施貴寶 (BMY) 2011 Q1 法說會逐字稿

Good day, and welcome to today's first-quarter earnings 2011 earnings release conference call.

This call is being recorded.

At this time, I would like to turn the call over to Mr.

John Elicker, Senior Vice President Investor Relations.

Please go ahead, Mr.

Elicker.

Thank you, Celia, and good morning, everybody.

Thanks for joining us.

We're here to discuss our first-quarter earnings release, and with me for prepared remarks are Lamberto Andreotti, our Chief Executive Officer, Charlie Bancroft, our Chief Financial Officer.

Also joining for Q & A are Beatrice Cazala and Tony Hooper, both of whom run our Commercial Operations, and Elliott Sigal, our Chief Scientific Officer.

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 10-Q and Form 8-K.

These documents are available from the SEC, the BMS website, or from Bristol-Myers Squibb 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.

Lamberto?

Well, thank you, John.

Good morning, everyone.

We have just completed a very strong quarter, one that clearly demonstrates that our BioPharma strategy is working.

Our financials were strong.

Our pipeline continues to deliver, and of course, YERVOY was approved and launched in the US.

Taken together, I'm very encouraged with our results.

Before discussing some recent highlights, I just want to note that our operations in Japan continued unabated.

Our shipments and sales were unaffected, and most importantly, our colleagues were spared any physical harm.

In fact, our first rate management team and our staff of dedicated employees have demonstrated extraordinary results through this entire crisis.

Nonetheless, we continue to monitor our operations in Japan and we'll update as appropriate.

So, with that, let me begin with the most exciting development of the quarter, YERVOY.

On March 25, the FDA approved YERVOY for the treatment of metastatic melanoma.

This was great news for our Company and for the many patients who will benefit from this breakthrough treatment, first such therapy to demonstrate a significant overall survival benefit.

The FDA's decision is a major accomplishment for Bristol-Myers Squibb.

It confirms our strong position in oncology and establishes our leadership in immuno-oncology.

It demonstrates the value of our Medarex acquisition initiative in particular and our String of Pearls Initiative in general, and it strengthens our vision of BMS as a benchmark BioPharma company.

As you know, YERVOY became commercially available in the US in early April and the response has been overwhelmingly positive.

Let me give you a few examples of this response.

First, the NCCN guidelines, which were updated on April 13, now list YERVOY as a Category 1 choice for metastatic melanoma.

This is important.

Not only with respect to the speed with which it was done, but also because this will help facilitate reimbursement by the managed healthcare companies.

Second example, we have already met with or are scheduled to meet with most of the key commercial accounts.

Third, and very important, physician interest has been particularly strong.

In fact, our customers grant our people much more time than usual, while this is not very common as you know now-a-days in the Pharma world.

And finally, activity on the website and at the call center has been very busy.

Moreover, to improve our ability to execute commercially, we are utilizing a new customer model, one that takes a more holistic, more informed approach to the process by focusing on all aspects of the patients journey, and all of the customers involved including physicians, nurses, payers, hospitals, and, of course, patients.

This customer model, along with our patient assistance programs, will help make YERVOY widely available to the thousands of Americans who suffer this terrible disease.

As you also know, we have announced that a second Phase III clinical trial of YERVOY, known as Study 024, met its primary end point of improving overall survival in previously untreated patients with metastatic melanoma.

The data has been submitted to the American Society of Clinical Oncology, ASCO, and we are hoping to present it at the annual meeting in June.

And finally, outside of the US, YERVOY's currently under review in Europe, where we are expecting a decision later this year followed by decisions in Australia, Canada, and other countries as well.

Let me now discuss a few key regulatory and clinical developments.

We have added 2 positive developments in Europe.

For ELIQUIS, apixaban, we received a positive opinion for the prevention of venous thromboembolist in patients undergoing total hip or knee orthopaedic surgery and are expecting a decision soon.

We also received a positive opinion from CHMP for NULOJIX, belatacept, for kidney transplantation and are expecting a decision soon, too.

On Dapagliflozin, we announced the FDA accepted the review the Dapa NDA, and so we are on track for a decision this fall.

Additionally the European Marketing Authorization Application was validated and this marks the start of the review procedure in Europe as well.

And, with respect to our hepatitis C portfolio, at EASL, we just presented encouraging data for our novel interferon and our first in class NS5A inhibitor, both of which we plan to move into Phase III this year.

Let me now give you an update on Manatee, the plans to are as expected, we received a letter from the FDA with several observations.

We responded to that letter and believe we addressed the points raised, and we are continuing our discussions with the FDA.

Manufacturing remains uninterrupted in Manatee, and I want to assure you resolving the issues in Manatee is one of our top priorities.

As I said before, this could delay FDA decisions on NULOJIX and ORENCIA Subq.

Taken as a whole, our Company is in a solid position as demonstrated by this very strong quarter.

We delivered on pipeline and we delivered on financials, and the progress we are making gives me confidence that we are well positioned to deliver for the post PLAVIX and AVAPRO era.

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

Thank you, Lamberto, and good morning, everyone.

We did have a strong quarter.

We delivered non-GAAP EPS of $0.58.

