. We remain committed to continued debt reduction. In the quarter, we repaid $2.8 billion of debt, and we remain committed to returning capital to shareholders. We executed a $5 billion ASR earlier this year, and have $9.5 billion remaining in our share via authorization, and we will continue to be opportunistic on share repurchases. Now turning to our 2022 non-GAAP guidance on Slide 18. We are maintaining our full year outlook. We continue to expect revenues to be approximately $46 billion with our in-line and new product portfolio growing in the low double-digit range. Our recent LOE guidance and Revlimid guidance remain unchanged. However, as mentioned earlier, we expect Revlimid sales to be in the upper end of the $9 billion to $9.5 billion range. We continue to expect gross margin to be approximately 79%, and our operating expenses, excluding acquired in-process R&D remain unchanged, primarily driven by favorability in FX as well as cost discipline, partially offset by the inclusion of expenses from the Turning Point acquisition. Putting everything I just mentioned together, we are reaffirming our full year non-GAAP EPS guidance, reflecting the strength of our underlying business and absorbing the approximate $0.06 impact from Turning Point acquisition. Before we move over to Q&A session, I want to express my gratitude to our employees for the performance in the quarter and their continued commitment to our patients. I'll now turn the call back over to Giovanni and Tim for a Q&A session.

Operator:

[Operator Instructions]. The first question comes from the line of Chris Schott with JPMorgan.

Giovanni Caforio:

Thank you, Chris. Chris Boerner will start and then David will give you some comments on Eliquis.

David Elkins:

Yes. On the Eliquis rebates, remember, this is a very large product over $10 billion in revenue. And based upon the product mix, we forecast what the anticipated discounts will be based upon the product mix across all the payers. And each quarter, we adjust that, some quarters are up and some quarters are down. But the last 2 quarters we had some releases, and that's what really explains it. But nothing changes for the full year, really.

Seamus Fernandez:

So a couple of quick questions. So the first one is just on the competitive landscape that's evolving in ulcerative colitis. Can you guys just give us a sense of how the launch of Zeposia is tracking in MS versus UC? And what percentage of patients are you seeing specifically at this point as we look at the sort of separation of scripts? And how you're thinking about the competitive landscape evolving with the increasing interest from physicians and IL-23, perhaps even the combination of IL-23s with biosimilars Humira as a potential new breakthrough in the category? Just wondering, what you guys were thinking coming out of the most recent meeting as well. And then just the last second question is on the Camzyos launch. Just trying to get a sense of when you guys anticipate seeing a meaningful inflection in prescriptions or revenue. Is this something where we should anticipate seeing a meaningful uptick in the fourth quarter? Or is it potentially with the new indication in the middle of next year?

Christopher Boerner:

Sure. Thanks for the question, Seamus. With respect to Zeposia, I would say Zeposia continues to perform well. We saw a nice double-digit demand growth in the quarter. The majority of that growth is continuing to come from ulcerative colitis. So I would say that the majority of patients, if you look at where the growth of this asset is going to occur through the end of this year, and certainly as we get into next year, the majority of that's going to be coming from UC. The market share that we have for Zeposia in MS continues to remain stable. Above 50% of the share in S1Ps is coming to Zeposia. We feel very good about the position that we're in there. Obviously, as we've talked about previously, the oral market in MS is under some pressure from IV. But in spite of that, we're maintaining a consistent share in the MS population. The big focus that we have continues to be on UC. We believe that's where we have the strongest position as well as the biggest opportunities for growth. And I would say that there, I think that from a competitive standpoint, so far, the position for Zeposia continues to be strong. Obviously, it is a very competitive marketplace. But for example, with the introduction of RINVOQ, the growth of RINVOQ has not largely come at the expense of Zeposia. In fact, we've maintained our position in that market in spite of the introduction of that new asset. Clearly, there are a number of dynamics that are going to continue to play out, but we feel pretty good about our competitive position as the first S1P in this market for UC. The only other thing that I would note is that obviously, as we've said, the big focus we have with Zeposia is to build volume and then convert that volume into a stronger access position. We did get a very important early win on the access side in October with CBS, Inc. now covering Zeposia with 0 step edits. That's important because if you add that with the other plans that -- smaller plans that have covered Zeposia, we now have about 30 million covered lives and we're well on track to be in a good position with the other PBMs as we go into 2023. And maybe I'll let Samit address the other part of that question, and then I'll pick up on Camzyos.

Christopher Boerner:

