施貴寶 (BMY) 2011 Q2 法說會逐字稿

Good day, and welcome to today's the second quarter 2011 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 sir.

Thanks, Brandi, and good morning everybody.

Thanks for joining us today to review our second quarter results.

With me today are Lamberto Andreotti, our Chief Executive Officer; he'll have prepared remarks, as will Charlie Bancroft, our CFO.

As you know, Elliott Sigal, our Chief Scientific Officer usually participates in the call, but sitting for him today for Q and A is our Head of Development, Brian Daniels.

Elliott enjoys these calls and would like to be here, but he recently had some knee surgery, and he is recovering well.

He enjoys participating, as I said, and he is looking forward to the October call.

With Brian for Q and A, also we have Beatrice Cazala, Senior Vice President of commercial operations, with responsibility for commercialization -- Europe and emerging markets; as well as Tony Hooper, Senior Vice President, commercial operations with responsibility for the US, Japan, and the rest of world.

Before we get started I will take care of the legal requirements.

During this call we'll make statements about the Company's future plans and prospects that constitute forward-looking statements for purposes of the Safe Harbor provisions under that 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 8-K.

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

During the call we will also discuss certain non-GAAP financial measures, adjusted to include certain costs, expenses, gains, and losses, and other specified items.

Reconciliations of these non-GAAP financial measures to the most comparable GAAP measures are available on our website.

Lamberto?

Thank you, John.

Good morning everyone.

We have just completed a very good quarter, and as you have seen, we have raised our guidance for 2011, and confirmed minimal non-GAAP guidance for 2013.

Our financial results were strong, with double-digit growth in sales.

Operationally, the execution of the YERVOY launch has already started delivering positive results, and from an R&D perspective we had several global regulatory approvals, including ELIQUIS and NULOJIX.

For ELIQUIS, we also announced exciting top line data for stroke prevention in atrial fibrillation.

Across all our operations globally, we continue to demonstrate that Pharma strategy on track, moving forward, and delivering results.

Charlie will speak to the financials, working you through specifics.

I will instead focus on some of the other key developments.

Clearly, a highlight to this quarter was the launch of YERVOY.

Approved in the US in March, our breakthrough medicine for metastatic melanoma was officially launched early in the second quarter.

And already, in it's first 3 months on the US market, YERVOY sales were strong, at $95 million.

While some patient demand had been building up pending YERVOY's approval most of these initial sales were due to one simple and compelling fact; the product is good.

And there is a very high demand for the first new treatment in over a decade, and the first one ever to demonstrate a significant overall survival benefit in this patient population.

The key driver of YERVOY's strong initial sales was our ability to execute commercially, utilizing the new customer model we talked about during last quarter's call.

We have received very positive feedback, both about the level of support we are providing, and the materials we are making available to the entire unit of care.

Based on the initial success of YERVOY, supported by our new customer model, we'll adopt a similarly thoughtful, holistic and focused approach to commercializing all new products in all countries.

The approach we take to fully understanding the patient journey, and the needs of all the customers involved will always remain core.

A few additional notes about YERVOY; Outside of the US YERVOY was approved in Australia in June, and it was just approved on July 14 in the European Union.

And at the annual meeting of the American Society for clinical oncology, we presented of the results of the second Phase III study of YERVOY, results that again demonstrated improved overall survival in patients with this most aggressive form of cancer.

So, taken together, the approvals, the launches, the clinical advances, this was an excellent quarter for YERVOY.

More generally, in addition to YERVOY, we had several other global regulatory successes.

Most notable were the approvals of our 2 other new products, ELIQUIS and NULOJIX.

ELIQUIS, apixaban, was approved and launched in Europe for the prevention of VT, venuous thromboembolic events, in adult patients who have undergone elective hip or knee replacement surgery.

Soon after, we announced top line results from our Phase III ARISTOTLE trial, which demonstrated ELIQUIS's superiority with respect to both safety and efficacy for the prevention of strokes in patients with non-valvular atrial fibrillation compared to warfarin.

This data will be presented at the European Society of Cardiology meeting at the end of August, and we are still on target for submitting regulatory filings in the US and the EU later this year.

NULOJIX, belatacept, our first in class biologic [immuno] suppressive therapy for the prevention of organ rejection in kidney transplantation was approved and launched in both the US and Europe.

As you know, we just received a negative opinion on dapagliflozin from the FDA's advisory committee, and, while disappointed, I want you to know that we are not at all dissuaded, and that we and AstraZeneca will continue to work with the FDA.

I'm saying this not because this is what we are supposed to say, but it's because we do believe in this product and remain firmly committed to its success.

