施貴寶 (BMY) 2004 Q1 法說會逐字稿

Good day and welcome to today's Bristol-Myers Squibb Company first quarter sales and earnings conference call. [OPERATOR INSTRUCTIONS]

For opening remarks and introduction, I would like to turn the call over to the Senior Director Of Investor Relations, Mr. John Elicker, please go ahead Sir.

Thanks Joe and good morning everybody.

Thanks for joining us.

We are here today to discuss our first-quarter results and obviously some business development activities that we announced this morning as well.

With us we have Peter Dolan, our Chairman and CEO, Andrew Bonfield, our CFO, Don Hayden, EVP and James Palmer, President of PRI.

The flow of the call will be Peter will have opening comments, Andrew will review the quarter and then James will give some R&D highlights.

Don will be here to answer any questions that you might have that might be appropriate.

Let me take care of some legal business first.

During the call, we may make various remarks about the company's future expectations, plans and prospects that constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995.

Actual results may differ from those indicated by these forward looking statements, as a result of various important factors including those discussed in the company's most recent annual report on Form 10-K and our periodic reports on form 10-Q.

These documents are available from the SEC, our Web site or from investor relations.

In addition, any forward-looking statements represent our estimates only as of today and should not be relied upon as representing our estimates as of any subsequent date.

While we may like to update forward-looking statements at some point in the future, we specifically disclaim any obligations as due so even if our estimates change.

With that, let me turn it over to Peter.

Thanks John and good morning everyone.

I want to give you some perspective on our overall performance in the quarter and also update you on our progress in executing against the company's strategy.

Following that, Andrew will go into more detail about quarter, and James will discuss our pipeline progress and plans going forward and all of us will be happy to take your questions.

This morning, we announced first-quarter earnings of 41 cents per share on a non-GAAP basis, same as a year ago.

Global net sales in the quarter grew 10% or 5% net of foreign exchange with strong contributions from Plavix and Pravachol as well as several of our important health care lines.

We're continuing to monitor closely any momentum shifts on Pravachol, any changes to assumptions related to Paraplatin exclusivity and the timing of generic competition with Taxol in Europe and Glucovance in the US.

Based on what we see today and in light of the quarter's solid performance and the strong prospects for our newer and key inline products, we're reaffirming our full-year EPS guidance of $1.50 to $1.55, excluding the impact of one-time items.

Let me update you on the three new products we have recently launched, both Abilify and Reyataz continue to build strength in share, last Friday we received an approvable letter from the FDA for important new indication for Abilify to treat acute mania and patients with bipolar disorder.

Erbitex, which was launched in late February, is also off to a good start and also is performing ahead of plan.

We also made good progress delivering on our new strategy to invest in our long-term growth prospects.

We are continuing to strengthen our portfolio in our 10 disease areas by boosting investments in R&D and by pursuing licensing and other external opportunities.

You will see that R&D spending in the quarter increased 23% over the same period last year, primarily due to activities related to our late-stage pipeline.

Overall, we continue to expect that R&D expenditures will grow in the 8-10% range for the year to support our pipeline objectives, including making up to three filings in the next 9 to 12 months and James is here today and will have more to say on that subject.

Internally, we made important organizational changes to support our strategy.

Our sales force and marketing structures are being reshaped to enable us to increase our emphasis on specialists and high-prescribing primary care physicians.

Both marketing and medical affairs have also been restructured into more globally integrated organizations and we are moving to better align our pharmaceutical development and manufacturing model with our evolving portfolio.

Let me say a few words about our corporate and business development activities.

During the quarter, we closed on two corporate transactions, the first was the sale of our Mead Johnson adult nutritionals business to Novartis and the second was our acquisition of Aquaris Specialty Fibers for our ConvaTec, Optamy and Mooncare business.

On the business development front, we also announced an agreement with Pierre Farb to develop and commercialize Javlor, a novel cancer treatment now in phase III development in Europe.

This is the second phase III compound we've licensed in the past six months, the first being the E2F Decoy from Corgentech to prevent vein graft failure in bypass surgery.

Javlor is also our second phase III cancer compound in addition to Ixabepilone, our novel epothilone.

Earlier today, we announced our new agreement with Merck for the co-development and joint commercialization of Muraglitazar, our dual PPAR agonist for treatment of both blood sugar and lipid abnormalities in patients with type II diabetes, an important area of unmet medical need.