And then picking back up on your question on Camzyos, I would just say at the outset, we are very pleased with the launch of Camzyos. We're seeing a really nice acceleration for this product in the second half. A few elements or color around that. First, we've talked about the importance of certified physicians. We now have over 2,000 REMS-certified physicians as of the end of the second quarter. We're seeing a nice healthy increase in that week-over-week. David referenced that as of the end of the third quarter, we had 1,100 patients who had been prescribed Camzyos. That's also seeing nice week-over-week increases. I think we had referenced on the previous quarterly call that a big focus area has been helping some of the larger institutions build the infrastructure to support the use of this product. We've seen very significant improvement on that in recent weeks. And the pace of new starts that we're seeing is consistent with those accounts, in particular getting organized. Nearly all of the patients that we are seeing are going through our Camzyos patient hub, and that's really important because that will facilitate getting patients onto therapy and staying on therapy. And I think it's notable that of the patients who have had multiple dispenses thus far, none of them have dropped out therapy, which is a nice indicator of how well that hub is working. I think the question with respect to how fast we're going to see an acceleration of revenue kind of speaks to this question of access. Access, as anticipated, has not been a barrier with this launch. We now have about 50% of plans covering Camzyos. All of the patients who are covering Camzyos are being to the label, which is a good indicator of a strong position. And you will have seen on the slides that as of the end of the third quarter, about 1/3 of those 1,100 patients had converted to commercial drug. In October alone, we've seen an almost doubling of the number of commercial dispense that we saw in Q3. So we feel very good about the pace of this launch and what we're seeing in the second half, and happy obviously to provide additional color as this launch continues and we get into the fourth quarter call.

Andrew Baum:

You addressed Reblozyl in your prepared comments. I'm just curious, same topic on Onureg. Given the attractiveness of the drug as an oral alternative, I'm surprised it's not doing better, perhaps you could outline what are the barriers here and some of the key catalysts ahead? And then second, in relation to milvexian, the 200-milligram dose, the efficacy was inferior to placebo. There was some discussion about whether COVID could have impacted the rate of thromboembolic events during the initiation of that particular dosage. I wonder whether you had trial to characterize that particular dosing arm of the trial?

Christopher Boerner:

Sure. The question on Onureg around some of the barriers that we're seeing. I would say that the biggest challenge with Onureg continues to be the proportion of patients who are getting intensive chemotherapy. As you know, those dynamics in the first-line setting here are continuing to evolve. We've seen a decrease in the U.S. mainly of the percentage of patients who go on to get intensive chemotherapy. And remember, the label is for patients who receive intensive chemotherapy and get a complete response. Having said that, focus with Onureg continues to be on ensuring that we maximize the opportunity for maintenance. The maintenance share right now is about 50% to 60%. We think there's opportunity to continue over time to expand that maintenance market. And for those patients who get intensive chemotherapy, get a complete response, go on to maintenance, the choice needs to be Onureg. So that's been the significant focus we have for the U.S. team. And then we continue to see very early stages of launch outside of the U.S. in markets like Germany and France, and the early uptake there has been good.

Operator:

The next question is from the line of Chris Shibutani with Goldman Sachs.

Giovanni Caforio:

Thank you, Chris. Samit?

Christopher Boerner:

Sure. Maybe I'll just add that while bispecifics and CAR T both share, in this case, the target of BCMA, I think it's important to keep in mind they offer very different characteristics for patients, including the availability of the products, the duration of treatment, adverse event profile. And I think ultimately, as we've said repeatedly, the utility of BCMA CAR T and bispecifics is going to be unique to each patient and the setting that we're in. And we anticipate that these various patient factors are going to become increasingly important in determining how patients are treated. And then maybe before I turn it over to Samit about the expansion of Opdualag, let me just say, at the outset, we continue to be very impressed with the strong performance of Opdualag out of the gate. Our focus has been and will continue to be to target that PD-1 monotherapy population. I think as David alluded to; we're seeing use of conversion of both Opdivo + Yervoy patients as well as PD-1 monotherapy to drive that use as of today. But as we think about the growth of this asset going forward, remember, where we sit today, PD-1 monotherapy is still about 20% of first-line metastatic melanoma. And that's the target for our commercial launch, and so we see continued opportunity to grow this asset through the end of this year and well into next year.

Operator:

The next question is from the line of Tim Anderson with Wolfe Research.

Giovanni Caforio:

Thank you, Tim. Let me ask Samit to answer your question both on milvexian and the pipeline. I just want to say, with respect to the pipeline, Tim, as I mentioned in my remarks, I think what's really exciting is that actually the mid-stage pipeline is beginning to accelerate and the number of catalysts there are really important. And that's why we highlighted that in my remarks, and we look forward to continuing to update you there.

Operator:

The next question is from the line of Stephen M Scala with Cowen.

Giovanni Caforio:

Thank you, Steve. I wanted to ask David to start on Revlimid and outlook, and then Samit will answer your question.

Samit Hirawat:

Thanks, David. And just, Steve, on the branebrutinib side, it is certainly not the toxicity. We've set ourselves high bars for taking molecules into late-stage development, and we did not meet the high bar for those indications. The indication for RA is continuing, and we'll see what the data reads out. And based on that data, then we'll make a decision whether that should continue or not.

Luisa Hector:

Maybe just to try again on the outlook for 2023. Is there anything more to say on Revlimid? You've had the guidance of $2 billion to $2.5 billion of erosion each year. Is that what you're expecting for next year? And then I wanted to try and clarify on some of the license income partly connected to your statements on IPR&D, but also when we look at that line within other operating income, royalties, license income does seem to be a step-up in Q3. So I'm just wondering, is that driven perhaps by the diabetes with Astra that's going particularly well on to future? Is there a one-off item within the line in Q3 or something a bit more sustainable that we should think about going forward?

