施貴寶 (BMY) 2010 Q4 法說會逐字稿

Good day, everyone, and welcome to today's Bristol-Myers Squibb fourth-quarter earnings 2010 earnings release conference call.

Today's call is being recorded.

At this time, I would like to introduce your host, Mr.

John Elicker, Senior Vice President Investor Relations.

Please go ahead, sir.

Thanks, Anthony, and good morning, everybody.

Thanks for joining us here in snow-covered Princeton, New Jersey.

With me are Lamberto Andreotti, our CEO; Charlie Bancroft, our CFO; Elliott Sigal, our Chief Scientific Officer; Beatrice Cazala, Senior Vice President Commercial Operations with responsibility for Global Commercialization, Europe, and the Emerging Markets; and also Tony Hooper, also Senior Vice President Commercial Operations, with responsibility for the US and rest of world.

This morning Lamberto and Charlie will have prepared remarks and then we'll go to your Q&A.

Before we get started, let me take care of the legal requirement.

During this call, we will make statements about the Company's future 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 materially 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 reports on Form 10-Q and Form 8-K

These documents are available from the SEC, the Bristol-Myers Squibb website, or from BMS 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 elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even if our estimates change.

With that, I will turn it over to Lamberto.

Well, thank you, John.

Good morning, everyone.

We have just completed a good quarter which wraps up another successful year for the Company despite the challenges associated with healthcare reform in the US and economic pressures in Europe.

In previous calls and meetings, we from Bristol-Myers Squibb talked a lot in areas of other companies of US healthcare reform and European prices.

I think that at this point, we should take these two factors for granted and move forward.

Today it is more important to describe how our achievements in 2010 have helped to position the Company well for the longer-term growth.

Specifically, 2010 was a groundbreaking year with respect to clinical data, a real testament to our biopharma strategy and our exclusive focus on pharmaceuticals.

We presented overall survival data on ipilimumab in second line metastatic melanoma.

The AVERROES study was stopped early due to overwhelming efficacy.

The attractive profile of dapagliflozin continues to emerge, and we shared encouraging data on our hepatitis C portfolio.

We also made significant progress on our string of pearls initiative.

Most importantly, we acquired ZymoGenetics while we continued to integrate Medarex.

We remain focused on increasing shareholder value.

We increased our dividend for the second consecutive year.

We initiated a share repurchase program of up to $3 billion in common stock.

We bought back debt and we still ended the year with $10 billion in cash.

You may have also noticed that we restructured our foreign legal entities and this resulted in more than 85% of our cash now being held in the United States.

Charlie will talk more about that.

With respect to manufacturing, we delivered on our optimization plan and continued to improve our costs, but we face some challenges.

We take very seriously the quality issues raised in the Manati warning letter and the voluntary Avalide recall.

I personally have devoted a significant amount of time to ensure understanding order of what happened and that we take all necessary action to remediate the issues, informed also by assessments from third-party quality consulting experts.

In fact, our plant in Manati is inspection-ready and we are looking forward to a reinspection.

Let me turn to some highlights from the fourth quarter.

We had good sales growth in some of our key brands which are important to our future growth including Sprycel, Orencia, Baraclude, and the Onglyza franchise.

We continued to have positive news on our pipeline.

We received regulatory approvals for Sprycel for use in a first-line testing in the US and Europe and for Kombiglyze in the US.

We completed key regulatory submissions.

We submitted dapaglifozin for regulatory review in both the US and Europe.

The European Medicines Agency has already validated our submission there and we are awaiting acceptance of the submission in the US.

In 2011, we will build on the momentum created in 2010 as we continue to position our Company for long-term success as a focused, differentiated biopharma company.

There are several upcoming key events that will help shape our future.

The first milestone is regulatory action in our filing for ipilimumab as well as the first-line data, both expected during the first quarter.

We are very excited about this product and we are ready to launch it.

Between 2011 in 2012, we anticipated up to five possible new product approvals.

In addition to ipilimumab, the other four are belatacept for organ transplantation, Orencia, in a subcutaneous formulation, dapaglifozin for diabetes, and apixaban, our anticoagulant.

For apixaban, based on discussions with the FDA and in agreement with Pfizer, we expect to submit the AVERROES and ARISTOTLE studies together in the US, which will cover the broadest spectrum of patients in one single filing.

We expect to have topline data on ARISTOTLE in the second quarter of this year and submit in the US and Europe either in late Q3 or Q4.