Strong sales growth in most of our key products and continued focused expense management were partially offset by slightly higher effective tax rate compared to the same period last year.

Included in our first quarter EPS is an incremental negative $0.03 impact due to US healthcare reform.

This impact is primarily from the Pharma fee and to a lesser extent, the doughnut hole coverage, both of which went into effect in 2011.

I now want to give you some brief highlights from our first quarter financial results before we go to your questions.

We reported first quarter net sales from continuing operations of $5 billion, up 4% compared to last year.

EU measures had a negative impact of 1% and foreign exchange had a 1% favorable impact on sales.

As Lamberto mentioned, our operations in Japan were largely uninterrupted, and we did realize a slight increase in wholesaler purchases of approximately $10 million.

As I look at the first quarter sales performance, I continue to be 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 27%, including 30% growth internationally.

BARACLUDE has been a real international success story as over 80% of our business is outside the US.

The ONGLYZA franchise delivered sales of $81 million, an 11% increase sequentially versus the fourth quarter.

We are very pleased with the early trends for KOMBIGLYZE which helped drive a 30% increase in ONGLYZA franchise prescriptions sequentially versus the fourth quarter.

Reported sales from KOMBIGLYZE in the quarter do not reflect prescription demand partially due to inventory work down.

SPRYCEL was up 31% in the quarter reflecting successful commercial execution and the launch of the first line indication.

US prescriptions were strong and our market share in the US increased to roughly 10%, despite our competitors 3-month head start.

ORENCIA was up 18% as we continue to make progress in becoming the IV biologic of choice.

We now have roughly 30% of the first line IV biologic market, up from under 25% a year ago.

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

The AVAPRO/AVALIDE franchise was down 8% in the quarter, but up 15% versus fourth quarter 2010.

The negative impact of the AVALIDE supply interruption in the quarter was $40 million to $50 million.

The sales increase versus Q4 was due to restocking as we were able to resupply the market in February with 2 of the 3 dosages.

We expect current prescription trends to continue based on lost demand and the fact that we do not have the third dosage form on the market.

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

I will focus my remarks on our non-GAAP results; reconciliations to our GAAP results are available in our Press Release and on our website.

Gross margin improved 20 basis points compared to the same period last year and 80 basis points compared to fourth quarter 2010.

The improvement from Q4 was primarily driven by foreign exchange.

Advertising and promotion expenses were basically flat at $214 million for the quarter, less spending on the promotion of PLAVIX and AVAPRO.

Product at the end of the life cycle was offset by increased investment spend on our new products and indications.

We expect A&P spend to soften in the second half of the year as we further manage PLAVIX and AVAPRO towards the end of their life cycle.

Marketing, selling, and administrative expenses increased 4% due to the Pharma fee of $61 million.

Excluding the Pharma fee, MS&A would have been down 3%.

R&D was down 3%, mostly due to timing of portfolio investments.

R&D spend is expected to increase through the year as we begin Phase III studies for elotuzumab, our HCV portfolio, and YERVOY in lung cancer.

You may have noticed an increase in equity income sequentially versus the fourth quarter of last year.

This was primarily due to order timing, reduction in discovery royalties, and improved profitability as we and Sanofi, our JV partner, manage expenses.

The effective overall tax rate on earnings from continuing operations was 26% in the quarter.

The Pharma fee had a negative 1% impact.

As I mentioned on the January call, I would expect quarterly variability in the tax rate based on timing of certain discrete items.

Finally, we have confirmed our 2011 GAAP and non-GAAP EPS guidance with no changes to our line item guidance.

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

Thanks, Charlie, and Celia, we're ready to go to Q & A and I just would remind everybody, in addition to Lamberto and Charlie, we have Beatrice, Tony, and Elliott for any questions you might have.

Celia?

Yes, thank you.

(Operator Instructions) We'll go first to Jami Rubin, Goldman Sachs.

Can you hear me?

Yes, Jamie.

Okay, thank you.

Good morning, everybody.

Lamberto, I'm wondering if you -- or Beatrice, I'm certain you could answer this question as well.

If you could help us think to about the up tick of YERVOY, given what was already in existence a very large expanded access program, existing clinical trials with the BRAF inhibitor, if you could just give us a sense for how quickly you expect the uptake to be and who the available -- the size of the available patient population.

And secondly, with respect to the O24 study, help us to think about how, if this trial is approved and incorporated in the label, help us to think about how the dynamics of this label might change if it were to incorporate the Front Line study, just given that the indication already includes Front Line.

Thanks.

Yes, let me start, Jamie and then I suggest that Tony speaks about the uptake and Elliott speaks about O24.

As I said before, we are extremely encouraged by what we are seeing in the marketplace and before that, we were extremely pleased to have the label covering both pre-treated and untreated Metastatic Melanoma patients.

This gives us the possibility of making the product available to a much broader number of patients than those that were treated under [critical] O20.

Tony, why don't you give Jami and the others an update on where we are and answer her question on updating?

Thank you.

So Jami, obviously, we're very pleased with the broader label and the indications for both pre-treated and untreated patients that we've now received from the FDA.