David Elkins:

Yes. On OI&E, it's a good question. A couple of good things that are going on there. One is that our royalties on PD-1 and diabetes continue to -- as those businesses grow, the royalties that we receive on those businesses continue to grow. A couple of other things, if you just think about interest rates with our cash balance, interest income is increasing. But as you know, we've been stepping down and paying down our debt, so our interest expense has been declining. And some of our licensing income that we've seen come through has also improved. So you put all 4 of those factors together, and that's how we see the OI&E progressing better over time. Just to recall, there longer term as it relates to that royalty income, those royalty rates will step down on our diabetes franchise in '23 and going and '24 for PD-1. So we'll update you on that guidance when we do guidance on the fourth quarter call.

Terence Flynn:

Maybe two for me. I was just wondering, first on Camzyos, just a clarification maybe for Chris. You mentioned that commercial access is improving this quarter relative to last quarter. I think you said something about doubling. So does that mean we should think about sales for 4Q in the $10 million range? And then your T cell engager, the data we're going to see at ASH, maybe you could just remind us. I know you changed the formulation to a subcu there if you're confident you now have a go-forward dose and you're seeing less CRS than maybe you saw with the IV formulation, and if you expect to be competitive with teclistamab, which was just approved from J&J?

Christopher Boerner:

Sounds good. So Terence, thanks for the question. Let me clarify a few things. First, while we're not going to give specific product level guidance for the fourth quarter. What I would say is that we are very happy with the conversion and increasing conversion of patients on Camzyos to commercial drug. Remember, as you think about this launch, you need to think about it in the context of how many physicians are REMS-certified. Our ability to then translate those physicians into getting patients into clinics and getting on therapy, we're seeing a nice increase week-over-week in terms of patients coming in at the top of the funnel, if you will. Because they're going into our hub, they're staying on therapy. And the fact that now we're converting those patients to commercial drug at a faster clip, I think it's a very good sign that this launch continues to accelerate in the fourth quarter. The only other thing to keep in mind is that because most patients will take some time to initiate therapy as well as work through the benefits verification and any appeals process, those patients are going to be on free drug for roughly 7 to 8 weeks. That time will decrease over time as we get PBM coverage decisions formally through the end of this year and into early next year. But that's how you should think about the flow of patients and the sequence of patients. The really good news, though, is that we continue to see physician interest in this product. The feedback has been good. We're seeing week-over-week increases in patients at the top, and we're seeing a nice increase in conversion of patients going on to commercial drug. And we anticipate that continuing.

Operator:

The next question is from the line of Carter Gould with Barclays.

Samit Hirawat:

Sure. Let me start with Camzyos first in the nonoperative hypertrophic cardiomyopathy. We are looking forward to initiation in terms of enrollment of patients in that Phase III study. The data that we had seen already in the Phase II are quite promising, looking at the impact on biomarkers and even in the longer-term follow-up of that trial. I can't give you the specifics on the titration at this time and certainly for future discussions. Once we have initiated the trial, we'll be able to talk more about it. For MYK-224, as you know, that we always want to have multiple shots. And this is a new molecule that we are developing. Certainly, the first trial that you'd probably see is going to be looking also at obstructive hypertrophic cardiomyopathy. And the reason for that is because we've got Camzyos data. We have in-house data the way we would want to compare the trial -- compare the drug and see what differentiation features that drug carries. And then as we look to the future from a development perspective, we'll define which indications we want to pursue with MYK-224, which indication we want to replicate with Camzyos. We have not defined and decided yet on how we will develop 224. And certainly, when we have that, we'll get into that dialogue as well.

Matthew Phipps:

Just a quick one for me. Samit, there's been a couple of failures this year in EoE, where maybe the Phase II is a histological endpoint, but not the dyspepsia endpoint. Just maybe you can give us any comments on why you think IL-13 would be better suited to IL-13 both of those endpoints in your EoE Phase III?

Operator:

Next question is from the line of Colin Bristow with UBS.

Giovanni Caforio:

Thanks, Colin. Chris, why don't you start on Sotyktu, and then Samit will take the IMiD.

Samit Hirawat:

Yes. And just talking about ASH. In general, one of the things that you will be seeing over there is the presentation of the data for the expansion arm of mezigdomide in combination with dexamethasone in fifth line plus patient population. But in general, from multiple myeloma, we will also be presenting the data for our next CAR T, which is GPRC5D-targeted as well as for KarMMa-2, one of the arms which is looking at proof of concept in the post-transplant treatment setting. That data will also be presented at ASH in addition to alnuctamab, which is the T cell engager.

Evan Seigerman:

One on Abecma. Can you provide just some color as to when we may see the KarMMa-2 data? I know that the 270 press release late -- a medical meeting, and I see that there's now a green checkmark on your near-term catalysts? And then also more broadly speaking, when you think about the evolution in the BCMA CAR T space, what do you -- how do you position Abecma versus, say, the competitors, especially with say, the Carvykti data on the horizon as well?

