Earnings Call Transcript - BMY Q3 2021

Operator, Operator

Good day and welcome to the Bristol Myers Squibb 2021 Third 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.

Tim Power, Vice President, Investor Relations

Thanks, Christina and good morning, everyone. Thanks for joining us for our third 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 with me for 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 and you can use those to follow along with David and Giovanni's remarks. But before we get started, I will read our forward-looking statements. During today's call, we make statements about the Company's future plans and prospects that constitute forward-looking statements. Actual results may differ materially from those indicated by these forward-looking statements. As a result of various important factors, including those discussed in the Company's SEC filings. These forward-looking statements represent our estimates as of today and should not be relied upon as representing our estimates as of any future dates. We specifically disclaim any obligation to update forward-looking statements, even if estimates change. We'll also focus our comments on our non-GAAP financial measures, which are adjusted to exclude certain specified items. Reconciliations of these non-GAAP financial measures to the most comparable GAAP measures are available at bms.com. And with that, I'll hand it over to Giovanni.

Giovanni Caforio, Board Chair and Chief Executive Officer (CEO)

Thank you, Tim. And good morning everyone. I hope that you're all doing well. Now turning to Slide 4. I'm pleased to report a very good third quarter with solid sales growth driven by strong commercial execution and good progress in our pipeline. I'm proud of the performance of our commercial teams who drove demand growth for our launch products and delivered solid performance of our in-line products, including REVLIMID, Opdivo, and Eliquis. In our R&D, we're progressing the most promising assets in our pipeline for sustained growth. In the quarter, we advanced our third I-O mechanism with the fixed dose Relatlimab plus Opdivo accepted for priority review in the U.S., for the treatment of patients with unresectable or metastatic melanoma. This is an important development for the I-O franchise and we have additional data readouts for Opdivo on the horizon. From a financial perspective, we reported sales of $11.6 billion and non-GAAP EPS of $2.00, with growth of 10% and 23% respectively. I'm encouraged by our results and how they position us for the rest of '21 and for the future. As a result, we are reaffirming our revenue guidance and raising the lower end of our non-GAAP EPS guidance range. Our balance sheet is strong and we continue to pursue a disciplined capital allocation strategy focused on investing in internal and external innovation opportunities. On the IP front, we are pleased with the decision by the U.S. Court of Appeals for the Federal Circuit upholding Eliquis's IP and providing exclusivity until 2028 under existing settlements. This decision confirms our belief in the value of the science behind Eliquis and the underlying IP, protecting its innovation. Overall, I'm extremely pleased with our progress in the quarter. Turning to our execution scorecard on Slide 5. At the start of the year, I laid out this scorecard with the milestones we thought would be important for us to deliver in order to successfully renew our portfolio. The team has worked hard and I'm proud that we're making progress across the board. A number of accomplishments were included on the prior slide so I won't go through all the details. But I want to call out a few highlights here. David will provide more details in his remarks. I'll start with Deucravacitinib. Deucravacitinib has demonstrated a compelling and differentiated profile in two Phase 3 studies as the oral treatment of choice in psoriasis and is an important asset with significant potential across a number of indications, including psoriatic arthritis, where we have already initiated a Phase 3 program. Although we did not achieve proof-of-concept in a Phase 2 study for ulcerative colitis, we're committed to advancing our promising Deucravacitinib clinical program in inflammatory bowel disease, including another study for ulcerative colitis, as well as Crohn's disease, lupus and other immune-mediated diseases. We continue to make great progress in our cell therapy franchise and we look forward to presenting the transformed data for Breyanzi in second-line DLBCL at ASH. We're excited with the strength of this data, which have the potential to enable our cell therapy franchise to reach a broader set of patients. And we are also looking forward to presenting data from the first Phase 2 study for a vaccine for VTE prevention in patients undergoing total knee replacement at the American Heart Association conference in a few weeks. Looking at the overall strength of execution so far, I am confident that we are on track to deliver what is required for us to renew our portfolio. Moving to Slide 6. It has been two years since we formed the new Bristol Myers Squibb. As I reflect on this time, we have already made great progress. We are doing what we set out to do, delivering on the value drivers of the integration, and most importantly, establishing a strong foundation for our Company's growth well into the future. Knowing that we face losses of exclusivity in the coming years, I recognize executing well on our multiple launches and continuing to advance our pipeline is particularly important for us. When I reflect on the last two years, I'm pleased on both fronts. We see strong demand for our newly-launched products and we are delivering on the promise of our pipeline, including a broadening dataset for our launch products and continuing progress with our next generation of assets, such as milvexian and iberdomide. Our Company today is more diversified than ever before, with four durable franchises and the financial flexibility to continue to invest in innovation. As we recently announced, we will be hosting an investor event on November 16 in New York City to review our progress over the last two years, and further discuss the Company's strategy, pipeline, and business opportunities. I look forward to the meeting and I hope you will join us. In closing, we have made significant progress through this period. And I would like to thank our global teams who have maintained the focus on delivering for patients. With that, I'll turn it over to David to walk you through the financials.

