Bristol Myers Squibb (BMY)

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Bristol-Myers Squibb (BMY) Management Presents at UBS Global Healthcare Conference 2017 - Brokers Conference Transcript

May 22, 2017 1:02 PM ET|1 comment| About: Bristol-Myers Squibb Company (BMY)

Bristol-Myers Squibb Company (NYSE:BMY)

Company Conference Presentation

May 22, 2017, 10:00 AM ET

Executives

Murdo Gordon - Chief Commercial Officer

Analysts

Marc Goodman - UBS Securities LLC

Operator

Marc Goodman

All right, we're going to get started with our next session and from Bristol-Myers we have Murdo Gordon. Thank you very much for joining us. I know you've joined us after quite a long time ago. I looked it up, it was 1989, so you are a Bristol lifer, but importantly you became Chief Commercial Officer about a year ago.

So obviously the world has changed dramatically and I think, so maybe we could focus on commercial, we can start with Opdivo. I think everyone was surprised that U.S. sales were actually up versus fourth quarter. Maybe you can talk about how you did that and how you have done such a good job maintaining the share and gaining the share in different areas. Give a little sense of what's been going on with Opdivo?

Murdo Gordon

Sure thanks for having me here Marc. Yes in 1989 the difference was my hair was a little bigger, the bags under the eyes were different, but it's been really exciting and particularly since becoming the Chief Commercial Officer where the company has really had significant challenges that also we continue to feel really good about the opportunities that exist in the marketplace and I think the first quarter was a good indicator of that.

The commercial organization broadly in the U.S. as well as ex-U.S. has been able to execute really well in the oncology portfolio, but also outside of the oncology portfolio with performances on Eliquis also doing extremely well. In particular in the U.S. with I-O we were very pleased to see the shares holding in second line on cancer. The Opdivo shares are running 40% and really flat and that was a really important thing for us to see.

Outside of lung cancer in the U.S. we continue to grow nicely in our core tumor types. We've seen a good build in melanoma. We've got really strong performance in second line share in renal cell carcinoma and emerging trends look good in head and neck, bladder and some of the smaller indications. So overall in the U.S. the growth is largely outside of lung cancer and overall worldwide we've got really good trends that have emerged since securing reimbursement in countries like France, Germany, Japan, Canada more recently, and Italy and Spain more recently.

Marc Goodman

So just a focus on the U.S. one second and then obviously Merck has a new approval, so give us a sense of how you expect the landscape to change over the next quarter or two?

Murdo Gordon

Sure, the Merck approval is something that we largely expected and built into our assumptions going forward. So I think the first line approval and as the chemotherapy combination approval in non-squamous, non-small cell lung cancer is largely in line with what we had expected. And I think even with that the performance in 2017 should continue fairly well in terms of the second line share, that pool of second line patients we think a little, but the larger impact of the first line usage of I-O therapies based on their current approvals is more likely to be felt in 2018 in terms of reduced eligible second line pool of patients in lung cancer.

We're also seeing some increase in our usage in small cell lung cancer and we would continue to expect to see some off label first line use in squamous cell carcinoma as outside of the marked [ph] label.

Marc Goodman

You are seeing over the next six months or so the second line market obviously is going to shrink, but you think you'll be able to maintain a strong share of that second line is what you are saying?

Murdo Gordon

That's right. And even that shrinking there is a rate limitation because these first line patients that are newly diagnosed and receiving treatment, their natural progression would have kept them out of that second line pool for the most part for this year and would be really a reduction in the next year revenue, so there will be pressure on our second line revenue overall in the U.S. next year.

Marc Goodman

So, if you just look at this second quarter, I mean, can second quarter be better than the first quarter? I mean is it – like how do you think about - push and pulls on it I guess without giving us guidance, you know what I mean, but?

Murdo Gordon

Yes, it's really you know whenever I talk about I-O in general, the variabilities are quite wide and when you get down into tumor specific events it's really very difficult to predict. I would say as we've talked about in the past there is a demand and I would expect uptake of pembro plus chemotherapy to be actually quite good in the community setting and that obviously will change the dynamics of lung cancer. But I expect there are shares in other tumor types to continue to strengthen.

If I look at melanoma, the regimen has performed very well in melanoma. Yervoy monotherapy is performing well in the adjuvant setting. We have really good shares now in first-line metastatic melanoma for Opdivo monotherapy. So between Opdivo monotherapy Yervoy and adjuvant and the regimen in metastatic melanoma, we've got strong shares of about 50% of that market and that is a BMS treated [ph] patient in one way or another either because of Yervoy/Opdivo or the combination. So melanoma is a strong core tumor type, our shares in renal cell carcinoma in second line are between 50% and 60% share, so that's a really high share and we expect that to continue.