As we look at the marketplace, we always said that there's between 15,000 and 20,000 patients with Metastatic Melanoma in the US and about 10,000 newly diagnosed patients per year, and these tend to come across fairly evenly across the year, so just under a thousand patients per month being diagnosed.

The AP program had at its peak about 2.6 or 2,600 patients in it for the US, and patients do have the option of either continuing on the AP program or converting to the Commercial plan.

We're seeing about a 50/50 split between those completing the EAP versus those going to the Commercial plan, so we see the uptake being a combination of a 1,000 new patients indicated or diagnosed per month together with second line patients who are failing on other indications as they come forward and that's where we see the growth and uptake of the marketplace.

The initial response in terms of ordering of vials has been fairly positive, but I'd obviously like to see this in a few more weeks to make sure that we can lock it down.

We've launched the product, as we've said, with a unique different customer model.

It's a model that takes a much more holistic approach, more informed approach of the process by focusing on all aspects of the patient journey and all customers involved including the physicians, the nurses, the payers, and the hospitals.

As Lamberto said, and our initial response has been great with physicians actually granting us with two to three times the amount of time they normally give us, and in fact the so-called no-see physicians proactively reaching out to us and asking to spend some time with us.

Metastatic Melanoma is treated, as you know, by medical Oncologist and about half the patients have treated in academic or hospital institutions, which represents about 600 physicians, and the other half of the patients are treated in the community representing about 5,000 community Oncologist's.

We have about 23 well-trained specialist melanoma individuals looking after the academic institutions; and one of our Oncology teams at close of 100 people looking out for the community Oncologist's; another 50 trains MSLs looking after physicians across the country; 18 dedicated reimbursement specialists backed up by our third party vendor Destination Access.

The model itself is unique in that because of the distribution model, as an order is placed, it triggers immediately the BMS team response, which allows us instantaneously have an MSL reaching out to the practice to make sure that the practice understands how to use a product and some important safety issues, but at the same time, it mobilizes the BMS team which consists of the melanoma sales specialist, the reimbursement specialist, the MSL, with assistance from the medical support center, and the entire unit comprising each of the critical roles in the treatment team of each practice.

They work with a person or the people that act as the patients prescriber, the side effect manager, the dosing administrator, the patient educator as well as the practice of reimbursement for financial lead, together with the patient and the patients caregiver.

So, so far we think the model is working exceptionally well.

We know exactly where sales are going and the responses from physicians have been outstanding.

The discussions with our payers, as Lamberto said, the NCCN guidelines got there as quick as they did, have been very beneficial in all our discussions of about 80% of our top payer clients to date, all of these discussions have gone exceptionally well.

They focused around the medical discussion and all of the medical organizations within the payer groups have identified the important innovation this drug brings, together with the important overall survival.

Jami, this is Elliott.

You asked about the impact and significance of 024, the First Line study, and I can say there's an immediate impact and then we'll be able to talk over time about its evolving impact.

Obviously, we've only been able to say that it's positive, that immediate impact is very significant.

We'll be talking about the full study at ASCO in June.

You noted correctly that the study was in First Line and essentially we already have that broad indication in the label, but the immediate impact of two positive studies in Metastatic Melanoma, which has seen no positive survival studies, is important.

This is an important data.

When you look at this study presented at ASCO, one of the things you'll focus on, no doubt, will be any consistencies between the two studies in both efficacy and safety and the uniqueness of the Kaplan-Meyers survival curve, which characterizes duration of response.

And so I think at this point, I would say that I think this is very important information to make available.

We'll see it in full in June.

We are currently in discussions with the health authorities.

The 3-milligram dose for now is our dose in the label.

We can't speculate about future labeling on approved dosage regimens, but this information of the study, we will have a filing decision on after complete conversations with health authorities.

Thanks, Jami.

Next question, Celia?

We'll go next to Tony Butler with Barclays Capital.

Thanks very much, and I appreciate the broad discussion, Tony, on YERVOY.

Thank you very much for that.

Elliott, really just a brief comment around the pipeline, we often talk about the late stage products, but I'm just curious, I had expected the Gamma Secretase inhibitor to complete its Phase II program.

And, I think I found on your website that the O13 study did conclude in January, and I'm just curious where you are in your thinking about potentially moving that forward.

I recognize the O3[A] study still requires some time, but is there any change in your outlook there especially given the previous Company failure?

Thanks very much.

Yes, Tony.

This is a very important area for us and for a lot of people, Alzheimer's disease, and really being after disease modification.

And, let me say first that the Beta Amyloid hypothesis remains a leading one in the area, and we continue to pursue it.

We're diligently moving forward on our Phase II program as you mentioned.

We have completed one Phase II to be presented soon, but the one in pre-dementia is ongoing, and our thinking has moved to having the most complete characterization of that study later in the year or early next year, before beginning our Phase III.

We have an eye to move into Phase III as the science dictates.

With this mechanism, it is important to show selective it for A-beta inhibition relative to notch, and we believe our compound has accomplished this more than any other compound in the field.

We're hoping that this selectivity will provide a therapeutic window that will allow efficacy with acceptable side effects, but it's going to be very important to select the right dose and the right patient population for Phase III.

To that end, we have 2, Phase II studies as I mentioned and you referred to one being completed.

