施貴寶 (BMY) 2011 Q3 法說會逐字稿

Good day, and welcome to today's third quarter 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 of Investor Relations.

Please go ahead, Mr Elicker.

Thank you.

Good morning everybody, and thanks for joining us to review and discuss our Q3 results.

With me this morning are Lamberto Andreotti our Chief Executive Officer.

Charlie Bancroft our Executive Vice President and Chief Financial Officer, Elliott Sigal Executive Vice President and Chief Scientific Officer, also Beatrice Cazala also Executive Vice President Commercial and EU and emerging markets.

And for the first time Giovanni Caforio, President of our US business.

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

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

Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Company's most recent annual report on Form 10-K and reports on Form 10-Q and 8-K.

These documents are available from the SEC, the BMS website, or from investor relations.

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

While we may 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 the Company's website, at www.BMS.com.

So, Lamberto and Charlie will have prepared remarks, and then we will go to your questions.

Lamberto.

Yes.

Thank you John.

Good morning everyone.

Before I talk about the results of the third quarter, I want to note a few management changes that we have recently made.

Changes that underscore our commitment to growth and recognize the talent of our Senior Executives.

I have promoted Giovanni Caforio to President of US pharmaceuticals and he has joined my Senior Management team.

Giovanni is a physician with a strong business background and this is a natural career path that builds on a senior operational experience and strategic leadership in our European/US and global commercialization units.

And I have also appointed Charlie Bancroft and Beatrice Cazala to the position of Executive Vice President expanding their respective roles and responsibilities.

Naturally, I am very pleased by how these changes will strengthen our already strong management team.

With that, let's get back to the topic of this call.

We have just completed another very good quarter, with strong sales, solid financials, and significant R&D, and business development achievements.

In short, we proved that once again that our biopharma strategy is on track.

Delivering results today while building a sound foundation for tomorrow.

With third quarter net sales of $5.3 billion, we delivered an 11% increase over last year.

That is double-digit growth for the second-straight quarter.

We also reported non-GAAP EPS of $0.61 in the quarter, compared to $0.59 a year ago.

Our top line performance was strong across a wide range of products, this includes of course YERVOY.

Our breakthrough treatment for metastatic melanoma, which in only its second quarter on the market had worldwide sales of $121 million.

I note that sales should have been $148 million instead of $121 million if we had not changed our returns policy which Charlie will describe later in the call.

During the second quarter, we launched YERVOY in Europe.

We had a few countries that have already started reporting sales while others have initiated their pricing and reimbursement discussions.

In the US, brand awareness of YERVOY is virtually 100% and the number of accounts ordering the product continues to increase month-over-month.

Most importly, update for YERVOY remains strong both in optical and community-based treatment centers.

Moving to our pipeline, we continue to deliver good news.

Most notable of which was the announcement of the full results of the ARISTOTLE clinical trial on ELIQUIS Apixaban at the ESC Congress in Paris.

The results of that phase-three study were very positive.

And demonstrated ELIQUIS's statistical superiority to warfarin, with respect to reducing the risk of stroke and reducing the risk of bleeding in patients with atrial fibulation.

Atrial fibrillation is a leading cause of stroke affecting approximately 10 million patients worldwide.

The results were remarkably consistent across all subgroups, and demonstrated a statistically significant improvement in mortality.

This is very important.

Very encouraging development.

One that underscores the strength and promise of our pipeline.

And, I would like to knowledge the tremendous work of our research and development organization and assess their commitment to both.

Follow the science and work in good sync with the business organization in the development of ELIQUIS.

In Europe, we have already launched ELIQUIS for (inaudible) DT.

And we'll let you know when the AP submission has been accepted in the US.

And we will get a PDUFA date which should we should receive before the end of the year.

Business development continues to be a priority and how we think about capital allocation and strengthening our pipeline.

We have had five key pipeline developments related to our single (inaudible) initiative in the last few months.

We started off the third quarter with an agreement with Innate-Pharma for the development and commercialization of a novel immuno-oncology biologic in phase-one.

In another one, to acquire Amira Pharmaceuticals, a Company focused on small molecules for fibrotic diseases.

Through an agreement with Ambrx, we have received worldwide results to research, develop, and commercialize novel biologics in diabetes and heart disease.

And, very important for our immuno-oncology portfolio through an agreement with OMA Pharmaceuticals we expanded our territory of rights on the anti-PD1 that we are developing for a variety of tumor types, including renal cell carcinoma and melanoma.