Samit Hirawat:

Sure. I will start with that, Evan. And from a KarMMa-2 data presentation perspective, certainly, as I said earlier, those data will be there as a proof of concept with a longer follow-up at ASH meeting. And certainly, we've talked about what the initiation of the next trial based on those data would be with -- and that's what I think 270 Bio I talked about, how we intend to initiate a trial in the earlier setting. It is a differentiated way of looking at it. And more details will be available when we actually do launch the trial in terms of trial design and how we have thought about it. In terms of the comparison of Abecma versus the data from Carvykti. Once again, as Chris has spoken about earlier, we do believe that Abecma remains a very differentiated asset from a safety profile perspective as well as the first CAR-T that has data as a randomized Phase III trial showing superiority to current standard of care. So that profile will continue to grow, and that profile will continue to improve hopefully. And that's why we are thinking of initiation of that early line trial in the post-transplant setting.

Dane Leone:

Congratulations on the results and progress this quarter. Two easy ones for me. Firstly, the launch of Opdualag has been going quite well. And looking into 2023, I think there's still some questions about the cannibalization potentially within the melanoma setting relative to Opdivo as the Street still expecting quite robust growth of Opdivo into next year. Could you just comment around what you're seeing as the launch starts to mature a little bit with Opdualag and whether your expectations are that's going to have limited impact in the utilization of Opdivo in the melanoma setting? And then secondly, an easy one, are you expecting EMBARK results for Camzyos next year? Or is that being pushed to 2024?

Christopher Boerner:

Maybe I'll start with Opdualag and turn it over to Samit. So what we're seeing right now, just to set sort of where we are with the Opdualag launches. We are sourcing roughly 50% to 60% of this business from PD-1 monotherapy and about 40% to 50% from Opdivo and Yervoy combination. That's slightly higher Opdivo + Yervoy cannibalization in the third quarter we had anticipated prelaunch. But we expect that to stabilize, and we would continue to expect that going forward, the majority of Opdualag business is going to come from PD-1 monotherapy. Remember, in the market right now, as I said earlier, we've got about 20% market share for PD-1 monotherapy. That's roughly evenly split between Opdivo and KEYTRUDA. So the way I would think about the progression of Opdualag is, first and foremost, you will see some cannibalization of Opdivo and some of Yervoy as well. However, the vast majority of the use of this asset in the long run should continue to come from PD-1 monotherapy. Some of that will be Opdivo, some of that will be from a competitor. And as I think about the growth trajectory, that 20% share is the target for us of PD-1 monotherapy. That's where we think we should be getting the business. And the fact that we still have 20% of this market to go gives us confidence we can continue to grow this overall business going into 2023.

Operator:

Your next question is from the line of Mohit Bansal with Wells Fargo.

Christopher Boerner:

Sure. Maybe I'll start on the Camzyos question. So let me just clarify the 1/3. Of the 1,100 patients, roughly 1,100 patients that we had as of the end, a 1/3 of those patients had dropped down to commercial drug, beyond commercial drug. And what I was referencing was in the first 3 weeks of October, we've seen an almost doubling of the number of commercial dispenses that took place through all of the third quarter. So that illustrates an important consideration for the trajectory of commercial sales here for this product, which is that we're starting to see an acceleration both in terms of the number of patients coming on to therapy and the pace at which those patients are converting down to commercial drug.

Operator:

The next question is from the line of Robyn Karnauskas with Truist Securities.

Giovanni Caforio:

Thank you. Chris, and then Samit.

Samit Hirawat:

Yes. And just very briefly on Sotyktu. Look, I think the overall potential for topical therapy is being evaluated and we'll have to inform you in due course because landscape is continuing to evolve with multiple therapies coming for the milder population or mild population. We already have the approval for moderate-to-severe plaque psoriasis, and the mild population indication, we'll need to continue to explore.

Operator:

Thank you. That does conclude today's teleconference. We do appreciate your participation. At this time, you may now disconnect.

Tim Power:

Thanks Sara and good morning everyone. Thanks for joining us this morning for our second quarter 2021 earnings call. I'm joined this morning with prepared remarks by Giovanni Caforio, our Board Chair and Chief Executive Officer; and by David Elkins, our Chief Financial Officer. And also part in today's call are Chris Boerner, our Chief Commercialization Officer; and Samit Hirawat, our Chief Medical Officer and Head of Global Drug Development. You'll note that we posted slides to bms.com that you can use to follow along with for Giovanni and David's remarks. Before we get started, I'll read our forward-looking statement. During this call, we'll make statements about the company's future plans and prospects that constitute forward-looking statements. 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 SEC filings. These forward-looking statements represent our estimates as of today and should not be relied upon as representing our estimates as of any future date. We specifically disclaim any obligation to update forward-looking statements, even if our estimates change. We'll also focus our comments on our non-GAAP financial measures, which are adjusted to exclude certain specified items. Reconciliations of certain non-GAAP financial measures to the most comparable GAAP measures are available on bms.com. And I'll hand it over now to Giovanni.