Bladder is much more competitive, now five approved agents, but nonetheless we're seeing good uptake. We continue to invest significantly in share of voice across all of our core tumors and make sure that we have the appropriate resources behind the commercialization of our I-O therapies in core tumor. So yes, I think we can be quite competitive this year and I would hope for a strong quarter, but it's very dynamic.

Marc Goodman

And when you say that you've been increasing share in core tumors, so would you think about the next year, maybe two years and all the different additional indications that you are going to be getting, how much incremental spend are we talking about or is - the stage has been set pretty much?

Murdo Gordon

I think for the most part we're sized and invested appropriately across our core tumors. If we have a major surprise to the positive then we would look differently at that and we would continue to invest as appropriate. In the early days of the Opdivo launches things were coming much earlier and faster than we had anticipated and resized very rapidly and we were able to dynamically adjust as appropriate and we would do the same thing going forward. But right now we have the resources. We've expanded across Europe. We expanded rapidly in the early phases of Opdivo in the U.S. I feel good about the commercial structure.

Marc Goodman

You started to talk about the O-U.S., maybe we can just come back, so where's the growth going to come from over the next year O-U.S., what are some of the incremental geographies that have just come on so we're going to see really good growth there?

Murdo Gordon

Yes, so in Europe it really is the emergence of Italy and Spain. They were a little further behind Germany because Germany has a reimbursement system that allows initial reimbursement pending final price negotiation, whereas in Italy and Spain and France for that matter it is more of a wait-and-see. So Italy and Spain are emerging rapidly. We recently secured reimbursement for non-squamous second line in Spain, so in that we have both squamous and non- squamous. Initially we had squamous only.

In Italy and Spain now we've got all core tumors reimbursed and we are seeing some really nice evolution. France, as you know, we recognized revenue in the fourth quarter that had been deferred pending price approval. We did that for a smaller amount in Germany as well. But, you know for example, in France we're between 75% and 80% of share of PD-1 market, so the sequence of events in Europe is slightly different than in the U.S.

The regulatory approval cadence and nature of the competitor approvals is slightly different. So have, I think a larger margin of advantage in Europe. We also have Canada online now, all 10 provinces reimbursed and I would expect this to do well there. We had a large bridging program that treated a lot of patients prior to reimbursement in Canada and…

Marc Goodman

You weren’t getting paid for that?

Murdo Gordon

We were not charging for that.

Marc Goodman

For now the switch gets flipped…

Murdo Gordon

That's right.

Marc Goodman

So you could talk about, there have been a couple of studies by your competitors, Roche had a failed bladder study, AstraZeneca had a positive third line lung study, what do you think about those studies and how do you think about that, what that does to the market?

Murdo Gordon

It's hard to comment until you see data, these are [indiscernible] announcements, but I would say it has been our own experience in some cases you get surprise trial results and you need to go through the data methodically and understand why those results came in the way they did. So in bladder, I'm not sure it is necessarily a major advantage or a major change in the market given that there are five approved agents today.

Marc Goodman

If you think that the FDA thinks differently about accelerated approval because of it at all?

Murdo Gordon

It's a good question. I would say, I mean, first off we have to commend the FDA for what they've done for oncology in general. If you think about all of the accelerated approvals that they granted most of which, the vast majority of which have been by additional trials and you think about the time advantage that they created for patients and how many patients got treated under an accelerated approval and that are alive today that wouldn’t have been, that's a huge effort and it's something that Dr. Pazdur and the rest of the team at the FDA should feel very, very good about.

I would say that the spirit of the FDA from everything they've said publicly continues to remain focused on being innovative, being fast and bringing novel therapies to patients as quickly as possible while still establishing their safety and I think that's really been good. So I'm not sure this one event in a single tumor type…

Marc Goodman

Was not enough to change the…

Murdo Gordon

I wouldn’t think so, and I think we all know why we've made huge advances with the advent of immunotherapies. There's still a lot of headroom and a lot of tumor types where we've yet to show that we can cure upwards of 50% of patients and that's what we're sharing for.

Marc Goodman

Focus on Yervoy a little bit, how much Yervoy usage is mono versus combo, just give us a sense of how it is being used? And in the U.S. if you exclude some of the inventory change in the first quarter, first quarter was probably flattish with the last couple of quarters, so just – there is price push and pull is going on underneath there, so give us a sense of what's happening?