David Elkins, Chief Financial Officer (CFO)

Thank you, Giovanni, and thank you all for joining our call today. Starting with our top-line performance on Slide 8, we had yet another strong quarter with third-quarter revenues growing double-digits versus prior year, primarily due to demand. Increased demand for our in-line brands, as well as our new product portfolio. So let me shed some light on some of our product performance, starting with Eliquis on Slide 9. Eliquis continues to perform very strongly with global sales up 15% versus prior year. In the U.S., sales grew 18% versus prior year. Demand growth continues to be strong with total prescription growth of 14% versus last year, driven by large class market share gains and growth in new-to-brand volumes. Sequentially, as usual, sales were impacted by the expected coverage gap liability that occurs in the third and fourth quarters each year. We expect strong new-to-brand share growth to further translate to overall total prescription growth. Internationally, sales grew 12% versus prior year primarily due to demand. Shares continue to increase across all key geographies and Eliquis continues to rank as the number one OAC in multiple markets with additional room to grow. We remain really pleased with Eliquis' execution around the world and expect to continue to grow Eliquis' share within a growing class. Now moving to Opdivo performance on Slide 10. We are pleased with the continued momentum for the brand, with sales growth of 7% versus prior year. In the U.S. sales grew 4% versus last year, primarily driven by uptake in first-line lung cancer and our multiple other new launches this year. And sequentially, we had demand growth of 5%, which was offset by a $40 million inventory build we noted in the second quarter. Our commercial teams continued to execute well. We've retained strong positions in core indications such as melanoma and renal and are very pleased with the performance of our newer indications. Outside the U.S. we had another strong quarter with sales up 11% versus last year. Growth was primarily driven by demand for new indications and expanded access in Latin America, Turkey and Russia. We continue to see strong uptake from our new launches in lung and renal cancer in Germany and Japan with pricing and reimbursement discussions ongoing in other key markets. These launches, together with the recent approvals of first-line gastric and now esophageal cancer, are expected to contribute to further growth internationally. Based on positive momentum from our current launches and future potential launches, including first-line esophageal in May of next year, as well as expansion opportunities from clinical trials that we'll read out over the next few years, the promise for Opdivo's continued growth is high. Turning to our in-line multiple myeloma portfolio on Slide 11, REVLIMID was up 11% globally, primarily driven by demand for triplet-based therapies and increasing treatment duration. Pomalyst global sales were up 10% driven by continued demand for triplet-based therapies and use in earlier lines. Now moving to our new products on Slide 12, we continue to be very pleased with our new products which generated sales of $344 million in the third quarter. This new diversified portfolio is already annualizing close to a $1.5 billion run rate, giving us great confidence that we're on our way to renewing our business with products that are much earlier in their lifecycle. So let's start with Reblozyl, which generated strong sales of $160 million in the third quarter, up 67% versus prior year. Sales growth in the U.S. was primarily driven by continued demand in the ESA refractory MDS patients, as well as a $20 million to $25 million inventory build. We're very encouraged by the recent NCCN guideline update that now recommends evaluating ESA response sooner at 6 to 8 weeks instead of the previously recommended 12 to 16 weeks. This supports the need to monitor and potentially treat new patients earlier in their treatment journey. Additionally, we remain focused on ensuring they receive the most appropriate dose for sustained benefit. Outside the U.S., uptake continues to be strong in countries where Reblozyl is launched. Sales were impacted by the usual price review, one year after launch in Germany. We expect to launch in Italy and the Netherlands in Q4 pending reimbursement discussions, and in more countries in 2022 to drive additional growth for the brand. Moving to our cell therapies, Abecma and Breyanzi. Demand for Abecma, our first-in-class BCMA CAR T, remains robust. We generated $71 million in the third quarter versus $24 million in the second quarter. Remember that Q2 revenues consisted of only 1.5 months of sales having launched in mid-May, so performance this quarter reflects a full quarter of sales. Demand continues to exceed supply, and we expect Q4 revenues to be largely similar to Q3. Now moving to our CD19 CAR T Breyanzi, sales in the quarter were $30 million versus $17 million in the prior quarter. Sales increased due to patient demand with physicians recognizing Breyanzi's best-in-class profile. We're extremely pleased to have clinically meaningful PFS data in second-line large B-cell lymphoma and look forward to presenting the data at ASH and bringing this treatment to earlier line patients in 2022. Turning to Zeposia, global revenues were $40 million in the quarter driven by the multiple sclerosis launch, and a one-time inventory build in the U.S. The MS launch continues to progress well, where Zeposia remains the S1P of choice in terms of written prescriptions. We continue to focus on establishing Zeposia as not only the S1P of choice, but also the oral treatment of choice in MS. Our launch in UC is also progressing well in the U.S. We're encouraged by the initial uptake and growth in the number of new trialists since launch in June. Our focus is building on volume, establishing demand for this oral biologic-like medicine, while broadening access over time. We're also very pleased to have just received CHMP positive opinion in Europe and look forward to making Zeposia available to patients living with UC as soon as possible. Lastly, we're making progress on establishing Onureg in first-line maintenance and AML patients. Onureg generated sales of $21 million in the quarter, primarily driven by increased demand as well as inventory build versus prior quarter. We continue to focus on shaping the new maintenance segment and increasing adoption and patient adherence. Now let's turn our attention over to P&L on Slide 13. We've already covered our strong sales for the quarter so let me walk you through a few other non-GAAP key line items. Gross margin increase versus prior year was primarily due to lower royalty payments. Operating expenses were higher than last year, particularly in R&D due to COVID recovery, but also slightly in MS&A due to investment supporting our launch and pre-launch activities. MS&A versus prior quarter did experience some softness due to the timing of investments that have shifted to the fourth quarter. Our Effective Tax Rate of 14.9% was primarily driven by earnings mix. Overall, non-GAAP EPS increased 23% year-over-year. Now moving to our Balance Sheet and capital allocation on Slide 14, our liquidity position remains strong with almost $16 billion in cash and marketable securities, and a strong cash flow from operations of $5.3 billion in the quarter. Our capital allocation priorities remain unchanged. We have significant financial flexibility to support a balanced approach to capital allocation. Our priorities are to continue to renew and diversify our portfolio through business development, paying down our debt, and returning capital to shareholders. We've executed several business development deals this year, bringing in differentiated early-stage assets. Business development remains a top priority as a leading innovation-based Company. We have paid down $6 billion in debt year-to-date, and are committed to maintaining our strong investment-grade rating. As it relates to returning capital to shareholders, we're committed to growing our dividend subject to board approval and remain opportunistic about share repurchases. We have already purchased $3.5 billion of shares to-date, and we currently have approximately $3 billion remaining in our authorization program. Now, turning to our guidance on Slide 15, based on the strong performance in the quarter, we're reaffirming full-year sales and raising the lower end of our non-GAAP EPS guidance. We continue to expect revenues to increase at the higher end of our guidance and gross margin to be approximately 80%. Moving to operating expenses, we are maintaining our MS&A and R&D guidance for the year. As I mentioned earlier, MS&A we are expecting higher expenses in the fourth quarter due to timing of investments that shifted by quarter. Additionally, we're updating our tax rate guidance to approximately 16.5% primarily due to earnings mix. All-in-all, I'm pleased with our performance. We had another remarkable quarter for the Company, and continue to execute well against our plans and to diversify and renew our portfolio. This performance cannot be achieved without the passion and dedication of our employees around the world, and I look forward to providing you future updates on our progress. With that, I will now turn it back over to Tim and Giovanni for Q&A.