And finally, adding to our overall good operating news during the quarter, we were informed by the FDA in June that the corrective actions we have taken at our Manati manufacturing facility in Puerto Rico has sufficiently addressed the [maturcident] it identified in the 2010 FDA warning letter.

I and my management team remain committed to ensuring in the actions that we took at Manati site, and that the Manati site, and all our other manufacturing sites, are in full compliance with both Company and regulatory requirements.

Before passing the torch to, Charlie I want to mention 2 business development transactions that we just completed, both of which have happened since the end of the second quarter, but I think that they are worth mentioning.

First, we announced the global agreement with Innate Pharma S.A., a biotech company France, for the development and commercialization of the biologic in Phase I development.

A good addition to our strong immune oncology portfolio.

And just last week we entered into an agreement to acquire Amira Pharmaceuticals, a San Diego-based company that focuses on the discovery and development of medicine for the treatment of fibrotic disease.

This is an area of increasing interest for us.

Again, taken together, it was a very good quarter.

We delivered solid results across all of our operations globally, and this not only increases my pride in our Company, it also increases my confidence in our future.

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

Thank you Lamberto.

We did have a very good quarter.

We delivered non-GAAP EPS of $0.56.

Sales growth across our key brands was partially offset by an increase in operating expenses, and a higher effective tax rate compared to the same period last year.

Included in our second 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 second quarter financial results before we go to your questions.

We reported second-quarter net sales at $5.4 billion, up 14% compared to last year.

Volume was strong, providing a 5% favorable impact on sales.

Price was also favorable by 5%, and foreign exchange contributed 4% of sales.

The US healthcare reform coverage gap implemented in 2011, and EU measures together, had just over a 1% negative impact on sales.

As I look at the second quarter sales performance, I am very encouraged by the trends in many of our key brands that are important to our future growth.

This includes continued strong performance for BARACLUDE, ONGLYZA, SPRYCEL, ORENCIA, and as you've seen, the YERVOY launch has been quite strong.

As Lamberto discussed, we are pleased by the performance of YERVOY, with sales of $95 million in the quarter.

We believe this strong start reflects both the compelling profile of the drug, and the execution of our commercial model.

We are breaking YERVOY sales into two categories, a stocking element, a [bolus] or one-time element, and underlying demand.

As expected, wholesalers are holding what we consider normal levels of inventory.

Our preliminary estimates are that the bolus has accounted for approximately 30% of our Q2 sales.

We believe the majority of the bolus was driven by a warehouse effect, and patients on current therapy being switched on to YERVOY before disease progression.

As we move into Q3, we will get a better sense of the actual size of the bolus and whether it has fully run its course.

The largest driver of our Q2 sales was strong demand.

New patient starts are split approximately 40% the first line and 60% in second line, and the majority of demand had been driven by physicians experienced with YERVOY.

For the remainder of the year, the YERVOY sales range will be dependent on a few factors; the actual size and depletion of the bolus, and the extent to which we can broaden our physician base beyond the prescriber set and expand the patient pool.

As I move to the rest of our product performance, please remember that foreign exchange did have a positive impact on all of our global brands.

Performance excluding foreign exchange is available on our website.

BARACLUDE, our treatment for hepatitis B, was up 31%, including 33% growth internationally.

BARACLUDE's long-term efficacy, safety, and five-year resistance data has strengthened its position as the preferred first-line agent.

The ONGLYZA franchise delivered sales of $112 million, a 38% increase sequentially versus the first quarter.

The franchise delivered 22% prescription growth, versus 6% for the class.

Going forward we are focused on commercial execution and positioning our data in renal patients, and our head-to-head studies versus SUs.

SPRYCEL was up 46% in the quarter, reflecting successful commercial execution, and the launch of the first line indication.

US prescriptions were up 11%, and our market share in the US increased to roughly 10%, for parity with Tasigna.

ORENCIA was up 28%, as we continue to make progress in becoming the IV biologic of choice, highlighting efficacy and durability of response.

We are prepared for the expected launch of our subQ formulation with its PDUFA date next week.

ABILIFY was up 12% in the quarter, despite the step down in our contractual share of net sales.

The anti-psychotic market in the US seems to have stabilized, after several quarters of decline, growing at roughly 3% in the quarter, while ABILIFY prescriptions grew at approximately twice the market.

European sales were also strong.

Let me give you just a few comments from the rest of our P&L.

I will focus my remarks on non-GAAP results of.

Reconciliations to our GAAP results are available at in our press release and on our website.

Gross margin was 73.1%, down 70 basis points compared to second quarter last year.