In 2011, we are also anticipating four significant Phase III transitions in hepatitis C, Alzheimer's disease, and oncology.

And finally in 2011, we expect strong sales trends for new brands and indications including Kombiglyze and Sprycel.

All these adds up to our 2011 guidance that you have seen in the press release and that Charlie will review.

In the release we have also reaffirmed our 2013 guidance.

Over the past few weeks, we have heard questions from many of you about our earnings in 2013, given some of the external challenges.

Well, we have listened and have decided to review our longer-term plan and we are reaffirming 2013 minimum non-GAAP EPS guidance of $1.95.

Our earnings release contains important information regarding our assumptions underlying this guidance.

Taken together, 2010 was a good year for Bristol-Myers Squibb.

I am very happy with the progress we have made over the past year strategically and financially and feel very confident about our future.

Most importantly, we have continued to strengthen our base and position ourselves for significant growth over the next few years, particularly for 2013 and beyond.

Our sales are up.

Our financials are strong, and our pipeline is robust.

And with that, let me turn it over to Charlie.

Thank you, Lamberto.

We did have another solid quarter.

We delivered non-GAAP EPS of $0.47.

Strong sales growth in most of our key products and continued focused expense management was offset by a higher effective tax rate compared to Q4 2009.

Included in our fourth-quarter EPS is a negative $0.02 impact of US Health Care Reform.

I now want to give you some brief highlights from our fourth-quarter financial results and talk about guidance before we go to your questions.

We reported fourth-quarter net sales from continuing operations of $5.1 billion, up 2% compared to last year.

US Health Care Reform had a 1.5% negative impact on net sales in the quarter, and incremental EU measures had a negative impact of under 1%.

Volume was up 2%.

As I look at the fourth-quarter sales performance, I'm encouraged by the trends in many of our key brands that are important to our future growth.

This includes Baraclude, Onglyza, Sprycel, and Orencia.

Baraclude, our treatment for hepatitis B, was up 25%, including 28% growth internationally.

Full-year sales for Baraclude were $931 million with over 80% of our business outside the US.

The Onglyza franchise delivered sales of $73 million.

Compared to the third quarter, sequentially our business was up over 40% in the US and doubled internationally.

We are in the process of launching Kombiglyze and expect it to be a key component of the franchise growth.

Sprycel was up 42% in the quarter, and as you know, we recently received the first-line indication in both the US and Europe.

We believe this represents a meaningful long-term opportunity and are off to a good start.

Orencia was up 20% as we continue to make progress in becoming the ID biologic of choice.

At the same time, we are preparing for the potential launch of our subcu formulation in the US later this year.

The Avapro/Avalide franchise was down 26% in the quarter.

This includes the impact of the Avalide recall and supply interruption in five markets, the US, Mexico, Canada, Puerto Rico, and Argentina.

Avalide net sales were negatively impacted by approximately $60 million in the quarter.

Full-year Avalide sales in the affected markets were $355 million in 2010.

As we move into 2011, resupply to the market is not certain and therefore we are assuming a meaningful impact from an extended supply interruption.

Lastly, our mature brands declined 14% or $125 million compared to last year.

Divestitures in and rationalization of our nonstrategic mature brands portfolio represents approximately 50% of the decline.

The full-year impact from US Health Care Reform in 2010 was about $0.10.

Our estimated incremental impact for 2011 is approximately $0.15.

This reflects the annualization of managed Medicaid, expected PHS expansion, and the new impact from both Part D Donut Hole coverage and the pharma fee.

As a reminder, we share in part both the sales and pharma fee impact with our partners.

Now let me give you just a couple of comments from the rest of our P&L.

Advertising and promotion expenses were down 19% to $271 million for the quarter.

The decrease is due to less spending on the promotion of Plavix and Avapro, products at the end of their life cycle, and to its [suca] sharing of certain Abilify, Sprycel, and Ixempra expenses.

This was partially offset by increased investment spend on new products and indications.

The effective overall non-GAAP tax rate on earnings from continuing operations was 25.7% in the fourth quarter.

The tax rate reflects the full-year impact of the R&D tax credit which was partially offset due to earnings mix between high and low tax jurisdictions.

Our full-year non-GAAP rate was 23.6%, right in the middle of our 2010 guidance range.

As Lamberto mentioned, we restructured certain of our foreign legal entities, resulting in 85% of our $10 billion in cash and marketable securities now being held in the US.

There was an associated $207 million tax charge which is included as a specified tax item.

Let me turn to guidance.