Murdo Gordon

Sure, and in the U.S. the vast majority of metastatic melanoma is combination usage of Yervoy plus Opdivo where we get some monotherapy utilization is in the adjuvant setting. We have a patient assistance program for the indicated 10 mg dose and so a lot of that product is provided at no charge to patients and we're awaiting additional clinical trials to see how that 3 versus 10 risk-benefit equation is in adjuvant, so hopefully we'll see some data there that will describe what the optimal dose is in adjuvant. I would say in the rest of the metastatic setting what we've been able to do is actually grow Opdivo monotherapy share and regimen share since this time last year. So that's been a nice evolution.

I do see it as more stable going forward. So there's not as much room for share gain except perhaps with the confirmation of the overall survival benefit study 67 of the regimen in metastatic disease I think that could be slightly positive for a regimen penetration of metastatic disease and we're doing additional descriptive analyses to try to find out which patients benefit most from the regimen.

Marc Goodman

I know when you flipped overseas, obviously a different dynamics of what's going on in Europe?

Murdo Gordon

Yes, so you got the lag to reimbursements, so we got very good reimbursement and very rapid reimbursement in the UK from nice one of the quickest approvals that they've ever given for cancer therapies on cost-effectiveness. We also secure France and Germany, so those are the three markets for the most part, a little bit in the Netherlands, Belgium that is driving the Yervoy return to growth ex-US and I think there are a few other markets that will online there and I would expect to see some modest growth in Yervoy.

Marc Goodman

So I'll flip gears to pricing in the oncology setting. So obviously up to now we haven't really seen a lot of peer pushback. I think there are a lot of pilot programs they are trying to consider right now to push back. I think there are a lot of people invested to discuss well, once those PD-1s can't be pushed back how do you think about pricing for the three to four years?

Murdo Gordon

Yes Marc, it's a good question and there is clearly a very dynamic legislative environment, policy environment and we pay close attention to that. I think for the most part in the U.S. there are early signs of some of those evolutions that we'll see and the oncology care model experiment you're seeing, commercial payers also experiment with fully integrated bundled payment models in oncology and then trying to establish performance measures in cancer as well.

I think in that world we feel very good about our ability to compete effectively to try to preserve margin, but also to better demonstrate the value of our medicines and the cost-effectiveness of our medicines. And I think in that world going forward having multiple treatment options in multiple lines of therapy across many tumors puts you in a very strong position to offer good value-based solutions to an integrated physician delivery network or payer or potentially the federal government if they enter into direct negotiations which is a big unknown.

So I think while there could be margin pressure on net price being in the position Bristol-Myers Squibb is in with the breadth of portfolio, breadth of approvals, breadth of indications, we feel good about our ability to compete there.

Marc Goodman

So you were talking about segmenting the market with respect to let's say there is a PD-1 plus another product combinations for one cancer type and then there's another PD-1 for another cancer type your synergies can't compare across if the market becomes segmented by what becomes best in class?

Murdo Gordon

Yes and the market also prefers to choose options that have a broad play across multiple indications and multiple lines and I think having that is very advantageous in a world where somebody is trying to pick, as you said, one of many PD-1s. I also think the market will segment naturally because of the biology of disease we are getting through a better understanding of which patients will respond to which kind of treatment we're seeing the emergence of some of the escape pathways or resistance mechanisms within immune checkpoint inhibition and that offers an opportunity for additional agents to come in and treat first-line patients who might progress on a PD-1 or a PD-1 plus CTLA-4. And these are the kinds of things that we've already started to look at and actually have been able to do outside of the U.S. where we have two agents in one tumor type already in metastatic melanoma.

So I think it's a very important space to watch, but is one where we have to be better and better at designing trials that show the benefit. And in some projects where this is already being done in small experiments where you said, you know to a physician group try to bring down the cost of care of cancer while improving outcomes what often happens is surgeries go down, radiation therapy treatment costs go down, diagnoses go down and drug costs go up. But the net effect is overall treatment cost comes down. So even in that world drugs are seen as a very effective solution to drive outcomes in cancer and then what we'll have to look at is the portion of total cancer care costs that we are able to demonstrate value in is something that we'll have to continue to focus on and do.

Marc Goodman

Let's switch gears to hepatitis C a market that's obviously been a little bit of a disappointment big picture, but you have this new opportunity in China which you are first in, so talk about like how long do you have the advantage and how big is the opportunity?

Murdo Gordon

Yes, I mean, first thing I would again say that the government in China along with other stakeholders like WHO, like the Chinese CDC have decided and taken very seriously that they have a healthcare crisis, a public health crisis with hepatitis C infection. We have fortunately been in China for many years and we've been in virology in China for over a decade with our HBV drug Baraclude and we were in a really good position to partner with them, design a Chinese development program for Daklinza and Sunvepra and demonstrate the benefit in a China specific population.