Giovanni Caforio, Board Chair and Chief Executive Officer (CEO)

Thanks David. Christina, can we go to our first question please?

Operator, Operator

Yes. Thank you. We'll take our first question from Geoff Meacham with Bank of America.

Geoff Meacham, Analyst, Bank of America

Hey guys, thanks for taking the question and congrats on a good quarter. I just wanted to ask about the new launches; the Abecma launch was pretty good. Just give us a sense for how much of that is still a bolus of patients versus underlying demand, and whether this also reflects the impact you are still seeing from the viral vector manufacturing. And then the second question is just on Opdivo. Was it flat sequentially? And how do you view going into 2022 with respect to what indications could be more of a tipping point versus others. Thank you very much.

Giovanni Caforio, Board Chair and Chief Executive Officer (CEO)

Thank you, Geoff. Thanks for the questions. This is Giovanni. Let me just start with a couple of comments and then I'll ask Chris to answer both of your questions. I just wanted to step back and really think about cell therapy and you'll remember in the past we've had a number of discussions about whether cell therapy treatments would have a fast uptake in the marketplace where this market would grow over time. There were concerns with payers' willingness to provide coverage for those therapies. And I must say, when I look at the experience that we've had with both Abecma and Breyanzi, it really confirms our belief that given the right treatments with the right efficacy and safety profile, there is tremendous willingness of physicians to prescribe and drive increased adoption in the marketplace. Many of the payer dynamics have been resolved, so beyond obviously the question that Chris will answer as we look at the medium and the long term and the commitment we've made to a broad cell therapy portfolio, I'm very reassured that the commercial potential of this modality is being recognized, significantly more than in the past. Chris?

Chris Boerner, Chief Commercialization Officer

So thanks for the questions, Geoff. Let me start with cell therapy, so we're very pleased with the performance really of both Abecma and Breyanzi. In the quarter we saw a very nice increase in demand for both products. There was some bolus for Abecma still reflected in these numbers, but the underlying demand for that product looks very strong, the same is true with Breyanzi. We're very happy with the commercial execution for both of these products. We now have over 70 accounts that have been activated across both products. And the majority of those accounts have been or plan to imminently use one or both of the cell therapy products. So overall, I would say the commercial performance continues to be very good. As has been mentioned already, we are actively managing the supply constraints which are mainly impacting Abecma. And as David mentioned in his remarks, we do anticipate that Abecma sales in the fourth quarter are going to be roughly similar to what we saw in the third quarter. And we are, of course, continuing to stay very focused on managing through the vector supply constraints. I mean, anticipating being in a much better position on that front as we get into the second half of next year. But, again, stepping back, as Giovanni just mentioned, we're very happy with what we're seeing in the marketplace on cell therapy and it confirms the opportunity we have to build a strong position here. With respect to Opdivo, the performance for the quarter for I-O was really in line with expectations. We saw very strong double-digit growth relative to the same time last year. And while sales were flat from Q2 into Q3, that was, as David mentioned, a function of inventory dynamics coming out of the second quarter. What is important here, is that we had very solid growth in the quarter. We had solid growth relative to the same time last year and quarter-over-quarter. And that growth was in the key tumors that are going to drive near- and medium-term growth for the I-O franchise. Notably in gastric cancer, where we've seen a nice uptake since the approval in April, in renal cell cancer, we continue to see very strong demand and we've seen coming at the end of the quarter some nice growth in first-line lung cancer. So overall, if you step back, we were very confident not only in the continued growth for Opdivo this year, but importantly, the momentum going into '22.

Giovanni Caforio, Board Chair and Chief Executive Officer (CEO)

Thanks, Chris. Christina, could we go to the next question, please?

Operator, Operator

Yes. We'll take our next question from Seamus Fernandez with Guggenheim.

Seamus Fernandez, Analyst, Guggenheim

Great, thanks for the question. So first one is on Deucravacitinib. I just wanted to get a little bit of a better sense. It just seems I was surprised to see that we don't have Deucravacitinib listed as filed yet. I just don't know what the limitations are. Are there new data being added or that you plan to be added, or is it simply waiting for FDA acceptance of the filing? The second question is, as we think about the opportunity for Deucravacitinib, I wanted to get a better understanding of what Bristol believes is necessary to succeed in ulcerative colitis. It's our understanding that the IT-9D may in fact be the most critical part of the development plan, and that perhaps Deucravacitinib may not achieve that unless the dose is really pushed. So just wondering if a long-acting formulation is something that Bristol is pursuing. Then just a final question very quickly: between your MK2 inhibitor, the BTK inhibitor, and the S1P1 that you have in Phase 2, would you call out any of these as having data in 2022 that we should be watching for? Thanks.

