Earnings Call Transcript
BRISTOL MYERS SQUIBB CO (BMY)
Earnings Call Transcript - BMY Q2 2022
Tim Power, Vice President, Investor Relations
Good day and welcome to the Bristol-Myers Squibb 2022 Second Quarter Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the call over to Mr. Tim Power, Vice President, Investor Relations. Please go ahead, sir. Thanks Sara and good morning everyone. Thanks for joining us this morning for our second quarter 2021 earnings call. I'm joined this morning with prepared remarks by Giovanni Caforio, our Board Chair and Chief Executive Officer; and by David Elkins, our Chief Financial Officer. And also part in today's call are Chris Boerner, our Chief Commercialization Officer; and Samit Hirawat, our Chief Medical Officer and Head of Global Drug Development. You'll note that we posted slides to bms.com that you can use to follow along with for Giovanni and David's remarks. Before we get started, I'll read our forward-looking statement. During this call, we'll make statements about the company's future plans and prospects that constitute forward-looking statements. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the company's SEC filings. These forward-looking statements represent our estimates as of today and should not be relied upon as representing our estimates as of any future date. We specifically disclaim any obligation to update forward-looking statements, even if our estimates change. We'll also focus our comments on our non-GAAP financial measures, which are adjusted to exclude certain specified items. Reconciliations of certain non-GAAP financial measures to the most comparable GAAP measures are available on bms.com. And I'll hand it over now to Giovanni.
Giovanni Caforio, CEO
Thank you, Tim and good morning everyone. Let's start with our second quarter performance on slide four. We are midway through 2022 and we've made great progress during an important year for the company. We continued to grow our in-line franchises, expand our new product portfolio, advance our pipeline, and execute important business development activities. Our foundation is strong and positions us well for growth. With respect to our commercial performance, we delivered continued sales growth with revenue up 5%, adjusting for foreign exchange and non-GAAP EPS increasing by 18%. The strong revenue growth was driven by excellent commercial execution with solid year-over-year growth for our in-line brands, particularly for Eliquis and our I-O franchise and significant momentum from our new product portfolio. Within our new product portfolio, Opdualag, our third I-O agent is off to a great start, and we are pleased with the team's early execution. Opdualag strengthens our position in I-O and accelerates the sustainability and growth of our I-O franchise. We are also establishing a strong foundation for Camzyos. As the first agent that effectively treats the underlying condition of symptomatic obstructive HCM, we see a lot of potential to drive significant penetration in this large underserved and underdiagnosed population. We also made great progress advancing our broad set of pipeline opportunities through regulatory approvals and clinical trial readouts during the quarter. In hematology, we received US FDA approval for Breyanzi with a best-in-class label in second-line large B-cell lymphoma as well as EMA validation. With this approval, Breyanzi now has the broadest patient eligibility of any CAR T cell therapy in relapsed or refractory LBCL. This reinforces our opportunity for leadership in cell therapy and further strengthens our view of Breyanzi as a key growth driver for the company with over $3 billion in non-risk-adjusted revenue potential in 2029. In cardiovascular, we delivered positive Phase 2 data for Milvexian in secondary stroke prevention. And we're looking forward to this data being presented at the European Society of Cardiology Meeting next month. With this data in hand, we plan to initiate our Phase 3 program by the end of the year, which provides an important opportunity to improve outcomes for patients and extend our world-leading anti-thrombotic business into the next decade. And in oncology, we continue to strengthen the growth outlook for Opdivo, with another indication in GI cancers, where it now has a leading position. During the quarter, our financial results were strong, with growth in our in-line and new product businesses. Our financial strength continues to provide us with significant flexibility to deploy capital in a balanced way, including for business development. And during the quarter, we announced an agreement to acquire Turning Point Therapeutics, a leading precision oncology company. On Slide 5, let's discuss Turning Point's lead asset, repotrectinib, which is a next-generation potential best-in-class TKI, targeting the ROS and NTRK driver mutations of non-small cell lung cancer and advanced solid tumors. Importantly, as you can see on the slide, the key First-Line lung cancer data has been announced for repotrectinib is differentiated from potential competitors on duration of response and safety profile. These acquisition will broaden our portfolio in precision oncology and in solid tumors and it is a strategic fit for the company. We expect the transaction to close in the third quarter of this year and believe it will support our medium to long-term growth strategy with accretion to non-GAAP EPS beginning in 2025. We plan to continue to leverage our financial strength to pursue transformational science through business development. Turning to our execution scorecard on Slide 6. We know the importance of continued delivery of key pipeline milestones, and we have made tremendous progress across therapeutic areas this year. In addition to the key milestones I already mentioned for Breyanzi and Milvexian, we have reached mid- to late-stage pipeline, and we are accelerating the next generation of potential medicines. Over time, we believe iberdomide and CC-480 or mezigdomide have the potential to play an important role in multiple myeloma. In that regard, we made good progress during the quarter, having moved iberdomide into its first registrational trial in the second-line setting of multiple myeloma. Looking ahead, I am encouraged by the breadth of opportunities for the rest of this year and beyond. We look forward to the PDUFA date for deucravacitinib in psoriasis in September. We're excited for the opportunity to bring this oral therapy to moderate-to-severe psoriasis patients soon. With multiple indications on the horizon beyond psoriasis, we believe that this asset has greater than $4 billion in non-risk-adjusted revenue potential in 2029. In addition, we also expect to see data to support important expansion opportunities for other key medicines over time. These include key data for Abecma, Opdivo, Opdualag and Reblozyl. We hope that this data will enable these medicines to benefit more patients and further expand their commercial potential. I remain excited about the multiple opportunities we have across our pipeline, and I look forward to continuing to update you on our progress. As I review our performance during the first half of 2022, I'm very proud of the employees of Bristol-Myers Squibb around the world. Together, we have built the foundation for an even stronger company with a more diversified portfolio of growth products and increased durability across each of our four key therapeutic areas. Our performance in the quarter continues to demonstrate the resiliency of our business and our continued financial strength. We believe this positions us well to continue to grow our business in an increasingly complex external environment. This includes macroeconomic factors, such as the strengthening US dollar and accelerating inflation as well as legislative headwinds in the US. Given our growing and rapidly diversifying business and our continued financial flexibility, we remain very well positioned for the future. With that, I'll turn it over to David to walk you through the financials in detail.
