Bristol Myers Squibb Co Q1 FY2021 Earnings Call

Good day and welcome to the Bristol Myers Squibb 2021 First Quarter Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Tim Power, Vice President Investor Relations. Please go ahead, sir.

Thanks Keith. And good morning, everyone. Thanks for joining us today for our first quarter 2021 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 for Q&A are Chris Boerner, our Chief Commercialization Officer; and Samit Hirawat, our Chief Medical Officer and Head of Global Drug Development. As you'll see, we've posted slides to bms.com that you can use to follow along with for today's remarks. But before we get started, let me read our forward-looking statements. During today's 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 those non-GAAP financial measures to the most comparable GAAP measures are available at bms.com. Giovanni?

Thank you, Tim. And good morning, everyone. Let me start by saying that I'm proud of our continued strong execution during a global pandemic and the significant progress we're making against our strategy. I want to recognize and thank our global employees for their hard work and resilience through this challenging time. Now turning to Slide 4. At the start of the year, I laid out our strategy to grow our business and renew our portfolio through the end of the decade. During the first quarter, we delivered strong results consistent with the strategy. We successfully grew our revenues, launched new medicines and new indications for IO and continued to advance our pipeline. Starting with our financial performance, our revenue grew 3%, despite the impact of COVID-19 related buying patterns in Q1 of last year. Our quarter was strong for sales and EPS in the context of COVID-related dynamics for some of our products. Based on continued strength in our business, we are affirming our full-year non-GAAP guidance for 2021. The accelerated renewal of our portfolio advanced across all four key therapeutic areas. Through regulatory and clinical readouts we're building a more diversified, younger portfolio that will fuel our growth through the decade and beyond. Although there remains uncertainty with how the COVID recovery will evolve, we are actively planning to return colleagues to the workplace and are prioritizing plans to fully bring our sales reps back into the field where conditions allow to further support our in-line products and launches. Let's turn to our execution scorecard on Slide 5. I am pleased that we've already made solid progress across the board during Q1. Specifically, in oncology, Opdivo is the first and only IO agent with a first-line approval in gastric cancer. Combined with our opportunities in metastatic and adjuvant esophageal cancer, Opdivo can become the leading IO medicine for patients with early and advanced GI cancers. We have strengthened the growth and long-term sustainability of our IO franchise with a positive Phase 3 clinical trial for relatlimab. We're now the only company with three proven IO mechanisms. Building on our leadership position in melanoma with the Opdivo plus Yervoy regimen, we've now demonstrated a clinically meaningful PFS benefit on top of PD-1 monotherapy for a second IO agent, which is a great accomplishment knowing the high efficacy of PD-1 monotherapy in first-line melanoma. This is great news for patients with advanced melanoma and we look forward to presenting the data at ASCO in June. Beyond IO, six of our eight near-term launches are now successfully underway. In hematology, we made great progress in our cell therapy franchise with U.S. approvals of Breyanzi and Abecma. Our other new product launches are also progressing well. A lot is happening in immunology. We presented Phase 3 data for deucravacitinib, which we expect to file later this year. We see this as an important medicine for patients and the company with significant revenue potential. As you know, deucravacitinib is the first-in-class selective TYK2 inhibitor with the potential to become the new oral standard of care in moderate to severe psoriasis. It also has broader potential to treat diseases such as psoriatic arthritis, IBD and lupus. In our mid-stage pipeline, we initiated the Phase 3 study for cendakimab in eosinophilic esophagitis. And in CV, we filed mavacamten with the FDA and have a PDUFA date of early next year. Given the potential for our early-stage pipeline with multiple assets across therapeutic areas and modalities, including protein homeostasis, cell therapy, and next-generation biologics, we are planning a more in-depth session with you sometime in the fall to update you on the progress within our pipeline and how that further supports the long-term potential of the company. Now turning to Slide 6. Our team's execution as a new company so far has been remarkable and reinforces my confidence in our ability to capitalize on the potential for future growth. We remain focused on growing our business between 2020 and 2025. Most importantly, we expect that in 2025, our LOE products will constitute less than 10% of our business, with at least one third of our continuing business coming from our launch portfolio. We believe our new launch portfolio has significant potential with $20 billion to $25 billion of known, risk-adjusted sales potential in 2029. And this does not include the potential medicines that could come from our mid or early-stage pipeline. To close, I’m confident we have established a strong foundation for our future growth. The strength of our execution, promising launch opportunities ahead, the breadth of our pipeline and strength of our balance sheet positions us very well. I will now turn it over to David to walk you through the financials. David?