We have issued 2011 GAAP and non-GAAP EPS guidance.

I will cover our non-GAAP line item guidance.

We expect sales growth to be in the low mid single digits.

This includes the impact from US Health Care Reform, expected EU pricing pressure, another step down in our contractual share of Abilify, and the Avalide supply issue I mentioned earlier.

We expect the incremental sales impact from Medicare Part D coverage GAAP to be approximately $250 million.

Gross margin percent should be consistent with 2010.

Advertise and promotion is expected to decrease in the mid high single-digit range.

This reflects continued lifecycle management of Plavix and Avapro, partially offset by investments in new products and indications.

MS&A is expected to increase in the mid single-digit range.

This includes the impact of the US Health Care Reform pharma fee expected to be approximately $250 million.

Excluding this fee, MS&A should be roughly flat.

R&D is expected to increase in the mid single-digit range.

This includes the impact from ZymoGenetics and investments across our portfolio.

We expect our tax rate to be between 25% to 26%.

The pharm fee adds approximately 1% to the tax rate.

Additionally, our expected change in earnings mix will also drive our rate higher.

As in past years, we are assuming a few tax discrete items in 2011 which will cause some variability in our quarterly rate based on timing.

Finally, we are also confirmed our 2013 non-GAAP floor guidance of $1.95.

Moving forward, we do not plan on updating our long-term guidance on a quarterly basis and you should expect updates to 2013 annually in July, consistent with our longer-term planning cycle.

I would now like to turn it over to your questions.

Thanks, Charlie.

Anthony, I think we're ready to go to Q&A at this point.

Just as a reminder, in addition to Lamberto and Charlie, we have Elliott, Beatrice, and Tony here to take your questions.

Anthony?

(Operator Instructions).

Jami Rubin, Goldman Sachs.

I just want to say thank you all very much for your brief and targeted comments.

My first question is for Lamberto.

The fact that you have reiterated your minimum 2013 guidance of $1.95, just to refresh my memory, when you first gave that guidance, it did not include US Health Care Reform.

Then you've reiterated it.

But after the second reiteration, it did not include European Health Care Reform, so -- European austerity measures.

Could you just reiterate for us whether or not this 2013 guidance now incorporates European austerity measures?

And obviously what the offsets are to that?

And then I have some questions for Elliott on ipilimumab.

First, just curious to know your conviction level that FDA will approve second-line ipilimumab if front-line data is not available.

And secondly, for the front-line study, just curious to know if you have a sense of what the life expectancy of the control arm is.

The six months, six plus months or so is from the Genasense trial, which is now about five years old.

Since then, the standard of care has probably improved.

If that is the case, is the trial adequately powered to detect a difference in your opinion?

And just lastly, if you could provide more granularity on the timing of front-line, when you expect to receive all -- if all the events have occurred if they have occurred, and when and how that will be communicated to the Street.

Thanks.

Thank you for your questions.

As I said in my remarks, we were not originally planning to issue guidance for 2013 because we felt that that was not strictly necessary.

But we listened to you and many others who indicated to us that this was significantly relevant to shareholders.

And before we did a good exercise or reviewing our plans and projections and hence, we confirmed what we confirmed this morning.

Obviously included in that guidance, all the things we know about products, about markets, and including what we know of the European pricing situation, I would like Charlie to elaborate a little bit more on that.

Yes, so thanks, Jami.

The $1.95 was a floor guidance that we had provided.

So some of the measures -- and we know we are -- the industry and Bristol-Myers Squibb is facing many external measures, US Health Care Reform and the EU pressures.

But there's also other pressures from other countries.

We know we will have to maximize the opportunities we have both on the revenue and cost side and given the progress we're making and advance in our pipeline and the great clinical data we've discussed over the past year and our continued focus and commitment to productivity, we are confident that at this point based on the assumptions we have of our $1.95 floor guidance.

Elliott?

Yes, Jami.

You had some questions on ipilimumab.

I remain very confident about this new medicine and in fact the new paradigm of immunotherapy.

And our first approval, we do expect this year in metastatic melanoma in pretreated patients.

I can say that we are actively engaged with the agency in all the types of activities you would imagine that would be moving towards an approval by our PDUFA date in March 26.

It's impossible to predict with confidence an exact date, but we are on track for approval for that PDUFA date and we are working -- and through our medical group with our commercial colleagues so that we are properly prepared for launch.

And Tony will say a little bit more about that.