David Elkins, CFO
Thank you, Giovanni, and thank you to everyone for joining our second quarter earnings call. Let's look at Slide 8 to review our strong top line performance. Unless noted otherwise, I will reference our sales growth on an underlying basis, excluding foreign exchange effects. In the second quarter, we achieved revenues of around $11.9 billion, reflecting a 5% increase from the previous year. This growth was largely fueled by a substantial 16% increase in our in-line and new product portfolio, effectively countering the impact of recent LOEs. Now, let's delve into our new product portfolio performance on Slide 9. Global revenues reached nearly $500 million, more than doubling from the previous year. Compared to the prior quarter, growth was also robust, increasing by 38%, mainly due to the strong launches of Abecma and Opdualag, which I will discuss further shortly. I am very pleased with how our new product portfolio is performing and its potential for the future, especially with two additional launches so far this year and the expected approval of Deucravacitinib in six weeks. Our new product portfolio presents significant opportunities for expansion and could generate over $25 billion in revenue on a non-risk-adjusted basis by 2029. I look forward to providing updates on these products as they reach their full potential. The performance of our solid tumor portfolio, as shown on Slide 10, was strong. Opdivo sales continued to rise globally this quarter, driven by demand for our newly launched and core indications. In the US, we achieved 12% growth for Opdivo compared to the previous year, driven by demand in first-line lung, renal, and gastric cancers, as well as adjuvant esophageal and bladder cancers, partially offset by some impacts from Opdualag in first-line melanoma. Internationally, revenues also grew significantly, increasing by 13%, primarily due to growth from new indications, particularly in first-line lung and renal cancers, as we continue to secure reimbursements in various countries. Looking ahead, we anticipate ongoing growth for Opdivo from our expanding indications in both early and late-stage cancers. Yervoy sales increased by 7% globally, and in the US, revenues were consistent with the prior year as we faced some variability in RCC and melanoma, along with higher inventory burn and gross to net adjustments this year. Notably, sequential revenues grew by 5%, primarily fueled by demand in first-line lung cancer, and we continue to expect growth for the brand. Now onto our successful launch of Opdualag, the first fixed-dose combination of a LAG-3 and PD-1 inhibitor. Although still early in its launch, we generated $58 million in sales this quarter, primarily by strong demand and $10 million from stocking. The demand for Opdualag aligns with our strategy of taking market share from PD-1 monotherapy, with some sales through the Opdivo and Yervoy combination. Internationally, we are encouraged by the recent positive opinion from the CHMP in Europe and look forward to realizing Opdualag's potential as a new standard of care for patients with metastatic melanoma worldwide. Now, turning to our growing cardiovascular portfolio on Slide 11, starting with Eliquis, our leading OAC globally, which has seen strong revenue growth of 20% year-over-year. In the US, sales increased by 27% compared to last year, driven primarily by demand growth and favorable gross to net adjustments. As we approach the third and fourth quarters, we expect typical dynamics for Medicare coverage gaps, with second-half revenues likely being lower than the first half, as we have observed in prior years. Internationally, sales grew by 9% from a year ago, largely due to increased market share in key markets, as the brand remains the number one OAC in several countries. This growth was partially offset by pricing actions in many markets and, to a lesser extent, at-risk generic launches in the UK and the Netherlands. We expect the impact of the at-risk generics launching in the second half of the year to be approximately $250 million. Moving to our most recent launch, Camzyos. Most patients starting treatment with Camzyos utilize a free trial offer for at least 30 days, which contributed to the $3 million in recorded revenue this quarter, primarily from stocking. In Q2, we successfully established the groundwork by leveraging our strong cardiovascular leadership in REMS to certify over 1,000 healthcare professionals. We are now focused on broadening our user base and assisting in the initiation of treatment for patients on Camzyos. We are pleased with the feedback from physicians so far and look forward to supporting more patients living with symptomatic oHCM. Turning to our hematology products on Slide 12, starting with Revlimid, which generated approximately $2.5 billion in sales. Sales were mainly affected by generic entry, particularly in international markets. In the US, while we experienced some demand softness due to volume generic entry this quarter, we know that specialty pharmacies are primarily using the current generic for new patients to ensure ongoing treatment. We expect Q3 revenues to be around $2.1 billion, as variability will occur quarter-to-quarter based on the deployment of generics. We maintain our full year global sales guidance at $9 billion to $9.5 billion. Pomalyst global revenues grew by 9% compared to the previous year, driven chiefly by demand for triple-base regimens in earlier treatment lines and extended treatment durations. Reblozyl generated $172 million this quarter, marking a robust 36% increase year-over-year. In the US, we are observing positive trends in patient adherence and treatment duration. Internationally, Reblozyl continues to grow as demand increases in both MDS and beta thalassemia-associated anemia, alongside gaining reimbursements in more countries. Finally, regarding our cell therapy assets, Abecma and Breyanzi, Abecma posted strong revenues of $89 million this quarter. This is a 36% sequential increase from last quarter, driven by expanded capacity and vector supply. While we are encouraged about treating more multiple myeloma patients, demand continues to outpace supply, and we are focused on further expanding capacity, including more manufacturing sites in the future. For Breyanzi, sales reached $39 million this quarter. Although demand remains strong for the brand, sales were affected by lower-than-expected manufacturing success rates, which have now been addressed. Importantly, as Giovanni mentioned, we are pleased to have received a broad second-line label for large B-cell lymphoma patients. We are actively working to invest and expand capacity early next year to enable treatment for this indication. As we work on building additional capacity to treat more patients in earlier lines, we expect revenues in Q3 and Q4 to be largely similar to Q1 revenues this year. Next, regarding our immunology product summary on Slide 13, Orencia's global sales grew by 11% compared to the previous year, driven by expanded US sales as well as demand in international markets. For Zeposia, global sales for the quarter hit $66 million, more than doubling compared to last year, mainly due to Zeposia's expansion into ulcerative colitis. Sequentially, in the US, sales were bolstered by a combination of favorable gross to net effects and wholesale buying patterns amounting to about $20 million. We are encouraged by the 24% demand growth over the last quarter and remain focused on expanding our volume to improve access throughout 2023. Internationally, Zeposia continues to secure reimbursement in additional markets for MS and