Thank you, Giovanni. And thank you all for joining our call today. I'd like to start with our strong top-line performance on Slide 8. Our continued sales growth of 3% was driven by strong operational performance. When excluding approximately $500 million of COVID-related buying patterns we experienced last year, underlying sales growth was strong, up 8% or 6% excluding the benefits of foreign exchange as our teams continue to execute very well operating in a mostly virtual environment. I’ll now provide additional color on the performance of our key brands and new launches, starting with Eliquis on Slide 9. This was another strong quarter for Eliquis. Global sales were up 9%, despite the unwinding of the fourth quarter inventory build and the approximately $350 million COVID-related build we experienced this time last year. In the U.S. first quarter sales increased 8% versus prior year, driven by strong demand with total prescriptions up 11% due to the strength of our position as the number one NOAC. First quarter sales also included the impact of a one-time true-up of approximately $160 million related to the Medicare coverage gap. As we look towards the second half of the year, we expect similar dynamics from the coverage gap as we've seen in prior years. We remain optimistic about the continued growth opportunity for Eliquis since we've seen both new-to-brand NOAC volumes return to pandemic levels, as well as accelerated switching from warfarin. Internationally, sales remain strong growing 11% versus prior year. Eliquis continues to be the number one NOAC in multiple key markets internationally with significant room to grow. We remain very pleased with the execution of Eliquis around the world and expect to continue to grow Eliquis share within a growing class. Now turning to Opdivo on Slide 10. As it relates to the first quarter performance in the U.S., first-line lung shares remained in the low double digits within the PD-L1 eligible population. The launch of our Opdivo plus Cabozantinib indication in first-line renal is going well with further builds and we're in a strong position in that space with significant uptake in the unfavorable segment where Opdivo plus Yervoy is not indicated. We did see some impact from COVID during the quarter, as the resurgence of the virus earlier in the year impacted infusion centers. We remain very confident Opdivo will return to growth this year. Further supporting this growth, we're also very pleased with the recent approval of CheckMate-649 as Opdivo plus chemo is now the first IO regimen approved in first-line gastric cancer. We look forward to launching additional indications in early-stage diseases across esophageal and muscle-invasive bladder cancers, which are expected to further contribute to our growth later this year. Additionally, we have multiple opportunities for future growth, including CheckMate-648 for treatment in first-line esophageal cancer, which we announced met its primary endpoints, as well as from other trials that we'll read out over time. Outside the U.S., sales are up 2% due to favorable effects of foreign exchange. We are encouraged to see strong adoption of new approvals and increased reimbursement, including the -9LA regimen in Europe and both -9LA and -227 regimens in Japan. These dynamics offset the second-line indications and the impact of COVID. Looking forward, we expect to expand the use of Opdivo in several additional indications currently under review. All in all, we remain very excited about the growth outlook for Opdivo. Moving to Slide 11. I'd like to touch on our in-line multiple myeloma portfolio. In the U.S., Revlimid sales are flat. Its growth was offset by the expected work-down of last quarter inventory build. We also saw the expected seasonality that Revlimid and Pomalyst experience due to patients entering the coverage gap early in the year. Outside the U.S., we saw a 4% increase primarily from foreign exchange, as well as strong demand for triplet-based therapies, which offset the approximate $100 million combined impact of an inventory build and a tender last year. This resulted in a 1% increase for Revlimid globally. Global Pomalyst revenues were up 8%. This was driven by overall strong demand from triplet-based regimens and use in earlier lines. Now we want to spend a few minutes sharing the progress we've made in the quarter on our recent launches on Slide 12. Reblozyl contributed $145 million in sales in the quarter. Let's start with Reblozyl, which generated $112 million in the first quarter. We continue to be pleased at the launch and uptake in new patient starts. We continue to see the transition from initial bolus to underlying demand. And while this market has seen some COVID impact, we remain focused on continuing to drive new starts for patients earlier in their treatment journey. Our initial launches in international markets are going well. And we will continue to add markets globally over the course of the year as we receive reimbursement. Moving to Zeposia, where we continue to see good traction establishing the brand as the S1P modulator choice in multiple sclerosis. Positive initial prescribing experiences are translating into repeat scripts. And we are also encouraged to see patients convert to commercial supply at a quicker rate than before. Beyond multiple sclerosis, we look forward to launching Zeposia in ulcerative colitis with FDA approval expected at the end of May. Outside the U.S., we're pleased that Zeposia MS launches in several markets and we will continue to secure reimbursement in additional markets as the year progresses. The marketing authorization application for ulcerative colitis also remains under review in Europe with approval expected toward the end of this year. Turning to Onureg. We continue to be encouraged by the launch where our teams remain focused on establishing the profile as the first and only oral treatment to demonstrate an overall survival benefit in the first-line maintenance setting of AML. Physician feedback and awareness have been positive and our focus remains on shaping and establishing Onureg and a new maintenance segment of the AML treatment paradigm, which we know will take some time. Outside the U.S., we recently received a positive opinion from the CHMP with approval expected this year. Turning to our newly established cell therapy franchise on Slide 13. We are very excited to have launched two differentiated cell therapies for patients following recent approvals of Breyanzi in large B-cell lymphoma and Abecma in BCMA-targeted multiple myeloma. First regarding Breyanzi, our best-in-class CD19 product, while we are early in the launch messages around efficacy and outpatient utilization are resonating, with high aided awareness among CAR-T treaters. We have also been very pleased at the rapid activation of our treatment sites, as we now have approximately 55 sites activated with patients already apheresised and recently infused. As it relates to BCMA, we're excited to have the first-ever BCMA CAR-T approved for patients with highly refractory multiple myeloma. We're just a few weeks into the launch and encouraged by the enthusiasm we are hearing from customers for the treatment. We also see a real opportunity for synergy from the combined execution of these two therapies. Abecma is able to leverage the existing and growing site footprint of Breyanzi. For both these important medicines, our priorities are expanding the site footprint, rapid account activation and maximizing our differentiated profiles while ensuring a seamless customer experience. Now, let me take you through a few items on the P&L on Slide 14. First, as we said, our gross margin will continue to be largely a function of product mix. And in the first quarter, our gross margin rate was impacted by the strength of Eliquis in addition to foreign exchange. Operating expenses reflect continued MS&A investment in our multiple launches across various therapeutic areas. And relating to our tax rate, our effective rate in the quarter was 16.8%, which reflects our earnings mix for the quarter. Now, switching gears to the balance sheet and our capital allocation on Slide 15. Our liquidity position remains strong with approximately $13 billion in cash and marketable securities, including strong cash flow from operations of nearly $4 billion in the quarter. Regarding capital allocation business development remains our top priority for the company, and we will continue to evaluate opportunities to complement our internal innovation. With regards to our debt reduction this quarter, we've demonstrated our commitment to a strong investment grade credit rating by accelerating our repayment of debt via a $4 billion tender and redemption. We are also committed to returning cash to shareholders through dividends and share repurchases. Recall that we increased our share repurchase authorization by $2 billion at the start of the year and that we planned to buy back between $3 billion and $4 billion in shares this year. In the first quarter, we have already repurchased $1.8 billion toward that goal. And we will remain opportunistic as the year progresses. Now turning to our 2021 guidance on Slide 16. Following this quarter’s performance, we are reaffirming our non-GAAP guidance for the year, which reflects significant growth over last year. Our businesses have remained resilient and our launch opportunities are coming to fruition. Again, I'm pleased, not just with the performance, but also with the considerable progress we made in executing our launches and advancing our pipeline. And now I'd like to turn the call back over to Tim and Giovanni for Q&A.