You asked some comments about life expectancy and part of my confidence comes not only from the very important Phase II studies and the results of 020 and the clear survival benefits, but also because of how long 024, the front-line study, has taken, the median age of the remaining -- the median survival time period for the group that is currently being followed, which is blinded, exceeds three years.

And we think this is quite remarkable.

As you know, the standard of care predicts a 75% mortality rate in the first year and less than a 14% survival rate at year two.

And so our statistics show us that we are adequately powered.

We are close to achieving the required number of events and I have great confidence that this study will be concluded in the first quarter.

I do not believe we need to submit any more study information to work with the FDA.

Our focus is on the adequate communication of the unusual mechanism -- the unique mechanism of action and the safety to ensure appropriate use in order for patients to achieve maximum survival benefit.

And the communication of the results, our goal would be to present at the scientific forum, hopefully at ASCO this year.

Tony, would you say something about our collaboration for market ready (inaudible)?

Thank you, Elliott.

First of all, we have product available in the US organization, both the commercial organization and the medical organization are both ready and able to launch this product in the first quarter of 2011.

We have taken our extensive experience and knowledge in the specialty market around oncology, HIV, as well as our recent experiences in the launches of both Orencia and Sprycel and applied this to evolve what we consider to be a rather effective and exciting and innovative new customer model as we plan to go to market.

We have identified that the patient journey with this particular disease is a complex one and we need to understand the unit of care as opposed to just the physician treating the patient.

And all are focus is around ensuring that in the patient journey we have access to the patient and the patient has access to information, health and care to ensure we can maximize the value of the asset.

John, I would like to make a final little comment on 2013.

Please let us work on delivering 2011, 2012, and 2013.

So don't ask us to deliver projections every time something happens.

We, as Charlie said, we will be readjusting our projections every year when we deliver our strat plan.

Our focus now is to deliver the results not in reviewing projections every other month.

Thank you.

Tony Butler, Barclays Capital.

Yes, thanks very much.

Comments around apixaban in the 10A market and given the strength early on in Pradaxa once it's been launched, Elliott, I'm curious how you might think even in the backdrop of perhaps (inaudible) in the market, how you think this market is going to play out and what are the pushes and pulls and the attributes that apixaban may need to show such that as possibly third to market, it may actually garner a substantial or any share when it comes out?

Thanks very much.

Thank you, Tony.

I will say a few words from a medical standpoint on our development strategy that we have worked carefully with Beatrice, and she will amplify her opinion of the market.

From the very beginning, we have had the feeling that this new age of oral anticoagulation that would replace Coumadin in many patients in preventing stroke in atrial fibrillation and standard of care that sometimes includes aspirin, often includes aspirin, where Coumadin is not administered 40% or 50% of the time in high-risk patients is going to be a tremendous opportunity and there will be multiple entrants.

We are pleased to be at the pioneering edge of this and have from the beginning committed to a differentiated product that meets the medical need of powerful efficacy with better safety and tolerability and ease-of-use than Coumadin.

And as the data has emerged from comparators from our competition, we are gratified to see the market uptake and the excitement about the whole new class and we continue to see a need for the differentiation that we have aimed from the beginning of our development program.

Powerful efficacy as you saw in AVERROES, a very attractive major bleeding profile.

And when we see ARISTOTLE, what we must look for is comparability to Coumadin and hopefully superiority in bleeding, safety, and tolerability.

This program is unique and including studying of patients that are intolerant or unable to take warfarin and in going for the exact benefit risk of powerful efficacy with improved safety.

And from what we have seen from out own data so far and from the competition, we are happy with our differentiation strategy.

Beatrice?

Yes, first I would like to remind people that over the last few years, we have always analyzed the market as covering probably third.

So all our NNACs and market insights have been collected with a view of what would happen when we introduce a product.

So we have gathered extensive patient insight, and extensive physician insight, and we truly believe that in this market which will be developed because there are a lot of patients today are not treated and they will be treated by this new category of products.

But as years go by, as you see the variation and the evolution of the reaction to the products, we will strongly position our product as very -- I'm sorry -- very important for the risk benefit that we will develop.

So in terms of our ability to position the product, we have a strong feeling that the safety will be very important not just the efficacy and the discontinuation rate that we are currently seeing both in the warfarin patients but also in the patients that are using aspirin and that we will see gathering momentum with the new use age of the patient replacing warfarin will create the opportunity for us.

Thanks, Tony.

Anthony, next question, please?

Seamus Fernandez, Leerink Swann.

Thanks very much.

So a couple of things in the guidance for next year.