That O13 study, six month study performed in patients with mild to moderate is completed, results to be presented in July at the International Alzheimer's meeting.

The second study, O18, is an ongoing two year trial performed in patients with pre-dementia.

We've decided to wait for the results of an interim analysis of the pre-dementia study slated for the fourth quarter of this year.

Prior to making a decision on Phase III and pending results of this study, we could move into Phase III some time in '12.

Great, thank you, Tony.

Celia, can we go to the next question, please?

We'll go next to Seamus Fernandez with Leerink Swann.

Thank you very much.

This question is actually more on the financial side.

Just wondering where we are in terms of the potential to continue to convert to a different cost structure heading into more of the specialty business and perhaps how much the cost structure could evolve with the patent expirations of PLAVIX and AVAPRO.

Thanks.

Well, it's obviously, Charlie that will give you the data, but what I want to just say is that we have not stopped our productivity initiatives even though we do not have branded them as under Productivity Transformation Number Three program, and this is throughout the Corporation.

The evolution of our portfolio is one of the reasons why we are looking at different structures and different types of organization, but also the evolution of the entire marketplace.

We just completed, Seamus, a very important and significant simplification process at management level, so we have eliminated a number of management positions and by increasing the spend of control and decreasing a number of layers.

So, the work is ongoing (inaudible) and Charlie do you want to go into more details?

Yes, historically, we finalized basically in 2010 the full $2.5 billion of productivity cost savings and cost avoidance, but we still have additional opportunities.

Lamberto mentioned the BioPharma implication, which is looking at primarily spans and layers, but overall governance in the organization.

We continue to identify additional outsourcing and procurement opportunities, and as Tony was mentioning as it related to your point, some of our other products as we see going forward, improving our go-to-market performance and our customer model.

We have been -- when we look at PLAVIX and AVAPRO, we have been doing some very significant life cycle flexing on those brands over the last several years, concluding in the back half of 2011, where we are essentially taking down a significant amount, if not all, of the expenses related to those products as we transition to some of our newer products, including how we think about ELIQUIS, Dapagliflozin, which do have the primary care audience as well, so I think we've done a lot.

I think we can always continue to do more, but what we're really focusing is balancing those kind of short-term productivity, medium term productivity, with how do we think about the long term growth in investments we need to grow the business.

Thank you, Seamus.

Celia, can we go to the next one, please?

We'll take our next question from John Boris with Citi.

Thanks for taking the questions and congratulations on the results.

First, just a real quick financial question, Charlie.

Can you -- it seems as though the share count was a little bit lower than we had projected.

Did you repurchase any shares in the quarter and can you remind us what's remaining there?

And then, one for Elliott, on the Hepatitis C front, you obviously presented a fair amount of data on your own portfolio at the EASL meeting.

Can you help us understand at least what some of the positives or that you felt came out of your own portfolio and then certainly on the Interferon side, do you still believe that Interferon Lambda can be backbone especially in light of some of the liver functionality that we've seen there?

And then, just one last question on the ACV portfolio, as you look at the paradigm for HCV and where it's going, do you think from a competitive analysis standpoint, you're optimally positioned in HCV?

Thanks.

Thanks, John.

I'll take the first part of your three part question.

As it relates to share repurchases, you're right.

We did have a lower amount compared to the previous three quarters, but for various business reasons, we had longer blackout periods in first quarter compared to earlier quarters of last year.

Moving forward, we do expect to repurchase shares primarily through our 10 B5-1 programs as well as opportunistically in the open market as we deem appropriate.

Yes, John.

With regard to our Hepatitis C portfolio strategy, this is an exciting time for providing fit new therapies to patients with hepatitis C, which is a significant worldwide problem, and as we speak, the FDA is moving towards approval of what we think of as the first wave improvement over standard of care that's existed for over a decade.

In our HIV experience, we have been cognizant of the fact that this virus will require combination therapy and that there will be more of a personalized approach for patients.

What that means is we think the market will evolve into a stratified set of patient populations based on different Genotypes, Polymorphism's of the host, and geographies, and therefore, we have from the beginning sought a broad-based portfolio that has multiple mechanisms for combination therapy and for selecting the right regimen for the right patient population in the right part of the world.

We have the first in class NS5A inhibitor.

We have perhaps a second wave Protease inhibitor, targeted at the unmet need that should still exist once the current drugs down at the FDA are approved.

We have a Polymerase inhibitor, and we have a novel Interferon.

Many people are trying to replace Interferon alpha, not totally clear that's going to be possible in all cases.

We do project a need for this important medicine; however, the goal of improving safety and tolerability we think can be achieved by this genomics-derived form of Interferon that uses the same intracellular mechanism, but a different set of target receptors, targeted to the liver and sparing the side effects by not targeting elsewhere.

I am not highly concerned, but obviously studying any side effects, such as the liver side effect, at high doses that you mentioned with regard to that Interferon -- we will be transitioning into Phase III, but without the highest dose.

It is a common issue in Interferon, even including Alpha Interferon, to have elevated LFTs, so this is not too surprising, but picking the right dose and the right management scheme will be our approach as we transition into Phase III.