This collaboration is consistent with our new strategy of focusing on specialists and high prescribing primary care physicians and when appropriate, partnering the unlock the full potential of our productive pipeline, particularly products that require maximum presence with a primary care audience to be fully competitive.

Through this arrangement, Bristol-Myers Squibb will gain access to Merck's considerable clinical development resources in this area, while allowing us to optimize our sales and marketing assets to support this exciting product opportunity, which we believe has the potential to be an important addition to rebuilding our diabetes franchise.

Going forward, as we seek to build greater leadership in our 10 disease areas, we'll continue to explore additional innovative approaches to sales, marketing, and licensing that enable us to take full advantage of the opportunities presented by our evolving portfolio, particularly those that we believe will require extensive primary care resources to optimize the assets.

I would like to turn things over to Andrew.

Thank you.

As Peter mentioned, this was another solid quarter.

I would like to briefly review our results, discuss our full year 2004 expectations and then turn it over to James.

As you have seen from our release, fully diluted earnings per share for the quarter were 49 cents boosted by eight cents of specified items, primarily the gain on the sale of the adult nutritional business of $295m.

The full reconciliation of GAAP to non-GAAP earnings per share is posted on our Web site.

Excluding specified items, fully diluted earnings per share on a non-GAAP basis was 41 cents, two cents ahead of the first quarter.

Sales were up 10% to $5.2b.

The sales performance resulted from a 5% increase due to foreign exchange rate fluctuation, and a 6% increase in volume and a negative 1% impact from price.

Worldwide pharmaceutical sales were up 10%, which included a favorable 6% impact from foreign exchange.

US pharmaceutical sales were up 3%, driven by the strong sales of Plavix, Reyataz and Abilify.

Additionally, we did not see generic competition for Glucovance in the first quarter.

We are expecting generics to enter the market in the second quarter.

Offsetting this growth with declines in Glucophage XR and Monopril due to loss of exclusivity.

Wholesale buying patterns had some impacts on reported sales levels in the quarter, specifically Plavix, Avapro and Sustiva.

However, we are pleased with the inventory management agreements that we put in place last year and overall, inventory levels remained at around the one-month level.

International pharmaceutical sales grew 19% or 4% net of foreign exchange.

This of course benefits from the fact that we had not yet seen significant generic competition for Taxol in Europe.

Again, we expect that generic competition for Taxol will increase in the second quarter.

Let me move onto a few of our key products.

Plavix sales increased over 70% to approximately $700m.

This is on the strength of a 30% increase in script volume.

The remainder of the increase is due to an easy comparison as there was a de-stocking of Plavix inventory in the first-quarter of 2003, to below the one-month level.

We estimate that there was approximately one month on hand at wholesale at the end of this quarter.

We reported $115m in total revenue for Abilify.

The successful launch continues with a shared new scripts for approximately 8% in the most recent week.

Additionally, total scripts for the first quarter were approximately 490,000, a 13% increase over the fourth quarter.

Sales for Reyataz, a novel protease inhibitor, launched in July for $75m.

The launch is still in early stages, but we are encouraged by the results to date including approximately 22% of the shares of the USPI market excluding Atazanavir.

Additionally, our reported sales included $9m in international revenue as we recently launched in Europe.

During the quarter, we received approval to launch Erbitux for the treatment of refractory corectal cancer.

We reported $17 m in sales for the quarter ahead of our internal projections, we should note that the reported sales will totaling track demand as we distributed Erbitux throughout year end and therefore, sales were reported on a consignment basis.

Mead Johnson sales were up 10% with solid growth both domestically and internationally.

Underlying growth excluding foreign exchange in the disposal of adult nutritionals was 14%, driven principally by infant formula in the US and the international markets.

ConvaTec and Mead Johnson, both reported strong double-digit growth for the quarter. (inaudible) was a growth driver for ConvaTec and Cardiolite had a strong quarter for medical imaging, up 23%.

Now let me move on to a few of the expense lines.

Gross margins in the first-quarter were 63.3% compared to 63.9% in the first quarter last year.

Key factors were OTN, which had a negative impact of .5% and the mixed impacts on US pharmaceutical business which is mitigated by the later than expected generic competition for Taxol in Europe and Glucovance in the US.

We still expect gross margins to climb about 1% for the full year.

Marketing, selling and administration expenses were up 12% due to the expansion of the Abilify sales force in the second half of last year, the unfavorable impact of foreign exchange, an increase in non-clinical grant spending for higher new products and higher pension expenses.