The decrease was primarily driven by the impact from certain manufacturing variants year-over-year.

Advertising and promotion expenses were down 4%, or 6% excluding exchange, at $253 million for the quarter.

Less spending on the promotion of PLAVIX and AVAPRO, products at the end of their life cycle, was partially offset by increased investment spend on new products and indications.

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

Marketing, selling, and administrative expenses increased 16%.

This is due primarily to the Pharma fee, which is recorded in G&A, and the negative impact from foreign exchange.

Excluding the Pharma fee and MS&A was up 9%, with approximately half of driven by foreign exchange.

We did have increases in investment spending behind YERVOY, NULOJIX and ELIQUIS.

R&D increased 8%, driven by overall portfolio spend, and the ZymoGenetics acquisition.

The effective overall tax rate was 27.9% in the quarter.

Earnings mix had a negative impact in the quarter, and the Pharma fee had a negative 1% impact.

As I mentioned on the January call, I expect quarterly variability in the tax rate, based on the timing of certain discreet items, which we expect to incur later this year.

As Lamberto mentioned, we raised our 2011 GAAP and non-GAAP EPS guidance.

Our non-GAAP guidance for 2011 is now $2.20 to $2.30.

Overall, we are seeing a good sales trends for our key products, including YERVOY.

At the same time, we are selectively increasing our investments in these products, as we look to maximize the value of our portfolio.

As I update our line item guidance, let me point out that this guidance assumes current foreign exchange rates remain constant or the balance of 2011.

We now expect sales to increase in the high single digit range.

Advertising promotion is expected to decrease in the mid single digit range, MS&A is expected to grow in the high single digit range, and we expect area effective tax rate to be approximately 26%.

Please note that this includes the impact of certain tax-discreet items expected to occur in the fourth quarter.

We've also confirmed our 2013 non-GAAP floor EPS guidance of $1.95.

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

Thank you.

(Operator Instructions).

We will take our first question from the line of David Risinger with Morgan Stanley.

Thanks very much, and congrats on the YERVOY launch success.

I had a couple questions.

First, the YERVOY sales ramp has obviously exceeded expectations, and Charlie talked about some of the drivers, but I just had a couple of questions about the ramp.

First of all, were there more patients that converted at the time of approval to paying patients than you had expected?

Second, what percentage of the real-world dosing is at 10 mg, rather than the labeled 3 mg dosing, and third on YERVOY, how should we think about third-quarter sales sequentially?

Should we expect them to be up or down from what you reported in the second quarter?

And then, just to change gears, could you just frame for us the disclosure plans on the apixaban data at ESC, including whether we should expect a publication that weekend?

I would suggest that Tony take the first two questions on YERVOY, and Charlie, maybe say something about Q3 sales versus Q2.

Okay.

Thank you.

As Charlie said, when we look at the Q2 sales, they're broken down into three buckets.

And when I look at the bolus bucket itself, specifically, which is about a third of the business, we estimate -- and I have to remind you that the data is fairly certain, so we are doing an assumption upon an assumption here, but our extrapolations show that only between $3 million and $5 million of our sales were the evolution of patients from the AP program to a commercial supply.

Very much in line with what we had projected.

We were surprised at the number of patients that were moved, i.e.

stable switched patients, that was more than what we had expected.

And lastly, the warehouse of patients we saw was much larger in terms of patients being brought in on both first line and second line.

So, when we look at the dosing, we don't have accurate data yet but in general, and the feedback we are getting from physicians, that in the majority they are using the 3 mg dose.

And last but not least, as I look into Q3, I think the bolus will by definition will roll into Q3 to an extent, because of the dosage being 12 weeks, and we see a continued increase in the usage of both first line and second line as we go into Q3.

Maybe just a little bit more specifically on Q3, as Tony mentioned, it will depend upon the actual size going in of bolus, and then the rate of depletion.

What we do expect the bolus to carry over into the third quarter, and from a demand basis we do expect demand to increase, and that is the extent in which we can broaden not only our physician base, but also expansion of the patient pool.

All right.

Thanks.

David, I think you asked it what to expect at ESC.

ESC is the meeting, I think it's in Paris, in the last week of August.

At that time that we will be presenting top line results from ARISTOTLE, and as well as some additional analysis from AVERROES, our accompanied studied in stroke prevention a-fib and patients who are intolerant to that, and we do also -- this external steering committee is working very diligently to try to ensure a simultaneous publication at the same time as the ESC plenary discussion.

Thanks for your questions, David.

Next question please Brandi?

We will go next to John Boris with Citi.

Thanks for taking my questions and congratulations on the results.