Can you just talk a little bit about the upward pressure on the tax rate?

We did see a pretty impressive change in the tax rate in the fourth quarter.

You attribute this to mix.

I'm just wondering if repatriation also is playing a role in the rate in the fourth quarter of this year?

And then for next year, is a lot of that -- we are estimating about 1 percentage point of that could be attributed to the pharmaceutical excise tax that you are estimating in there, just wondering if that's the factor in 2011?

And then separate question on apixaban, Elliott, maybe if you could just address for us the question of the ITT versus per protocol analyses.

We did see some potential anomalies in the ROCKET AF study at least that were explained to us.

Just wanted to know how Bristol is going to manage those potential issues or is managing those potential issues in the context of ARISTOTLE?

Thanks a mill.

This is Charlie.

The movement of cash had no impact on our non-GAAP effective tax rate either in the fourth quarter or has no impact on our rate in 2011.

As I mentioned and as you noted, a portion or about 1% of our increase in the tax rate is due to the non-deductibility of the pharmacy.

In addition, our initiatives over the past few years to reduce our manufacturing network as well as evolving our entire portfolio, we have been experiencing a shift in earnings from low tax to more high tax jurisdictions, which has had some increase in our underlying rates.

So when I talk about mix, it's a combination of those two things, which has put pressure on our rate in 2011.

As we think about that moving forward, we think that we will be in line with that rate as we think about our -- as what we know today on our tax rate.

Seamus, on the apixaban analysis plan, and I think you are referring to the discussion that ensued after the ROCKET data was discussed on what's the standard way to treat the primary efficacy analysis, and I respect the investigators involved.

But the standard way to treat this analysis is an intention to treat or the efficacy for the primary efficacy analysis, and that's our agreed-upon plan with the agency.

And it's also the analysis, we believe, all regulatory authorities want to see.

And also the other question that we get a lot is the time and therapeutic range, the INR for warfarin in the study, because you want to be monitoring this closely to have a very good comparison with well-controlled patients on Coumadin to the extent possible.

We are monitoring this very closely in the trial and we believe that the proportion of warfarin patients in the therapeutic range will be closer to what was seen in the RE-LY trial, that's the mid-60s, rather than the ROCKET trial, which was under 60%.

Great.

Thanks, Seamus.

Anthony, next question, please.

John Boris, Citi.

Thanks for taking the question.

I guess first question for Lamberto.

One thing that has obviously been challenging has been the commercial model.

You are on the cusp of launching five new assets.

Can you help me understand how Bristol is adapting its commercial infrastructure to accommodate the assets that you are about to launch?

How should we be thinking about launch curves of some of these assets?

Second question just has to do with ipilimumab.

Lamberto, you indicated there was an inspection that had to occur [in demand feasibility].

I believe ipi being manufactured out of that facility.

You have a PDUFA date of March 26.

Does that inspection have to occur before that in order for the FDA to approve the product, or is that not linked or tied to it?

Then last question just had to do with the four assets, Elliott, you will put into Phase III development.

Can you just give some commentary around elotuzumab and its rank within those four assets, in terms of how you will allocate assets across those four assets going forward?

Thanks.

Yes, let me start with very quick answers to your second question.

Ipi does not -- is not manufactured in Manati, so ipi and Manati are totally disconnected.

I probably can take this as an opportunity to make a couple of comments about again about manufacturing.

I think that as I said in my comments before, John, we are very happy of what we deliver in terms of optimization plan of our manufacturing network and improvement of our costs.

But we also taken very seriously a couple of quality issues that were raised in that warning letter of Manati that I repeat does not affect ipilimumab and the Avalide recall.

I personally spending a lot of time or spent a lot of time to understand what happened and based on the assessment that I received not only from my people but also by third-party quality consulting experts, I believe that we do not have systemic issues with our manufacturing facilities.

As I said before and I think Charlie repeated, we are ready for inspection in Manati and in fact, we are eagerly waiting for that inspection.

You were asking about the commercial model.

This is a very important question.

We have two important factors, the evolution of the market environment and the number of products that we are going to launch if we get them approved as we hope.

We are devoting a lot of time -- we have devoted a lot of time modifying things according to the requirements of the marketplace.

I think we are very ready for the launch of ipilimumab.

As Tony was saying before, we have moved to a totally different model than the one we have used in the past.

We have tested a lot of components of that model with existing products.

So we feel very confident that we have a global approach to the different people involved in dealing with ipilimumab from prescribers, nurses to reimbursement specialists to patients in a very innovative way.