UC. Finally, we are excited about expanding our portfolio with another first-in-class asset, our selective TYK2 inhibitor, Deucravacitinib. Our commercial and medical teams are in place, and we are prepared for the launch. Now let’s look at Slide 14 to go over the second quarter P&L. I have already covered our revenues, so I will concentrate on other key non-GAAP line items. Gross margins fell mainly due to product mix, partially offset by foreign exchange effects and related hedging settlements. Our operating expenses, excluding acquired in-process R&D, were generally aligned with the prior year, reflecting increased investments in our new product portfolio and pipeline, mainly offset by foreign exchange. Acquired in-process R&D charges were $400 million this quarter, primarily from the buyout of a royalty obligation for Camzyos, totaling $295 million, along with a $90 million upfront payment for BridgeBio. This had a 17% impact on diluted EPS. Last year, acquired in-process R&D charges totaled approximately $793 million, accounting for a $0.30 impact on diluted EPS. The second-quarter tax rate was influenced by the earnings mix. Lastly, we recorded strong growth in non-GAAP EPS this quarter, increasing by 18% year-over-year. This includes a $0.14 impact from acquired in-process R&D. Excluding these charges, non-GAAP EPS would have grown by 7%. Now, moving to the balance sheet and capital allocation on Slide 15, the company's balance sheet remains robust with $13.2 billion in cash and marketable securities as of June 30. Cash flow from operations in the first half of the year reached $6.1 billion. In this quarter, it was approximately $2.3 billion, influenced by a cash tax payment, and we expect cash flow from operations to recover in Q3 and Q4. Our capital allocation priorities remain steady. Business development continues to be a high priority, and we are making progress with the announcement of our planned acquisition of Turning Point Therapeutics. We are dedicated to reducing debt, having repaid $2.9 billion in debt this quarter, and we remain committed to returning capital to shareholders. Earlier this year, we executed a $5 billion ASR and are open to repurchases in the future. Now looking at our 2022 non-GAAP guidance on Slide 16. We are updating our revenue guidance to around $46 billion this year, reflecting the strong appreciation of the US dollar against other global currencies. Excluding currency effects, we anticipate underlying sales growth for the business to be 2% versus 2021. We estimate the FX impact on full-year sales at today's spot rate to be around $1.5 billion. We expect our In-Line and new product portfolio to grow in the low double-digit range and reaffirm our LOE guidance, including Revlimid's guidance of $9 billion to $9.5 billion for the year. Gross margin is projected to be approximately 79%, up 100 basis points from previous guidance due to favorable currency effects and related hedging settlements. Our operating expense guidance, excluding acquired in-process R&D, remains unchanged, declining in the low single-digits compared to the prior year, mainly due to favorable FX and cost discipline. For the second half of the year, we expect a more balanced expense phasing than in previous years. In sum, we are reaffirming our non-GAAP adjusted EPS guidance based on the solid strength of our portfolio, mitigating currency translation through our natural hedges and hedging program. Before we proceed to Q&A, I want to express my gratitude to all our colleagues worldwide for their continued efforts in delivering strong commercial, clinical, and financial results. The resilience of our company and the exciting catalysts ahead energize me about the growth opportunities before us. I will now hand the call back to Tim and Giovanni for Q&A.
Giovanni Caforio, CEO
Thank you, David. Sarah, could we go to our first question, please?
Operator, Operator
Thank you. And we'll take our first caller from Chris Shibutani with Goldman Sachs.
Unidentified Analyst, Analyst
Hi. This is Dan on for Chris. Thanks for taking our question. Two from us. First on the Milvexian readout, if you could maybe frame some areas of focus into the ESC data and provide any additional color into how you're thinking about the Phase 3 program as the data is in-house. And then second, on Camzyos, if there's any additional feedback you can provide on some of the early launch dynamics and your expectations into the second half of the year and early next year. Thank you.
Giovanni Caforio, CEO
Thank you, Dan. Samit will answer your question on Milvexian, and Chris will provide some incremental color on Camzyos. Thanks.
Samit Hirawat, Chief Medical Officer
Sure. Thank you, Giovanni, and thank you, Dan, for the question on Milvexian. I’m certainly looking forward to having the data presented at ESC and discussing the results. And of course, as you know, we'll go into the details with the other specifics of the data itself. But I think there are two questions that probably are important to answer when we look at the data. And that would be one related to the efficacy, specifically when it comes to the impact on clinically proven ischemic strokes. And the second, of course, is to look at bleeding rates, and more specifically over there, one that physicians and patients would be interested to know about would probably relate to intracranial bleeds, where patients with strokes have a propensity to have those kinds of bleeds. So those are the kinds of questions that we set out to answer. And I think those are the questions that people will be very interested to know. For Camzyos, let me pass it on to Chris to take you through.
Chris Boerner, Chief Commercialization Officer
Thanks, Samit, and thanks, Dan, for the question. We are very pleased with the early launch of Camzyos, while it's still very early days. We're off to a very good start. What I would say is that, by and large, the performance that we're seeing is aligned to our expectations. I would highlight maybe two or three things. First, awareness is very good. We've seen incredibly strong enthusiasm for the product from both physicians and patients. Importantly, the feedback that we're getting on the clinical program has been overwhelmingly positive and consistent. I'm going to give you some vignettes on that. Patients are seeing significant benefit, both in terms of feel and function. And that benefit is being seen very early, in fact, as early as four weeks post-initiating treatment. And that's really important because it's driven a lot of enthusiasm, both from patients and it's given physicians a reason to believe that the product is living up to the promise that we have. In terms of physician experience, the feedback has been very positive. The REMS education that we've initiated is intuitive, getting on and certified for REMS has been straightforward. As David mentioned, that's translated to over 1,400 HCPs being REM certified. And one thing I would highlight is that this is probably the most important leading indicator for this product launch, given the fact that you don't have a history of REMS in the cardiovascular space. Physicians are going to be REMS certified if they have intent to use. The last thing I would highlight is we're seeing a healthy increase in the number of centers prescribing week-over-week. We don't see any access issues on the horizon that would prevent these patients who are getting on to therapy converting to drug. If I sum it up, performance is in line with expectations. We're happy with what we're seeing, and we very much look forward to the continued uptake of this product over the course of the year.