Just to conclude before Beatrice adds her important perspective, out of Berlin, we were very excited at that International conference to be the first company to show that two small molecules can cure patients as measured by distained viral reduction in 24 weeks after therapy without Interferon.

We've been able to progress to which patients can be selected for two drugs.

We've shown that two drugs on top of standard of care can treat patients that are null responders, do not respond to current standard of care, can achieve with small numbers now in early studies between 90% and 100% cure.

And this is even a far advanced improvement over the new medicines currently being considered under regulatory review.

So, from the competitive standpoint you're asking if we're well positioned, and what we believe is that we will have multiple options as we move into Phase III across our portfolio which will allow us to take into consideration all of the data emerging from the competition in the evolving marketplace.

We would be monitoring extremely closely the uptake and the real world performance of the Wave One [EA].

We don't know yet how those compounds will behave in different genotype, in different patient population, in different geography, so without breadth and depth of portfolio, we believe with the flexible strategies that have been described many times we will be able to take advantage and react.

Obviously, we aren't in the Wave One, but we are busy monitoring and adjusting on our strategy, so we feel very comfortable that when we start looking at what extent the pool of currently diagnosed patient will flow into the first wave, we will identify further opportunity to develop our portfolio.

So, if I could just conclude, with -- Beatrice and I are working closely together on is the fact that the evolving unmet need is still significant to increase cure rate beyond the first waves set of compounds to improved tolerability and safety, and therefore allow more patients to enter therapy around the globe.

Thank you, John.

Next question, please, Celia?

We'll go next to Tim Anderson with Bernstein.

Thank you.

I have three questions all on YERVOY.

The first question is if the rate of uptake is very fast, do you have adequate manufacturing capacity?

The second question is can give us an update on where anyone is with a bio-marker for this product?

It seems like a perfect candidate for a bio-marker.

And then the last question is an updated perspective on YERVOY's potential to work in other tumor types, what's the scientific evidence for and against this and what's the timing of seeing some of these other studies?

Okay, very quickly, Tim, yes.

We have enough manufacturing capacity, so we don't have any concerns about supplying the market in adequate quantities, and Elliott why don't you take the other two questions?

Well, the research on bio-markers continues around the world.

This is an interesting issue and we are heavily involved in this.

We would like to understand more the mechanisms of response and prediction.

I don't believe there's any clear evidence of a bio-marker yet.

We will be pursuing it, but I'm also cognizant of the advice I've received directly from the physicians that are taking care of these patients and running the trial, and that is at least equal attention should be paid to increasing the number of patients that do respond as to trying to figure out a marker to predict the 20% of the patients that have a very significant durability; and we have those options at hand today.

We have potential combination therapy that is standard Chemotherapy, sequential Chemotherapy, and new targeted agents that we and others have in their pipeline, so our effort here is to take Immune Oncology to a place where Ipilimumab is foundational in a variety of tumor types and can be -- its response can be improved upon by other therapies, both targeted and otherwise.

The evidence that other tumor types -- first of all the theory that this ought to be applicable is the basic mechanism that this is unleashing the immune system that has been put in check by the Cancer and in so doing activates T-cells to attack the evading Cancer.

This should be more of a general mechanism.

Classically, Immunogenic Tumors have been thought to be Melanoma and Kidney Cancer, so those are the first two applications; however, we now have a probe to prove or disprove that and broaden the number of Tumor types.

With our early data in Prostate, we are conducting Phase III programs in Prostate Cancer with our data presented last year in Phase II Lung Cancer.

We are encouraged to begin a Phase III program this year in Lung Cancer, and more data about Lung Cancer will be presented at ASCO.

Thanks, Tim.

Next question, please, Celia?

We'll go next to David Risinger with Morgan Stanley, Smith Barney.

Thanks very much.

I stepped off the call briefly, so I apologize if either off these 2 questions have been asked, but Elliott, I was hoping that you could review the design of Aristotle and your aspirations when you design the study.

And then second, with respect to the conversion of Ipilimumab EAP users, just so we can understand that, I think the comment was that 50% will convert to paying customers.

What is the number that we're talking about in terms of EAP patients?

Thank you.

So, let me handle the EAP patients first.

At the time we got approval, the number of patients running on the EAP program was about 500, so not a large number of patients left to be converted, remembering that a lot of the patients were on the four dose regimen.

The majority of patients were to go outside the EAP program itself.

So the Aristotle program tests Apixaban head-to-head with Warfarin in patients that have Atrial Fibrillation and some risk factors for Stroke in an effort to prevent Stroke against the standard of care, oral Warfarin.

This is part of a larger program, as you know, that includes the unique program of Averroes what read out last year, very favorably, where patient that can't take Warfarin because of frailty or bleeding risk were compared with standard of care.

It's important to know the comparison with Coumadin given the evolving landscape, so we had designed an 18,000 patient study with patients that have Atrial Fibrillation and at least one risk factor for Stroke.

The average Chad score was about two.

This compares with what Dabigatrin had for Rely as well as quite similar to Abaroas, and that means on average a patient had either two risk factors for Stroke in addition to A-fib or had, had a prior Stroke.

The end point is the time to, excuse me, the dose is our 5 milligrams BID, which we think in multiple studies has given us positive benefit risk versus Warfarin, where we try to keep the INR in the two to three range.