And the same is happening for all our other launches or expected launches.

So there is a lot we have invested in technology.

We are [lot] in base technology, a lot we have invested in creating the right files that will allow us to be more effective in targeting of our promotion.

And the technology is also helping us to make the work of our reps better, more focused, more targeted, and support that work with peer-to-peer web-based interactions and gaining access to relevant information to all our stakeholders when they want them and in the format that is more convenient to them.

John, you asked about elotuzumab, our biologic in the treatment of multiple myeloma, which Lamberto mentioned, we will I believe transition into Phase III this year.

I'm very excited about that.

I just want to establish between the five drugs we're working very hard with to get approved by the end of '12 and at the same time sustain the Phase III pipeline by four transitions into Phase III including elotuzumab.

So the five that we're trying to get approved we've been talking about, ipilimumab, apixaban, dapaglifozin, belatacept, and brivanib.

Of those, we've seen the Phase III data and are in regulatory discussions with all but brivanib.

Brivanib, we will see the first Phase III data sometime this year and we will be able to make some decisions about its course forward and its evolving profile.

To that group of five which can potentially be approved by the end of '12, beginning this year, I would add an important catalytic event of Orencia subcu.

At the same time, there are four compounds we hope to potentially transition to Phase III this year.

I am very sure elotuzumab will go into Phase III for the treatment of multiple myeloma.

It's an antibody that is directed to a very specific cellular protein on myeloma cells.

And we have had very important response and insights on how to improve current regimen.

We have two hepatitis C programs that I expect to transition to Phase III.

One is our novel first in class 5A and one is our potentially superior interferon lambda.

We have a lot of clinical data we will be discussing in scientific forums on our whole portfolio both at EASL and at the liver meetings.

The first in April and the second in November.

This data will give insights to the doses that we will be taking in to Phase III and we will talking about our Phase III strategy later in the year.

The one program that we're waiting for more Phase II data on before a decision of transition is our gamma secretase in Alzheimer's.

We believe we have a more specific inhibitor in this pathway than predecessors.

We want some confirmatory data.

We are studying both pre-dementia as well as mild to moderate and we will be getting some data early part of the year and making some decisions hopefully moving to Phase III by the end of the year.

Thanks, John.

Anthony, can we go the next question please?

David Risinger, Morgan Stanley.

Thanks very much.

I have two questions.

The first is with respect to ARISTOTLE, just wondering, Elliott, if you are still expecting to present that study at the Paris cardiology review in May.

And then second with respect to the comment in the press release about R&D spending in 2011, I'm hoping that you can put that into context.

The press release said that 30% to 40% of 2011 R&D spending will be on Phase III assets.

If you could maybe put that in perspective relative to the historical percentages and maybe what you understand the industry average is for major pharmaceutical companies in terms of percentage of R&D spending on Phase III assets.

Thank you.

Thank you, David.

On ARISTOTLE, we are working to present that in September in Paris at the European Society of Cardiology and hope to have a submission around that time, late Q3 or early Q4.

There is a new SEC requirement that has led to our disclosure of some more specific information than we have historically done with regard to late stage development.

I put -- we put in the press release specifically all the different items that go into R&D so that you see in addition to discovery, early clinical, you have late clinical support and support for marketed products.

Those two last components form the numerator for the 30% to 40%, but in addition, we add into the denominator not only the research and early clinical but also the Phase IV marketed support of products, some biologics work that supports the pipeline in manufacturing, the medical support for products that are in the market, as well as some very important aspects of -- well I mentioned of the Phase IV that are done jointly in the regions.

That percentage is about the same as has been tracking 30% to 40% over the last several years.

However in the pipeline, we are clearly investing in sustainability as some compounds are taken down from Phase III, we are investing in others.

I mentioned four potential transitions and we are expanding our support in R&D for late stage development as well as medical support for marketed products both in Phase IV and in medical personnel.

I think -- this is Lamberto.

I think that the totals do not reflect the good work that Elliott and his team have done in improving productivity of R&D.

So we are projecting certain level of spend that allow us to finance all the projects that we consider of primary importance in the different stages of development.

And we are also able to do that because R&D, like all the other units of this Company, have improved its productivity through different actions and different activities.

But have been very important over the last few years and we continue to be important.

Thanks.

Anthony, can we get to the next question please?

Tim Anderson, Sanford Bernstein.

Thank you, a couple of questions on related to ipilimumab and then on apixaban, maybe starting with apixaban just to clarify something.