Tim Power, Vice President, Investor Relations
Okay. Thanks, Chris. Sarah, can we go to the next question, please?
Operator, Operator
Thank you. And next, we'll take Andrew Baum with Citi.
Andrew Baum, Analyst
Thank you. First question on Milvexian. Is there any possibility you could expedite what's going to be a very large and long-duration clinical trial program through the adoption of MRI-defined strokes within a composite endpoint either to expedite the trial or to decrease the required accrual for the trials? Second, could you comment on whether you are exploring your CD19, CD3 at your CD19 CAR T, excuse me, Breyanzi, for autoimmune indications given some of the recent data in lupus? And then finally, one of your competitors announced some intriguing data related to MSS colorectal cancer. I know that Bristol has one in, I think, two; if you could provide us any update on that, that would be useful. Many thanks.
Giovanni Caforio, CEO
Thank you, Andrew. I'll ask Samit to answer your three questions.
Samit Hirawat, Chief Medical Officer
Yes. Thank you, Giovanni, and thank you, Andrew. Very thoughtful questions, as always. For Milvexian, look, we're not obviously going to get into the Phase 3 indications right now. From a Phase 2 perspective, you will certainly get to see the data. And what is important is from a physician's perspective, what matters really is the clinical strokes and those certainly will be the questions to discuss when the data are presented. On the CD19 side, certainly very intriguing data in the autoimmune disease, especially in the lupus, SLE patients who are severely impacted by the disease. Those are the things that we continue to discuss from a scientific perspective on how to explore, where to explore, and certainly not hidden from us. As we evolve in our thinking, we'll share with everyone where we are going with that. The German data were very intriguing, I have to say, and as we presented earlier this year. For CTLA-4, we've seen the data on CRC from a competitor. From our perspective, we have three CTLA-4 antibodies in development, the Non-Fucosylated Probody as well as the Non-Fucosylated Probody. So there are three that are in development. The way we think about it is, number one, we have an ongoing study in MSS TRC for you know that we just initiated the Opdualag comparing to the standard of care. And for future developments for CTLA-4 antibodies, we have to think about combination strategies because we know that many times, even in the past, when single agents have been used, the response rates ultimately in registration trials have really been single-digit or low single-digits in fact. So we will obviously be able to share the data once we have these combination studies completed. They are currently ongoing. Too early to talk about the data at this time. We're certainly aware of the CRC data.
Andrew Baum, Analyst
Thank you, Samit.
Tim Power, Vice President, Investor Relations
Sarah, can we go to the next question, please?
Operator, Operator
We'll take our next question from Geoff Meacham with Bank of America.
Geoff Meacham, Analyst
Thank you for the questions. I have one about commercial aspects and another regarding the pipeline. Chris, could you discuss the trends for Reblozyl in the US and how the duration of therapy compares today to last year? Is the demand strong enough to exceed your peak forecast? Samit or Giovanni, although Turning Point hasn't finalized yet, how much emphasis is placed on combining immuno-oncology with targeted therapy for Bristol in the future? I understand your ROS1 combinations are likely to advance in the pipeline, but do you see this as a new approach to enhance an immuno-oncology strategy? Thank you.
Giovanni Caforio, CEO
Thank you, Geoff. Chris, why don't you start on Reblozyl and then Samit will comment on oncology strategy.
Chris Boerner, Chief Commercialization Officer
Yes. Thanks for the question, Geoff. We're very pleased with the continued uptick that we're seeing with Reblozyl. We had good growth in the quarter versus prior year as well as sequentially. I would highlight a few things. First, we're continuing to see good acquisition of new patients for this product. One of the things that we look very carefully at is what are physicians' perceptions of the product and importantly, how quickly they're moving patients off of ESAs to get on Reblozyl therapy. That time on ESAs when patients are not getting an adequate response continues to shorten, which is a leading indicator of the number of patients that will be within the indication that we have. Importantly, we're seeing nice trends in both dosing and administration. The average MDS dose by cycle has grown steadily during the course of this launch and has increased this year. That's resulted in improved efficacy and longer duration of therapy which, to your question, has been up 6% this year relative to where we were in 2021. While your question was mainly focused, I think, on the US, I would highlight that ex-U.S., the launch is early, but we're seeing very good uptake in the early launch markets, notably markets like Germany, and then we'll have additional access and reimbursement decisions ex-U.S. So overall, we feel very good about where we are, and we look forward to continued uptick of this product as we go through the remainder of the year.
Samit Hirawat, Chief Medical Officer
Thanks, Chris and Geoff, maybe I can take on the Turning Point question. So first of all, excited about the acquisition of Turning Point Therapeutics and looking forward to bringing repotrectinib to patients in the second half of next year. Your question around the combinations. Those are all going to be data-dependent and so explorations will continue. Although at this time, certainly, there is a lot of knowledge and lots of emergence of data TKI combinations or tyrosine kinase inhibitors, which are not necessarily mutation-specific tyrosine kinase, which have generated a lot of interest and a lot of data and have been approved in multiple indications when combined with I-O therapies, but it does provide additional opportunities in the future to look at these sorts of combinations in more specific, pre-specified populations and selected patient populations, but those will be data that will need to be generated at the current time, too early to tell.
Geoff Meacham, Analyst
Thank you, Samit.
Tim Power, Vice President, Investor Relations
Great. Sarah, can we go to the next question, please?
Operator, Operator
We'll take our next question from Chris Schott with JPMorgan.
Chris Schott, Analyst
Hi, great. Thanks so much for the questions. I guess the first one for me was on Breyanzi in terms of what's the latest on maybe the timing and, maybe as importantly, the magnitude of your capacity expansion. It sounds like this might have been getting pushed out into 2023 versus I think previously, you were talking about maybe a Q4 target. I just wanted to elaborate a bit more on what's happening there? And the second question was on Camzyos. I know there's a bit of a lag between when docs get certified for the REMS and when Bristol actually starts to generate sales for the drug. But as we just kind of think about the sales ramp from here, should we be thinking about this as a fairly gradual process, or is this a product that could see a steeper ramp starting sometime later this year, given the promising initial data in terms of the number of physicians getting certified, et cetera? Thank you.
