Bristol Myers Squibb (BMY)

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Bristol-Myers Squibb (BMY) Presents at Barclays Global Healthcare Broker Conference (Transcript)

Mar. 15, 2017 1:17 PM ET| About: Bristol-Myers Squibb Company (BMY)
Bristol-Myers Squibb Co (NYSE:BMY)

Barclays Global Healthcare Broker Conference Call

March 15, 2017, 08:30 ET

Executives

Charlie Bancroft - EVP & CFO

Analysts

Geoff Meachem - Barclays Capital

Geoff Meachem

Good morning, welcome to the second day of the Barclays Global Healthcare Conference. My name is Geoff Meachem, I'm a senior biopharma analyst and I have Paul Choi from my team as well with me on stage here. And it's our pleasure to have Bristol-Myers on stage. And speaking on behalf of Bristol is Charlie Bancroft, CFO. Charlie, welcome.

Charlie Bancroft

Thanks for having me, Geoff.

Geoff Meachem

So if you want to start off with a couple of high-level comments and then we can get ready some questions.

Charlie Bancroft

Sure. Bristol-Myers Squibb is in interesting time where we find ourselves in a very competitive second-line lung market. The first-line lung market continues to evolve in competitive dynamics there. We'll continue to evolve as we think about Merck getting approved in the high expressers last year-to-centric now in second-line in all-comers. Merck is actually getting improved in Keytruda chemo combo for first-line.

So we see that dynamic, but we still feel based on our broad portfolio, not only in lung but across IO that we have significant opportunities and we'll be a meaningful player even in the lung market. But we realize that, we have a broad program and some of that still has to read out over time and its competitive dynamics still are evolving.

We also have a portfolio that continues to grow outside of oncology. So if you look at Eliquis is a big driver for us orencia continues to grow well, Sprycel even though slightly older product, continues to grow well. And then if you look at our pipeline, both in oncology and non-oncology - and I'm sure you have some questions on that, we see some really interesting opportunities in areas what we determine as high unmet medical need and the potential for high treatment effect, because that's really important when you think about the value proposition and trying to make an unambiguous for payers that there's a real opportunity there.

So we're really excited about what we have coming forward, but we do appreciate that with the competitive environment we find ourselves.

Geoff Meachem

Perfect. Let's start first with the commercial IO business. I know part of the thesis for this year is that you'll see IO growth in the U.S. And I wanted to get a perspective from you Charlie on the second-line lung market. What are you seeing now, what would you expect to see with perspective to market share at the sort of exit of this year and how important is getting the - say, market expansion and incremental share, let's say in Europe to the whole IO growth for 2017?

Charlie Bancroft

Sure. The second line lung market is still very important for us. And as we think about exiting out of 2016 into this year, we find that our shares right now are fairly stable. The biggest impact in the fourth quarter really came from the centric, but by and large our shares are stable. And interestingly even in first line, our non-promoted sales were still seeing mid-single-digits in non-promoted sales. As I mentioned, just a few minutes ago, it will continue to become more and more competitive and as Merck potentially gets approved with their Keytruda chemo combo, in May, that will in some way shrink the second line market as there's more patients in the front line setting.

And we continue to see testing for high-expressers, we're testing for TDL 1 I should say and Merck approved in high-expressers in the front line also will continue to shrink. So the second line setting is still going to be extremely competitive. Now, internationally, we don't have that - Merck will likely get approved 024 in some markets in the early approval markets in 2017. But we see that we started significant ramp still now outside the U.S.

So as we've mentioned previously, we expect to grow IO internationally and we expect that in the U.S. will potentially remain flat overall for IO because if we think about the rest of the opportunities that we have, because we resourced for a month earlier this year with the anticipation that we would get approved on 026. So we really focused those resources on defending the second line of gaining share in melanoma also expanding an increasing share in renal cell and then of course we're launching head and neck and bladder.

For example, just on melanoma, for example, we have in the regimen 30% to 40% of first line market, but in BRAF positive patient it's actually far below that. And given our data that should be a big opportunity, so we think we can still drive opportunity in melanoma. In renal cell, we had a really good start, our share dipped down a little bit, but now it's rebounded to 60%. Just several months ago, it was 40%. So we're seeing good continued growth in renal cell and we see combo now primarily being used at this stage in third line. So we still see lots of opportunity across our portfolio. When we launched - head and neck was launched and as we see uptick in that and bladder, we can hope to see strong growth across the rest of our portfolio outside of lung.