Finally, we announced yesterday our new partnership with Gilead to develop and commercialize a fixed dose combination containing our REYATAZ and their boosting agent cobicistat.

So, taken as a whole, it was a very good quarter for us.

Executing against our biopharma strategy, we will continue to drive short-term results while building a solid long-term foundation.

Delivering strong sales while strengthening our pipeline.

This is a good time in the life of our Company, but we do not rest on our laurels.

We deliver today and plan for tomorrow.

Thank you, and with that let me turn the call back to Charlie.

Thank you, Lamberto.

We did have a very good quarter.

We delivered non-GAAP EPS of $0.61.

Sales growth across our key brands was partially offset by an increase in investment spending, the pharmacy, and a higher effective tax rate versus the same period last year.

Included in our third quarter EPS is a negative $0.04 impact due to US healthcare reform.

This impact is primarily from the pharmacy and the doughnut hole coverage both of which were incremental in 2011.

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

We reported third quarter net sales of $5.3 billion, up 11% compared to last year.

Volume was strong, providing a 6% favorable impact on sales.

Price was favorable by 2% and foreign exchange contributed 3% to sales.

The US healthcare reform coverage gap implemented in 2011 and EU measures, together, had just under a 3% negative impact on sales.

As I look at the third 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 and ORENCIA.

This was up another very good quarter for YERVOY and we believe this reflects both the compelling profile of the drug and the execution of our commercial model.

As Lamberto mentioned, we reported YERVOY sales of $121 million in the quarter.

Excluding the sales deferral, YERVOY sales would have been $148 million.

Last quarter, we discussed US YERVOY sales in three categories.

A stocking element, a bolus or one-time element, and underlying demand.

I will cover those three again, but first I will address the sales deferral.

As a result of our customer model and our ability to connect with the entire unit of care, we have identified an opportunity to implement a new returns policy to alleviate financial concerns physicians have raised related to potential YERVOY returns.

Since the prevalence of this disease is quite low, many community oncologist see only a few patients each year.

If the intended patient does not usually order drug, it may be some time before the oncologist has another eligible patient.

We believe that the new policy will remove such concerns and facilitate greater uptake by these divisions.

From a historical perspective, typically we use a returns trend based on history of returns.

But, we don't yet have enough history to reliably estimate the returns for YERVOY under this new policy.

So, accounting standards require that we only book the sales when the product is used.

As a result, we are deferring $27 million in sales, which corresponds to our estimate of the inventory in the channel, at the end of Q3.

Now, back to the three categories of US YERVOY sales.

Wholesalers are holding approximately two to three weeks of inventory which is a build of $10 million to $15 million this quarter.

We estimate that the Bolus is accounting for about $10 million to $20 million of our Q3 sales and that we should see little to no impact moving forward.

The largest driver of our third-quarter sales were strong demand.

New patient starts are split approximately 60% in first line and 40% in second line.

Actives in reimbursement have gone very well and we now have C-code allowing hospitals to be reimbursed.

And we expect a permanent J-code in January.

As Lamberto mentioned, we are in the process of launching YERVOY in Europe.

And reported $12 million in international sales.

We are working with authorities to try and obtain full reimbursement in the major European markets, which is expected over the course of 2012.

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 36%, including 43% growth internationally.

BARACLUDE 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 $127 million a 13% increase sequentially versus the second quarter.

The franchise delivered 15% prescription growth versus 5% for the class.

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

SPRYCEL was up 47% in the quarter, reflecting successful commercial execution and the launch of the first line indication.

In the US, our rolling three-month share indicates we are the leading second generation agent in first-line with over a 15% share.

ORENCIA was up 27% as we continue to make progress in becoming the IV biologic of choice.

Highlighting efficacy and durability response.

We have recently launched our sub-Q formulation allowing us to compete in the two thirds of the market that is currently sub-Q.

ABILIFY was up 14% in the quarter, despite the step down in our contractual share of net sales.

ABILIFY prescriptions were up 4% in the US, roughly double the market growth.

International sales were also strong, up 27%.

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

I will focus my remarks on GAAP results.

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

Gross margin was 74%, up 10 basis points compared to the third quarter last year.

Advertising and promotion expenses were down 11% at $205 million for the quarter.

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

Marketing, selling, and admin expenses increased 15%.

This is due primarily to the pharmacy, which is recorded in G&A and the negative impact of foreign exchange.