The end point is the time to first occurrence of confirmed stroke or systemic embolism.

The time to major bleeding and treatment are follow-up.

It's an event driven trial.

We hope to have the results in the coming months and we hope to present the results in Paris in September at the European Society of Cardiology, and we are working on a filing that combines Avaroas and Aristotle should the results dictate.

Thanks for the questions, Dave.

Next question, Celia, please?

We'll go next to Steve Scala with Cowen.

Thank you.

Two questions.

Just to clarify.

How many patients have received a dose of YERVOY commercially since approval?

Is it closer to 50 or 300?

And secondly, for Elliott, are you more or less confident in the outcome of Apixaban's Adopt trial post results of Zeralto's Magellan, given the less sick patient population in Adopt.

Thanks.

So, this is Tony.

Let me just respond.

Obviously, we understand how much has moved in terms of vials from us to our wholesalers and how many vials have moved from wholesalers to physicians or academic institutions.

We don't have clear numbers yet of how many patients have been infused and obviously we'll have that in the next couple of weeks.

So, you're referring to the competitor in the field has had a study in medically ill patients where we like to anti-coagulate them because a sick patient is at great risk for clot formation, and their current therapy of either subQ Heparin or Coumadin has its disadvantages.

And the first trial, I don't know that we've seen full results yet, but with regard to what the FDA requires as a 30 day read and then a follow-up, had some 30 days in good efficacy, but there was increased bleeding.

Our approach from the beginning has to pick the dose of Apixaban and the regimen that balances efficacy with bleeding.

We have focused on benefit risk being a quotient of efficacy and bleeding; and that is in stark contrast to some of the competitor programs, so our Adopt trial is in the same type of patient population with a very similar design, but with a different approach to benefit risk but we must wait until that Phase III data matures later this year and perhaps we'll be able to present it, then.

Thanks, Steve.

Next question, Celia, please?

Our next question comes from Gregg Gilbert with Banc of America Merrill Lynch.

Thank you.

I have a few.

First on Manatee.

We certainly recognize that those two products you mentioned could be delayed, but given that you've had a dialogue with the agency, do you expect those products to be delayed based on what you know today?

Secondly for Beatrice, how has your thinking about European pricing pressures changed if at all over the past few months and how do you think the European pairs will react to your voice price when you get to that point?

And lastly for Elliott, I know it's early, but can you frame your collaboration on the OpCo Alzheimer's blood test and how that fits into your longer term R&D strategy, or is it more of a commercial question?

Thanks.

So, let me start with Manatee, and to answer to your question very directly, we cannot speculate on what the final outcome will be on ORENCIA subQ and Belatacept.

On the other hand, as I said, I want to repeat it following the re-inspection by the FDA, they issued a Form 83 letter; there were several observations.

Those observations related to manufacturing processes and maintenance to procedures relating to our manufacturing investigations and to the process for following up on product.

We have submitted a response to the 483 letter to address each of the observations.

Now, there is a potential -- there's a range of potential next step from the FDA and we hope that the matter will be finalized as soon as possible.

We take this matter very, very seriously, Gregg, and what is important to note is that so far there has not been any impact to the production of the supply of products produced at the Manatee facility; and another important factor is that the FDA recently conducted an inspection of our other manufacturing facility at Humacao in Puerto Rico and the FDA concluded with no observations, so the matter is under close monitoring and we hope that we'll be finalized as soon as possible.

Beatrice?

Yes, regarding the European pricing as you were asking our views on it, we have not changed our view of previous quarters.

We have historically budgeted the 2 to 2.5 impact of price in Europe; you know the employment has been challenging for several years.

We now consider that the numbers we have put in which is mid-single digit negative impact on the sale will be the case for the whole year and we feel comfortable with what we see this quarter that we made the case at this stage.

If you talk about the reimbursement, which is slightly different, there is still a fast-forward to recognition for innovation in Europe.

Regarding YERVOY specifically, you know that we are expecting our approval, so we don't have our final level yet, final indication and scope of the product, so based on that, you know that we are looking at numbers of factors as a company.

When we price we look at the value we deliver to patients, the scientific innovation we represent, we feel comfortable that Europe can recognize the innovation of the product.

We will look at specific market dynamics.

They are very important consideration, and like in the US, we will look at the context of each one of the market and the patient we will need YERVOY for medicine.

So clearly pricing is a challenge, however recognition for innovation is important and remember that's how on YERVOY we feel extremely comfortable that with overall survival, we are meeting the definition of innovation in Europe.

Gregg, if I understood your question right, I think you asked for the significance of the relationships -- some of the relationships we've been announcing in the area of bio-markers for Alzheimer's disease.

This is a very important area.

This is an area where our information about how to select patients, how to diagnose patients, is all -- and how to follow patients is all very significant; it's changing and it's very relevant to clinical trial design.

I'm proud that our team is at the forefront in defining Prodromal as a patient group to study and experimenting with a variety of bio-markers like A-beta fragments Tao, [fosto borlated Tao] as well as PET scans, not only to get the right patients and a more homogeneous set of patients into the trial, but the type of patients that we think would respond to Gamma Secretase inhibition, and the best methods to augment the clinical testing as we follow these patients, so you'll see more of that and you'll see that incorporated in our Phase III design.