Giovanni Caforio, CEO
Thank you, Chris. Chris?
Chris Boerner, Chief Commercialization Officer
Thanks for the question, Chris. On Breyanzi, what I would say just at the outset around cell therapy in general, is that the demand in the quarter for both of these products, Abecma and Breyanzi, was strong. We continue to be very pleased with the feedback on the profiles of these products and importantly, how those profiles position us competitively. With respect to Breyanzi, as David mentioned earlier, we had underlying demand that was very strong. We're obviously very pleased with the second-line approval and the fact that it's given us the broadest label of any CAR T in DLBCL. But as David also mentioned, sales were impacted in the quarter by manufacturing success rates. Those success rates, the issue underlying that was resolved, and we expect success rates to improve as we head into this quarter. More generally around manufacturing with Breyanzi, given the broader label, we had hoped to have increased capacity in the second half of this year. We're now anticipating that in Q1 of 2023. Delivering that capacity is a top priority. The focus here is on increasing both vector and drug product supply. I will note that we've seen a nice increase in the capacity for Abecma, driven by successful drug product expansion and increasing vector supply, and we anticipate that same focus will now be applied to Breyanzi and have every expectation that we'll be able to deliver on that. That capacity is going to be important. Because given the broad label with this product and the compelling profile, slot availability is going to be critical. The good news is we have a very strong manufacturing team focused on increasing the supply, and we look forward to delivering that supply in the first part of the year. As for Camzyos and the pace of launch, I would view this as a steady increase in the number of patients. There are going to be four things that are really going to determine the pace of this launch. Physician and patient demand, the volume of REM-certified physicians, how quickly those patients come to get on Camzyos therapy, and then obviously, the conversion of those patients to commercial drug. I would say really across all of those dimensions, we're happy with what we're seeing as I referenced earlier, it's in line with where we expected to be this early in the launch. The demand for the product is very strong. We're getting great feedback from both patients and physicians. I spoke to the volume of users and the fact that we're seeing a nice increase in the number of REMS-certified physicians every week. We had told you previously, I think, in fact, last quarter, that we expected patients to initiate therapy during their routine visits. That's largely playing out. Though I would say, we've seen a number of accounts, including some of our smaller and medium-sized accounts quickly getting multiple patients on to drug. We're also seeing some of our larger accounts organizing Camzyos clinic days so that they can efficiently bring large volumes of patients, initiate them and monitor them. So again, that's where we thought it would be. Finally, as I referenced earlier, access is an important consideration here. Virtually all oral specialty products like Camzyos go through this period of two to six months of getting on to formulary. During that period, the majority of patients are going to go on to free product. That's what we're seeing here. But again, the good news is we're not seeing any access issues. We don't foresee any challenges converting those patients to commercial drug. So when you add it up, we expect the volume to increase over the course of the year. You'll see those patients convert to commercial sales as formulary status is achieved. Bottom line, we're very happy with what we're seeing thus far very much in line with expectations.
Tim Power, Vice President, Investor Relations
Thanks, Chris. Sarah, can we go to the next question, please?
Operator, Operator
Thank you. We'll take our next call from Steve Scala with Cowen.
Steve Scala, Analyst
Well, thank you very much. A couple for Samit. First, in your deucravacitinib FDA discussions to date, has there been any mention of a box warning whatsoever, or has that not come up in any conversation? And also given the time frame involved, can we assume there won't be an ADCOM? And then the second question is based on available data, does Bristol think other cardiac myosin inhibitors will have black box warnings, or do you think they could avoid that? Thank you.
Giovanni Caforio, CEO
Thank you, Steve. Before I ask Samit to answer both of your comments, as you know, we don't comment on ongoing discussions with regulatory authorities, but Samit will provide his perspective on both.
Samit Hirawat, Chief Medical Officer
Yes. Thank you. Steve, as Giovanni has mentioned, no specifics to be provided here. What I can repeat, I think, from the past conversations we've had is our confidence in the data itself and we think about from an efficacy perspective, differentiation and superiority that has been proven through the Phase 3 trial versus Otezla from a safety perspective, showing differentiation when we think about the JAK inhibitors versus deucravacitinib, first in inhibitor. This is that profile that has continued to evolve through multiple other trials that have given us the confidence to initiate the programs, as you know, in psoriatic arthritis, two Phase 3 trials ongoing, and also now looking forward to initiation of the SLE Phase 3 trials at the end of the year, beginning of next year. Overall, we're looking forward to the September 10 PDUFA date and bringing this new medicine to patients. In a similar way, I would say, in the cardiac myosin inhibitors, it is difficult and not appropriate probably for us to comment on other people's drugs as to what a profile is going to look like and if they will have any warning and precautions in the label or not. What we can say though is again, I believe in Camzyos as already alluded to by Chris and David in his remarks, our belief in the data and our physicians are acting in terms of getting trained and prescribing it to the patients. Overall, looking forward to the initiation of our non-obstructive Hypertrophic Cardiomyopathy Phase 3 program towards the end of the year.
Tim Power, Vice President, Investor Relations
Sarah, can we go to the next question, please?
Operator, Operator
Yes. We'll move on to Seamus Fernandez with Guggenheim.
Seamus Fernandez, Analyst
Thank you for the question. I have a couple of quick inquiries. First, Giovanni, if Congress enacts the Medicare pricing reform, could you clarify the potential impacts on innovation and your long-term guidance? Are you optimistic that there could be changes that might reduce the effect, such as extending the protection period for small molecules from nine years to 12 or 13 years? I'm curious if there are constructive opportunities to consider. Additionally, I would like some insight into the launch dynamics for deucravacitinib. You've expressed enthusiasm for bringing this product to market and to patients. In the event that the label includes a JAK boxed warning, which we don't expect, what feedback are you receiving from physicians on how to address that? We've also had many inquiries from investors regarding the idea that a JAK warning could position it post-biologic, which doesn't quite resonate with us. I'd like to know your thoughts on this proposal. Thank you.