Giovanni Caforio, Board Chair and Chief Executive Officer (CEO)

Thank you, Seamus. Let me ask Samit to answer your questions.

Samit Hirawat, Chief Medical Officer and Head of Global Drug Development

Sure. Thank you for your questions. On the first one on Deucravacitinib, let me just start by reiterating our confidence in the data which differentiates it and establishes it as a potential best oral therapy of choice in the future for patients with psoriasis. In terms of the filing, as you very well know, we don't comment on when we file, but we certainly do make it public when the filing has been accepted, validated, after we have filed for the indication. So we will certainly make you aware and everyone aware when we hear as time comes. But having said that, we do anticipate bringing the medicine to patients in the second half of 2022, as we have said before. On the question on ulcerative colitis, you're right in the sense that the dose required in ulcerative colitis, Crohn's disease, or IBD in general, is going to be two to three times higher than what we see for psoriasis. And we've seen that for other molecules as well. And that is the intent of the ongoing trials, to test out these doses. We obviously have not shared exactly what doses are being pursued for confidential reasons and competitive reasons. But we are looking at all avenues in terms of looking at the impact from not only PK, but the PD outcomes as well and we'll continue to follow those and those will be the ways to define a proof-of-concept in this disease for pursuing further in ulcerative colitis. In terms of the MK2, S1P1, BTK additional data, those trials are ongoing. As you know, these are in the Phase 2A, Phase 2B settings where we have multiple indications being pursued in BTK in the autoimmune space, S1P1 also. Additional work being done in Crohn's disease, for example, for Zeposia and for MK2 as well, data is evolving. I can't say that you'll see the data in '22 or not, but certainly we'll make it available as soon as we have evolution of the clinical outcomes for these data.

Giovanni Caforio, Board Chair and Chief Executive Officer (CEO)

Thanks, Samit. Christina, can we go to the next question, please?

Operator, Operator

Yes, we'll take our next question from Chris Schott with JPMorgan.

Chris Schott, Analyst, JPMorgan

Great. Thanks so much. Just two questions. Is May 1st? There's been a lot of debate on the rate of Revlimid erosion in '22. I know you're not giving guidance for next year, but any color you can provide on both U.S. and international dynamics, and maybe specifically on the international side of the business, would be helpful. Is it reasonable to think about the business being down about 50% next year given the loss you're facing, or are you thinking of something much better or worse than that? Again, Revlimid is something we all expect to erode over time, so any color on the rate of erosion would be much appreciated. And then a bigger-picture question: you've been steadily rebuilding the portfolio, but the stock has underperformed this year. If that underperformance continues and you're concerned about some of these longer-term losses of exclusivity, would that at some point lead to a more aggressive deployment of capital, such as stepping up business development to look at larger, maybe later-stage deals, or going the other direction with more aggressive share repurchases? I'm trying to get your sense of when you would address a disconnect between what's happened with the business and the stock price. How do you think about starting to address that? Thanks very much.

Giovanni Caforio, Board Chair and Chief Executive Officer (CEO)

Thank you, Chris. Let me take your questions here. First of all, on Revlimid generic entries, nothing has changed there and let me just reiterate what we've said before and what we see happening next year. So next year, we will begin to see a volume-limited generic competition in the U.S. And at the same time, we expect to see generic entries for REVLIMID ex-U.S. That's consistent with what has always been our understanding, it has not changed, it has been fairly clear in our filings and we're preparing for that. The second thing that I would like to say is that if you remember beginning at JP Morgan, we clearly articulated how we think about the Company during the period of loss of exclusivity for Revlimid and Pomalyst. We expect to be able to grow the Company. In fact, we've articulated low-to-mid single-digit for the total Company and low double-digit for our continuing business through 2025. And when we provided that perspective, we obviously were reflecting our understanding of the Revlimid erosion. And I think the conviction that we have that we can continue to grow the Company is really driven by the belief which is proving right that the combination of strong growth from our in-line products, namely, Opdivo and Eliquis, combined with the strong uptake of our launch brands, which is happening, would more than offset the loss of exclusivity of Revlimid internationally next year and then over time in the U.S. So what I'm not going to give you exactly a percentage of erosion for next year, and we definitely will have an opportunity to talk more about this when we eventually provide guidance for the year. What I can tell you is that our belief remains strong and I think that our perspective that we're able to grow sales and earnings per share applies to next year as well. And so nothing has really changed there. Now, with respect to your second question that speaks to what are our priorities as we renew the portfolio in the face of LOEs, first of all, I think we have a rapidly evolving portfolio of new medicines that has tremendous potential, where we're executing multiple launches well. And I think our priority is always going to be first to maximize the opportunities that we have in a very rich late-stage pipeline. At the same time, we have tremendous financial flexibility as David said. And obviously, we've said for some time now that business development is a priority for us as we think about allocating capital. And that continues to be the case, at the same time as I've said before, we will be disciplined as we think about the BD because we do have many opportunities to deploy our capital to accelerate growth. And I also believe that our capital allocation strategy will continue to be balanced, where as David mentioned, we have a history to look at our dividend, and we have increased our dividend consistently over the last several years. We've done that double-digit in the last couple of years. And looking at share repurchases year-to-date, we've repurchased $3.5 billion. We have an existing authorization for another $3 billion this year. And obviously, we'll continue to look at that as well. But I can tell you that of course, I understand the focus on LOEs, at the same time we believe that we are executing really well on a plan to renew our portfolio, and we have tremendous financial flexibility to continue to make the right moves to do that.