I would say I've been absolutely impressed by the focus of the Chinese Regulatory Association, the regulatory agency to rapidly review our data and give us an approval and the R&D organization, the regulatory organization at BMS have done a fantastic job making sure that we were not going to slow down anything that could benefit Chinese patients. The estimates range significantly. We ballpark the infected population to be about 10 million in China.

We think that there are between 100,000 and 200,000 patients in acute care right now that are seeking approved treatment, so this is a large opportunity. It could manifest itself differently than in the Western world where or in Japan where we saw rapid treatment rates of the warehouse patient population and then rapid treatment of remaining patients and a commitment by governments and payers to eradicate disease. I think that problem is so much bigger in China that that slope up could be different. What happens on the other side also could be different so...

Marc Goodman

I mean do you see the government pushing these 100,000 to 200,000 patients, on therapy quickly, I mean is that...?

Murdo Gordon

I think those patients will seek treatment quickly. They're very active, they're on We Chat boards, these are engaged patients, these are patients that know these treatments have been approved and they will seek treatment themselves. I think the screening approach is the need to be developed in China to confirm who else could be infected and bring them into care is where the government will have to focus their energy. The acute piece will happen naturally.

Marc Goodman

And how is the pricing in China versus the U.S.?

Murdo Gordon

Again, we entered this journey knowing that this was a large scale public health problem and I think that requires that we think differently about pricing and you know we're engaging in that process now with the pricing authorities both at the Federal and at the provincial or regional level in China and it is still in motion, so it's too early to comment, but we're committed to trying to help the government treat as many patients as possible there.

Marc Goodman

So we should expect a significant discount relative to what's going on in the U.S. you're not going to talk about pricing hasn't been set yet?

Murdo Gordon

Yes, I think it's hard, it hasn't been set and it's hard to say where we're going to end up. I would say that the other thing to remember is this will take a bit of time as well. We have the approval now. We're probably looking at fourth quarter before we're going to have a lot of those things resolved.

Marc Goodman

And as far as your lead time any idea on your lead time versus the competition?

Murdo Gordon

I really can't comment. I'm just pleased that our teams did everything they could, both clinically and from a regulatory perspective to give us the opportunity and now the commercial teams are moving as fast as we possibly can.

Marc Goodman

So Eliquis, this has been one of those very interesting products. I think everybody expected this market to rapidly take share from Warfarin when Rivarox [ph] came in years ago. When it didn't happen and now all of a sudden it just seems like it's just accelerating and it's nonstop. So, give us a sense of where we go, I mean it seems like Warfarin has probably got 50% of the market now or somewhere in that range maybe 55, so where do you see this in two, three, four years?

Murdo Gordon

Yes, it's a great question. I mean, we're also extremely pleased and working with Pfizer on Eliquis. We've been able to first off demonstrate the value of the Eliquis profile. We've confirmed the clinical trial findings in real world data settings and we along with other organizations have done a lot of retrospective and prospective analyses to see that we continue to have a great profile in terms of stroke and reduction in atrial fibrillation patients, but also a great leading profile. So, that, that's a really powerful differentiation platform for us and even payers are doing their own analyses and confirming some of the sponsored real world data work.

So that's helpful that payers now see us as a very cost effective option to Warfarin and potentially even other NOACs from their own analysis. When we think about the future we always look at cardiology as a leading indicator and in the cardiology market Warfarin carries roughly a 30% total prescription share compared to the 50-55 number that you cited from primary care. And when you look at new to brand shares it's even lower, so I would say that we are well on our way to having Warfarin be displaced as standard of care in these patients which should have potentially happened sooner now it’s happening.

Marc Goodman

So by the end of the decade it could really be 80-20 or 85-15 NOACs versus Warfarin could be that dramatic? I mean given the numbers you just said I mean?

Murdo Gordon

I think by the end of decade those cardiology numbers could be reflected in the broader population.

Marc Goodman

Yes, so actually let's talk about Sprycel a second, so the $2 billion charge that nobody talks about, may be you could just give us a sense of, what are the dynamics in the market, I mean I don't even know if there was a question in the conference call about it?

Murdo Gordon

Yes there wasn’t. Now the hematology team in our oncology organization have done a great job. The Sprycel story is a fantastic one when you think about even when Gleevec and Tasigna were being actively promoted we were gaining market share and not just in second line but in first line CML patients. So that team knows how to compete. They know how to describe the ideal patient for Sprycel.