Giovanni Caforio, CEO
Thank you, Seamus. Let me start on pricing reform and then Chris will comment on deucravacitinib. So first of all, as you know, discussions are ongoing in Congress, and it's difficult to speculate exactly on the bill and some of the details. They will be included in the bill. There will also be obviously a long period during which the implementation of some of the measures will be clarified, and some of the dynamics would be really important to understand. With respect to your question on would there be an impact on innovation. First of all, we've consistently said that the elements of reform that improve affordability for patients, we are supportive of. As an example, the redesign of the Part D benefit and establishing another pocket for patients. That's very beneficial, and we are definitely very supportive of that. There are elements in the bill, however, which are obviously very detrimental to innovation and particularly price setting by the government at nine and 13 years, obviously have the potential to have a negative impact on innovation overall. I would say that with respect to the impact for our company, there's two things I can say at this point. First of all, it's really not helpful to look at our exposure to the channel today. I think it's important to really understand the dynamics that will develop over the next few years before these policies are implemented. A couple of things I'd like to say. First of all, obviously, as you know, Revlimid revenues in the US are declining rapidly. Eliquis, we share that 50% with Pfizer. Importantly, as you think about Opdivo, that loses exclusivity at the end of the decade. What I can say is that our rapidly diversifying portfolio and a significant number of new medicines that we're launching today and would be launching before key elements of this policy are implemented position us well to navigate the challenges associated with reform for the entire industry. Obviously, there is much more that we need to learn, first of all, through a potential finalization of the bill; second, really understanding better some of the elements of its implementation.
Chris Boerner, Chief Commercialization Officer
So maybe I'll pick up, Seamus, on the question regarding deucravacitinib and the launch. Where, as you know, we're very excited about the opportunity to launch this product. As was referenced previously, the commercial and medical teams are in place. They're ready to go. They're very experienced. What I've said previously, I think, is where we'll start this conversation, which is that we explore every meaningful scenario as we think about the launch of any new product, but we continue to index heavily on the scenario, where we think that the preclinical and clinical data support. That is that this is a unique mechanism of action that is clearly differentiated from other products in the class. When we talk to customers, we get an almost uniform alignment that that’s the right way to think about deucravacitinib, that the mechanism based on all of the data that we've seen is unique and it is differentiated, not only from JAKs, but it's differentiated, most importantly, from the current standard of care for oral agents treating moderate-to-severe patients. As we step back and think about this product, we anticipate very strong demand for deucravacitinib based on the clinical profile from 2 Phase 3 studies that show clear superiority relative to the existing standard of care. We have a unique mechanism of action that's clearly differentiated and we think positions us well to become the oral branded choice for these moderate-to-severe psoriasis patients. As was implied in the premise of your question, we're very excited to launch this product, and we look forward to the PDUFA date in September.
Tim Power, Vice President, Investor Relations
Thank you, Chris. Sarah, could we go to our next question, please?
Operator, Operator
We will take Luisa Hector with Berenberg.
Luisa Hector, Analyst
Hello. Thank you for taking my question. You showed your slide on business development, highlighting the importance there. I just wanted to check, has there been any shift in the activity, the trends in companies coming to you versus you approaching other companies? Just any more recent trends given the longer duration now of depressed valuations, just whether you're seeing any shift in those dialogues that you're having with targets. Thank you.
Giovanni Caforio, CEO
Thanks, Luisa. I would say nothing has changed there, it continues to be an area of great focus for us. We're looking at bringing new science into the company. You are right, the valuations are resetting now for a longer period of time, and we plan on continuing to be very active in this field. It's always been a priority for us.
Tim Power, Vice President, Investor Relations
Thanks, Giovanni. Can we go to the next question, please?
Operator, Operator
Thank you. We move on to Tim Anderson with Wolfe Research.
Tim Anderson, Analyst
Hi. I have a question on Milvexian, which is historically, when companies have added together anti-platelet therapies or anticoagulant therapies to try to achieve better results, it pretty much always results in higher bleeding and that calculation is whether that higher bleeding is more than offset by higher efficacy. So in the secondary stroke prevention setting, just theoretically ignoring any data you already have at hand, shouldn't we expect that same sort of thing where we would likely see at least some additional bleeding and then we'd have to weigh that against efficacy, or is it in the realm of possibilities that you really don't see any additional bleeding in that triple therapy arm? And then TYK2, you guys expressed high confidence in the molecule. I'm wondering why you haven't advanced yet to mild-to-moderate patients, if you're fairly confident in the label why not push ahead in Phase 3 and start to expand the market like Otezla has already done.
Giovanni Caforio, CEO
Thank you, Tim. Let me just ask Samit to answer your question, both on Milvexian and also plans for deucravacitinib.
Samit Hirawat, Chief Medical Officer
Yes. Thank you. And certainly looking forward to, again, the presentation of the Milvexian data. I obviously cannot get into specifics of the data itself. But let me just reiterate that the two questions that would be important from everybody's perspective is on the efficacy, looking at the clinical strokes; and secondly, from a bleed perspective, it becomes very important what kind of bleed and especially, when we think about the fatal bleeds, or meaningful bleeds that become important. If you look at the past, you will see those kinds of things that made people a little bit worried. We can discuss more when we have the data presented at ESC around Milvexian. On TYK2, certainly, we are very pleased with the profile for the oral TYK2 inhibitor that has obviously evolved and continues to evolve in multiple other indications as well. As we look to the mild-to-moderate psoriasis, as we've said before, we are looking to bring in the topical formulation, the Phase 2 trials that are about to begin from the Phase 2 or from the TYK2 perspective, and that's our foray into the mild-to-moderate psoriasis. The pivotal trial was conducted in moderate-to-severe plaque psoriasis patients. Of course, multiple Phase 3 trials in various indications, first of all, in psoriatic arthritis that are ongoing and then later this year leading the starting of Phase 2 trials in Ulcerative Colitis as well as in Crohn's disease.
Tim Power, Vice President, Investor Relations
Thanks, Samit. Can we go to the next one, please Sarah?
Operator, Operator
We'll take our next caller from Matthew Phipps with William Blair.
Matthew Phipps, Analyst
Hi, thanks for taking my questions. Another melanoma landscape question. The results of studies presented at the recent ASCO showing Opdivo maybe should be used even ahead of BRAF inhibitor combinations. Do you think that's enough to drive more uptake of Opdivo and Yervoy in that setting in the front line, or is this thing you're going to explore with additional trials, maybe newer CTLA-4 antibodies?