David Elkins:

Thank you, Giovanni, and thanks, again, for all of you joining our second quarter earnings call. Let's turn to Slide 8 to discuss our solid top line performance. Unless otherwise stated, I will discuss our sales performance growth rates on an underlying basis, which excludes the impact of foreign exchange. Second quarter revenues were approximately $11.9 billion, growing 5% year-over-year. This performance was driven by robust growth of our in-line and new product portfolio of 16%, more than offsetting our recent LOEs. Let's now double-click on our new product portfolio performance on Slide 9. Global revenues were nearly $500 million, more than doubling revenue versus prior year. Growth over prior quarter was also very strong, up 38%, primarily due to strong launches of Abecma and Opdualag, which I will touch on in a moment. I'm very pleased with the performance of our new product portfolio and its future potential with two additional launches year-to-date and Deucravacitinib anticipated approval in six weeks. Our new product portfolio has significant expansion opportunities and the potential to generate greater than $25 billion in revenue on a non-risk-adjusted basis in 2029. I look forward to updating you on these products as they continue to realize their full potential. The performance of our solid tumor portfolio, shown on Slide 10 was strong. Opdivo sales in the quarter continued to grow globally, driven by demand for our newly launched and core indications. In the US, we delivered 12% growth for Opdivo versus prior year, driven by demand in first-line lung, renal and gastric cancer, as well as adjuvant esophageal and bladder cancers, partially offset by some – by Opdualag in first-line melanoma. Internationally, revenues were also strong, growing 13% primarily due to growth from new indications, particularly first-line lung and renal cancers. As we continue to secure reimbursement in many countries. Looking forward, we expect continued growth from Opdivo from our new and expanding indications in both early and late-stage cancers. Yervoy sales grew 7% globally and in the US, revenues were consistent with prior year as we experienced some variability in RCC and melanoma, as well as higher inventory burn and gross to net adjustments this year. Importantly, sequential revenues grew 5%, primarily driven by demand in first-line lung cancer, and we continue to expect growth for the brand. Now to our strong launch of Opdualag, the first fixed-dose combination of a LAG-3 and PD-1 inhibitor, while still early in the launch, we have already generated $58 million of sales in the quarter, driven primarily by robust demand and $10 million of stocking. The robust demand for Opdualag like has mainly been in line with our strategy, taking share from PD-1 monotherapy and as expected, some huge in place of Opdivo, Yervoy combination. Internationally, we are pleased with the recent CHMP positive opinion in Europe and look forward to realizing Opdualag's potential to be a new standard-of-care in patients with metastatic melanoma around the world. Turning to our growing cardiovascular portfolio on slide 11, starting with Eliquis, our leading OAC globally with strong revenue growth of 20% year-over-year. In the US, sales increased 27% versus prior year, driven primarily by demand growth and favorable gross to net adjustments. As a reminder, looking to the third and fourth quarters, we expect the usual dynamics for Medicare coverage gap with second half revenues being lower than first half as we've seen in previous years. Internationally, sales grew 9% versus a year ago. This growth was primarily driven by increased share across key markets as the brand continues to be the number one OAC in multiple countries. This was partially offset by pricing actions in many markets as demand grows and to a smaller extent, at-risk generic launch in the UK and the Netherlands. For the second half of the year, we expect the impact of at-risk generic launch to be approximately $250 million. Now turning to our most recent launch, Camzyos. As you know, the vast majority of patients initiating treatment on Camzyos are starting on a free trial offer for at least 30 days and then the $3 million recorded in revenue in the quarter was mainly due to stocking. During the second quarter, we have successfully laid the foundation, leveraging our strong CV leadership in REMS to certify over 1,000 healthcare professionals. We are now focused on broadening our user base and supporting the initiation of patients on Camzyos. We are pleased with the physician feedback thus far and look forward to helping more patients living with symptomatic oHCM. Moving on to a few of our hematology products on slide 12, starting with Revlimid. Sales in the quarter were approximately $2.5 billion. Sales were primarily impacted by generic entry, particularly in international markets. In the US, while we did experience demand softness from the volume generic entry in the quarter, we understand that specialty pharmacies are mainly utilizing the current generic for new patients to ensure continuity of treatment. As mentioned in the past, we know there will be variability quarter-to-quarter based on how generics will deploy their volume. As additional entrants will be coming to the market in the US in the third quarter, we expect Q3 revenues to be approximately $2.1 billion. We maintained our full year global sales guidance of $9 billion to $9.5 billion. Pomalyst global revenues grew 9% versus prior year, primarily driven by demand for triple-base regimens in earlier lines and extending duration of treatment. Now, moving to Reblozyl, which generated $172 million in the quarter, up a strong 36% versus prior year. In the US, we are seeing encouraging trends in patient adherence and extended treatment duration. Outside of the US, Reblozyl continues to grow driven by demand in both MDS and beta thalassemia-associated anemia, and as we attain reimbursement in additional countries. Finally, turning to our cell therapy assets, Abecma and Breyanzi. Abecma generated strong revenues in the quarter, equaling $89 million. This represents a 36% sequential increase over last quarter driven by expanded capacity and vector supply. Though were encouraged to treat more multiple myeloma patients, demand continues to outpace supply, and we are focused on further expanding capacity, including additional manufacturing sites in the future. As it relates to Breyanzi, sales in the quarter were $39 million. Demand remained strong for the brand, although sales were impacted by lower-than-expected manufacturing success rates, which now have been addressed. Importantly, as Giovanni mentioned, we are very pleased to have received a differentiated broad second-line label in large B-cell lymphoma patients. We are working hard and investing to expand capacity early next year to enable update for this indication. As we work through building additional capacity to treat more patients in earlier lines, we expect revenues in the third and fourth quarters to be largely similar to the first quarter of this year. Moving on to our immunology product summary on Slide 13. Orencia. global sales grew 11% versus prior year due to expanded US sales, driven by increased market share as well as demand in international markets. Turning to Zeposia, global sales for the quarter were $66 million, more than doubling sales versus last year, primarily due to expansion of Zeposia into ulcerative colitis. Sequentially, in the US, sales were primarily driven by a combination of favorable gross to nets and wholesale buying patterns of approximately $20 million. Importantly, we are encouraged by the 24% demand growth over the previous quarter and we remain focused on working to for expand volume, so we can continue to improve access in 2023. Internationally, Zeposia continues to secure reimbursement in other markets for MS and UC. Closing out on immunology. We very much look forward to broadening our portfolio with another first-in-class asset, our selective TYK2 inhibitor to Deucravacitinib. Our commercial and medical teams are in place and we're ready for launch. Now let's turn to Slide 14 to discuss the second quarter P&L. I've already discussed our revenues, so I'll now focus on the other key line item -- non-GAAP line items. Gross margins decreased primarily due to product mix, partially offset by foreign exchange and related hedging settlements. Our operating expenses, excluding acquired in-process R&D were broadly in line with prior year, driven by higher investments around our new product portfolio and pipeline offset primarily by foreign exchange. Acquired in-process R&D charges in the quarter were $400 million, primarily driven by the buyout of a royalty obligation for Camzyos of $295 million as well as a $90 million upfront for BridgeBio. This accounted for a 17% impact to diluted EPS. Acquired in-process R&D charges in the prior year were approximately $793 million, which accounted for a $0.30 impact to diluted EPS. The second quarter tax rate was impacted by earnings mix. And lastly, we delivered strong non-GAAP EPS growth in the quarter, up 18% year-over-year. This includes the $0.14 impact of acquired in-process R&D. Excluding acquired in-process R&D, non-GAAP EPS would have grown 7%. Now moving to the balance sheet and capital allocation on Slide 15. The company's balance sheet remains strong with $13.2 billion in cash and marketable securities on hand as of June 30. Cash flow from operations in the first half of the year was $6.1 billion. In the quarter, it was approximately $2.3 billion, which is impacted by a cash tax payment, and we expect cash flow from operations to rebound in Q3 and Q4. Our capital allocation priorities remain unchanged. Business development continues to be a top priority, and we continue to execute on this priority with the announcement of the planned acquisition of Turning Point Therapeutics. We remain committed to continued debt reduction. In the quarter, we repaid $2.9 billion of debt and we remain committed to returning capital to shareholders. We executed a $5 billion ASR earlier this year and remain opportunistic about repurchases in the future. Now turning to our 2022 non-GAAP guidance on Slide 16. We are updating our revenue guidance to be approximately $46 billion this year, reflecting the significant appreciation of the US dollar to other global currencies. Excluding the effects of currency, the underlying sales growth for the business expected to be 2% versus 2021. We estimate the FX impact to full year sales at today's spot rate to be about $1.5 billion. We continue to expect our In-Line and new product portfolio to grow in the low double-digit range and reaffirm our LOE guidance, including Revlimid's guidance of $9 billion to $9.5 billion for the year. Gross margin is expected to be approximately 79%, up 100 basis points from previous guidance due to favorable impact of currency and related hedging settlements. Our operating expense guidance, excluding acquired in process R&D remained unchanged, declining in the low single-digits versus prior year. This is primarily driven by favorability in FX as well as cost discipline. In terms of phasing for the second half of the year, we expect a more even phasing of expenses than in prior years. All said, we are reaffirming our non-GAAP adjusted EPS guidance based on the underlying strength of our portfolio, mitigating currency translation from our natural hedges and hedging program. Before we move to Q&A, I just wanted to express my gratitude to all our colleagues around the world for continuing to deliver strong commercial, clinical and financial results. The resiliency of our company and exciting catalysts ahead make me energized by the growth opportunity ahead of us. I'll now turn the call back over to Tim and Giovanni for Q&A.