So I think the original hope was on the AVERROES you might get prior-year review.

If you're bundling that now with ARISTOTLE into one filing, does that essentially knock out the possibility of getting a priority review?

Is that most likely to be a standard review?

On ipilimumab, two questions.

One is the regulatory status of ipilimumab in Europe.

I'm wondering if regulatory authorities might have a problem with the control arm in the 020 trial?

And then, Elliott, I would be curious to get your thoughts on the only direct competitor in this category, which is tremelimumab which as you know, has been kind of resurrected from the ashes and they apparently are setting their drug in conjunction with a biomarker.

And I'm wondering if you can talk about biomarkers with this mechanism of action and what you see going forward related to your compound?

Yes, thank you, Tim.

With regard to regulatory progression in Europe, we are engaged with the revelatory authorities on 020.

We are supplying them with all the information that they ask for.

The control -- I wouldn't say we have identified issues, but the whole file as I've talked about before, does address the validity of the control arm, which we stand behind, as well as the patient population in the setting of a very significant survival event in pre-treated patients where there is no approved therapy.

So I am pleased with the progress so far, but I don't have any more than that to report in Europe.

With regard to apixaban, what the key message is today that instead of doing this in two stages, a narrower indication with AVERROES, given the proximity of the ARISTOTLE and quite honestly the complexities that we could imagine with ensuring appropriate use with just that indication and the need to really see the comparability as the field has changed with warfarin, we feel with Pfizer and after consultation with the FDA that we have a much stronger application waiting to file by the end of Q3, early Q4 for the broadest possible opportunity.

In both cases, we have included AVERROES, which may entitle one to review on a priority basis, but that's a decision that the FDA will make when they look at the file, look at the field, and give us a filing decision and a categorization decision.

I believe this is an area of unmet medical need and we will make those cases.

With regard to the competitor, I do understand the biomarker possibilities.

We don't have data that really has allowed us to pick out a very favorable biomarker, but we are constantly searching for this.

We have a biomarker study and we're looking at ways to predict.

I will make a very important point, though, and most of our outside advisers have strongly urged that although we are going to do biomarker work in parallel, the most important thing that we can do is to add combinations of drugs, existing and novel target agents, to try to increase the small but significant number of patients that have a remarkable durable response.

The key to this drug is durability.

We want to maximize the efficacy by combination therapy, use it in earlier lines, different tumor types, as well as look for biomarker results.

Thanks, Tim.

Anthony, we can go to the next one, please.

Catherine Arnold, Credit Suisse.

Good morning, everyone.

I have two questions.

One is related to ipilimumab for Elliott and then on the US cash flow for Charlie.

On ipilimumab, could you remind me of the allowance for patients in the DTIC arm to transition to other experimental agents on the trial?

And if you have any kind of data as to what percentage of patients have done that so far?

And then also on ipilimumab in terms of BRAF, there was a -- I think an expectation that at some point there would be a combination study of ipilimumab and BRAF in patients with that mutation.

I wondered if you have any definitive plans at this point to do that?

For Charlie, I wondered if you could give us a little bit more color.

You've been very helpful on the US versus ex-US cash flow, but how should we be thinking about the percentage of cash even in a range or directional sense in 2012 and 2013 with the patent expiries affecting your net income and changing the geographic placement of income?

Catherine, with regard to the specific question on the trial design and conduct of 024, the front-line study with dacarbazine, let me just say that we have done everything we can to reduce things like crossover and anything that would introduce confounding.

I don't have the exact disposition table and we will have those results by the end of the quarter.

With regard to BRAF combination, this is a very exciting field.

It's in our strategy to add to ipilimumab targeted agents and other agents to increase that percent of response.

We have an internal program that's ongoing with that combination and we think that by the time BRAF inhibitors are out there, it's our responsibility to test the combination of the two and work out regimens to maximize the effect for patients in combination with ipilimumab.

On the cash between the US and overseas, in the US, although it's our biggest business, we also have some of our biggest expenses when we think about R&D, our dividend, and predominantly our acquisitions.

So for business reasons, we were fortunate to be able to restructure some of our foreign legal entities to be able to move cash to the US where generally we have more overseas cash than we do in the US.

As your question specific to the near-term of '12 and '13, we still feel that we will have cash in the US and that will be in our view a strategic advantage for us.

Just to confirm, we start the year at 85%.

At 85%, yes, cash the US.

Can we go to the next question, Anthony?

Marc Goodman, UBS.