Tim Power, Vice President, Investor Relations

Christina, can we go to our next question please?

Operator, Operator

Our next question from Tim Anderson with Wolfe Research.

Tim Anderson, Analyst, Wolfe Research

Well, thank you. A couple of questions. LAG-3: when can we expect overall survival data in melanoma for the package you've already submitted? And can you update us on what the development program looks like from here in terms of new trials and new tumor types? I look at Roche with TIGIT; they pushed into lots of registrational trials for many different tumors all at once. I'm wondering why we're not seeing Bristol do the same here. There's a signal that your confidence in this molecule just isn't there yet and that the melanoma survival data is a gating factor. Second question, on Mavacamten: last quarter I asked why you received only a standard review when it had previously been awarded breakthrough therapy designation; I didn't quite understand your answer. In 2019 it was pretty clear you expected approval and launch in 2020 to 2021. So I'm going to re-ask: are you confident we have an approvable drug at the PDUFA date, or is there a potential they'll want additional data and you'll get a CRL?

Giovanni Caforio, Board Chair and Chief Executive Officer (CEO)

Sure. Thank you, Tim. Let me ask Samit to answer both of your questions, LAG-3 and Mavacamten.

Samit Hirawat, Chief Medical Officer and Head of Global Drug Development

Sure. Thank you, Tim. For LAG-3, the overall survival data of course, is dependent on the events. We're going to continue to follow them and we'll share the data once available through our medical conference, but certainly I'll make you aware of it. We have to remember though, that in I-O therapies, more important than those hazard ratios are going to be the shape of the curve and we're going to continue to watch out for that. And we'll share that when that becomes available. I cannot tell you exactly what the timing would be at this time. From a development program perspective, the first-line melanoma study readout we submitted, we have a PDUFA date for March of 2022. We have initiated the adjuvant trial in melanoma at this time. We have a randomized phase 2 study ongoing in non-small cell lung cancer and plans to initiate phase 3 trials later this year or at the end of this year or early next year. And we have a randomized proof-of-concept trial ongoing in parotid carcinoma as a proof-of-concept generation. One has to ensure that the proof-of-concept that we're following are going to be strong. And we believe that the trials that we have ongoing will give us that data to go forward. For TIGIT, if you recall, there is a proof-of-concept in non-small cell lung cancer, and that is a different tumor type and different value in terms of the tumor microenvironment. So we have to judge the scientific data and put that in perspective as we look for new tumor types to explore. And we'll certainly keep you posted if new tumor types are added in the LAG-3 program as well. For mavacamten, we are certainly comfortable with the data that we have from the EXPLORER trials, from the efficacy perspective, as well as safety perspective. We have a PDUFA date for January of next year. We have not heard from the FDA in terms of what additional data would be required. We certainly don't comment as to what the outcomes will be and how the ultimate decisions will be made by the agency but we continue to engage with them. And as is usual for any filing, the back and forth in answering questions continues. But that is not unusual as we look at mavacamten or any other drugs.

Giovanni Caforio, Board Chair and Chief Executive Officer (CEO)

Christina, can we go to the next question please?

Operator, Operator

Our next question from Luisa Hector with Berenberg.

Luisa Hector, Analyst, Berenberg

Hello, thank you for my questions. I wanted to check on Deucravacitinib whether you have started hiring your dermatology sales force already, or whether this is now the key for and the reasons for the phasing of the marketing costs into Q4 from Q3. And maybe you could also update us on where you are with your cost-savings? Where you plan to be by the end of this year. And what kind of increment we could see in 2022 given market generic impact as well, just to think about the phasing of those various items. Thank you.

Giovanni Caforio, Board Chair and Chief Executive Officer (CEO)

Let's start with Deucravacitinib commercial investments in preparation for the launch. Chris and then David on synergies.

Chris Boerner, Chief Commercialization Officer

Sure. Thanks for the question. We are well on our way to building out the U.S. commercial and medical teams and feel great about the quality of the team that we're pulling together as well as the commercial readiness. The medical teams have actually been in place for a number of months. We've managed to hire a very strong team with deep dermatology experience. Key roles have been filled and they're in the process of executing against launch plans and we are building out the sales teams now.

Giovanni Caforio, Board Chair and Chief Executive Officer (CEO)

David?

David Elkins, Chief Financial Officer (CFO)

Great and thanks for your question on synergies, the execution on the integration continues to go extremely well as we indicated before, we'll over-deliver on our initial commitment. We're now at $3 billion. By the end of this year, we anticipate being about $2.5 billion, which you may recall was the original overall commitment. So as we head into next year, getting to that $3 billion is what we're targeting. So good execution and continued overachievement of our initial expectations on the synergies.

Giovanni Caforio, Board Chair and Chief Executive Officer (CEO)

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

Operator, Operator

Our next question will come from Andrew Baum with Citi.

Andrew Baum, Analyst, Citi

Yes, thank you. First question is on TYK2. Could you just update us on the additional emerging datasets in terms of what you're seeing from zoster, cardiovascular as well as malignancy if anything. And also perhaps you could comment in light of the recent FDA comments, how are you thinking about potential labeling for TYK2? Obviously that's a continuum potential label, some very unfavorable, some obviously more favorable. And then second, in relation to your Analyst Meeting that is coming up, to what extent would you be able to talk to your Phase 3 program for your Factor XIa inhibitor, or will we have to wait until you have the actuation data in hand next year before you and your partner can talk to the Phase 3 trial program? Thank you.