Due to the impacts of the restatement, which reduced the 2003 base, an increase is due to the impact of foreign exchange, we now expect SG&A expense to increase in the mid to high single digit range for the full year.

AMP spending was roughly flat with increased spending behind Abilify, Reyataz and Erbitex, offset by lower spending on more mature products.

For the same reasons I just discussed to SG&A, we also expect AMP spending to increase in the mid to high single digit range for 2004.

R&D expenses increased 23% to $583, primarily driven by spending on increased resources behind development projects including phase III spend on Entecavir, Abatacept and Muraglitazar.

R&D spending will remain as or above current levels and we continue to expect full-year R&D spending to be up 8-10%.

Pharmaceutical R&D spending as a percentage of pharmaceutical sales increased 13.3% to 14.8%.

Equity income from affiliates increased $53 m as a result of the favorability in net share of ImClone profits and an increase in minority interest income received from the sale of (inaudible) joint venture products outside the US.

Although foreign exchange had a positive 5% impact on sales, the impact on profits was less than this as we hedged our transaction exposures one year in advance.

We commenced hedging our 2005 exposures and the full benefits of the current weakness of the dollar will only be reflected in the earnings next year.

Minority interest expense was $107m compared to $55m last year.

This reflects the growth of influx of Plavix in the US.

The effective tax rate from continuing operations before minority interests and income taxes and excluding specified items in the first-quarter decreased to 24.3% from 26.9% in the first quarter last year.

Again, we expect the tax rate to decline further through 2004.

Operating cash flow remains strong and net debt fell to $2.8b at the end of quarter.

I am pleased that we are confirming our previously issued 2004 non-GAAP fully diluted earnings per share excluding specified items and any process R&D as a result of external development at $1.50 to $1.55 per share.

Including specified items, our 2004 GAAP earnings guidance is $1.49 to $1.54.

Again, the full reconciliation is posted on our web site.

Our guidance takes into account first-quarter results.

The expected impact of losses from exclusivity including a change in exclusivity of Paraplatin due to the recently announced settlement with Taba, which is subject for SEC approval and the later than expected generic competition for Taxol in Europe and Glucovance in the US.

Our current expectations for Pravachol, in our original guidance for 2004, we've budgeted for modest decline in US script growth volume due to increased competition.

We are now planning for a slight acceleration in the script decline in the US.

In our original plan for 2004, consistent with the execution of our strategy, we had anticipated a business development deal on Muraglitazar and therefore, the period we announced today with Merck has no incremental impact on our 2004 guidance.

With that, let me turn it over to James.

Thank you, and good morning.

In the next five minutes, I would like to update you on recent accomplishments in R&D and give you an overview of key events in the next 6-9 months.

Two thousand and four got off to a good start.

This builds on the successes of 2003.

In February, along with partner ImClone, we received approval from the FDA for Erbitux.

In early March, we received the European approval for Reyataz, which following its first approval in the US in June 2003 is now approved in all major markets, including Japan.

Finally, in February this year, we received a positive opinion from the CPMP for Abilify, which we expect to lead to formal approval in Europe in the second quarter of this year.

Our primary focus for the remainder of 2004 will be achieving three major NC filings.

These filings are in Texaver, Muraglitazar and Abatacept, or CTLA4Ig.

If achieved we will have delivered three major approvals within a period of 15 months, Abilify, Reyataz and ERBITUX and will potentially deliver three major filings in the subsequent 9-12 months.

Let me give you a little more detail about each of these.

First in Texaver.

Hepatitis B affects 400m people worldwide and about one million people die from this disease each year.

And Texaver is a potent inhibitor of Hepatitis B virus, phase III studies demonstrated superiority over the current standard of care and our phase III program compares in Texaver in Lamivudine sensitive and Lamivudine resistant patients.

Phase III data will be available by mid-year and will serve as the basis for the NDA filing which we expect to occur in the fall.

Our second filing will be for Muraglitazar, a duel PPAR agonist for treatment of type 2 diabetes.

Phase III studies have evaluated this drug as monotherapy and an element of combination therapy.

Phase III data will be available third quarter and we plan to file in late 2004.

As you saw in the release and heard from Peter, we announced our co-development and co-promotion agreement with Merck for Muraglitazar, we are excited about working with Merck as both Merck and DMS bring substantive experience in diabetes drug development that will be invaluable to the success of this compound.