First question for Lamberto, really specific to YERVOY and ELIQUIS.

Quite frequently, as you forecast products for the long-term you have optimistic, pessimistic, and base case scenarios.

One would assume -- and I was looking at to confirm, can confirm whether you have moved from a base case to an optimistic scenario and if you have, what that means for potential sales trajectory over the long-term for those assets, and also what does that mean for the level of investment that is required to reach those targets over the longer-term.

Any commentary on that.

And then I just have on follow-up for the ORENCIA.

John, first of all thank you for the congratulations.

Clearly, the YERVOY results are in line with our best projections, and most optimistic projections.

I think that the important thing to underline here is that the uptake is faster, probably, than what we have with base case.

I think this is, as we said before, a demonstration of the quality of the product, and the validity of our commercial execution.

Now, when we look at ELIQUIS and we look at the data that we are seeing and we expect to have more understanding of the data in the next few weeks in the publication of it, as Brian was saying, obviously we have moved our expectation for ELIQUIS from a base case to a high case, given the results of ARISTOTLE, and given the importance of the full package of ARISTOTLE and other [odds] at the same time.

You were asking about resources.

We are allocating the right resources to both products, and it's clear that for ELIQUIS we have underway a good analysis of whether additional resources are needed, because of the different profile that we now have from what our base case was projecting.

Pfizer and Bristol-Myers Squibb are working together very diligently and very effectively.

John, I don't know if you are still the line.

We might have lost you for your ORENCIA question.

Brandi, can we go to the next question then?

Yes we will take our next question from Catherine Arnold with Credit Suisse.

Thanks a lot, good morning.

I was wondering if you could give us some more color on YERVOY, there's been a lot of questions asked, but I know at Ascot there was some commentary from the podium about using the drug as mono-therapy in [first line] instead of with the Carbozyne, and the thought being that the toxicity would be lower so the number of cycles may actually be greater.

I'm wondering what you are hearing from the field, if you can give us any color on that.

And if you could give us an update on YERVOY and the other solid tumor programs, particularly Prostate and non-small cell Lung Cancer.

Let me respond first.

As I said, the data is based on some preliminary discussions with physicians, and we are seeing a usage of the drug across the board in different situations, but there is no clear feedback from physicians at the moment.

From a cycle perspective, or number of doses, I think we are going to be looking in the rear view mirror and really understanding how many doses the patients have.

We are hoping to have that data within the next couple of months to really lock it down.

We do see about 600 physicians, a large number of them have been experiencing YERVOY, who are using the drug in a fairly large number of patients.

And the feedback is consistently, the reason why they do that, is based on the long-term efficacy data that they are receiving.

Brian.

Thanks Tony.

Catherine, I'll just follow up on the Life Cycle Management, opportunities that we see for Ipilimumab and for YERVOY.

Just to remind you, we have an ongoing adjuvant study in Melanoma, which we are working with the European trial group with, that we're diligently enrolling, and then waiting for data.

That would be in the Melanoma space, but a continuation of the development of the profile and its potential benefits in different patient population.

If you then move to other Tumors, we have already started an extensive Phase III development program in hormonal resistant castrate Prostate Cancer that has two studies.

We are looking to begin our Phase II program in non-small cell Lung Cancer with a study in the Squamas.

Istotype histology starting this year.

Also interested in following up on our data in small cell Lung Cancer as well, and we have a large variety of Phase II, what I would call single detecting studies in a diverse set of cancers, many of which have not historically been thought to be immunologically sensitive, but from those studies we will make the right Phase III investment decisions based on the data that we see as it rolls out over the next few years.

Thanks Catherine.

Can we go to the next question please?

We will go next to Seamus Fernandez with Leerink Swann.

Thanks very much.

Actually, just 3 quick questions.

First, can you update us on the situation with the dual eligible, and if you think there is possibly any changes coming with regard to health care reform?

Just what you are hearing from Washington in that regard.

Second, the share repurchase came in a little bit below our expectations.

Despite that, you obviously have a great quarter.

Just wanted to get a little bit of an update in terms of the sequence, Charlie, of what you saw or mentioned to us previously with regard to M&A first, followed by other capital allocation decisions.

Maybe you can just give us an update on that.

And then last, with regard to next year, can you just update us on how we should think about the PLAVIX erosion, given the fact that there is no exclusivity for the generics in that time frame.

Thanks.

Okay, I will talk to the first.

The answer is very fast.

I think that nobody knows what is going on in Washington right now.

I think the people in Washington themselves do not know it.

We obviously are supporting our industry association in making clear to the Congress, the White House, the importance of innovation in this country, and the importance of our industry as an employer of qualified people.