Giovanni Caforio, Board Chair and Chief Executive Officer (CEO)

Sure, Andrew. Let me just start by giving you a perspective at the investor meeting, and then we'll ask Samit to comment on the TYK2 programs. So as we think about getting together in the middle of November, the objective is really primarily to give you an update on everything that has happened in the Company and our portfolio over the last few years. It will be two years since we closed the acquisition of Celgene and a lot has happened. And so we'll talk about the progress with the pipeline, some late-stage programs, the commercial opportunities we see from the assets and we'll talk about the outlook for the Company. Specifically, there will be an opportunity to focus on a few of those. So for example, as you know the Milvexian data will be presented at AHA just before our meeting, and we'll look forward to discussing that update with you. We're also making progress in another area, which is hematology and that includes cell myeloma and the Breyanzi second-line data that were mentioned earlier. They are expected to be at ASH and we have an opportunity to review those at the event. So these are just some of the examples of the updates that we're planning on discussing at the meeting. Samit?

Samit Hirawat, Chief Medical Officer and Head of Global Drug Development

Thank you. And in regards to the TYK2 inhibitor, the long-term data that we continue to follow in these patients we don't see the profile differentiating in any other way than what we've already disclosed before. And we believe this is a TYK2 inhibitor without a JAK-like signature. The overall profile from the lab parameters perspective, cardiovascular perspective, infections perspective remains stable as the data have been shared before. So we are looking forward to continuing the engagement with the agencies as we go forward and looking to bring it to patients in the second half of next year. As far as labeling and JAK comparisons are concerned, again, these are going to be part of the future discussions with the regulatory agencies. We don't see it as a JAK inhibitor, so we're not really thinking about it like that, and we will continue to update you once we get more clarity in terms of advice, if there is any to be shared.

Giovanni Caforio, Board Chair and Chief Executive Officer (CEO)

Thanks, Samit. Christina, can we go to the next question please?

Operator, Operator

Okay. Our next question from Carter Gould with Barclays.

Carter Gould, Analyst, Barclays

Great. Good morning. Thanks for taking the question. First, I guess maybe start with commercial. I wanted to ask whether you are seeing anything tangible and demand for Zeposia, and to what extent the start of the year will be an important milestone for broadening access. And a clarifying question on deucravacitinib: Samit, you mentioned you may need to explore doses two to three times higher than those active in psoriasis. I know you don't want to get into specific doses, but are you exploring something above the 12 mg that I think was the high end in the psoriasis study? Finally, I know this is sensitive given ongoing litigation, but could you describe how you're thinking about the backup TYK2 compounds in your portfolio? Thank you.

Giovanni Caforio, Board Chair and Chief Executive Officer (CEO)

Sure. Chris, why don't you start on UC and Zeposia demand.

Chris Boerner, Chief Commercialization Officer

Yeah. So we feel very good about the performance that we're seeing for Zeposia. Let me start with execution. The execution of the team really, since approval, has been very strong. We've got very good awareness for the product. The unaided awareness now is over 60%, aided awareness is well over 90% since approval. We estimate that we have around 400 trialists that have already begun to utilize the product. Virtually all of the gastroenterologists that we survey who are aware of Zeposia are interested in trying it. Frankly, in spite of a still relatively restricted access environment, the sales teams are having very good success in engaging with customers both in-person and remotely. So from an execution standpoint, early days, but we feel very good about where we are. As you note, access is going to continue to be something we pay a lot of attention to. We feel good about our ability to start generating volume this year and into the first part of next year. And we think that volume will build momentum as we get into the second half of 2022 when we begin to get additional, more favorable access with key payers. But so far, the UC performance that we're seeing commercially is very, very strong and very happy with where we sit.

Giovanni Caforio, Board Chair and Chief Executive Officer (CEO)

Thank you, Chris. Before I ask Samit to comment on the Deucravacitinib dose, let me just say, Carter, we're not going to comment on any ongoing litigation. I just want to say that that litigation is really not related at all to the BMS program or any backup that may exist. So they're completely different programs and there is no relationship there.

Samit Hirawat, Chief Medical Officer and Head of Global Drug Development

Yeah. And just as a minor thing to add over here, as we talk about the doses, without getting into the specifics of it, I can tell you that we selected the doses which are higher than what we use in the psoriasis program based on PK modeling and taking into account the historical experience. We will certainly say that at this point, we don't know if these higher doses will translate into efficacy or not. That's the proof-of-concept we're trying to get and once that is available, that will certainly pave the way for the future program. We will need to see what the data are from the next trials that we're pursuing right now, both in Crohn's disease as well as ulcerative colitis.

Giovanni Caforio, Board Chair and Chief Executive Officer (CEO)

Can we go to our next question, please?

Operator, Operator

We'll take our next question from Ronny Gal with Bernstein.

Ronny Gal, Analyst, Bernstein

Good morning and thank you for taking the questions. The first one is on the PD-1 space. There has been some debate about the approvability of PD-1 with data from Asian populations only. You've obviously generated a lot of data in various populations. I was wondering if there is any scientific basis to this concern that is in your trials, is there a difference in either efficacy or safety in different ethnic populations with your PD-1? And second on Washington we had a discussion around price reform in the drug area. It seems to be clear that the negative scenarios for the industry will not play out, but there's still some discussion of pharma contributing to catastrophic insurance in Part D. And if there will be price negotiations the discussion seems to be focused on Part B, given that you're essentially more exposed to the oncology space, I was wondering if there is any basis for that. Is there a risk that oncology will take the brunt of the impact of the DC of whatever giveaways to be taken, or will it be more balanced across product types.