We have great pediatric data now and which show really good durability of the fact and I think Sprycel has a lot of potential still in it. We do have a patent challenge in Europe that we're playing out and feel good about our ability to defend successfully and we feel that the patent real estate there is very good but nonetheless that’s a challenge.

Marc Goodman

But, I mean with Gleevec going generic, it really hasn’t stopped the development, what kind of underlying trend is?

Murdo Gordon

No, I think, again I think there is recognition that Sprycel has a superior clinical profile and I think that when you’re treating a serious disease like chronic myelogenous leukemia you want to make sure that you choose the best option and I think generic imatinib has largely cannibalized the Gleevec brand.

Marc Goodman

And it’s all happened and you still continue to grow through the market?

Murdo Gordon

For the most part, a little different country by country, but that is definitely true in the U.S.

Marc Goodman

And the other one is Orencia which is not really talked about much but continues to do really well, give us a sense are you gaining share what seems to be working, we know the market is pretty healthy?

Murdo Gordon

Yes, Orencia has been a great story, we focused about 18 months ago, 24 months ago on the early rapidly progressing patients. Orencia tended to be used in later lines of therapy after maybe one or two TNS have been used as first choice biologics. And of course the product while performing well there could offer more benefit if used earlier in the course of disease and our label allows us to promote there and that’s what we did and I think that strengthened definitely the sub-cutaneous profile, so sub-cu product has been gaining share.

In some countries we've had some really good robust share evolution in Germany in particular has had a great performance. Japan has a great trend going where we actually co-promote with Ono as a partner there and so we’ve had a really good emergence of our Orencia business. The IV market tends to be holding share while the IV market grows, so it’s mostly new demand growth coming from subcutaneous.

Marc Goodman

So maybe if you just kind of think back broadly and this question goes to any part of your business, over the next year or two what do you think will be the big surprise to us, the outside of investment community from Bristol-Myers?

Murdo Gordon

Well, at the speed of change in our portfolio will probably be a surprise to me as well but...

Marc Goodman

Go ahead make your guess.

Murdo Gordon

We are excited about the opportunity to jump in to first-line lung and we have a broad program as you know with our 227 approach. I do think China is an interesting opportunity at least for us in the short term and I think we’ll continue to perform well across the market approved indications in our oncology portfolio as well as Eliquis and the other brands.

But one of the really exciting things and we’re starting to talk about that at this upcoming ASCO is the emergence of mechanisms or products beyond Opdivo and Yervoy in oncology and starting to show hopefully what will become a broad portfolio of drugs that can help patients initially in second line settings for patients who have tried and progressed on existing immune checkpoint inhibitors like PD-1 inhibitors where we might be able to help them in second line.

And also looking at the oncology world rather than by primary tumor diagnosis or line of therapy, but much more at the biology of cancers that these patients are diagnosed with and seeing if there isn’t a more precise immunotherapy that should be offered to patients in first-line based on the biology of their tumor and the immune phenotype of the patient, that’s a really exciting potential future for oncology. And I think with our pipeline and the capabilities of our R&D organization and the ability of the commercial organization to move quickly, move rapidly on a global footprint, that’s a really exciting world and I’m hopefully going to be around to enjoy that.

Marc Goodman

It seems right now the discussion is obviously we're migrating from PD-1 fortunately to PD-1 plus maybe something else, it seems the question is do you think there is even a possibility that PD-1 is not even one of the combo products three, four years from now, how quickly do we move?

Murdo Gordon

This is definitely where I would say you should talk to Tom Lynch. I would say that there are different schools of thought, but it’s probably more about what pathway and when you treat a patient.

Marc Goodman

And just coming back to your comment on China, you said a big surprise China did you mean on the oncology side can China be a big market?

Murdo Gordon

Potentially.

Marc Goodman

When does that start to kick in?

Murdo Gordon

It’s hard to say, but what we do know is that China is clearly with this approval in hep C shown they’re committed to addressing public health and building much better healthcare in the country for their citizens. And I think if I look at what others public health crises might they want to tackle I think about had a cellular carcinoma because of the large amounts of hepatitis that they have. I think about gastric cancer, I think about lung cancer.

There are a lot of - there's some epidemiology there that is different than in the West and because of our partnership with Ono and the development plan we had is unique to Japan and other Asian markets. We’re in a really good position to address those public health needs of the Chinese population and I would say China is starting to become real in terms of an emerging first world healthcare market.

Marc Goodman

And just lastly there, how quickly was the China hep C approved the application?

Murdo Gordon

Just over a year.

Marc Goodman

Over a year?

Murdo Gordon

Yes.

Marc Goodman

And have you filed already for the…

Question-and-Answer Session

Operator

Q -


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