Thanks, Gregg.

Next question, please?

We'll go next to Chris Schott with JPMorgan.

Great.

Thanks very much.

Just had a couple here.

Maybe starting off with BARACLUDE.

You continue to show pretty impressive growth, here.

You're now over $1 billion run rate.

As there is so much of this business ex-US, particularly Asia, can you talk about the opportunity from here?

How much more room do you see to grow the business, what type of peak sales opportunity do you see for the product?

Second question was a financial one.

Just can you quantify how much spend is left on PLAVIX and AVAPRO at this point?

I know you talked about it coming down to effectively zero by year-end, but can you give us a sense of where that stands at this point.

And finally on YERVOY, I know I appreciate all of the info you provided on the call so far.

Just if I can throw one more out of there.

Based on the initial feedback you've had from physicians and payers, what do you see as the hurdles, if any, at this point that you're most focused on to get broad uptake?

Have there been any surprises and areas you've had to retool the program so far?

I know it's early, but any feedback on that front would be appreciated.

Thanks.

Let me first thank you for asking a question about BARACLUDE.

Finally, we get one about a great product and the fact that only 20% of the sales in the US have kept this program a little bit less monitored than others.

And Beatrice, why don't you answer the question on BARACLUDE.

Yes, as you understand, we are very pleased with as a company with our strong sales performance, driven mainly by the preference of BARACLUDE for many patients of soft line therapy.

We have everywhere increased awareness.

We have acceptance of the long term efficacy of the products.

We continue delivering long term safety and resistance data all the time, so this product is clearly recognized as the market leader.

It is helping us also on the worldwide basis with the pathologies and (inaudible-heavy accent) which will help us in the future for our C1, so obviously very important product, not just BARACLUDE, but the link to a pathology in the future.

We look at the various region internationally and you see very strong growth in Europe.

We're 42% value market share; we have continued fueling of that growth in the [nine] segment, so it's not just the one nine product also First Line.

We see that in all the region, initially, very strong success in Japan.

We also have very strong growth in Asia and Japan of 38%.

We see basically the preference of that product, both by patient and physician, running the growth, so now we have challenges.

If you take China, where we are growing, we have also generics coming now on board, but the value of the compound in the people that are using it and the physician, as I say, keep a very strong branded generic growth behind that compound, so, so far we see some continued growth in that region outside of the US.

The US is still growing.

Let's not forget that.

It's also a growth product in the US, so very, very interesting for us long term.

It's a good success for the Company.

It's also a good success for the patient and it is also serving us as a base for image in pathology in general.

I would like to say something on BARACLUDE.

I think that this is demonstration that our approach to a number of emerging markets based on innovative products can work and work very well.

BARACLUDE has become our pillar of our China expansion and the fact that we have other products that we are developing for our key emerging market is a confirmation that we will continue with the strategy of not going with mature brands or semi-generics or generic products there, but with innovative products, and when they are properly developed for those markets and properly supported in the marketplace then it can generic success.

If I can just add to Lamberto, in a country like South Korea, BARACLUDE has become the number one product in the country with a very sophisticated execution of both a strategic marketing strategy, a medical strategy, and a patient assistance program itself; and then in a country like Japan where we have 64% growth, we hold about 65%, 68% of the market share, and about 98% of all newly diagnosed patients are actually initiated on BARACLUDE, so we continue to show very good growth there.

Let me move into the question on YERVOY in terms of the hurdles.

Obviously, the first question that we ask is what is the price of product and then we spend a huge amount of time discussing the value proposition this drug brings with this combination of overall survival and mean survival, and we have no pushback from the medical organizations over there.

The question of course is really around the temporary JACO in the beginning which is around the time it takes before institutions and hospitals are reimbursed, so we spend quite a bit of time working with our distributors to insure that do we have sufficient days?

Do we have granting to our distributors which they are passing on to the hospitals to give them 120, 150 days to really get their money before they are paying us?

So at this stage, we are seeing no major hurdles in terms of the use of the drug and the supply is going slightly better than what we would have expected it to be at.

And on PLAVIX and AVAPRO?

Oh, on PLAVIX and AVAPRO, you'll see the A&P spend on these drugs is about one-third of what it was 18 to 24 months ago.

On PLAVIX specifically, we've taken the primary care sales force down by about 64%, and then we have maintained presence in the institutions where, of course, we're defending our business against some competition there.

Thanks, Chris.

I think we have time for 2 more questions, Celia.

And we'll go next to Marc Goodman with UBS.

Yes, first question is on ABILIFY.

It looked like end market sales seemed to be a little lighter, and I was just curious if there was destocking in the quarter.

Second you started to talk about the emerging markets.

Can you talk about what are some of the key products that will rollout over the next, let's say 2 years that will drive the emerging markets?

And then the third question is on SPRYCEL.

I was just curious, I would have thought that SPRYCEL would be ramping up a little bit more with the First Line and was curious what your thoughts are there on why we're not seeing higher revenues.

So, I'll take the one on ABILIFY.

From a prescription standpoint, scripts are actually up in the US 5%.