Giovanni Caforio, Board Chair and Chief Executive Officer (CEO)

Thanks, Ronny. Let me just start there and then I'll ask Samit to comment on your question about PD-1 development. So let me just start by saying that it's really difficult to forecast at this point what price reform will look like in the future. From my perspective, what's important is that any change that is made actually improves affordability of medicines for patients. And that's the lens that we are applying. From that perspective, there are a number of elements of potential reform like establishing out-of-pocket caps in Part D, the redesign of the Part D benefit to reduce the exposure of patients that we support. And we also support some changes, like introducing market forces in Part B. It's very difficult to answer your question with respect to whether a disproportionate impact may happen in oncology or not. I think what's important is that we don't go to reforms that actually impact the ability of the industry overall to continue to invest in innovation. That's the primary lens here. I think from the perspective of the BMS portfolio, when you look at our portfolio, it's very diversified across therapeutic areas, across Part B versus Part D. And so I can't speculate what the impact of any reform would be on us. I think what's really important is to continue to advocate for reforms that improve affordability of medicines for patients but at the same time enable us to continue to invest in innovation. Some of the hyper-partisan scenarios being discussed in Washington would actually impact both negatively.

Samit Hirawat, Chief Medical Officer and Head of Global Drug Development

Yeah. And just starting from where you left off in terms of the portfolio, we have a very broad portfolio which means that when we conduct our clinical trials, we do them globally, including those in the Asian countries. And when we file the data, we have to provide subset analyses by region or sometimes even by country. And that's how we seek approval in some of the regions and countries in the world, including in Asia. As it comes to the PD-1 inhibitors, where we have conducted clinical trials globally and across more than 20 indications and 12-plus tumor types that have now start approvals, we don't see a major difference occurring because of regional differences or population differences. That doesn't mean that representation of larger populations may not be required in clinical trials. So keep that in mind rather than thinking about a singular country trial will lead to approvals or not.

Giovanni Caforio, Board Chair and Chief Executive Officer (CEO)

Christina, can we go to our next question, please?

Operator, Operator

Our next question from Matthew Harrison with Morgan Stanley.

Matthew Harrison, Analyst, Morgan Stanley

Great. Good morning. Thanks for taking the questions. I guess, Tim, for me. So first on the second-line CAR T study, I'm just wondering how you're thinking about that commercially and specifically, whether you think you need longer-term follow-up to compare to transplant to be commercially successful. And then as we look at the data coming at ASH, I think we're going to get data from the Kite study as well. I'm wondering if there's any differentiation you're looking for your product versus those. And then, second on Zeposia, I'm just wondering if you could talk about or if you thought about it, if Biogen wins their appeal on TECFIDERA and branded TECFIDERA comes back to the market. Does that change any of your assumptions and how you think about the MS market? Thanks.

Giovanni Caforio, Board Chair and Chief Executive Officer (CEO)

Thank you. Matthew, let me start with Chris, just maybe a comment on Zeposia? And then we can move to the second-line CAR-T data and Samit will add some comments.

Chris Boerner, Chief Commercialization Officer

Yeah. So just on Zeposia very quickly. We don't anticipate that any potential change on Tecfidera would have an impact on us. We've seen very limited competitive impact of generic Tecfidera that's predominantly been cannibalization of branded Tecfidera and then obviously a shift in the utilization within that portfolio. Our focus on Zeposia in the EMEA side continues to be not only establishing ourselves as the number one S1P, which we are right now in terms of written scripts, but also becoming the number one oral. And so our focus will continue to be, in a very disciplined way, focused on that. And let me just give the commercial perspective on the second-line CAR-T setting, and then I'll turn it over to Samit. When you look at that second-line setting, generally, you generally see that population divert into those physicians who tend to be very focused on transplant. There's a sort of defined segment of those physicians. There are a number of physicians who are very open and look for opportunities to avoid transplant where possible, and then there are a number of physicians who really take it on a case-by-case basis. And so we're excited about the data that we've seen so far, and look forward to seeing that data continue to play out and be presented at ASH. We'll adjust obviously accordingly from a commercial standpoint.

Samit Hirawat, Chief Medical Officer and Head of Global Drug Development

Yeah, and just continuing that excitement from a data perspective, we truly are looking forward to sharing the data at ASH from the second-line study. And PFS in this particular case is an accepted endpoint from a regulatory perspective. So looking forward to certainly getting engagement with the agency and getting this again to the patients as soon as possible. We will obviously continue to follow patients for overall survival. And as is required for CAR T therapies, long-term safety follow-up as well. So those data will evolve and will be shared in the future. At the current time, the primary endpoint of this study was PFS, and we have that in hand and that will be presented.

Giovanni Caforio, Board Chair and Chief Executive Officer (CEO)

Thanks so much. Christina, can we go to the next question, please?

Operator, Operator

We'll take our next question from Steve Scala with Cowen.

Steve Scala, Analyst, Cowen

Thank you. A couple of questions. Lupus seems like an area of strategic interest to the Company. Does the Company feel it has all the assets it needs in lupus or would you look for M&A to supplement this area? So that's one question. Second question is, on the Factor XIa data at AHA, it was mentioned on this call that the Company is excited about where we're going to see. On the second quarter call, Samit, you noted that the data we're going to see is dose finding and safety data. So should we conclude that what we will see at AHA is that you have the Phase III dose and it is proven safe, or might we see more than that? Thank you.

Giovanni Caforio, Board Chair and Chief Executive Officer (CEO)

Thank you. Samit, do you want to take them both?