Our third filing will be Abatacept for rheumatoid arthritis.

This is a first in class biologic; we published phase II data in the New England journal of medicine in November of last year.

Phase three studies are completing and we will report on these initially in the summer.

We're on target for a filing before year end.

We're excited about the potential of these three filings, obviously they'll depend on successful phase III data and will be a major challenge for the organization, however, we have the appropriate resources behind them and the organizations fully geared up to make them happen this year.

Certainly many of you are interested in knowing when you will see the data from these compounds.

The three filings will occur in the second half of this year and our plan is to present the clinical data at our R&D date, which we have confirmed now for November 17 in New York City.

In addition to our lead phase III compounds, we continue to develop a strong portfolio.

During the last year we entered into partnerships on important late-stage compounds including Edifoligide with Corgentech and E2F Decoy for vein graft failure and Javlor with Pierre Fabre, an alkaloid in phase III trials in Europe for bladder and lung cancers.

We will initiate large-scale clinical trials of Javlor in the U.S. this year.

These compounds will join our in house portfolio of molecules progressing in phase II and III clinical development, which includes Ixabepilone, a novel epothilone, with the first indication being for breast cancer.

Razaxaban, an oral factor 10a anticoagulant with a potential for no need for coagulation monitoring and LEA-295, a novel biologic for prevention solid organ transplant rejection.

Again, a first in class mechanism.

And lastly our DPP-4 Inhibitor for diabetes for which we will have phase two data early in the second half of the year.

As you can now appreciate, it has been and will continue to be a busy and exciting here in R&D at BMS. we are delivering on our strategy and increasingly competent in the strength of our pipeline.

I would like to turn things back to John and look forward to taking any questions.

Thanks, James.

I think that we're ready to go to questions.

If you could limit them to one at a time.

Again, we have Peter, Andrew, and James as well as Don Hayden here to answer any questions that you might have.

[OPERATOR INSTRUCTIONS] We'll go first with Steve Scala of SG Cowen.

Thank you.

On the Q4 call, various items of P&L guidance were provided.

All were reiterated except for the sales outlook.

In January I think that you said that you expected five pharma sales and low digit sales growth overall.

Is that still the case?

Steve, it's Andrew.

That is the underlying case.

Obviously, the impact of foreign exchange and the assumptions around FX will have an impact on the year.

Thanks Steve, Joe can we go to the next question.

David Reisinger from Merrill Lynch.

Thanks very much.

With respect to the price decline that's you talked about in the press release, you mentioned a 1% net price decline, could you break out U.S. versus non U.S. and discuss your comment on O.T.N. that the growth was lower than it has been in the recent past due to price pressure.

And then another question if I might, if you could discuss the Muraglitazar study that's you are performing.

Thank you.

David, your first question on price, we don't break it out by market as you see on the web site.

The decrease -- price decrease in the overall medicine business was around 2%.

That was primarily in the U.S. and also some in Europe for example the German price reductions again this year.

David on the question on O.T.N. it is a competitive environment in the oncology distribution market today more so than it was last year, and in the years before that.

I think given the size of O.T.N. in the market, that competitive environment that we have seen is slowing in rate of growth at the sales line.

On the combination study, the development program is standard.

We're looking at mono therapy in combination with studies -- with net forman.

Can we go to the next question?

Pop Carl from J.P. Morgan.

Relative to the specialists and high prescribes, can you tell us where are you from your sales force deployment right now relative to that goal and if there are still changes to occur, what are the nature of those changes as to whatever your end vision is of that.

If I could throw in a second question, on the Muraglitazar, there is a letter that there are shared rights.

Since it is described, as a backup is that different diabetes compound?

Carl to your second question first.

Yes, it is a -- another dual compound that we were referring to in the release and also we are sharing those rights with Merck.

As it relates to our strategy, let me answer the first part of that question and I will turn it to Don to talk about status in the U.S. the major elements in the strategy are focus on 10 disease areas and build out franchises in those 10 disease areas and optimize the assets that we have in those areas.

Where we need to add resources to complement our primary care and specialist capabilities because of the extensive requirements necessary to optimize a product for example on the diabetes arena, that particularly is an area where we will look for a partner to help us take full advantage of what the asset is.

We are in the process of working with our sales organizations around the world to direct them towards organizing themselves around the portfolio of future, and the portfolio that will have in a few years, and we are at various places with different geographies in terms of making that evolution.