Geoff Meachem

So, if second line lung contracts this year, in the U.S., do you see enough growth from Hodgkin lymphoma, renal, head and neck, et cetera, melanoma, to offset that? Or is it really about lung being by far the bigger contributor to the business?

Charlie Bancroft

Like I said, I think we'll see pressure upon the second-line, for us, I think it will be offset by and large, by growth in the other tumor types. So net-net, we see that our IO business in the U.S., let's say roughly flat year-over-year.

Question-and-Answer Session

Q - Unidentified Analyst

Perhaps pivoting to the clinical trial side and thinking about the lung trials here, obviously a big focal point with investors is 227. And so maybe you can sort of walk us through what some of the milestones might be in terms of potential look this year, how and when those might read-out. And as you potentially do better in interim looks, what are sort of implications perhaps from a statistical perspective, whether you guys may or may not take a hit and how that factors into your potential registrational strategy.

Charlie Bancroft

Sure. Thanks. So we have by far the broadest program in first-line lung when you look at 227 and 568. And at the heart of our strategy is still Opdivo-Yervoy combination and we think there's strong potential in that. But we also are testing Opdivo and chemo, we're testing Opdivo-Yervoy plus chemo and that could potentially address early progresses.

So we feel that we still have meaningful opportunity as we think about our lung program. As it relates to when the trial will read-out, it's posted on clinicaltrials.gov, it's early 2018. We have said that we do have a planned interim look, but at this stage, I don't think it's [indiscernible] time for that. And we didn't - as we said, spend any statistical alpha in 227.

Geoff Meachem

Just with respect to IO combinations beyond ipi/nivo, would you say that Bristol is still - are you at capacity, would you be looking to add more assets that are combinations in IO? And obviously you guys are pretty far along when it comes to novel mechanisms, LAG-3 care, et cetera. But how much is enough from a capacity standpoint?

Charlie Bancroft

It's a good question, because I'm also responsible for business development. Every time we think that we have enough, there is always something else. So the science here continues to evolve and it continues to evolve rapidly. We have, besides Opdivo and Yervoy, two approved products, we have - I might get this wrong, but 10 or 11 other molecules in development.

So I'm not sure given where the marketplace is going and the market is going to eventually go to a very segmented patient population. And when you look at the future, it's going to be differentiated on patient selection and segmentation. So when you think about that translational medicine, understanding the underlying biology, when you think about biomarkers and having the capabilities and skills there gives you better insights into what kind of development plans will help quickly progress the programs in a more rational way than an empirical way, but then also very importantly on the commercial side, from a value standpoint, how do we think about these from really targeted value based medicine standpoint to identify the right patients for the right medicine.

So that's where the industry is going, that's where we're going, we're spending a lot of time in energy in continuing to build our capabilities in translational medicine and biomarkers mostly through third-party partnerships, but we view that that's going to be where ultimately as you think about where this industry is going to go. It's going to be much more segmentation, because if you look at the standard of care today even in lung cancer, there are still based on all the clinical trials, a lot of room to raise the standard of care. So from a business development side and looking at assets, I think we'll always do that. I think oncology is so important to us and the ability to continue to drive and defend our position, but also grow, it's imperative that we continue to drive in business develop.

Geoff Meachem

And along those lines, what's your perspective, Charlie, on the pricing debate? A lot of folks on oncology say that adding incremental regimens to a combination ultimately is not going to be cost-efficient. And the answer from some of your peers across the pharma space, they talked about owning all the assets in a bundle, is that still - philosophically, do you agree with that?

Charlie Bancroft

I'll come to that. I think the answer to that is yes, because it provides you much more optionality, but I would go back to what I was just saying at the heart of the pricing discussion is value. So where you can show value and where you can show value in a real way, you'll be able to get price. And again, I think it's going to come back to segmentation, patient selection really showing long-term durable results. And you'll be able to think of pricing in different way. It's more about how do you think about value. Now having said that, we firmly believe that having more of the assets and the combined ability of assets internally as a strategic imperative and as a strategic - provides us more strategic optionality as we think about pricing, I don't want to talk about pricing of unapproved products at this stage, but we do feel that it will provide more optionality for us.