Excluding the pharmacy, MS&A was up 10% with just under half 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 26.4% in the quarter.

The increase compared to the third quarter of 2010 was primarily due to certain tax settlement last year.

Earnings mix had a negative impact in this quarter and the pharmacy had a negative 1% impact.

As I mentioned, I expect a favorable impact from the resolution of certain discreet items during the fourth quarter.

We have refined our 2011 GAAP and non-GAAP EPS guidance.

Our non-GAAP guidance for 2011 is now $2.25 to $2.30.

Overall, we are seeing 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.

The only change to our line item guidance is MS&A where we now expect low double digit increase.

As I look back over 2011, there are two main drivers from our original expectations for MS&A.

First, based on changes in FX we've see a more negative impact.

Second, we have increased investment in our products that should contribute to our long-term growth.

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

Thanks.

Celia, I think we are ready to take questions.

Just a reminder, in addition to Lamberto and Charlie we have Elliott, Beatrice, and Giovanni here for any questions you may have.

Celia?

Thank you.

(Operator Instructions)

Well go first to Tony Butler with Barclays Capital.

Thank you, good morning.

Two brief questions, if I may.

One on YERVOY.

Do have some information about a percentage or rough percentage of patients that may actually take a second dose or have taken a second dose, versus those who have only had one dose or may be naieve to the second dose.

And then the second question please, for Elliott, Elliot, in the DAPA for those in panel there were comments around liver injury and Hy's law and consternation around Hy's law.

Can you comment on the new data sets that have been submitted with respect to liver injury with -- DAPA and those patients sense?

Thanks very much.

Tony, this is Elliott.

I will go first on DAPA.

We haven't presented the scientific study that we are submitting.

I think the key thing for today is that we are working closely with the FDA to answer questions that arose in the advisory committee.

And we had two significant studies, that studied about 1,800 patients with type II diabetes.

Those were phase-three studies that ended late in the review, they were originally designed in special populations, in this case high-risk cardiovascular patients.

They afford us the opportunity to describe not just the efficacy but the safety.

And we believe this additional information will help the FDA make a decision.

And we are pleased that we have a major amendment, which resets the clock 90 days.

And we have a new PDUFA date of January.

Giovanni?

Yes, thanks for the question.

As you know, we are accumulating increasing expedients with the use of YERVOY in the market in the US.

For both naive patients and patients in later lines of therapy.

Many patients are receiving more than one those.

And that depends clearly on the line of therapy and the experience with the product.

But many patients are receiving more than one dose.

And as you remember, the approved course includes four doses of YERVOY.

Thanks Tony.

We will go to the next questions Celia, please.

Well take our next question from Jami Rubin with Goldman Sachs.

Lamberto this is a question for you.

Recently, Bristol's management has been signaling an increased appetite to pursue larger strings of pearls than you have in the past.

And, I'm just wondering if you can give us a sense for, what it is that you think you actually need?

Bristol has had such great success with its first wave of new products and it looks like an exciting second wave of products.

So, maybe if you could articulate what it is you would be looking for.

And related to that, is it that you are concerned about the 2012, 2013 cliff?

Or are you looking to acquire something to augment 2014 and beyond.

If you could just sort of provide color around your thinking on M&A that would be appreciated.

Thanks.

Yes, Jami, thank you for the question.

Yes.

There has been a lot of talk about the size of potential acquisitions let me put it this way.

Business development remains one of our top priorities.

The two deals with completed in this quarter Amira and Innate are two examples of things that we are interested in.

What we are interested in, given the underlying fundamentals of the Company, we actually see an opportunity to improve the long-term growth of the Company.

So, we continue to look at opportunities that are a good strategic fit, but are scientifically sound.

And, that make sense from an economical point of view.

And, we will stick to our discipline.

So, at the same time, we are also looking at opportunities of licensing, the only acquisition for us, the licensing both small molecules and biologic agents that again, all this is to bolster our pipeline and all this is to improve the long-term growth of Bristol Myers Squibb.

Thanks Jamie, Celia can we go to the next question please.

Well go next to Tim Anderson with Sanford Bernstein.

Okay.

Thank you very much.

I'm wondering if you can give us an idea of how we should think about spending reductions in 2012 related to PLAVIX and AVAPRO going off patent.

We model that SG&A will go down a fair bit next year.

But I'm wondering maybe that's not realistic because of the need to ramp up spending on products like ELIQUIS.