I think, Carl, just to take that one step further in terms of execution in the U.S. business.

On the specialty side I think that we made very good progress, we created and then expanded a new science sales -- neuro science sales force for real indication of internal resources.

We slightly increased the size of our sales organization, we positioned oncology and the size and structure of that organization for the launch of Erbitux and in that process reduced the size of our primary care sales organization over the last 18 months, as we look down the road, well obviously be making decisions around the appropriate focus and level of sales force support for products like in Texaver.

On the specialty side and we're evaluating from a primary care perspective what the right level of resource will be as we look to future there as well.

Can we go to the next question?

My question is regarding Erbitux, we have seen five weeks of Erbitux sales. $18 m.

That indicates that the launch is off to a solid start.

We estimate sales could be about $200m in 2004.

What can you tell us about April sales and how is this ramping from March numbers, and when do you expect to be in a position to announce phase three of the clinical trials with Erbitux?

We have been encouraged what we have seen from the early results.

I am not in a position to comment on April sales on Erbitux, but I think that the early reports that we have taken from the oncology community has been encouraging and I think that we have been pleased with what we have seen in the early sales results as well James as well.

The non small -- those phase three studies are in planning stages right nowand they will start in the second half of the year.

And they will obviously build on the phase two data that we have seen with Erbitux that showed promising results.

Joe, next question.

Jim Kelly of Goldman Sachs.

My question reacts to the -- relates to the assumptions Pravachol sales.

It mentions in the 10-K that we will lose the composition matter in -- composition.

How is that assumption coloring the guidance for this year?

We take into account the expectations for generic competition for Pravachol in European countries.

We do not disclose individual sales in.

Good morning, thank you.

Recognizing that the, will not be completed until the end of the third quarter, can you give us an idea of the kinds of presentations or forms that some of data may come out on these three late-stage products?

If we go through it quickly.

Texaver will go to the meetings in October with the phase three data for ctla-4; we're hoping will make a late break session at the A.C.R. in October.

And for Muraglitazar, we will be at A.D.A. in June with pre clinical and phase one data.

Where you'll see all of the latest clinical data that we have, and that will be all the phase three data on which we'll base the filings and assuming that they're all successful, will be at the r and d-day on November 17 in New York.

So that will be the best place to see the whole waterfront getting all of data.

Thanks Tony.

Next question.

Fixon Michael from IBC World Markets.

On Muraglitazar, how will you account for the portion paid to Merck and is there anything that you can disclose?

Is it a sliding scale?

Is it capped at a flat rate?

First, the milestones that we received from Merck will be capitalized over the period of the deal.

Similar to how we amore advertise phase three payments for post approval for Erbitux, so similarly it will be the mirror of that.

As regards, the royalty rates, we haven't disclosed though but they are based on a percentage of sales.

Next is Timothy Anderson, Prudential securities.

In Europe there seems like there is a different set of dynamics when it come to the atypical anti-psychotics and the different agents.

Outperforms all other products and in the U.S. that's not the case today.

Why do you think that it is different in Europe and is that likely to change with the introduction of your product in Europe and a quick one on Muraglitazar, do you think that will get a fast review by F.D.A.?

Let me have a shot at that, I think that the issue in Europe has been the relatively limited availability of some of these products.

Obviously we were very pleased with the positive opinion on Abilify in A&P in February that will lead to a full approval 90 days from February.

So it's going to be fairly soon and I think we will see how the introduction of that product changes the overall dynamic and I think you will see potentially the market starting little more similar to the U.S. in terms of usage.

With regards to Muraglitazar, it's too early to speculate.

The decision on the priority review is ultimately the FDA's, and they will make that decision when they looked at the file and they have seen data.

As I said in my remarks and alluded to in some of the answers to the questions, we got a lot of phase three data coming through during the year, and obviously we will take a look at all of that as it comes in and that will determine, the filings.

But we are on track right now, fingers crossed that everything will go well this year and our three filings will happen as planned.

We got our next from Arthur Richmond of J.P. Morgan.

Yes good morning.

I have a question about the Merck deal.

Peter, how did you think about the fact that Merck is entering phase three on a potentially competitive product that could compete both with your PPAR as well as your EP4.

For the dual PPAR, we really think Merck is an excellent partner for us and that's bringing the capabilities of the two companies together will really help us unlock the value of Muraglitazar.

We are pursuing the dual PPAR, EP4, they are as well and those are separate and apart from the transaction that we announced this morning.