Geoff Meachem

Maybe switching gears, outside of lung, you, Bristol will have actually pretty data-rich 2017, 2018. So as we look at the next 12, 18, 24 months, you're going to have multiple tumor types reading out beyond lung and melanoma that could potentially add the label. As we think about the mix of Opdivo revenue changing over time, what kind of contribution can these tumor types that are coming up in terms of data readout potentially be as a mix of potential peak sales versus most people assume lung is the bulk of sales followed by melanoma and so forth. So how should we think about potentially modeling over time, what these tumor types could add in terms of revenue to your Opdivo franchise?

Charlie Bancroft

Sure. I'm not going to give you any forward-looking, but I can kind of frame it. I think, taking a step back, if you think about the biggest opportunity from unmet medical need in epidemiology, still lung is important. Given our program, we still feel open opportunities in the lung market. But beyond that, if you look at the other tumor types where we've competed in melanoma, we've done quite well. We've launched well in renal cell, we've now launched in head and neck and bladder. The opportunities we see as we think about two, three registrational trials that we have breaking out in the next 12 months or so. So we have epicellular cancer in line with Opdivo. We have the regimen for both renal cell and first line in non-small cell lung cancer in the front line setting.

And then if you look at our entire development program, it's quite a large if you look at the number of readouts that we'll have over the next several years. So each tumor type really, I always say, it depends on the data, because the data in the competitive environment will really drive how much we think each of those will generate as far as sales. And our view is that any individual one could be fairly big but collectively outside of lung they will be meaningful. And that's how we look at it.

Geoff Meachem

And Charlie, when you think about the - we talked earlier about the international components. So far, I know it's much earlier than the U.S. kind of roll out, but so far is there any things that you'd point to that differs sort of European versus U.S. with regard to testing or adoption, that give you kind of maybe a different perspective in terms of what the peak trajectory or the trajectory of peak opportunity.

Charlie Bancroft

One of the things that surprised us initially when we launched in the U.S. was the time to peak sales as we were modeling it in most of the indications in which we've competed. And so as we now look in Europe which is a little bit different dynamic in that pricing access and reimbursement paradigms is slightly different, you have some early access markets where you have access then you have other ones where it's much more controlled than if you want to take, the UK is one of the more challenging ones.

Some of the HPA markets it can be a challenge, but where we have and gotten approval and we've gotten a lot of approvals over the course of the last couple years, we continue to see not surprised anymore, but we continue to see peak - time to peak sale is actually continues to be very, very strong. So, the competitive environment is still robust in all these markets, some of the markets have more of - I would call a hierarchy of how you - when you can introduce IO, it's a little bit more stringent than sometimes in the U.S. But we think our international business as we mentioned is going to grow quite significantly in IO this year, year-over-year.

Geoff Meachem

Maybe switching gears outside of IO for now, as we think about the non-IO pipeline which had become a more prominent part of the discussion with regard to Bristol, at what point - how do we think about the areas you're working in terms of like heart failure, the autoimmune assets and things like fibrosis becoming more available in terms of data when we should start to see potential read-outs for those and how do you think about those over the long-term being contributors and diversifying new revenue mix?

Charlie Bancroft

Sure. We're very excited about our early pipeline in oncology and outside of oncology. And we believe that if you look at IO growth - I'm going to get you answer for your question. If you look at our growth over the next three to four years, it's really driven by IO and Eliquis by and large. So for us strategically diversifying is something that's really important for us.

And as we allocate our R&D dollars, we're very focused on driving towards those assets that we feel address a high unmet medical need, that have high treatment effect and in many ways will be unambiguous to payers that there is opportunity for value there. So, getting to your question, we're going to present data at upcoming at EASL on FGF21 for the liver fibrosis, for example, that's a very exciting opportunity for us and what could be a very large market as you know.

In heart failure, we have the nitroxyl donor that's in Phase II. I'm not sure when we'll see the pivotal data on that, but that's for decompensated heart failure and that's also a very big market for us. In immunoscience, we have [indiscernible] for psoriasis that could also be a potential big opportunity in Lupus. That we'll see data potentially at the end of this year.

And we have the BTK inhibitor for RA which we expect to see data early next year. All of those things dependent up on data of course could pivot into a registrational study.

Geoff Meachem

Also outside of IO, when you look at Eliquis business, obviously the growth has been fantastic, the share gains have been quite good. But I think that the tipping point though to me still seems like the warfarin getting share from that. So is there either data or physician comfort or is there some sort of inflection point that you would see over time that could move you to capture that bigger part of market?