And then, on YERVOY, in that segment, 50% of patients were you will be competing directly against Zelboraf how are things shaking out in terms of the choice of first-line agent?

And also any update on where anyone is with a biomarker for YERVOY?

Charlie you will take this, but let me make a short premise.

We are obviously focusing our attention to delivering good quarters, quarter-after-quarter.

But at the same time, we're very interested in continuing to grow this Company in the long term.

So, when we look at 2012, we consider obviously importance of delivering results in 2012.

But also, importance of building the assets that we have in our portfolio, and in our pipeline, and -- that we follow in planning for next year.

Charlie want to go ahead.

Yes.

Thanks Lamberto, and thanks for the question Tim.

As you are aware we have delivered between 2008 and 2010 $2.5 billion worth of cost savings, or cost avoidance.

As a result, our P&L already reflects significant improvement in expenses that we've made over the last few years.

As it relates to PLAVIX and AVAPRO, over the last couple of years we have been rationalizing our expenses on those two brands as they come near end of life for those.

But we have retained the appropriate infrastructure to help us successfully launch our new products.

We therefore, don't anticipate significant reductions in our expenses, as these brands go off patent next year.

Lastly, I would also comment, we will continue to invest in R&D, which is critical for our long-term success as a pure-play biopharma Company.

On YERVOY and Zelboraf, I would say at this point it's too early to assess the impact on Zelboraf on the market.

And we will need to assess how the process of BRAF testing progresses and prescribing patterns evolve over time.

It is clear that Zelboraf has a good response rate, but the ultimate goal of treatment in metastatic melanoma, regardless of BRAF status is really to maximize long-term survival.

And YERVOY has extremely strong data from that perspective.

We continue to believe that in the long-term, the two products are complementary for patients with metastatic melanoma and positive BRAF status.

Tim, this is Elliott.

Your question on biomarkers, we continue our research in-house and our collaborations and following the best we can independent investigations and predictors of safety and efficacy of immunotherapy area.

I'm not aware of any breakthroughs in this area at this time.

Can we go to the next question, Celia, please.

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

Thanks very much.

I have two questions, one is commercial and then one for Elliott.

So, I was just hoping that you could explain to us a little bit more detail on where BRAF testing stands now.

For example, if someone is diagnosed with metastatic melanoma today, is there effectively no chance that they're getting YERVOY in the immediate future, because they are going to be tested for BRAF?

And thus potentially go on Roche's therapy, is that what's happening?

And thus, it will cause a pause in some patient demand?

That's my first question.

And then second, just wanted to extend my congrats Elliott, on the Ono announcement.

Could you just go into some detail on your enthusiasm for PD1 and the clinical trial timeline in coming years for validation?

Thank you.

Giovanni, why don't you take the YERVOY question.

Yes.

Thanks for the question.

Again, on Zelboraf and BRAF testing, I would say that it really is very early, to assess what dynamics are developing in the marketplace.

As we look at our Q3 performance, we estimate that YERVOY had approximately 30% market share across lines of therapy in the US.

And that is regardless of BRAF testing.

We know that physicians will adopt BRAF testing in both the institution and the community.

And again, as I said before, we believe there is a role for both YERVOY and Zelboraf in the treatment of BRAF positive patients.

But this treatment pattern clearly will evolve over the next few months.

David, this is Elliott.

Thank you for your question.

I share the excitement about working on PD1 and having the rights with our new partner, Ono.

Data, as you know from a very early phase 1B dose escalation study in solid tumors, was presented in ASCO 2010.

We will presenting hopefully at ASCO 2012 data on renal cell carcinoma, melanoma, and lung.

In early clinical trials since we saw multiple tumor types, including lung, have interesting activity.

And we think the safety profile is at this point quite acceptable.

We are planning registrational trials in multiple tumor types.

These trials will become public and on clinicaltrials.gov in early '12 and we will have more to say about them.

The -- under the agreement, to remind everybody, we obtained worldwide rights to PD1 excluding Japan, Korea, and Taiwan.

But this extended our reach beyond North America significantly worldwide.

And we will -- that's very exciting to us.

Cecelia can we go to the next question please.

Well go next to John Boris with Citi.

Thanks for taking the question and congratulations on the results.

First question for Lambert, as a significant amount or a significant number of the phase-three assets have been de-risked, some have been commercialized.

You do have your 2013 minimum guidance out there.