Great. Thanks very much, David. Keith, can we go for our first question, please?

Thank you. We will now take our first question from Terence Flynn of Goldman Sachs. Please go ahead.

Great. Thanks for taking the question. It looks like the ClinicalTrials.gov listing for your Factor XIa Phase 2 study in total knee replacement is now showing a completion date this month. So just wondering if we could actually get data from that trial here over the near term? And then looking back at enoxaparin rate of bleeding in this setting, it looks to be about 4% to 5%. So just wondering what level of differentiation there you're looking for? Thank you.

Thank you, Terence. Good morning. Samit, I will pass the two questions on Factor XIa to you.

Thank you, Terence. We're looking forward to the readout of the first trial in the total knee replacement setting, which is testing the single-agent Factor XIa in the next couple of months as we look forward now and, as we've spoken before, the second trial would read out in the early part of next year as well. In totality, it will be the one determining factor to really ascertain truly the overall safety and of course what we can gain in terms of efficacy to define the plan as we move forward. So more to come on that. I did not go into the specifics of what level of improvement we are trying to look for. Those are going to be defined with the differences that we see, but again, we've said before, if we can produce another agent for prevention of clotting and thrombosis at the level that is similar in efficacy, but with a better safety profile, that is what we are looking for and certainly looking forward to the data in combination with antiplatelet agents as well. Thank you.

Thanks Samit. Keith, can we go to our next one, please.

We will take our next question. It comes from Chris Schott of JPMorgan.

Great. Thanks so much. Just two questions here. Maybe first, just elaborate a little bit more in terms of LAG-3 and its role in the market. I guess should we be thinking about this combo mostly as a kind of monotherapy competitor, or is this something that you think from an efficacy standpoint can stand up against an Opdivo, Yervoy type of combo? And then my second question was just a little bit more color on the Opdivo adjuvant launches. As we think about kind of treatment rates and development of these markets. Just a little bit more color on how do we think about the esophageal and bladder kinds of ramps as we think about kind of this year. So are these big 2021 events, or is this going to take a couple of years to really see the opportunity for those indications? Thanks so much.

Thank you, Chris. So first on LAG-3, let me share my enthusiasm for the fixed-dose combination, which represents really important data to validate a third immuno-oncology agent from the company. And let me ask Chris to give you his perspective on dynamics in melanoma and where that fixed-dose combination may play and then give you insights into the uptake in adjuvant.

Yes. Thanks for the question Chris. So let me start with LAG-3. First, let me say that we are very excited and pleased with the data readout that we've seen for the third IO that we have from BMS. The results are very encouraging and I think seeing an enhanced activity on top of Opdivo in melanoma, that's a pretty high bar. And so we're excited about the opportunity to bring this to patients. In terms of where it fits, you remember the current landscape of first-line melanoma: Opdivo plus Yervoy represents about 35% to 40% of first-line melanoma. Approximately 30% of this market is still single-agent IO, and you've got another 30% that is non-IO. So we think there's a real clear opportunity here for us to drive the benefit of relatlimab plus Opdivo into that population. There's clearly a continued unmet need with physicians looking for additional options that have a dual IO-like effect, and we're looking forward to bringing that combination to patients as we work our way through the regulatory process. In terms of the adjuvant opportunities, again, this is going to be an important opportunity as we get into the latter half of this year, and certainly as we look for the growth opportunities beyond 2021. You noted esophageal and the upcoming opportunity with bladder, we're very excited about those. With adjuvant esophageal, this is a substantial patient population with considerable unmet need. The treatment rates here are relatively low today just given the lack of approved therapies. So we would anticipate that over time we'll be able to drive utilization both in terms of the patients who are being treated today, which is relatively small, and then improve treatment rates over time much the way we did in adjuvant melanoma. And we would expect a similar dynamic to play out as we launch in bladder cancer as well. So very excited about those opportunities and look forward to seeing those launches play out in the coming months.