Remember though that our contractual arrangement with Otsuka is there's a step down in sharing on net sales going from 58% last year to 53% in 2011.

Right, so even there was no destocking at all end market sales?

There was also some slight destocking.

Yes, we see about $20 million that was put into the market in the fourth quarter, which has now been worked out during the first quarter of 2011.

Tony, why don't you speak about SPRYCEL and then Beatrice will speak about emerging Markets.

So, we're very pleased with SPRYCEL performance in the US for quarter one, and we're particularly proud of our commercial execution following the approval of our first line indication in CML in October, which is about 4.5 months after Cigna.

Our sales for the quarter were up about 59% at about $61 million and our Rx's themselves continue to grow on an ongoing basis.

At the moment, we hold about 10% of that market and I think the challenge is how the second generation [Tekias] can consistently move and taken over market share from [Bevak].

And on emerging markets, you were asking the question of what are we focusing on in terms of potential launch in the next few years.

Obviously, we have prioritized versus our portfolio, but the three main areas where we are focusing on, one is diabetes.

This is such a large epidemic out there, we believe our ONGLYZA franchise with that recent launch in India of ONGLYZA, with the launch in '12 for China, are going to be very strong.

We see it also in Brazil, so ONGLYZA and the franchise of ONGLYZA is going to be followed by (inaudible) later on, so diabetes is a huge investment for us.

We do it obviously with our partners at AstraZeneca.

Secondary, looking at Cancer and starting with Brivanib, which would probably one of the first coming and as you know.

HCV is a key disease and gained 70% of the case in Asia Pacific, so will represent a big opportunity for us in the liver franchise; and as we discussed earlier we have also been very successful with that, so we know the field of liver disease pretty well there.

And more recently, we have SPRYCEL, which has been rolled out and launched in the various (inaudible-bad connection) which we are continuing investing end points.

So, those are the two big areas, diabetes, oncology, liver, and later on (inaudible-heavy accent) would be our next wave of focus in the market.

Great.

Thank you, Marc.

And Celia, can we go to our last question, please?

Yes.

Our final question comes from Catherine Arnold with Credit Suisse.

Thanks very much.

Hopefully last, but not least.

As far as my questions for Lamberto, I'm wondering if you could talk about the most important variable towards revisiting your trough guidance for 2013.

I'm wondering over the next year, as you see how YERVOY ramps up, if it might be fair to say that, that would cause you the greatest chance of potentially increasing your guidance for that trough year.

And then for Beatrice, I'm wondering if you could comment on Dapagliflozin and talk about how you see that product, assuming it gets approved in the fall, would you see that as ramping up faster than perhaps you've seen with ONGLYZA given the first in class status and if you've begun to work on oral combinations for Dapagliflozin.

Okay, let me confirm that you're last, but not least, Catherine, and second let me confirm that we are not going to look again at our guidance for 2013 until we review our plan.

Just as a reminder, when we confirmed our guidance in January, we had gone through an exercise, but considered the present portfolio and gave a certain degree of risk to the different products in the portfolio itself.

Obviously, at that point, we had a strong belief in importance of YERVOY, so what we are seeing and again, we are only at the very beginning of the launch of YERVOY, what we are seeing for YERVOY, we do not consider as a surprise and again, we are not going to update our guidance until start planning time.

Beatrice?

Regarding dapagliflozin, as you know, there is still a lot on that meeting Type II Diabetes and the prevalence is huge.

It's a progressive disease; it's often requires (inaudible-shuffling papers)communication to provide [proper counsel] (inaudible-paper shuffling).

We know that more than 40% of the Type II Diabetes patients are not achieving treatment goal on current therapy, so the patient management today is pretty stressful world but there is a share and we need to mobilize more around treatment guidelines, diabetes and as we provide new option for treatment to further improve quality of Diabetes care, the segmentation of the way the patient has treated depending on their profile, depending on their co-morbidity.

So, we are very excited by Dapagliflozin unique independent mechanism because it is not only first in class, it's first in a very different class.

It's acting independently from insulin and therefore bringing a very different type of option from existing therapies, so we believe it could have also a meaningful effect on the addition to glucose control, on [barometric] weight and blood pressure, and in a disease like diabetes, those attributes could be extremely important and valued by the patient themselves, not just the physicians with the ability of increasing compliance for the patients.

So, we feel extremely encouraged by what we see by Dapagliflozin.

We have learned more and more, and we continue learning about the Diabetes market and what the levers will be, so we are working on that and hopefully we will be able to get a fair share of what the market will accept at the time of our launch.

I'll just add, Catherine, with regard to your question on fixed dose combinations, to what Beatrice said given the importance of these combinations in the marketplace, we have a Dapagliflozin Metformin fixed dose combination in development and plan to explore other combinations.

So, let me close this call.

Thank you again for your questions, and I'd like to say that we are very proud -- we are very proud -- of the number of high quality products that were discussed during this call and I would like to reiterate one key point.

Bristol-Myers Squibb has had a very good first quarter of 2011, one that confirms our focused BioPharma strategy and our ability to deliver strong financial results while at the same time making progress on our innovative pipeline.

Thank you very much, everybody.

And that concludes today's conference.

We thank you for your participation.