And we are also considering to explain to people what Medicare means, especially from the point of view of the drugs.

Now, what will happen, nobody knows.

Hopefully --what will happen, will happen soon, and it will not be detrimental to the pharmaceutical industry.

Charlie?

Just briefly on the share repurchase.

We basically do our share repurchase through a systematic 10-D 51 program.

We do very little opportunistic type purchases.

It is subject to a bunch of different things.

The share count -- it's how many shares we have repurchased, are we in a blackout period?

And if there is any option exercises and clearly the price of the stock does the 10-D 51 is based on dollars, not on shares.

That should give you a sense of how we implement our Share Repurchase Program.

As it relates to capital allocation, I think we've been very consistent on this.

We look across the board at capital allocation as it relates to business development and shareholder distributions.

We try to have a balanced approach.

We think at this stage our best return on our capital is business development, but we will remain disciplined.

We look at all deals that have to make strategic sense for Bristol-Myers Squibb but it also have to make sense financially.

We continue to look at a lot of different opportunities.

Lamberto mentioned a couple that we executed in July, and we continue to be very active in that field.

This is Tony.

Let me then respond to your question around PLAVIX and loss of exclusivity.

When we lose the patent on May 17, 2012, we do expect generic erosion to occur very quickly.

I think we have run a model with about the last seven generic erosions, but I probably believe that the recent case with Cozaar provides a useful data point.

In that case, they lost about 85% of their demand in the first two months with only two generics.

As you correctly say, we will not have the 180 day exclusivity period, and therefore we will anticipate multiple generics coming at the same time.

I would like to also remind some folks that in the marketplace, both the wholesalers and the retailers hold a fair amount of inventory.

Our data shows the wholesalers holding between 0.4 and 0.5 of a month, and retail holding as much as a month.

So if you're selling about $550 million a month, that's about $750 million of stock, and therefore we expect that the actual ex-factory sales are going to be dramatically different to what the end market to model we post loss of exclusivity.

So both lower demand, much lower demand, and we have the inventory here now.

Okay.

Thanks.

Thanks Seamus.

Can we go to the next question Brandi?

We will take our next question from John Boris with Citi.

Thanks for the follow-up.

Just a question for Beatrice on ORENCIA.

On the sub-Q opportunity, do you have, first off, launch quantities are ready to go, and sales force trained and how would you characterize that opportunity?

And then from Brian, an update on that Lupus Nephritis opportunity, and how well it is going there?

We launch first in the US.

Tony, you want to speak about that?

So, 1, we are pretty delighted with the performance of IV solution at the moment, as we continue to grow market share in the market becoming what we believe to be the drug of choice in IV.

We are also looking forward to launching a ORENCIA in the sub-Q market, which is the other two thirds of the market where we haven't been able to complete to date.

We do believe the patients and physicians who prefer sub-Q will value a medicine with an alternative mechanism action to the NTT&Fs.

We do expect initially that we will see adoption from existing ORENCIA users.

The team are trained, our PDUFA date is next week, and the manufacturing organization is running, and we don't expect any problems with product supply.

I would point out that our commercial model for this launch, again, is designed to provide a high level of customer service to both patient and the end of care, and in particular is intended to support patient initiation and retention, while on ORENCIA sub-Q.

It will include customer services offering dedicated to helping individual patients with logistics issues such as sourcing shops, containers, and getting reimbursement support.

The me just briefly update you are with where we are on Lupus Nephritis.

If you think about it, Lupus and Lupus Nephritis, those represent sort of the touchstone of how we think about developing novel drugs for Bristol-Myers Squibb.

An area of very high medical need without a lot of, today, innovation -- particularly for Lupus Nephritis, available to patients.

So we have had a long program in Lupus with ORENCIA, and we will be presenting our Phase II Lupus Nephritis trial at ACR, which is in November of this year.

We are looking at that data, and under evaluation both internally, as well as a series of external Lupus experts, as to what are potential steps in Phase II might be.

It's a very challenging area to do clinical research, and it is -- we are taking our time to make the right decisions for the medicine and for patients.

Brandi, can we go to the next question please?

We will go next to Gregg Gilbert with Bank of America Merrill Lynch.

Thanks.

3 quick ones.

First one, Lamberto, as you took a harder look at the $1.95 or better goal, can you talk about some of the upsides versus down sides that have occurred since you last went through that process?

Obviously some are obvious and maybe some are less so.

Secondly, Charlie, specifically for 2011, what changed in your outlook other than YERVOY?

And third, perhaps a commercial question, what have been the learnings so far for you guys s from the PRADAXA launch, other than the fact that it's been a pretty good start?