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

Our next question comes from Seamus Fernandez of Guggenheim.

Well, great. Thanks for the question. So I wanted to follow up on Chris' question as it relates to LAG-3. I noticed in one of the ASCO abstracts there's also an adjuvant trial that is supposed to report some data. I assume that this is just a single-arm trial, but what's Bristol hoping for in adjuvant melanoma in particular as well as the planned acceleration of the non-small cell lung cancer opportunity. Just hoping that Samit could maybe opine a little bit, or give us a little bit of visibility on where do you see LAG-3 potentially fitting in on the lung cancer side? And then separately just wanted to get a little bit of a better sense of your thoughts around the stroke secondary prevention (SSP) trial with Factor XIa still first half of next year. And maybe you could just remind us of the opportunity that you see there. In our view, we think that could be a $4 billion plus opportunity. That's really not reflected in expectations, but nobody knows this space better than Bristol-Myers Squibb given your experience with Plavix. Thanks.

Thank you. Thanks, Seamus. And thanks for the question. So let me just say before I pass it to Samit, what I look forward to is presenting the LAG-3 data at ASCO. I think it's going to be a great opportunity to show the strength of the data. On Factor XIa, let me just agree with you. This is a space we know extremely well where we've demonstrated our ability to be successful with Plavix, of course, going back a few years and with Eliquis, we're seeing as we speak now with the current performance of Eliquis. Samit?

Yes, thank you, Giovanni. Certainly very excited to see the data coming out and very happy with where we are going in the pipeline for LAG-3 in oncology for BMS as well. Overall, the natural progression after seeing the data in the first-line setting with the addition of relatlimab on top of nivolumab would be to go into the adjuvant setting. And that's where you begin to hear a lot more; we'll be progressing into a Phase 3 program in the adjuvant setting for this core formulation that we now have as a fixed-dose combination for Opdivo plus relatlimab. Certainly more to follow as we look deeper into the data for the metastatic trial to gain a more in-depth knowledge on the biomarkers, as well as the long-term follow-up that will come from the current 047 trial that will continue to evolve in terms of our knowledge. Now, the second part which you asked is about the non-small cell lung cancer opportunities. We're certainly excited to have started the early signal-generation trial, as well as looking at that combination of nivolumab plus relatlimab plus chemotherapy to see where we can take it. That's the idea behind accelerating the enrollment in that trial so that by the end of the year, we can initiate a Phase 3 program in that setting if we have tolerability that is demonstrated in that early trial that we're looking at. In addition to that, you continue to hear evolution of the data, potentially in hepatocellular carcinoma that we're looking also to explore in a Phase 2 study, and that can open up additional indications that we look forward to. Beyond that in the stroke secondary prevention trial, yes, we are still looking forward to the readout in the early part of 2022. As I said earlier, there are two opportunities. Opportunity number one is to improve on the current anticoagulation paradigm with a single agent and then opportunity number two is to expand the use of anticoagulants in the background therapy with antiplatelet agents. Those are the two studies that together will form the basis of the clinical development plan that we are thinking through, whether it'd be the venous side or the arterial side of thrombosis.

Thanks, Samit. We will go to the next question, please, Keith.

Thank you. Our next question comes from Tim Anderson of Wolfe Research. Please go ahead.

Thank you. I have a kind of a higher level question on the PD-1 space. Can you just talk about your longer term view on whether price competition in this category is kind of imminent or eventually will happen in developed markets, both U.S. and Europe? The space is clearly getting more crowded with both domestically produced PD-1s as well as those sourced from Chinese biopharma companies. And while price competition usually is not a winning strategy, it might be the only lever a lot of these other companies can pull. And I think at least in China, as many have started to recognize the PD-1 category, it has become a commoditized class. So lots of folks are trying to figure out what precludes this from happening outside of China. Can you articulate your views here? Thank you.

Thank you, Tim. Let me ask Chris to give you our perspective on a really important topic.

Yes, thanks for the question, Tim. We obviously think about this quite a bit, as we think about the number of new PD-1 entrants in the market, we really look at it on two dimensions. First, there's the competitive impact of having additional players on the market. Frankly, that's an area that we pay attention to, but we're a little bit less concerned about. We have considerable resources focused on planning around competition. We have a good track record of competing in these markets. And while we're always a bit paranoid of potential new entrants, we feel very good about our ability to effectively manage competition. The second dimension that we look at is, when you're raising, which is the risk of commoditization of a market. And the way we look at that is commoditization we think requires two things. It requires a low-cost entrant, and it requires perceived interchangeability on the part of payers, providers, and patients. The risk of both of these things coming together likely varies by geography, healthcare system and may be even by therapeutic setting, but we pay very close attention to this. In terms of the risk, we absolutely believe it's something that we need to stay on top of; it's, as you note, very dynamic. Currently the areas where we see the greatest risks don't overlap with our largest markets at least today. But we certainly have plans to address the risks as they become more tangible. The two things that I think we can continue to do that position us well against this threat are, first, continue to leverage the extremely broad data set that we have generated in I-O to ensure that treatment decisions continue to be clinically driven. And then second, continue to rapidly bring new data and approvals to market such that we're constantly pushing forward innovation and changing the standard of care. But this is an area that's very dynamic and we're paying close attention to it.