Operator:

Thank you And we'll take our first caller from Chris Shibutani with Goldman Sachs.

Giovanni Caforio:

Thank you, Dan. Samit will answer your question on Milvexian, and Chris provide some incremental color on Camzyos. Thanks.

Chris Boerner:

Thanks, Samit, and thanks, Dan, for the question. We are very pleased with the early launch of Camzyos, while it's still very early days. We're off to a very good start. And what I would say is that, by and large, the performance that we're seeing is aligned to our expectations. And I would highlight maybe two or three things. First, awareness is very good. We've seen incredibly strong enthusiasm for the product from both physicians and patients. Importantly, the feedback that we're getting on the clinical program has been overwhelmingly positive and consistent. I'm going to give you some vignette on that. Patients are seeing significant benefit, both in terms of feel and function. And that benefit is being seen very early, in fact, as early as four weeks post initiating treatment. And that's really important because it's driven a lot of enthusiasm, both from patients and its given physicians, a reason to believe that the product is living up to the promise that we have. In terms of physician experience, the feedback has been very positive. The REMS education that we've initiated is intuitive, getting on and certified for REMS has been straightforward. And as David mentioned, that's translated to over 1,400 HCPs being REM certified. And one thing I would highlight is that this is probably the most important leading indicator for this product launch, given the fact that you don't have a history of REMS in the cardiovascular space, physicians are going to be REMS certified if they have intent to use. The last thing I would highlight is we're seeing a healthy increase in the number of centers prescribing week-over-week. We don't see any access issues on the horizon that would prevent these patients who are getting on to therapy converting to drug. And so if I sum it up, performance is in line with expectations. We're happy with what we're seeing, and we very much look forward to the continued uptake of this product over the course of the year.