Giovanni Caforio, CEO
Chris?
Chris Boerner, Chief Commercialization Officer
Sure. Well, thanks for the question, Matthew. We have long believed that I-O has promise in improving the outcome of BRAF mutant positive patients. Today, as you may know, the use of I-O, particularly as a first-line treatment in that population is still somewhat limited. It's around 30% to 35% of that population. The data that were presented actually last year at ASCO are potentially practice changing in that they provide, I think, important insights into how to best sequence dual I-O therapy relative to targeted therapy. In particular, they show that the use of dual I-O before targeted therapy led to a significant improvement in overall survival. So in that regard, the data are compelling and could inform practice. The one big caveat to keep in mind here is that the targeted therapy combination used for first-line BRAF-mutant patients has been very sticky. While we may see some use of dual I-O in the frontline setting based on the data, I would anticipate that would be mainly in an academic setting, primarily because that's where the data are going to be most known. Remember, we can't promote this data. So I think it's unlikely you're going to see broader adoption. That said, it's encouraging data, and it could have an impact on selected customers.
Tim Power, Vice President, Investor Relations
Thanks, Chris. Sarah, can we go to the next question, please?
Operator, Operator
Thank you. We'll move on next to Carter Gould with Barclays.
Carter Gould, Analyst
Great. Good morning. Thanks for taking the questions. I wanted to go to Eliquis and exactly kind of what countries are baked into sort of the second-half headwind. You mentioned the $250 million headwind on the quarter. You made some intra-quarter comments. And we've seen some additional countries have generics like Canada. And I guess just bigger picture, is it more appropriate to still think about Eliquis as a tailwind to overall company growth in 2023, given some of these headwinds? It seems like every month, there’s a new country sort of launching generics. And I guess then secondly, just on deucravacitinib, how are you guys thinking about those IBD indications right now and specifically, sort of the viability of those higher doses and if anything has shifted based on your conversations with the FDA around psoriasis.
Giovanni Caforio, CEO
Thank you, let me just start on Eliquis and then David will provide some more insight and Chris will answer your second question. So what's referred to by David in terms of the impact of EU generics for the rest of the year at this point is the UK and the Netherlands. So let me just step back and remind you where we are in the UK, as you know, the high courts have found our composition to be invalid. Obviously, we strongly disagree with that ruling because that's the same patent that was actually upheld and reaffirmed in both the US and Canada last year, and we're seeking permission to appeal. The Netherlands is very different because in the Netherlands, a generic company decided to launch before the trial actually took place on the merits. That trial is still ongoing. There are generics of Eliquis that we expect to enter the market in Canada that was planned later this year. As we've communicated before, there are similar lawsuits ongoing in other EU countries and every country actually is completely independent and each jurisdiction will make a decision independent of one another. From our perspective, we continue to be very much convinced about the strength of our IP and will defend every case in every country. David?
David Elkins, CFO
The majority of our growth is driven by the US, and we have patent protection until April 1, 2028. We are confident about the continued growth potential of Eliquis due to this. To give you an idea of our business, in the UK, it amounts to around $500 million. We anticipate that the combined revenue from the UK and the Netherlands will be approximately $250 million this year. As Giovanni mentioned regarding other European markets, we will actively defend our intellectual property there. This provides an understanding of our outlook on growth potential.
Chris Boerner, Chief Commercialization Officer
And then maybe I'll just say something very briefly on IBD and turn it over to Samit to talk about the development. IBD is obviously a large and underserved market. Some elements are more competitive than others, but in general, there's still a need for multiple oral options here. Given the profile that we've seen with deucravacitinib, certainly through the psoriasis program, I think from a commercial standpoint, there would certainly be an intriguing opportunity for us, but Samit can speak more directly to the clinical plans.
Samit Hirawat, Chief Medical Officer
Yes. Just to keep it very brief, both trials are ongoing in Phase 2 right now, one in Crohn's disease, one in ulcerative colitis. Based on data, we will be making decisions on development as well as the doses. But I would say it has no bearing at all in terms of the approvability of the deucravacitinib in September for the psoriasis program. So rest assured.
Tim Power, Vice President, Investor Relations
Sarah, can we go to the next question, please?
Operator, Operator
We'll take our next caller from Dane Leone with Raymond James.
Dane Leone, Analyst
Hi, thank you for taking my questions. Two strategy ones for me, and this is something that comes up in almost every investor conversation. For you guys to win with Milvexian, the view is that you really have to have that head-to-head comparative trial versus rivaroxaban in AFib, and AFib is going to represent the majority of the addressable market for Milvexian. The question is, from a lot of people's perspective, it seems like you guys might be behind on that front. Could you just maybe address what your strategy is to get into AFib? What do you view as the timelines for success? And then generally, how do you view head-to-head trials as potentially mitigating the LOE associated with Eliquis as we go through this decade? Kind of to the same point, there are a lot of questions about how you preserve the Opdivo revenues going forward and how much you can actually swap out with further studies of Opdualag? You have a number of ongoing but what do you really see as the potential of Opdualag peak sales from what you know now between what's going to cannibalize Opdivo and potentially Yervoy versus where are going to be de novo markets for pure growth? Thank you.
Giovanni Caforio, CEO
Thank you. Let me just answer your Opdualag question first, and then Samit is best positioned to comment on Milvexian. On Opdualag, as we've stated before, we see great potential for Opdualag. Looking at and in fact, we've articulated our perspective that peak sales for the asset can be from a non-risk-adjusted basis above $4 billion in revenue, and that, of course, comes from a number of indications. When you look at the indications that we are currently studying, of course, melanoma is the entry for Opdualag, but there are trials ongoing in colorectal cancer, liver cancer and lung cancer. In some cases, those are indications where we currently have a presence with Opdivo, in some cases, there are new indications. You are right when we look at Opdualag as an opportunity to provide durability to our I-O franchise. Assuming continued successful development, there is clearly potential for Opdualag to be playing in a meaningful part of the current revenue space for Opdualag. With respect to Milvexian, again, Samit will comment. Let me just remind you that as he said before, we'll be able to provide much more insights into developing the development program once you've seen the presentation of the data. Obviously, we're looking at a broad set of indications well beyond AFib. But Samit?