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

Thank you. Our next question comes from Geoff Meacham of Bank of America. Please go ahead.

Hey guys. Good morning. Thanks for the question. Just had a couple of quick ones. Under new launches highlighted on Slide 12, what were some of the headwinds you saw for Reblozyl this quarter? And then what do you think could be the tipping point for Zeposia and Onureg for the current indications? And then the second question is, with your cell therapy franchise, I know it's early, but just given the proximity of the two launches, are there synergies that you're seeing with respect to site activation or reimbursement, etc.? Thank you.

Thank you, Geoff. Chris, why don’t you go ahead? Let me just give you my perspective. I'm really excited with what's happening on the front of our launch brands. The profile of the medicines that you mentioned is very differentiated. We have strong labels and what we are hearing from physicians is exciting in terms of the potential role that these agents will have in the marketplace. Let me just ask Chris to give you more insights into some of the launch dynamics you referenced, Geoff.

Sure. Thanks for the questions, Geoff. There's a lot there. So let me try to hit on each of these relatively quickly. So Reblozyl, we're very pleased actually with the continued strong execution of the teams and what we're hearing on Reblozyl. Our expectations for growth this year, and certainly in the long-term remain unchanged. As for the dynamics that we saw in the quarter, sales were relatively flat Q4 into Q1. There were really two factors underlying this. First, as you will have heard from some of our peers, we have seen new patient volumes down in hematology generally. They were down about 10% to 20% versus pre-COVID levels in the MDS population. And so that was one of the factors that played, at least for the quarter. And we have seen, specific to Reblozyl, a bit of a prolonged bolus wash-out period. To give you some context around that, in Q4 we estimate that bolus patients for Reblozyl were roughly around 40% of the overall business. In Q1 that has come down to about 20% to 25%. And we would expect those patients to continue to come off therapy over the coming months. Those two dynamics notwithstanding, we are very encouraged by the continued uptake of new patient starts in this setting and continue to see a broadening of the prescriber base, which is critically important at this point in the launch. Continued excitement from our perspective with respect to Reblozyl. Onureg and Zeposia, in terms of pivot points, I would say, as we have discussed in MS, and as you've seen with some of our peers, it does take time to transition patients from written scripts to commercial dispensation in MS. That said, it was a big focus area as we discussed last year, and we are seeing very nice acceleration for Zeposia in MS. And of course, we have the opportunity and you see coming up with the PDUFA date a month or so away. And that's obviously another important opportunity for Zeposia and we very much look forward to bringing this differentiated product and mechanism into IBD. Onureg, we're in the process of creating a market with Onureg. That launch is going very well. In fact, we saw patient demand volume increase about 50% from Q4 coming into Q1. And I would say in that space, we're very excited with what we're seeing. Now, again it's a market where we're creating a new treatment paradigm and that's going to take some time. But all indicators are that the efficacy profile of this data is landing well with customers. And again, the teams are executing well. And then pivoting to your question on cell therapy, we're very excited about the two cell therapy launches. Both products have been very well received. Given Breyanzi has got a little bit more data in terms of the launch timing, let me start there. The launch there is going very well. We've had over 50 accounts that have been activated already. Our highest priority accounts in fact were activated within eight weeks of approval. The messaging around the best-in-class profile for Breyanzi is landing well. Physicians are clearly seeing a differentiated safety profile. And in fact, we've already apheresised and infused patients with Breyanzi. So I would say the execution there has been exceptionally well. And just quickly on Abecma, obviously a bit earlier in the process for Abecma, but we have the advantage of launching that product on top of the infrastructure that we built with Breyanzi. So we've actually been able to more rapidly activate sites there; we've had 25 centers activated within 10 days of approval. The physician feedback has been very positive and there's a lot of enthusiasm for us bringing the first BCMA-targeted cell therapy into multiple myeloma. So far, early days but the launch seems to be off to a very good start.

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

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

Thanks. First question to Giovanni in relation to business development, Bristol we anticipate is going to be more active. Many of your peers given the cadence of allowance in your portfolio, the FTC has been making increasingly loud noises about consolidation being a driver of increased drug prices and diminished patient access of late. I'm interested in how you think this could impact business development going forward, whether it's more noise than action. And what we should be looking for in novel mechanisms to engage, to determine whether M&A relates to anti-competitive activities. And then second question to Samit. Perhaps you can comment on whether you anticipate an advisory committee meeting to assess JAK safety broadly in a cross-divisional way? I'm obviously thinking about the assessment of its broader membership of that particular category? Thank you.