But going forward, how should we be thinking about the long-term growth projectory of Bristol in light of the success that you have had with your pipeline?

And then, second question for Elliott.

On the hepatitis-C portfolio, one of the ASLD abstracts has some pretty unique data on SVRs and genotype 1B in Japanese patients.

It seems as though you are at a critical juncture of rolling out a lot of different clinical trials for your hep C portfolio.

But can you maybe provide a framework for how you see, at least your portfolio is going to be going after that disease state.

Thanks.

Okay.

John, first of all just a clarification.

When we updated our long-term guidance in July, and when we did that, we said that we are not going to update it every quarter.

So, we did that at that time.

And we will speak again about it in the future, when we update the -- '12 guidance.

How do I think about the future?

I think in an optimistic way.

We see as you say -- as you said, a number of our pipeline products make it into the market supported by good clinical data.

Clinical data that is not only important from a prescription point of view but also for access.

We seem to have found the right way of commercializing products.

What we see in the commercialization of YERVOY is for sure -- is effective.

So, we think that we are delivering what we are planning to deliver.

A Company with a totally renewed pipeline after the loss of PLAVIX and AVAPRO.

And with interest in situation of having a portfolio very diversified in very different areas with some products.

But are shaping up to be bigger than probably most people were thinking of not long ago.

And this is again, good clinical data, strong attention to reversibility and pricing, and innovative ways of managing customers.

John, this is Elliott.

Indeed, hepatitis C is a rapidly evolving field.

Our development strategies take into account different genotypes, perhaps different polymorphism of the host and different geographies.

And consequently, we believe multiple therapeutic approaches may be needed given the diversity of the patient populations around the world.

Based on the breadth of our portfolio with several small molecule mechanisms, and the Interferon Lambda we believe we are well-positioned in this area.

We were the first easel to show that a combination of two oral agents could indeed cure a subset of populations.

That was correlated with patients that had genotype 1B when the MS 5A was paired with the protease inhibitor.

We followed that up in Japan, as you referred to, that we will be presenting at the liver meetings.

Because he predominant genotype in that geography is 1B.

We have a very exciting program of both the dual approach and a quad approach, in a variety of patient populations.

Our MS 5A inhibitor is in phase-three now, several studies are ramping up.

We will be doing a variety of studies for different situations around the world, as I mentioned.

And we're following up the use of MS 5A with a protease inhibitor alone and in combination with Peg interferon alpha ribavirin and we have phase-three starting relatively soon for our Interferon Lambda.

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

We'll go next to Chris Schott with JPMorgan.

Great.

Thanks very much.

Just had two questions on ELIQUIS.

I guess the first, how relevant in your view is positive ACS data for Xarelto, relative to ELIQUIS?

When considering the Afib opportunity given some of the comorbidities that exist between these populations.

And then second, if Xarelto were to be delayed at its PDUFA in a few weeks, does that meaningfully change your marketing approach and commercial outlook for ELIQUIS or is it really not that relevant in your view?

Thanks.

Yes.

Thank you, Chris.

We recognize that the top line data of Xarelto showed, in the Atlas trial that you referred to, that it met its primary efficacy end-point.

But there was also a statistically significant higher major bleeding rates.

So, all I really can say at this point that I think it's wise to wait and see the detailed results of the Atlas trial to fully understand the benefit-risk profile.

And I think we would do the obvious analysis there.

As you referred to, the major opportunity in this area that we see is in atrial fibrillation.

We are quite excited about ELIQUIS profile that's emerging from the clinical data, better in safety and better in efficacy.

Our colleagues in commercial feel that this is combined with ARISTOTLE and AVERROES a very important position to be in, to meet the needs of patients and physicians.

And I will just mention that we should all realize that there are three programs that are pioneering in this area.

So, there will be mixed results in different trials, and we are just happy right now with what we're doing in atrial fibrillation and our lifecycle.

Related with what Elliott was saying we are excited about both AVERROES and ARISTOTLE so when you are asking about Xarelto coming into the market, it has been in our planning from the beginning, and is coming as a sale agent.

We have been working very hard, looking at all the market opportunities and the segment opportunities both from the specialist as well as a primary care standpoint where we see that our profile having shown both efficacy, at -- against population which have been using warfarin where we have also shown that were patients have not used warfarin and have been using Aspirin we see there that our product profile will be very accepted by both generally and the primary care physicians.