Maybe some more nuts and bolts stuff there.

Thanks.

Charlie, why don't you take both?

When we think about 2013 floor guidance, which we gave in March 2010, there ware a few unknowns at that point.

US Healthcare Reform had not been enacted.

There was also additional European government measures that began around actually this time last year.

We do feel very optimistic about our future.

We remain focused on productivity, but at the same time, as we have various opportunities, various exciting opportunities in front of us, we are appropriately investing in business for the long term.

And as it relates to 2011, it was primarily sales driven, YERVOY in part.

But if you look across the rest of our brands, we have also seen very strong performance, particularly sequentially quarter to quarter, from Q1 to Q2, so we are very encouraged by that.

Thanks.

Beatrice, do you want to take the other question?

As you can imagine, with our coming launch soon of ELIQUIS, we have been looking extensively at PRADAXA and potential learning with our partner Pfizer, so the first thing I will say is that it's confirmed that there is a huge opportunity beyond what PRADAXA is already capturing of the market.

It's a 7-year unsatisfied market with unmet medical need, and we see with our launch the benefit of working very closely with the [credulities] through a launch that would comprise (inaudible) all the way to credulities education as well as patient and physician integration.

That's very important.

Where we learn from them, too, is that we need to understand a bit more in that.

What's going on between the credulities and the general practitioners, as well as some [interns], because that link between the two are going to be critical with the speed of adoption of the time, once you passed the first wave of [credulity] prescriptions.

While looking at that internally, we are preparing with Pfizer on what's the best customer model to bring our profile to the customers as soon as we can do that, and that's important to us, to realize that the (inaudible) opportunity needs to come with the appropriate customer model the way we have done it with other partners.

I think that I can add something to this.

I think that we are obviously happy for Boehringer Enzyme, and their results are good, but then when we think that we have a better product, we are very excited about how we can do well in the marketplace, and how important our trial is.

I would like to add another thing.

It is interesting to think that our future involves very many products now.

So we will speak about a very differentiated portfolio, with differentiated products, each in its therapeutic class.

It is an interesting story and it makes us very confident about ELIQUIS, obviously, but the entire portfolio.

Can we have the next question, please, Brandi?

We will go now to Marc Goodman with UBS.

Just a few questions.

First, can you tell us the number of patients that are actually on YERVOY right now?

Second, can you remind us of the timeline for the combo study with the Roche BRAF?

When does that kick off, and when should we think about seeing results for that?

And then third, PLAVIX was very strong in the US.

Can you give us a sense of -- was there anything unusual there, and should we expect that product to remain at these types of levels?

I know you took some price increases, but I guess I was surprised that so much would be able to flow through.

Just a little flavor there -- because I would have thought that, that would have also helped you as far as raising your 2011 guidance.

So, this is Tony.

As we look at the YERVOY data at the moment, trying to determine the actual number of patients is kind of tough, because we're not quite sure whether patients are receiving second or third doses at this particular stage.

But we have done some calculations, which put the numbers in excess of 1,000 at least, at this particular stage and that we'll keep digging down to try to make sure we understand what that situation is.

As we break the data up, it is pretty clear we are getting more usage in the second line at the moment, but the first line is much higher, probably at about 40%.

PLAVIX itself continues to be a unique success story.

It is without a doubt a wonderful treatment for a broad range of patients.

And our sales in the US were up about 17% this year, and about 7% higher than last quarter, driven primarily by price and inventory bulk.

As well as some decreased demand and higher Medicaid part D rebates.

If you look at the TRX data, we are down about 4%.

If you look at the volume in terms of actual capital, that's only down about 2%, showing that the prescriptions have actually gotten slightly longer.

The market itself is slightly softer due to a decreased level stints, but the rest of the business is fairly flat and we are holding out market share quite strongly.

Sure.

Mark, I will just follow up.

As you are aware, in June we announced our clinical collaboration with Roche to use Ipilimumab, or YERVOY in combination with their BRAF inhibitor in that subset of patients who have activating mutation of BRAF.

We just 2 weeks ago finished a meeting between the two companies to complete the design of that Phase I, Phase II study, which we hope to have first patient dosed in the third quarter of this year.

As that data evolves, we'll obviously together look to rapidly either enlarge the trial or move to more important registrations type of work based on what we see.

But the first study will be a Phase I, Phase II safety efficacy study, particularly looking at how best to combine the medicines together, and manage the toxicity profiles of both.

Brandi, can we go to the next question please?

We'll now go to Chris Schott with JP Morgan.

Great, thanks very much.