Thank you, Andrew. Let me start with your question on business development and then Samit will follow on your second question. So it's really difficult to speculate at this point in early days what the evolving position of the FTC will be. A couple of things I'd say: number one, I do agree with you that business development is an important priority for us. It has been for a while and it will remain one of the priorities for deploying capital and our capital allocation strategy. The second thing I'd say is that I actually feel that we've demonstrated over and over that when we acquire assets into the company, it's actually a way of accelerating their development and generating even more value for patients. And it's an important element of what drives our business development strategy. I feel there are plenty of opportunities to continue to strengthen our portfolio across all of the areas where we have presence and expertise. And obviously, we'll always take competition issues into account when we look at opportunities. But I don't see that at this point as limiting our ability to continue to execute a very differentiated business development strategy.

Yes, thanks Andrew. And certainly, yes, we've heard the speculation around an advisory committee potentially looking at JAK inhibitors broadly from a safety perspective and whether TYK2 would be included. The way we think about it is, if you look at the data, we do believe deucravacitinib is differentiated. There are good measures in terms of preclinical data, the clinical data, the mechanism of action and the way the data has evolved on the efficacy side. So overall, I think we have very strong arguments if there is an advisory committee. Certainly we'll be prepared with all the data that we've shared already. And we'll continue to evolve in terms of the long-term follow-up as well. We do believe this is a breakthrough in science. It's a novel, first-in-class TYK2 inhibitor with promising efficacy data for patients with psoriasis, which addresses an unmet medical need. So certainly, looking forward to sharing more as we go along; at the current time, we are in discussions in terms of preparing the file and getting it to the regulators and moving it forward as soon as possible.

Thanks Samit. Keith, can we go to the next one?

Our next question comes from Ronny Gal of Bernstein.

Good morning, everybody. Two if I may. First, the Office has now come out with restructuring Part D with some participation by pharma, through the cost structure of roughly 10%, even from the Democratic side, from the Republican side. I was wondering if you could just ballpark for us the relative impact of pharma participation in the cost structure of Part D and how does that translate into your own revenue? And second, I was wondering how are you going to handle the difference in prices for Zeposia between the MS market and the IBD market, because the two have different price bands and you're transcending that, so how are you thinking about handling that?

Hey Ronny, it's Tim, we couldn't quite hear the first part of your question. We heard the part about the price on Zeposia. Could you repeat the beginning of your question, if you don’t mind?

Sure. Part D restructuring, can you give us a feel for how a 10% hit in reimbursement requirements by pharma would translate into impact on your revenue?

Okay. Thank you. Let me start there, and then I'll ask Chris to address your question on Zeposia. So let me say, obviously there is a continued dialogue about potential benefit design changes that may be discussed by the administration. I think it's premature to go into any assessment of what the Part D redesign may entail — the details matter. I think what's important is a couple of things. First, as you know, we have a very diversified portfolio across multiple payer segments and multiple therapeutic areas. And so, there will always be different impacts on different parts of our portfolio from any benefit redesign and different dynamics for a product like Revlimid versus a product like Eliquis. And so that makes it difficult to give you any insights into the impact of reforms, because it really is important to know the details. What I think is more important is the fact that from our perspective, it is critical that we look at reforms that have one objective in mind, which is to improve affordability and access for patients in Medicare Part D. That's the core priority. The proposals that we'll continue to make as we interact with the administration will be focused on elements of Part D redesign that include establishing out-of-pocket caps, reducing the overall impact to patients in the catastrophic phase, smoothing expenses throughout the year. As proposals progress, I think it'll be easier for us to provide insights into how that impacts our portfolio.

Yes. Thanks for the question. Obviously we are keenly aware of the differential in prices between the MS market and UC. As you know, we priced Zeposia in line with the value it provides and to ensure the broadest patient access in the MS market. As we think about UC, it's certainly too early at this point to discuss specifics on pricing in UC. What I would say is that we will factor price considerations as we think about the broader access. Access is important in IBD generally and we have plans in place that we'll execute as we get closer to the approval of Zeposia in UC. It's something we've been focused on for some time.

Thanks very much. Please can we go to the next question please Keith.

Our next question comes from David Risinger of Morgan Stanley.

Yes, thanks very much. I have two questions please. First, could you just discuss the bar that Bristol-Myers set in first-line melanoma with the combination of Opdivo plus Yervoy? Just so we have that in context ahead of the LAG-3 readout. And then second, could you provide a framework for Zeposia sales drivers in coming years in both the U.S. and ex-U.S.? Thanks very much.

Thank you. I'll start on the melanoma clinical perspective. Opdivo plus Yervoy established a high bar in first-line melanoma with durable responses and long-term overall survival benefit. That regimen has been an important standard with long-term data supporting its use. For relatlimab plus nivolumab, the key comparator in the pivotal trial is nivolumab monotherapy, and the data we've seen demonstrate an improvement in progression-free survival on top of nivolumab. We do not have overall survival mature data yet for relatlimab, and the trials were not designed as a head-to-head versus nivolumab plus ipilimumab. So while the regimens are complementary options for physicians, the clinical positioning will depend on the totality of data including longer-term follow-up and safety profile. Relatlimab plus nivolumab offers another important IO-based option with an encouraging benefit-risk profile for patients.