Operator:

Thank you. And next, we'll take Andrew Baum with Citi.

Giovanni Caforio:

Thank you, Andrew. I'll ask Samit to answer your three questions.

Andrew Baum:

Thank you, Samit.

Operator:

We'll take our next question from Geoff Meacham with Bank of America.

Giovanni Caforio:

Thank you, Geoff. Chris, why don't you start on Reblozyl and then Samit will comment on oncology strategy.

Samit Hirawat:

Thanks, Chris and Geoff, maybe I can take on the Turning Point question. So first of all, excited about the acquisition of Turning Point Therapeutics and looking forward to bringing repotrectinib to patients in the second half of next year. Your question around the combinations. Those are all going to be always data-dependent and so explorations will continue. Although at this time, certainly, there is a lot of knowledge and lots of emergence of data TKI combinations or tyrosine kinase inhibitors, which are not necessarily mutation-specific tyrosine kinase, which have generated a lot of interest and a lot of data and have been approved in multiple indications when combined with I-O therapies, but it does provide additional opportunities in the future to look at these sorts of combinations and more specific pre-specified populations and selected patient populations, but those will be data that will need to be generated at the current time, too early to tell.

Tim Power:

Great. Sarah, can we go to the next question, please?

Chris Schott:

Hi, great. Thanks so much for the questions. I guess the first one for me was on Breyanzi in terms of what's the latest on maybe the timing and maybe as importantly, the magnitude of your capacity expansion. It sounds like this might have been getting pushed out into 2023 versus I think previously, you were talking about maybe a 4Q target. I just wanted to elaborate a bit more on what's happening there? And the second question was on Camzyos. I know there's a bit of a lag between when docs get certified for the REMS and when Bristol actually starts to generate sales for the drug. But as we just kind of think about the sales ramp from here, should we be thinking about this as a fairly gradual process, or is this a product that could see a steeper ramp starting sometime later this year, given the third some identified kind of patients out there? I'm just trying to see in terms of expectation setting of how to think about the ramp given some of the, I guess, the promising initial data in terms of the number of physicians getting certified, et cetera. Thank you.

Chris Boerner:

Thanks for the question, Chris. On Breyanzi, what I would say just at the outset around cell therapy in general, is that the demand in the quarter for both of these products, Abecma and Breyanzi, was strong. We continue to be very pleased with the feedback on the profiles of these products and importantly, how those profiles position us competitively. With respect to Breyanzi, as David mentioned earlier, we had underlying demand that was very strong. We're obviously very pleased with the second-line approval and the fact that it's given us the broadest label of any CAR T in DLBCL. But as David also mentioned, sales were impacted in the quarter by manufacturing success rates. Those success rates, the issue underlying that was resolved, and we expect success rates to improve as we head into this quarter. More generally around manufacturing with Breyanzi, given the broader label, we had obviously hoped to have increased capacity in the second half of this year. We're now anticipating that in Q1 of 2023, delivering that capacity is a top priority. The focus here is on increasing both vector and drug product supply. I will note that we've seen a nice increase in the capacity for Abecma, driven by successful drug product expansion and increasing in vector supply, and we anticipate that, that same focus will be now applied to Breyanzi and have every expectation that we'll be able to deliver on that. That capacity is going to be important. Because given the broad label with this product and the compelling profile, slot availability is going to be critical. So the good news is we have a very strong manufacturing team focused on increasing the supply, and we look forward to delivering that supply in the first part of the year. As for Camzyos and the pace of launch, I would view this as a steady increase in the number of patients. There are going to be four things that are really going to determine the pace of this launch. Physician and patient demand, the volume of REM-certified physicians, how quickly those patients come to get on Camzyos therapy and then obviously, the conversion of those patients to commercial drug. And I would say really across all of those dimensions, we're happy with what we're seeing as I referenced earlier, it's in line with where we expected to be this early in the launch. As I mentioned earlier, the demand for the product is very strong. We're getting great feedback from both patients and physicians. I spoke to the volume of users and the fact that we're seeing a nice increase in the number of REMS-certified physicians every week. We had told you previously, I think, in fact, last quarter, that we expected patients to initiate therapy during their routine visits. And that's largely playing out. Though I would say, we've seen a number of accounts, including some of our smaller and medium-sized accounts quickly getting multiple patients on to drug. We're also seeing some of our larger accounts organizing Camzyos clinic days so that they can efficiently bring larger volumes of patients, initiate them and monitor them. So again, that's where we thought it would be. And then finally, as I referenced earlier, access is going to be an important consideration here. Virtually, all oral specialty products like Camzyos go through this period of two to six months of getting on to formulary. During that period, the majority of patients are going to go on to free product. That's what we're seeing here. But again, the good news is we're not seeing any access issues. So we don't foresee any challenges converting those patients to commercial drug. So when you add it up, we expect the volume is going to increase over the course of the year. And then you'll see those patients convert to commercial sales as formulary status is achieved. But bottom line, we're very happy with what we're seeing thus far very much in line with expectations.