Our perspective there would is it would be strong versus the market and energies and we will be monitoring very carefully what both products continue to do, as well as what Xarelto will be doing in the marketplace.

In the early days.

In summary Chris, we second and third -- we are very happy that we have ELIQUIS and we are very happy of how the product has been developed and having ARISTOTLE and AVERROES to important results are we have, and I feel very happy that out of the three, we have ELIQUIS.

Celia can we have the next question please?

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

Thanks very much.

This question is actually, I guess first question is for Charlie and Beatrice.

Can you talk about a little bit as we think about 2012, how you are considering the impact of global price pressures.

And any specific markets that you think -- are worth thinking about, relative to what some other groups have talked about, where you might see less or greater exposure than the group.

And then secondly for Elliott, can you help us think about what the goal of therapy or treatment would be with anti-PD1, specifically in lung cancer.

We know, again, the goal of therapy is cure with ipilimumab and we've seen something closer that in a small percentage of patients.

Is the hope and the possibility that, that could also be seen in lung cancer?

Thanks.

Regarding the environment for global pricing, the focus of our attention at the moment, as you may imagine is Europe.

We have been operating in a negative pricing environment for some time there and we have had historically projected about a 2% to 2.5% price impact every year.

Fo '11 our estimation that our safety would have a mid-single digit impact on the sales has been shown now to be what we see in our numbers.

So, our current plan are reflecting similar impact for next year, however if the economic situation in Europe continues to be of concern, it is possible that there could be additional measures, they could be implemented and will further affect our industry.

In those cases, should that happen, we will address our expectation and plan accordingly.

You were asking about specific markets, obviously where news across Europe specifically to look at country by country, understand the situation, we're looking at all our launches very carefully and are negotiating all our access of -- the good point for our portfolio as you know is that we have innovative compounds, all our discussion today happening with our products, there's an innovative portfolio, so that put us in a more favorable position than if we have not.

We see clearly across Europe all the market of constant, they are looking carefully at pricing of major products.

To that effect we feel comfortable that being aware that market by market there could be differences with our innovative portfolio, we will be able over time, obviously, as it takes time in some markets to get their results new innovative compounds.

Seamus this is Elliot, I think I have to reiterate that this is early days with anti-PD-1 and certainly even with immunotherapy.

However, based on the data we have become firm believers that there are ways to reactivate one's own immune system to fight malignancies, that these responses in some patients may well be durable.

If we begin to accumulate experience of five years as we may be approaching with some patients with -- melanoma, we could one day hopefully talk about cures but it's too early at this point.

These two approaches are different in their mechanism of activating T-cells.

They give somewhat different safety and efficacy profiles and perhaps different relevance, different tumor types.

As we said we are testing multiple tumor types with anti-PD-1 including lung, we will ramp up to a phase-three program, we'll be talking more about next year.

And, I think immuno-oncology remains a very important priority for Bristol Myers Squibb.

Celia, next question please.

We'll go next to Barbara Ryan with Deutsche Bank.

Thanks for taking my question, they've already been answered, I appreciate it.

Thanks Barbara.

We'll go next to Catherine Arnold with Credit Suisse.

Thanks for much, and good morning.

I have two questions, one on your earnings outlook and then another on ORENCIA.

I guess my earnings outlook question is a little rhetorical, because I don't expect you to give me 2012 guidance right now.

But I want to point out that obviously, when you gave 2013 trough-guidance that was March 2010, and certainly your world has changed a lot since then, and certainly for the good.

So, as I think about the combination of the near-term step up investments that you guys are making the early stages of (inaudible) next year, but then the ramp of new products following, I guess I don't see why 2013 is really the relevant trough anymore and that next year actually might really be the trough.

So, I guess I wanted to see if you could comment on that logic.

On ORENCIA, I wondered if you could give some color on how you think about the sub-Q launch as an inflection point to the baseline franchise growth.

And that whenever the product has matured, do you anticipate that the sub-Q piece of that is the majority of the market like you see in the overall biologic's space for RA?

Yes, Catherine, let me take your first question.

Gives us time until January to come out with our 2012 guidance, but when you think about 2012 for us.

Do the way we do it.

We think that 2012 is a very important year.

Where, thanks to good things that we have from our R&D, we can continue to bill ELIQUIS, we can continue to grow YERVOY, establish ELIQUIS, and possibly start working on Alpha.

It will be a year investment will be -- clearly important for the years to come.