And let me take the Zeposia commercial framework. The way we think about Zeposia is first of all, we're very excited about the near-term opportunity in both the U.S. and ex-U.S. in MS. Zeposia brings a differentiated profile into MS, it's performing well on written prescriptions and we're gaining share among oral agents. We're also making progress at converting written scripts into commercial dispenses which is a key commercial focus. Ex-U.S. it's early, but initial launches in markets like Germany look promising. Looking further out, the UC approval would be a meaningful incremental opportunity, and that launch will drive additional growth in 2022 and beyond. In UC we'll be focused on driving volume initially with patients who have open access and then working with payors to broaden access over time. So the major sales drivers will be continued share gains in MS, geographic expansion ex-U.S., and the addition of UC as a new indication.

Thanks guys. Can we go to the next one please?

Our next question comes from Gregg Gilbert from Truist Securities.

Thank you. On LAG-3, how are you thinking about the importance of biomarkers here? And what level of granularity should we expect around the data set at ASCO as it relates to LAG-3 positivity, etc.? And then Giovanni as a different twist perhaps on the BD question: when you took over as CEO, I imagine there was quite a sense of urgency to diversify the company, but with the steps you've already taken to do so, would it be fair to characterize your M&A strategy from here as more about enhancing existing franchises and less about diversification as a concept? Thanks.

Thank you, Greg. Let me start there, and then I'll ask Samit to give you an answer on biomarkers for LAG-3. I think you are absolutely right. One of the things that is a clear strength for the company today is the diversification of our business. When you look at our oncology business, solid tumors and hematology, what's happening in immunology, which is clearly the fastest growing segment of our business right now, and the long-term sustainable leadership position that we have in cardiovascular medicine, I think we have an incredibly well-diversified set of businesses with strong dynamics in all four. So that's an important foundation we've built for the company. At this point I see that as an opportunity because we have capabilities that we can leverage, we clearly have deep expertise, whether that's from a scientific and development perspective or from a commercial perspective growing in all of those areas. It gives us an opportunity to look at assets where we can apply promising technology, apply our expertise and maximize the value of those assets. So the priority for us now in business development is across all of those areas to continue to strengthen our portfolio. We've made good progress, and the objective is to further strengthen the outlook in the second part of the decade.

Thanks, Greg. For LAG-3, I won't get into the specifics of the data that we'll present at ASCO, but certainly some of the biomarker data will be included in the presentation. As you may recall from the published literature around LAG-3 and IO more broadly, identifying a single biomarker that dictates activity has been difficult. We'll continue to present deeper analyses after the primary data are presented, and we'll look at the landscape of biomarkers as we evaluate combinations and other indications.

Let’s go to the next one, please.

Our next question comes from Matt Phipps of William Blair.

Hi, thanks for taking my questions. Two quick ones. Can you give us any update on timelines for an EFS look in CheckMate-816? And how do you think the overall market there and the potential opportunity are impacted by Roche's PO10 positive announcement? And then secondly, on deucravacitinib given the strong results you saw in moderate-to-severe patients, and also the Otezla advanced study in mild-to-moderate, any plans to maybe run an additional head-to-head study versus Otezla in a mild-to-moderate patient population to expand the opportunity?

The EFS readout for CheckMate-816 is expected toward the end of 2022 to early 2023 timeframe. You've already seen the pathologic complete response results, which are encouraging, and we look forward to sharing EFS as soon as it's available. Regarding deucravacitinib versus Otezla in mild-to-moderate psoriasis, we are excited about the data we have in moderate-to-severe psoriasis and about the program overall. We have additional studies ongoing in other indications like IBD and lupus. We continue to evaluate the optimal development plan including potential comparative studies. At this time we are not ready to share plans for an additional head-to-head in mild-to-moderate psoriasis, but we will consider studies that expand the clinical data and the label where appropriate.

On the commercial opportunity for CheckMate-816, we're happy with the results seen so far. This is a sizable opportunity with just under 30,000 treatable patients in the neoadjuvant setting. Treatment rates are in the order of 60% to 65%, so there is an opportunity to provide a neoadjuvant option for those patients being treated today and to potentially increase the overall treatment rate as neoadjuvant options become more established. We'll continue to evaluate the competitive landscape and how new data shape adoption.

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

Our next question comes from Gregg Gilbert from Truist Securities.

Thanks very much Samit.

Our next question comes from Steve Scala of Cowen.

Thank you. A couple of questions. Based on everything that has been said, it sounds as though the relatlimab data is not competitive with Opdivo plus Yervoy on efficacy. It might be on safety, or am I misinterpreting? For instance, you mentioned adding to the armamentarium, but not advancing it. You referred to many patients on monotherapy who are not receiving IO, but you didn't really refer to those on IO-IO. So, I'm just curious what we should interpret and will full data be in the abstract on May 19? Second question on Slide 6 about 90% of products in the continuing business: should we think about Opdivo plus Yervoy comprising about 50% of that 90%? Thank you.