We are obviously looking forward to working with them in the dual PPAR arena and than potentially competing with them in the other compound.

The next is Mario Cursor (ph), Summer Street Research.

Thank you for taking my question.

I have a question on Muraglitazar, will the agreement with Merck, will marketing cost be share equally and than also so following upon Arth's question, if Merck does launch a DP-4 inhibitor so there's nothing in the agreement to prevent them from marketing their product over yours, or is there fine line terms to this in which things could end if one or both parties want to go their separate ways, thanks?

On the first part of the question, Mario, we do share commercialization costs equally between the companies.

Next is George Gothic (ph) of Smith Barney.

Thanks for taking my question.

First could you comment on your plans for building out Biological capacity for some of your pipeline compound and if we should expect increased CAPEX because of that over next couple of year.

And secondly regarding the product litigation, there are few patents listed in the orange book that are not a part of the current litigation and specific the Q1 path and I think covers them more some are going stable form of products.

Your expectations that these patents enter the litigation at some point, thanks?

On the Biologics, what we have done is, we have entered into an arrangement with lonzer for initial production of both CTLA and LEA-29Y, we continue to evaluate with the appropriate company to add its own facility.

However, at this point of time, there's nothing, there is no change to our capital requirements for this year, which we indicated to be around about $800m for the year because of what we have made that decision at this point in time.

But we will continue to evaluate it.

Obviously the Plavix patent is subject of litigation, we don't really have our comment on that any further.

Next is Steven, Friedman, Bills, Bradley.

Yes thanks it's Steven Marcks, just a couple of points.

You mentioned, I heard that there were three filings in the back half of this year, CTLA-4 in that of your Muraglitazar and Peter initially you said, in your openings, that there will be three filings over the 9-12 months.

Would you be able to clarify that discrepancy, please?

We are looking to making these filings over the next 9-12 months and hopefully it will occur in the front end of that, and we are allowing ourselves some room in the event that it doesn't happen by the end of the year.

And I am committed to make them happen this year.

So we will see how quick and that we are confident that we can do it.

Barbara Ryan of Deutsche Bank.

Good morning.

Thank you for taking my question.

The question is for Andrew and James.

I know you have spoken in the past about adjusting the risk returns in your business and being more deliberate in that process and I am just wondering, given the striking uniqueness of the deal that you have done with Merck for two major companies competing with each other on a phase three drug, to what extent is this deal a sign of the times and what you have said previously and to what extent is this deal unique to this compound?

Let me look at it from a financial perspective, Barbara.

As we said before, one of the things the industry needs to look at is this risk profile.

What this does for us is actually to solidify some of the value of the dual PPAR and Muraglitazar earlier on and it shows that on the risk return basis we have a very favorable return on that investment.

Let me add something, a couple of comments.

I think that this is a good opportunity to maximize the value of the asset that we have, which is Muraglitazar.

Secondly, as we talked about, the deal does cover follow-on compounds, so the ability here to build a PPAR franchise is a strong one, and obviously both Merck and BMS bring expensive experience in diabetes and in the PPAR areas to the table.

So I see this as a win-win.

I think that it does reflect a shift in strategy as we execute against that strategy and look for partners who can complement us when we want to supplement our primary care capabilities beyond what we have and will maintain with specialists and with our primary care product subscribers.

Last question from Finn Lockman (ph), Edwards Capital.

We all know Merck does not give away money lightly.

For them to give away $100m, it means that they looked at this product and loved it.

Starting with their promise, why is it a sweetheart deal for Bristol.

If the product is that good, than Merck will pay $100m. second question, since it is late stage, is it fair to assume that the profit split is not 50/50 while the cost split is, and that Bristol gets the majority of the profits, which would make it a sweetheart deal for Bristol?

James here.

We are confident in the product and obviously confident in the profile and obviously Merck did extensive due diligence on this, so they have seen exactly what we have seen and obviously excited about what are the prospects offer by this product.

And from assumptions correct, the terms of the deal are such that it is not a 50/50 profit share deal between ourselves and Merck.

Thanks Finn and thanks John.

I think that takes up our lot of time for Q and A and we will go ahead and close this out.

We will remind everybody that if you have follow-up questions, Sue and I will be in our PR office, in New York.

Please give us a call and we would be happy to take any question that you might have on the quarter or Muraglitazar deal.

Thanks every body.

This completes the conference.

You may disconnect at this time.