With respect to 2012, I think that my recommendation is that we internally and you externally gives us a look at how generic competition works nowadays.

We have two big products exclusively next year.

AVAPRO and PLAVIX, and PLAVIX, remember we have exclusivity with a lot of generics from the very first day.

We are refining our analysis of how we will -- they suffer because of the loss of exclusivity and I suggested everybody that we (inaudible) because there might be a disconnect between what reality is and what some might project for PLAVIX.

But going back to my message I am giving you, we are building a strong portfolio and we are committed to it.

And at the same time, we are very carefully not losing our by now consolidated attention to productivity or across the entire Company.

Regarding ORENCIA, we were very pleased with Charlie with our performance with the IV today.

This has been growing by 12 percent of this last year, so we have a significant presence in the IV market, and we're obviously very pleased to have now launched our sub-Q formulation which will be able to assess roughly the two cell dossier patient that prefer the sub-Q segment.

We were not able to compete in that market segment.

So our plan, clearly to position the ORENCIA sub-Q as the biologic of choice, in first line, but also to recognize that many patient, sub-Q TNS agent would also be a possible patient for ORENCIA sub-Q.

We expect however that initially the early adoption will come from current prescriber ORENCIA, and we expect some portion of our patient possibilities was covered by commercial insurance will switch to the sub-Q.

However, we are planning, to your question to continue investing in organic ORENCIA growth and to plan to roll the IV also.

The IV represents data set of the patient population, that prefer that formulation.

So, we consider great competitive advantage to abort formulation to compete in the marketplace in an increasing competitive RA-market.

Thanks, Catherine.

Can we go to the next lesson please?

Well go next to Mark Schoenebaum with ISI Group.

Hello guys, thanks for taking the question I appreciate it.

Just on -- I want to push you on a little bit on the use of cash, in an earlier question.

Did I understand correctly, that your focus is mainly on license deals?

As opposed to outright M&A, or did I misunderstand the response to an earlier question?

And then, maybe a question for Elliot and then also I would be interested in the commercial perspective.

At this point after you review all the data, do you expect explicit update label claim for mortality and superiority in stroke prevention over warfarin?

Commercially do you think that that is even needed?

Given the data as it stands.

Thanks a lot.

Mark, probably I was not very clear in what I said before.

I mentioned licensing because, what I wanted to say there is that we are interested in licensing both biologic's and small molecules, but business development for us includes obviously acquisitions of products, companies, and technology.

So, the acquisition piece is a significant element of our business development program, and we, senior management of this Company, spend a good time in assessing the different opportunities we have there.

So, it's both acquisitions and licensing.

Mark, this is Elliot.

You had a question on ELIQUIS labeling and what is needed.

It's premature to talk about labeling at this point, certainly the clinical data needs to be in the label to fully inform the type of clinical investigation that was done.

I think what's needed, in this field, is an anticoagulant that is oral better than Coumadin in both efficacy and safety.

Essentially, physicians I believe are looking for an improved therapeutic window and they know Coumadin well, as having a narrow therapeutic window.

And I think they are very concerned, in general, about delivering an adequate anticoagulant to achieve superiority in stroke prevention.

While improving the side-effect profile of available medicines.

So, this I think will expand the market to the 40% or 50% of patients that are not on Coumadin, that should be.

And, be a very important option for patients that are anti coagulated because it's better in efficacy and better in safety.

I think -- the good practice we have here is not to comment about labels -- before we complete our conversations with regulatory agencies.

We have a very good dialogue with the agency here and the agency in Europe.

And I think that we should keep our discussions between us and them, and obviously disclose the information that becomes relevant, when it is relevant.

Can we go to the next question please, Celia.

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

Thanks.

I'll ask three up front.

First, on YERVOY, I don't want to put words in your mouth -- but it sounds like you would not expect quarterly sales to go down during this launch phase and the possible ramp-up of genetic testing, that's first.

Second, does your interaction with the FDA, Elliott, on DAPA make you confident in the products approvability, despite the panels outcome?

And third, do you have any comments on the early but interesting data in Hep-C that Abott shared recently on their four-drug regimen?

Thanks.

So, on YERVOY, a couple of comments.

As you know, YERVOY is approved in relative broad indication regardless of (inaudible) status.

We are actually pleased with increased penetration in the marketplace.

Both in the institutional setting and in the community setting.

And so, if you look at Q3 sales versus Q2 sales, the percentage of sales that came from the community setting rose from 30% to 50%, as an indicator of increased adoption in the community.