Thank you, Steve. Let me provide some perspective. First, on your question about the 90% continuing business by 2025: as we've said, 90% of the business will be continuing business excluding Revlimid and Pomalyst. Of that continuing business, about one third will be from our launch brands and the remainder will be our existing in-line portfolio. We're not breaking down that 70% further into individual products at this time. On relatlimab, we remain enthusiastic. Opdivo plus Yervoy is an established standard-of-care with long durability and long-term data. Relatlimab plus nivolumab demonstrated an improvement in progression-free survival compared to nivolumab monotherapy, which is a meaningful result because PD-1 monotherapy is already a high bar. We view relatlimab plus nivolumab as an important additional IO option with its own benefit-risk profile that will expand choices for physicians and patients. We will present the full dataset and further details at ASCO, and we look forward to discussing the data with the community.

Steve, to add, we did not do a head-to-head study of nivolumab plus relatlimab versus nivolumab plus ipilimumab, so direct efficacy comparisons between the two are not appropriate. Nivolumab plus ipilimumab has long-term OS data and a certain response profile; relatlimab plus nivolumab has demonstrated PFS benefit versus nivolumab monotherapy and has an encouraging safety profile. We'll have more granularity in the ASCO presentation, and then we'll be able to discuss positioning as the data mature.

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

Our next question comes from Luisa Hector of Berenberg.

Hello, thank you. I wanted to return to the Zeposia piece. In MS the market is obviously impacted by COVID. I'm just wondering which patients are starting on Zeposia and do you expect that to evolve? And then on the UC indication, are you anticipating an advisory committee? And could you update us on how you're preparing for launch? Thank you.

Sure. Let me start. Very happy with the performance of Zeposia in MS, particularly given the COVID environment. This market was hit by COVID in terms of new patient volume being down. As we entered this market, we engaged with customers and focused on three things: selling the differentiated profile, driving written prescriptions, and converting scripts to commercial dispenses. Most of our early demand has come from switch patients, and we're seeing new patient starts increase as well. We're also working to improve the commercial dispense rate and patient journey, and we've seen acceleration there. So we expect the patient mix to broaden over time as Zeposia gains traction. On preparing for UC, the PDUFA date is at the end of May; we have had constructive conversations with the FDA and at this point we do not anticipate an advisory committee for ulcerative colitis. We're preparing launch plans in parallel so we can move quickly upon approval.

Yes, just to reiterate on UC, we have had good interactions with the agency and currently have no knowledge of an advisory committee for ulcerative colitis for Zeposia.

I think we've got time for maybe two last ones Keith. Can we go to the next one please?

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

Thank you very much for taking the question. And congratulations on the start to the year. I know it's late in the call, but thank you for taking the questions and I'll keep it brief. A question we get a lot from investors is how to think about the multiple myeloma franchise over the next couple of years and your market share collectively within that. Obviously you have some moving pieces with Revlimid, with some offsets at the pipeline. The specific question, I guess, is where is your team looking in terms of some of the new agents that the clinical community is becoming more interested in, such as iberdomide/hydrobromide? And how do you think that can move into a commercial setting as an offset to some of the headwinds you may face in the space? Thank you.

Thank you. You correctly asked about our multiple myeloma strategy. We are leaders in multiple myeloma and continue to build on our heritage in that space. We have a broad portfolio and now are beginning to see the results with Abecma approval. We view our approach as three-pronged. One, CELMoDs: these have the potential to replace or complement existing therapies over time; we have agents like iberdomide being evaluated with near-term data readouts in later-line settings and others like CC-220/CC-92480 type programs reading out next year. Second, BCMA targeting: Abecma is approved and we are investigating other BCMA-targeted modalities including T-cell engagers and ADCs. Third, combination strategies: we'll evaluate combinations and moving agents into earlier lines of therapy. We feel very good about our position given multiple modalities and are confident we can continue to build leadership in this space.

Thanks, Samit. Can we go to our last one please Keith?

Our last question comes from Navin Jacob of UBS. Please go ahead.

Hi, thanks so much for taking my question and putting me on. Just two if I may. I want to confirm that on Eliquis the $160 million true-up was indeed a tailwind and not a headwind. And then finally just on BD, a question for Giovanni. I noticed you have a somewhat new vertical for BMS in neuroscience. As you think about BD, what are the areas that you'll be looking to invest in? And roughly how much are you looking to deploy on an annual basis for the next few years?

Yes, thanks Navin. Let me just say very quickly yes, you are right. The $160 million Medicare coverage gap true-up was a tailwind in the quarter. With respect to business development, what we are doing in neuroscience is interesting. Over the last few years we've built a model where a network of partnerships and a small team at BMS has advanced an early portfolio that looks compelling. It's not a large late-stage development area for us yet, but it's an emerging franchise that could be important in the future. As I said earlier, we will continue to look to strengthen our portfolio across all areas where we have expertise. We haven't given a fixed target in terms of annual M&A spend, but we've made it clear this is a top priority for capital allocation. The acquisition of MyoKardia last year is a good example of the focus we want to continue. We have significant financial flexibility to invest in the right opportunities and science.

So with that I would like to thank all of you for joining us today. As we discussed this quarter, we delivered strong results, consistent with our strategy. We've continued to grow revenue, execute on our launches and advance the pipeline. I'm really proud of what our teams have accomplished so far this year, including so many of the important milestones that have been discussed during the call. As always, our team will be able to answer further questions you may have during the course of the day and the rest of the week. So have a good day. And thanks again to all of you for participating.

This concludes today's call. Thank you for your participation. You may now disconnect.