Charlie Bancroft

We're extremely happy with Eliquis and we don't get a lot of questions anymore in the market, but if you look at the growth that we've had and you look at potential for growth going forward, it's still quite great. In large part, it's because if you look at the safety and efficacy data that we have based on our clinical trials and the growing amount of real world evidence, it's quite striking and that's where we're seeing the growth for Eliquis.

And even as an example as we work with some of the plans in the U.S. the medical teams that has managed care components, they really focus on the real world data and that's been a big benefit for us as we think about those particular plans. We still feel there's opportunity in growing against the other NOACs but also against warfarin which today in the U.S. represents about 40% of the overall market. And I'll give you some examples, in the U.S. right now, Eliquis is the Number 1 TRx in the NOAC clients. But if I look at cardiology and working with cardiologists which is sort of the precursor to the broader population, we lead in TRx across the entire class including warfarin.

So we feel that there's still a big opportunity based on good clinical data, continued growing real world evidence, they continue to make inroads both in warfarin, but also against the other NOACs. And we're doing that without really in anyway growing the expenses related to Eliquis. So it's really very, very focused targeted including DTC as we've seen in the U.S. that's in extremely - has a really good ROI for us and that's helping also with warfarin usage.

Geoff Meachem

To Paul's question earlier about assets outside of IO and Eliquis well, is there a philosophy, Charlie, about stated goal of trying to diversify the business in a broad way from state of [indiscernible] perspective. My guess here is that a lot of companies are waiting for more clarity on tax reform, repatriation, things like that. That may be a tipping point for some, but I get the sense that if there is a need to do a deal, than that would kind of override any kind of near-term fluctuation on the Washington side of things.

Charlie Bancroft

We look at diversification in two ways and I think you're touching on that. One is to continue to grow our entire pipeline. So if diversification within other tumor types, even within immuno-oncology, we talked about the number of assets that we have there in which to do that, continue to build out our translational medicine and be leaders and how we think about translational medicine and new biomarkers, so we can continue to segment patients. It's also about diversifying through building out our non-oncology portfolio and I talked with Paul a little bit about the assets that we have there.

From a business development standpoint, we're always looking at opportunities. And quite frankly, we look at opportunities from the largest to the smallest and we do that on a regular basis. And we do it though I would say, majority is within our core therapeutic areas where we have deep understanding of the science where we can be synergistic with some of our - potentially with our current assets, it can be synergistic with knowledge base that we have. It can be synergistic with the commercial infrastructure that we have.

It's always hard to talk about BD, but I would say that we've always been very active. Where we found the best value though, by and large, has been early. So when you look at the risk-reward trade-off of the assets, I don't want to say things are fulsomely priced in the later stage, but if becomes a little bit more challenging from a valuation perspective. But we find it early, because it really doesn't cost that much. If it works, it's great, if it doesn't, that's just part of our business model.

Geoff Meachem

Another part of the business, obviously the focus tends to remain on IO and Opdivo, but another very well performing business has been Orencia for you. And unlike some of the - anti-chain assets have been sort of focused on targets for biosimilars. It seems like Orencia is largely flying under the radar with respect to competitive threats there.

Can you talk a little bit maybe about how you see growth continuing for that franchise, a time here there are some lumpiness between sub Q and IV formulations. And maybe does that market and product line continue to look like at the current growth rate for you going forward?

Charlie Bancroft

A lot of questions are packed in there. Orencia - again not exactly get a lot of questions on this generally, but it has been a strong growth brand, growth franchise for us when you think about the sub Q and IV. We've been really focused because of the data that we have on the rapid early progressers in RA. And that message has been resonating well with the prescribing physicians because you continue to see that Orencia is moving up the treatment paradigm of the recycling of TNFs.

So recycling at times orencia keeps moving up that treatment paradigm. So we're very pleased with that and we have a lot of good evidence there. We continue to invest. I think the composition of matter patent for Orencia is 2019 and the method of use is 2021, thereabouts. Our resourcing model has biosimilars in the market either directly against Orencia. So orencia is not a TNF, so it actually has its own area to play in. But if we do get biosimilars which we expect we will and that's within our planning horizon, we will resource Orencia accordingly based upon the market dynamics.

Geoff Meachem

Charlie, thank you very much.

Charlie Bancroft

Thank you.

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