Samit Hirawat, Chief Medical Officer
Good. Just very briefly, thank you, Giovanni. What I would say is that there will be data presentations, both from the competitor molecule and ourselves at the same time at ESC. Neither of the two companies have started the Phase 3 program, and our partners, Janssen and BMS. We, of course, are looking forward to the initiation of that program later this year. As I said earlier, both on the venous and arterial side of things, single-agent combinations, and then we'll be able to talk about the competitors as well. So thank you.
Tim Power, Vice President, Investor Relations
Thanks, Samit. Sarah, can we go to the next one, please?
Operator, Operator
Thank you. We'll move on to Colin Bristow with UBS.
Colin Bristow, Analyst
Hey, good morning and congrats on the quarter. On mezigdomide, when should we expect to see the fourth line update on this asset? And could you just walk us through the broader development plan and timing around this, please? And then maybe just a follow-up on business development. Just how should we think about this going forward in terms of your therapeutic areas or mechanisms of interest? What are you now thinking as your sort of sweet spot for deal size? Thanks.
Samit Hirawat, Chief Medical Officer
Sure. I will start with mezigdomide. The data we've previously presented regarding its use as a single agent and in combination has been very intriguing and beneficial for planning its long-term development. We plan to provide an update on the data at the upcoming ASH conference for the ongoing single-arm open-label study. More importantly, as highlighted earlier, there are two Phase 3 trials for mezigdomide scheduled to begin in 2023. These trials will investigate its combination with trecholis and compare it to pomalidomide. Both trials will focus on second-line plus indications, and we are eager to see these initiatives launch in 2022. I will now turn it back to Giovanni for the business development question.
Giovanni Caforio, CEO
Thank you. From a BD perspective, what I can say is we remain size agnostic. We have tremendous financial flexibility. What we look at is compelling science in areas that we know well and the opportunity to continue to further strengthen the outlook of the company in the second half of the decade and beyond, and obviously do that through deals that generate value for patients and for shareholders.
Tim Power, Vice President, Investor Relations
I know we're running short on time. I think maybe we have time to squeeze two last ones and maybe go to the next one, please.
Operator, Operator
Absolutely. We'll take our next question from Mohit Bansal with Wells Fargo.
Mohit Bansal, Analyst
Thank you for taking my question. I have a follow-up regarding Camzyos. When we talked to cardiologists, there were concerns expressed by general cardiologists about ramps and whether only cardiomyopathy clinics, which have more patients, can effectively handle this. Is that accurate? Additionally, how can Bristol facilitate this process for doctors? Lastly, do you have any information on what percentage of the patient population is treated at specialty cardiomyopathy clinics? Thank you.
Giovanni Caforio, CEO
Thank you. Chris?
Chris Boerner, Chief Commercialization Officer
Sure. With respect to the REMS and sort of how that's been received, as I mentioned earlier, the feedback on the REMS process has been very favorable from physicians. It's straightforward to get certified. We've spent a lot of time working with Samit's team before approval to make sure that the REMS program generally was intuitive and fits into how cardiologists generally treat patients. So far, that work upfront as well as the education we've done is paying off. Cardiologists are generally seeing it as not a barrier. In fact, the fact that we have seen a large number of medium and small clinics get not only REM certified, but get patients onto therapy, and in many cases, get multiple patients on therapy is an indicator of the fact that the REMS program is, by and large, being seen as something that's very manageable for physicians and hasn't proven to be a barrier at all. Moreover, I think that the REMS program when we designed it was important to make sure that patients are initiated and monitored over the course of their disease. That's exactly how this process is playing out at this point. So very happy with respect to what we're hearing back from physicians on REMS.
Tim Power, Vice President, Investor Relations
Thanks, Chris. Can we move to our last question, please?
Operator, Operator
We will take our last question today from Robyn Karnauskas with Truist Securities.
Robyn Karnauskas, Analyst
Thank you for allowing me to ask my question. Regarding Breyanzi, it seems that only about 20% of eligible patients are currently able to access the medication, despite its broad label and its availability for use in the second line. What strategies are you implementing to enhance the time from vein to vein or from brain to vein? Additionally, about deucravacitinib, how do you see its positioning compared to dermavan or Eliquis, especially considering its lower price and favorable safety profile? What potential step edits might be necessary in this context? Thank you.
Giovanni Caforio, CEO
Thank you, Robyn. Chris?
Chris Boerner, Chief Commercialization Officer
On Breyanzi, our primary focus remains on addressing operational issues, particularly after the recent challenges that impacted success rates in this program. We are working on improving turnaround time, which is a key priority for the manufacturing team. Additionally, for both Abecma and Breyanzi, it is essential to concentrate on increasing vector supply and drug product supply. We are collaborating with health authorities to boost the capacity for Breyanzi at our current facilities and are also establishing two new state-of-the-art facilities in Devens, Massachusetts, and Leiden, the Netherlands, which will be crucial for expanding production capacity as we move into next year. Regarding deucravacitinib, our key consideration is the value proposition associated with this asset. We believe we have a compelling narrative, especially given the strong anticipated demand and our two Phase III studies that provide head-to-head data versus the current standard of care for patients with moderate to severe psoriasis. I am not overly concerned about competition from topical treatments, as many of them will still be used alongside oral therapies. Our strategy involves ensuring rapid access for patients under plans with open access. Unlike some other markets, many patients in this market will have access as we launch, but we will need to continue building volume to extend coverage for those without open access initially.
Giovanni Caforio, CEO
Again, looking at what we need to deliver from this asset, we are highly committed to ensuring that patients have access and coverage. And really, the strategies we are putting into place are looking to strengthen our position and ability to do that over the longer term. Now more broadly, I want to thank all of you for participating in the call. This was a strong quarter for the company. We have good momentum with our in-line business. There are very positive dynamics with our new product portfolio, and that positions us well for the second half of the year, which again, will be very important for the company. I look forward to continuing to answer your questions, and our IR team will be available for any follow-up you have. So thanks again, and have a good day.
Operator, Operator
Thank you. And that does conclude today's teleconference. We do appreciate your participation. At this time, you may now disconnect.