Yes, in the quarter, could you just tell us was there Kombiglyze stocking?

And it seemed like there might've been some major inventory changes for Abilify and Plavix.

Can you just talk about that?

Sprycel first-line CML, did it start to have an impact in the quarter do you think?

And then just one other question is your thoughts on the strategy of the Pharmasset deal, thanks.

Tony, why don't you start with that?

So in response to your first question around Kombliglyze, there was only about $5 million of stocking in the market for Kombiglyze.

As you know, we had learned a lot from the Onglyza launch that accessed early on in the promotion of this product was very important, so we actually did a small amount of stocking, did a huge amount of work around access, which allowed us by the beginning of January in fact to have 83% of all our accounts listed with Kombiglyze and about 25% of the accounts already on Tier 2.

Sprycel, as you know, Tasigna got their first-line indication about 4.5 months before us and the most recent data I've seen was the November data, which already showed that Tasigna was taking about 12% of all new first-line patients and Sprycel was already taking 9%.

So already a very strong response in the marketplace from our first-line indication.

Yes, Marc, and you asked about the strategy around the Pharmasset deal.

First of all, at a higher level the strategy in hepatitis C is to look at multiple mechanisms of small molecules and to deliver a superior interferon.

We think this is going to be a field modeled after HIV of combination therapy.

We have a chance of cure and to increase that cure rate and reduce the tolerability issues with the therapy and increase the number of patients that are being treated.

We have a first in class 5A inhibitor in the field and we are very impressed with Pharmasset's capabilities in the nucleoside area.

And so we are combining those two agents with and without ribavirin to see if an all oral regimen of that nature to new drugs and an older drug can treat patients.

This is a clinical trial agreement.

We have our own combinations and we have an openness to working with others with regard to delivering the best treatment regimen to patients.

This is Tony.

Let me just come back and answer your question on inventory as well.

Yes, we did in fact see toward the end of the year a slight build in Abilify inventory.

We have some between about $20 million and $30 million and we are seeing most of that moving out of the market in the first quarter this year.

Abilify was also up about $25 million in inventory.

We haven't seen much change in the marketplace however but I assume that will be gone by the end of the first quarter.

Leaving that Plavix the second trial.

The second trial with Plavix (multiple speakers)

Thanks, Marc.

And, Anthony, I think we have time for one more question.

My apologies to anybody left on the line, I think we have had a pretty robust discussion so far.

But, Anthony, if we could go to our last question, please.

Chris Schott, JPMorgan.

Great, thanks.

I just had two questions here.

First, just following up on an earlier question on SG&A, can you just qualitatively comment, on your SG&A spend longer term?

I think you've highlighted the Company is pretty lean after multiple rounds of cost-cutting.

It seems like there should be some incremental spend here with obviously some important launches next few years.

Are there further savings to be had here or should we anticipate an upward bias towards spend over the next couple of years?

Second question is on cash deployment.

Any changes in priority with the Company now holding about $4.5 billion of net cash with most of that cash in the US and with the ever-increasing clarity on the pipeline?

How are you thinking of the preference between kind of share repo, mid-stage deals, and in market transactions?

Thanks.

Chris, let me start and then Charlie will elaborate.

I've said many times and I will say it again today, we are very focused on preparing for the adequate development and launch of all the new fortunately many new assets we have.

Therefore, we are allocating the right resources to that -- the completion of the development and the launch of those assets.

Having said that, we have learned over the years that there is always space for additional productivities, therefore, without starving any of the launches or without under-allocating resources there, we will continue to look at opportunities of delivering productivity.

Again, my first priority and the priority of my management is though to deliver growth and growth means successful launches of many different assets.

In your question to cash, our higher US cash balances, it does give us an even flexibility when we think about capital allocation and our first priority has always been and we have stated this business development where we focus on strategic and financially sound deals.

Notwithstanding any deals, we always look at how we think about deploying capital and what are in the best interest of shareholders.

Thanks, Chris, and thanks, everybody, for your questions.

Again, Bristol-Myers investor relations is here to handle any follow-ups and before we wrap up the call, Lamberto has some closing comments.

I will be very concise.

Jami said we were very concise at the beginning, I will be even more concise now.

Thank you again for your questions.

I would like just to reiterate one key point.

BMS is clearly in a strong position financially and operationally with $10 billion in cash, a robust pipeline, and a streamlined operation.

We are poised for solid, sustained growth.

Thank you very much.

Thank you, everybody.

This does conclude today's presentation.

We thank everyone for their participation.