Operator:

Thank you. We'll take our next call from Steve Scala with Cowen.

Giovanni Caforio:

Thank you, Steve. Before I ask Samit to answer both of your say, as you know, we don't comment on ongoing discussion with regulatory authorities, but Samit will provide his perspective on both. Samit?

Tim Power:

Sarah, can we go to the next question, please?

Seamus Fernandez:

Thanks for the question. So just a couple of quick questions. First off, this is really for Giovanni. Should Congress pass the Medicare pricing reform. Can you just help us understand what impacts you think this is likely to have, whether it be on innovation but also on your own long-term guidance from that perspective. And are you hopeful that there might be -- should this go through potential changes that could temper the impact perhaps a push out of this small molecule of nine years of protection and perhaps maybe push that out to 12 or 13 years. Just wondering if there's -- there are any opportunities to think a little bit more constructively about this. And then separately, hoping to just get a little bit of color on the launch dynamics around deucravacitinib. You guys are commenting on your enthusiasm to kind of get this product to market and to patients. Just wanted to get a better sense of should the label actually have a JAK boxed warning, which we don't necessarily anticipate, but should that occur, what are you hearing from physicians with regard to the opportunity to kind of work around that? Maybe just as a clarifying question. We've gotten a lot of questions from investors on the possibility that if there were a JAK warning, could it actually be post biologic, doesn't make a lot of sense to us. Just wondering where you guys stand on that proposal. Thanks so much.

Chris Boerner:

So maybe I'll pick up, Seamus, on the question regarding deucravacitinib and the launch. So where, as you know, very excited about the opportunity to launch this product. As was referenced previously, the commercial and medical teams are in place. They're ready to go. They're very experienced. What I've said previously, I think, is where we'll start this conversation, which is that we explore every meaningful scenario as we think about the launch of any new product, but we continue to index heavily on the scenario, where we think that the preclinical and clinical data support and that is that this is a unique mechanism of action that is clearly differentiated from other products in the class. And actually, when we talk to customers, we get an almost uniform alignment that, that's the right way to think about deucravacitinib, that the mechanism based on all of the data that we've seen is unique and it is differentiated, it's differentiated not only from JAKs, but it's differentiated, most importantly, from the current standard of care for oral agents treating moderate-to-severe patients. And so as we step back and think about this product, we anticipate very strong demand for deucravacitinib based on the clinical profile from 2 Phase 3 studies that show clear superiority relative to the existing standard of care. We have a unique mechanism of action that's clearly differentiated and we think positions us well to become the oral branded of choice for these moderate-to-severe psoriasis patients. And as was implied in the premise of your question, we're very excited to launch this product, and we look forward to the PDUFA date in September.

Operator:

We will take Luisa Hector with Berenberg.

Giovanni Caforio:

Thanks, Luisa. I would say nothing has changed there, continues to be an area of great focus for us. We're looking at bringing new science into the company. You are right, the valuations are resetting now for a longer period of time, and we plan on continuing to be very active in this field. It's always been a priority for us.

Operator:

Thank you. We move on to Tim Anderson with Wolfe Research.

Giovanni Caforio:

Thank you, Tim. Let me just ask Samit to answer your question, both on Milvexian and also plans for deucravacitinib.

Tim Power:

Thanks, Samit. Can we go to the next one, please Sarah?

Evan Seigerman:

Hi, guys. Thank you so much for taking my question. I want to talk on the kind of dynamics between Opdivo and Opdualag. Can you provide more color as to the split between patients who are switched from Opdivo to Opdualag? And then one on Turning Point. I know kind of the when you announced the deal, it was still kind of TBD on the pre-NDA discussions with FDA, any update on the – on that may be will give us more confidence that you're able to launch in the second half of next year. Thank you.

Chris Boerner:

Sure. So we're very pleased with where we are with the Opdualag approval and the early uptake, the execution of the team has been very strong and physician reaction has been quite positive. In terms of the dynamics within the market, shares in first-line metastatic melanoma are in the low doubl-digits for Opdualag. We have seen some early use in second-line plus patients that's mainly driven by the fact that, remember, the flow of newly diagnosed metastatic melanoma can be somewhat staggered just given the volume of patients you have in this market. And so what we're seeing is not only are physicians using the product in first-line, but they're also looking to use it in second-line as patients either progress or they're willing to switch patients. In terms of who those patients are, that dynamic is playing out largely as expected. We're mostly displacing PD-1 monotherapy, that's to be expected, just given the strength of the clinical data with a more than 2x improvement in PFS and a strong trend towards overall survival relative to PD-1 monotherapy. We are seeing some modest conversion of Opdivo, Yervoy to Opdualag. But at this point, that's very much within the -- what we had expected. So overall, I would say Opdualag first, the performance continues to be very good. It's early days, but certainly, we have strong momentum. And the interplay between dual I-O, single-agent I-O and Opdualag is largely as expected.

Operator:

Thank you. We'll take our next question from Terence Flynn with Morgan Stanley.

Giovanni Caforio:

Thank you, Terence. Samit?