As I said before, it is really too early to predict how the launch of Zelboraf is going.

There is clearly a significant opportunity that continues to exist for YERVOY in the marketplace.

Greg this is Elliot.

With regard to the question on DAPA (inaudible) I cannot prejudge how the review will end up.

However I do have confidence in the benefit risk of this compound and the data that supports it.

I think the advisory committee gave some clear direction in their discussion.

And raised points that hopefully can be answered by the new clinical data that we submitted, but we will have to work with the agency to appropriate conclusion.

With regard to hepatitis C, I think there's a very fast evolving area.

I don't like to comment on data before I see it, data really hasn't been released yet.

But, we do believe as we have shown that it is possible to get cure at least in some patients with certain regimens.

And, I believe that MS 5A will play an important role in our program for that reason.

Paired with, either our internal agents, or agents that are becoming available.

Celia, we have time for two more questions.

We'll go next to Steve Scala with Cowen.

Thank you.

I have three questions.

First, on Apixaban, it sounds as though you have already filed it for atrial fibulation in the US, because you said you would tell us when it was accepted by the end of the year.

So, can you tell us when it was filed?

Second, the ORENCIA sub-Q label offers the option of an IV loading dose.

In clinical practice, how often do you believe an IV load be used?

And what sort of impediment will this be to adoption?

And then thirdly, on a Apixaban's Adopt trial, my understanding is that it was originally going to be presented at ASH but now it's going to be presented at AHA.

Elliott, can you help me think the reasons why the data would be presented at an earlier higher profile meeting, other than the data is very strong?

Thank you.

Regarding ORENCIA and your question about the adoption.

Clearly on that one, we have looked at it very carefully and we have plans to work with all the physicians -- to use a drug.

However, we believe that there is the option of using it or not using it, we believe that the usage will land where the patient, and the physician agree, and the way they are going to be able to organize the unit of care to be able to do it.

So, on a case by case, I think the situation will evolve and we may need to read carefully.

Our planning at the moment do not analate a huge (inaudible) when it is going to be given.

Steve this is Elliot.

I can't improve upon the statement Lamberto has already made that we would like to inform you when we know when the PDUFA date is disclosed.

On Apixaban, I don't have any more granular timelines, than that.

I wouldn't attach any significance one way or the other on the Adopt trial.

I am not aware of our plan to put this at ASH.

I would just say, Adopt is a part of our comprehensive global clinical programs, designed to explore multiple indications.

And as a reminder, there have been mixed results among the different programs in this area.

We investigated here 2.5 mg, twice daily in a patient population that was at risk of developing deep vein thrombosis, when they are hospitalized for an acute medical illness.

Like congestive heart failure.

And other risk factors.

And we are going to present this in a few weeks.

Celia, final question please?

We'll take our final question from Marc Goodman with UBS.

I was hoping you could remind us of some of the key launches that will be coming up, like in Japan in Asia, emerging market areas that haven't been that critical growth drivers for you lately.

What about for them for the next year?

Thanks.

If we look at our key markets, at the moment actually we are just launching in China ONGLYZA, we got approval before the Summer, so September was the launch.

We also have (inaudible) also improved in China and we have significant performance at the moment from the launch of ONGLYZA in India, which is doing very well.

And we are preferring in some of those markets to be -- very, very soon to introduce next year our fixed dose combination of ONGLYZA (inaudible).

So, with the focus of what we have -- we are successful with also our launches in (inaudible) in Japan, so we are very conservative with the rules that we have in most markets.

So, let me conclude -- and Marc, I think the interesting thing is that, over the years, we have significantly improved our global development of products.

So, we have managed to gain approvals in different geographies, in a much more limited amount of time than we did in the past.

And our goal is to have countries like Japan and China, very close in terms of approval time to the rest of our geographies.

General comment, to conclude the call.

This was a very good quarter for us.

Executing our -- against our biopharma strategy, we continue to drive short-term results, while building solid long-term foundation.

We said delivering strong sales while strengthening our pipeline.

We are excited about what we have delivered so far.

And we continue to work at delivering results in the next quarter with the same energy and devotion to innovation that we have proved to have over the last years.

Thank you.

Thanks everybody.

That concludes the call.

Just, as you know Terry, Tim, and I will be available for any follow-ups you might have.

Have a great day.

Thank you.

That concludes today's conference.

We thank you for your participation.