Just three quick questions.

The first was a follow up on the earlier Apixaban question.

When you are thinking about the build-up of Apixaban in A-fib, are you thinking of something more like ONGLYZA that will start slow and build momentum over time, or do you see potential for a much more dramatic uptake in the market?

Second was on YERVOY and European pricing and uptake on Europe.

And finally with the tax rate sitting at about 26%, can you comment a little bit about what has been driving that higher currently, and is just some color about how we should think about the tax rate trend for Bristol, as you go through some of these patent expirations.

Regarding a decrease in the uptake, that's the work we are currently doing, analyzing how fast the uptake can be.

Very different situation from ONGLYZA, because there was a truly large unmet medical need, and there don't seem to be treatment inertia as we saw in the Diabetes market.

So clearly, looking at what is happening there, we need to understand, now the relationship between the credulities and the general practitioner to see how we create the right forum for the prescription to go fast.

However, we have here a very strong data.

We have head-to-head comparisons with the standard of care.

Whether they were depending on the patient profile, as is the Warfarin, or we have data also on [escaline,] so we have a bold scope of data, we have the work that has been done already to indicate by Boehringer with PRADAXA, so we believe the penetration would be significantly faster than ONGLYZA.

And obviously are spending a lot of time now trying to optimize that in an even better fashion.

YERVOY in the EU, we are very pleased because we got the approval on 14 July, so you can imagine, that was a magnificent moment for the team.

And we have now launched in Germany, in Sweden, and in the Netherlands.

So this is already, because it's only two weeks.

We are planning to launch in the UK as soon as it we have final clearance, probably in August.

And what we hear from our investigators and our prescriber or potentially interest for the price are very important.

We have worked very carefully with the all of these advancements to look at how to transition best, market by market, the European access program.

As you know, in Europe there are different regulations according to countries, and therefore we are moving in that EAP program depending on the market.

In a market like Germany, where we have launched, we have launched at a similar price as the US -- it's $30,000 per infusion, it's about EUR21,000.

As you know, in Europe we discuss country by country over time, so our price will come through the access negotiation on a country by country basis.

So far, it's very early, but we have got very good reception from the value of the product from both of the potential prescriber, the patient and very strong patient support, and the first discussion we have had with some of our government and payers.

Regarding the tax rate, as we enter 2011 one of the drivers that put pressure on the tax rate was the non-deductibility of the of the Pharmacy fee.

As we look now throughout the full year of 2011, the increment at the high end of that range of our original guidance is primarily due to earnings mix between low and high tax jurisdictions.

Moving forward, there are a few items to keep in mind regarding taxes.

One is, earnings mix will impact our rate.

We are constantly evaluating various tax planning opportunities that will hopefully have a positive impact on our rate.

Also, PLAVIX is a US-based partner product, so the loss of PLAVIX will have a favorable impact on our rate going forward.

Thanks Brandi, can we go to the next question please?

We will go next to David Maris with CLSA.

Good morning.

A few questions.

Lamberto, one of the CEOs from a peer company said yesterday something that the market for deals has gotten a bit out of hand for development programs.

Do you agree with this and is that reflected in the 2 development stage deals that you announced in the quarter or are you not seeing that?

And then separately, on the Express Scripts-Medco deal, what do you think it means, if anything, longer-term for the industry?

I will answer about the deals, and the costs of them, and Tony you can think about how to answer the second question.

I think that good companies and good deals exist.

They are not planted.

I think that our approach to identifying deals, and negotiating them is that winning because we really focus on things that are very complementary to our pipeline and very strategic for us.

The initial cost of certain deals might make -- look a bit higher than they were in the past, but I believe that we are buying value products and projects at the right price.

Charlie, do you want to expand on this?

Yes, I would just comment briefly on a mirror, where we just purchased on July.

Because we see Fibrotic disease as strategically attractive adjacency to several of our core disease areas.

In particular, Immuno science, Virology, Cardiovascular and Metabolic diseases.

It's our belief that by completing this transaction, we were able to advance our capability in this disease area, and are getting access, not only to a lead Phase I asset, but also to a platform producing other candidates in the future.

These are diseases with high unmet medical needs, so with these considerations in mind we believe that we have hated fair price for a mirror.

I think, Charlie, we should also add that we reached the conclusion to move faster into the disease -- strain 2 type Fibrotic disease, not long ago.

Very careful analysis made by our team.

At the moment we decided we acted pretty fast and effectively.

This is a sign that our Company can be much more adroit than we have been in the past.

I would not say much more adroit, probably, than some of the competitors we have in the marketplace.

This is Tony.