Samit Hirawat, Chief Medical Officer and Head of Global Drug Development

Sure. Absolutely. Thank you, Steve, for your questions. Starting with lupus, as you know, we will first of all get the data for our Deucravacitinib in psoriasis at the beginning of next year. We have a discoid lupus study that is also ongoing, which will read out in '23 or later part of that. We have a couple of other assets in early development which we have ongoing studies looking at lupus as well. So we do believe that we've covered a broad range of targets and a broad range of medicines being explored in lupus and several of those could be pursued for the future. From a Factor XIa perspective, for Milvexian, we've said at AHA you'll see the data. And there are two things to really take away. One, the intent of the study was to define a range of doses that will be pursued for future evaluation in Phase III, once the full data set is also available, so that collective data set then leads to the decision-making for future exploration in indications as we go forward. Second, we wanted to see a differentiation in terms of not only efficacy, but very importantly from a safety and bleeding risk perspective. And when we think about that, it is going to be important to pay attention to major bleed and minor bleed and overall bleed. So those are the kinds of things that you probably will see at AHA, and then we can certainly have a discussion in the middle of next month when we have the presentations for the investors meeting.

Giovanni Caforio, Board Chair and Chief Executive Officer (CEO)

Thanks, Samit. Seamus, can we go to the next question, please?

Operator, Operator

We'll take our next question from Dane Leone with Raymond James.

Dane Leone, Analyst, Raymond James

Thank you for taking the questions and congratulations on the update. Firstly, just going back to the generic erosion debate heading into 2022. Taking a different angle, obviously post the acquisition of Celgene that was accretive to your overall operating margin. The question from a lot of us that followed Celgene historically, along with Bristol, was the belief that REVLIMID drove a lot of that margin for Celgene. And with that going away, even with new brands ramping up, is there enough from the portfolio and steady-state growth of maybe Eliquis and Opdivo to offset an impact operationally from EBITDA. Or will there need to be bridging like you said, of additional cost efficiencies from the organization. So essentially getting to whether there could be a lost year or two of EBITDA growth from the existing portfolio. Secondly, a quick one for me. It's been brought up a lot why the team has not aggressively moved to start studies in more of a mild-to-moderate population per Zeposia and ulcerative colitis. So any thoughts around the development plan there would be appreciated. Thank you.

Giovanni Caforio, Board Chair and Chief Executive Officer (CEO)

Thanks very much. So let me just start, I'll ask David to make some comments there. I'll reiterate what I said earlier that from our perspective, as we think about the period of loss of exclusivity of Revlimid, first of all, we have always said that in the U.S. there will be a slope that will happen over time. We've been more conservative on that slope than consensus. At the same time, we believe strongly that the growth of the in-line portfolio and the launch brands will enable the company to grow through that period. David can give you a better perspective about the profitability of our business going forward and how we think about that.

David Elkins, Chief Financial Officer (CFO)

Thanks Dane for the question and we feel very confident in our ability to maintain our operating margins in the low-to-mid 40% through 2025. And there's a couple of things driving that. One is execution on our synergies; we've been doing better than plan and have strong execution against that as we head into next year and the run rate after that. The other is we've been very disciplined on the P&L side of things and you may note from an MS&A perspective, we're very efficient and top-tier in our industry. And the other thing I would say is that we've been very disciplined from the standpoint of reallocating resources from those low-growth brands to our launch brands, which gives us further confidence. And the last thing is if you think about the portfolio and the launches, many of those products have strong margins. Opdivo is a high-margin product, and some of the other ones that are in the launch portfolio, Zeposia as well as Reblozyl, those products have nice margins as well. So, that's what gives us confidence in our ability to keep those operating margins in that low-to-mid 40s as we progress.

Samit Hirawat, Chief Medical Officer and Head of Global Drug Development

And in terms of Zeposia, we have the indication for MS as well as UC, and the Crohn's studies are ongoing. We currently do not have any plans in the mild-to-moderate UC patients at this time.

Giovanni Caforio, Board Chair and Chief Executive Officer (CEO)

Excellent. Christina, I think we have time for one last question.

Operator, Operator

Okay. Our last question from Matt Phipps with William Blair.

Matt Phipps, Analyst, William Blair

Good morning and thanks for including me. You mentioned that Abecma would be relatively flat going into the fourth quarter. Should we expect it to remain more or less flat until the vector supply issue is resolved, which I think you said would occur in the second half of next year? And could you comment on whether the higher dose that was explored in the late stage, in light of the CC trial with Deucravacitinib, is also being explored in Crohn’s and FLE, or whether different doses are being used across those indications as well?

Giovanni Caforio, Board Chair and Chief Executive Officer (CEO)

Thank you. Chris?

Chris Boerner, Chief Commercialization Officer

So just quickly on Abecma. Yes, we've commented on how we anticipate Abecma sales being similar in Q4, and we've also said that we are staying very focused on increasing vector supply as we get into the first half of next year. I don't have the ability to give you any additional information for next year but, obviously, we'll continue to update you on future calls.

Samit Hirawat, Chief Medical Officer and Head of Global Drug Development

And as it relates to the doses, again, on Deucravacitinib in UC and Crohn's disease, there are some similarities in the doses, but we have optionality to amend them and change the dose and dosing patterns. So we will continue to work with our clinical trial teams and look into the data to see if there are any adjustments needed for either of the two trials.

Giovanni Caforio, Board Chair and Chief Executive Officer (CEO)

Thanks, everyone. Thanks again for participating in the call. We had a great quarter with very, very strong performance. The in-line portfolio continues to progress and launch brands are growing strongly. We look forward to the opportunity to continue to discuss the evolution of the pipeline and the future outlook of the Company, when we get together in the middle of November for our Investor Day. The team and the rest of the management team will be available throughout the day to answer any other questions you have. Thanks and have a good day.

Operator, Operator

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