Let me just respond to your question around Express Scripts.

Obviously it's a personal opinion, but there's no doubt in my mind that the biggest change in the US market the last couple of years has the fourth hurdle, being access.

Unlike the rest of the world, or where the US was several years ago, every single prescription in today's environment has an economic basis to it and therefore our ability to ensure access as we come to market is very important.

With Express Scripts potentially growing to managing between 40% and 45% of PBM market, they became a much more stronger organization to negotiate and to put into place potential blocks.

The whole issue of course it moves back to your ability to move back and forth within the pipeline to present differentiated products from a clinical perspective, from a patient's benefit perspective, and the pharmaco-economic perspective.

When I look at our portfolio think we are well-positioned to ensure decent access as we go forward.

Brandi, I think we have time for two more questions.

We will go now to Mark Shoenebaum with ISI Group.

Hello guys.

Thanks for taking the question.

I apologize if I missed this.

On YERVOY you said inventory is normal.

Can you give us any indication of what normal is in days or weeks perhaps?

And you mentioned there are roughly 1,000 patients on drug, I think you said roughly 30% of those are from of the bolus, so about 700.

What would 700 patients represent in terms of penetration into your target market?

And my second question was around Apixaban and the medically ill.

In the medically ill population, I think you have a trial that's coming out.

I was wondering if you could on timing in the market opportunity, because I know that Lovenox, at least at one point was doing $2 million in medically ill, and I wonder if you see a similar opportunity?

When we talk about inventory, we see about $15 million of the $95 million being inventory, so plus or minus 2 weeks of inventory the market place.

Remember, we have an exclusive distributorship model over here, with only 2 distributors, so we know exactly what's in the marketplace.

Number 2, the bolus being about 30% would mean that's about 300 patients.

When I look at the non-bolus market we are thinking we are in the range of between 20% and 25% market share of the first line and second line patients.

Sure.

Mark, just a follow-up on the medically ill.

So this is a study that looks at the prevention of Deep Venous Thrombosis and Pulmonary Embolism in patients who are admitted to a hospital for serious medical conditions.

So, as opposed to the approval that we had in Europe where we are looking at prophylaxis in patients who are having elective Orthopedic surgery, this obviously looks at a much different patient population, one with a lot more co-morbidity, much more higher acuity, because obviously they are being admitted to the hospital for things like Multilobar Pneumonia's, Strokes, and the like.

We will be looking at that top line data sometime this year.

And based on that, look at either supplementing our regulatory approval in Europe with that indication, or potentially moving forward with the DVT prevention broader indication filing in the United States.

That will be data-driven and we will be seeing that data sometime this year.

I would say, and that's not my area of expertise, I'm not sure I have ever seen an estimate that the medically ill DVT prevention market is $2 billion for Lovenox, but it's not my area of expertise.

We have a look at (inaudible) potential profile in the marketplace, and clearly we are not in that range of numbers.

Our major indication for us will remain (inaudible) and that's what we are focusing on now, while waiting for the profile (multiple speakers) determine the potential.

A great.

Brandi, can we go to our last question please?

We will take our last question from Steve Scala with Cowen.

Thank you.

First, for Dr.

Daniels regarding Dapagliflozin, and I would imagine you haven't had a chance to sit down with the FDA yet as a follow-up, but what is your best guess on the path forward for Dapagliflozin, and what is it your best guess on the time frame of that path?

And secondly for Tony on PLAVIX, what is your view of an authorized generic option for 2012?

Thank you.

Thanks Steve.

You are correct in your statement, and in fact we, internally, and with our partner at AZ, are still coming to an understanding of the comments from the advisory committee and how best to address the concerns that were raised by some members as we continue, I think, more diligently with the FDA on their review of this very important medicine.

I would say, secondly, because this was a global program, we have reviews ongoing in all major countries and regions world as well, and so that's also an area that we are focused on executing additionally.

I think at this point it wouldn't be -- as in general when we talk about regulatory interactions, inappropriate for me to speculate as to the timing and the exact path forward.

On the authorized generic we are in discussions with our partner, Santa Fe.

We haven't made a decision, yet.

It obviously is an option, but I would remind you that with multiple generics in the marketplace, the true dollar value of the authorized generic is much smaller than normal.

Great.

Brandi, thanks for the questions.

Everybody, thanks for participation.

I would just like to turn it over to Lamberto for some final comments.

Very quickly, thank you for your questions.

Again, we had a very good second quarter, and across all our operations globally, we continued to demonstrate that our Bio Pharma strategy is delivering results.

Thank you again, and have a good day.

This concludes today's conference.

We thank you for your participation.