施貴寶 (BMY) 2012 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to today's Bristol-Myers Squibb second-quarter 2012 earnings release conference call.

Just a reminder, today's call is being recorded.

Now, for opening remarks and introductions, I will turn the call over to Mr. John Elicker, Senior Vice President, Public Affairs and Investor Relations.

Mr. Elicker, please go ahead.

Thanks, Debbie.

And good morning, everybody.

And thank you for joining us this morning to discuss our second-quarter results.

With me this morning for prepared remarks are Lamberto Andreotti, our Chief Executive Officer, and Charlie Bancroft, our CFO.

And then joining for Q&A, are Elliott Sigal, our Chief Scientific Officer; Giovanni Caforio, President of the US Pharmaceuticals Business; and Beatrice Cazala, Executive Vice President of Commercial Operations.

Before I turn it over to Lamberto, let me cover the Safe Harbor language.

During the 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 the Private Securities Litigation Reform Act.

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 SEC filings.

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

We specifically disclaim any obligation to update forward-looking statements, even if our estimates change.

We'll also discuss non-GAAP financial measures, adjusted to exclude certain specified items.

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

Lamberto?

Thank you, John.

And first of all, congratulations for your promotion and expanded responsibilities.

Good morning, everyone.

In the second quarter, we lost the exclusivity of Plavix in the US, after having lost the exclusivity of Avapro and Avalide towards the end of the first quarter.

These two events did not come unexpected, and in fact, we have worked for years to get ready for them to transform our Company.

I feel good about our progress in the full transition to our portfolio of the future.

When I look at sales, exclusive of Plavix and Avapro/Avalide, I am pleased to see 8% year over year growth for the rest of our portfolio, and this despite the significant weakening of many currencies versus the dollar.

Importantly, this sales growth came from a portfolio of products that is innovative, is diversified, covers a range of therapeutic areas, and spans across multiple geographies.

All these factors provide a foundation for the future success of our Company.

With respect to our long-term growth, as we have been saying for some time, business development is a top priority and a key part of our Company's balanced approach to capital allocation.

Having completed the acquisition of Inhibitex in the previous quarter, I am very excited about our recently announced planned acquisition of Amylin and the resulting expansion of our partnership with AstraZeneca.

The strategic rationale for this acquisition is clear.

There is significant unmet medical need in diabetes and there is a real demand for different but complementary treatment options.

We see particular value from Amylin's dual marketed GLP-1 product, BYETTA and BYDUREON.

They are already approved in the US and in Europe.

They complement our current portfolio and will enable us to offer a more comprehensive disease management solution to patients, healthcare providers, and payers.

In addition, for reasons we have explained before, we believe this transaction is a logical expansion of our successful alliance with AstraZeneca with which we have collaborated since 2007.

We expect that by leveraging the existing Bristol-Meyer Squibb AstraZeneca sales force, our capabilities in access and our marketing experience will significantly broaden the prescriber base and drive increased adoption of Amylin's GLP-1 franchise.

We also recognize the great value of Amylin's US endocrinology capability, as having the potential to enhance the promotion of our existing Onglyza franchise.

Finally, we look forward to integrating Amylin's state-of-the-art plant in Chester, Ohio into our global manufacturing network.

Again, I am very excited about this opportunity.

We will be ready to move forward as quickly as possible after the transaction closes.

Also, related to diabetes, and as you know, we are waiting for the European Commission's decision on the marketing of authorization of Forxiga in the second half of the year.

Switching from diabetes to oncology, at ASCO in June, we built on our leadership position in immuno-oncology with the presentation of compelling data on our investigation on our investigational anti-PD-1 immunotherapy, which was simultaneously published in the New England Journal of Medicine.

The data showed potentially meaningful responsivity in three advanced cancer types -- lung cancer, kidney cancer, and melanoma.

Based on these encouraging results, we plan to begin our Phase Three program in lung cancer and renal cancer in the coming months, with Phase Three in melanoma expected to start later this year or early next year.

Finally, as you know, we received a complete response letter on the new drug application for Eliquis for the prevention of stroke and systemic embolism in patients with atrial fibrillation.

We have met with the FDA and have a clear path forward.

On balance, our second quarter performance sets a good foundation for the future of our Company.

We are confident with our new and key products and continue to position Bristol-Myers Squibb for success and that our portfolio of the future can get us where we need to be for sustained long-term growth.

With that, let me turn it over to Charlie, who will give you some additional information and walk you through some of our numbers.

Thank you.

Charlie?

Thank you, Lamberto.

This was an important quarter for the Company, as we officially move past Plavix and Avapro and take another step towards our transition to the portfolio of our future.

In the second quarter, we delivered non-GAAP EPS of $0.48.

We reported second quarter net sales of $4.4 billion, down 18% compared to last year, due to the loss of exclusivity of Plavix and Avapro.

Volume was down 19%, price was favorable by 3%, and foreign exchange had a negative 2% impact on sales.

As Lamberto mentioned, global sales grew 8%, excluding Plavix and Avapro.

Overall, we are pleased by the trends of our key brands that are important to our future growth.

Let me provide a few highlights.

We continue to make progress with Yervoy and are focused on delivering longer-term growth.

During the quarter, we reported Yervoy sales of $162 million, with US sales of $121 million.

Demand in the US was up approximately 7% sequentially compared to the first quarter.

As we look forward, we are focused on reinsuring that physicians and all stakeholders understand the potential for long-term survival.

We also continue to focus on expanding our prescribing base in the community setting.

As you know, the process for getting access and reimbursement in Europe takes time, as negotiations take place in each country, and we believe we are making good progress.

In markets where we have access, such as the UK and Germany, we are outperforming most recent oncology product launches.

Our virology franchise had a very strong quarter with Baraclude delivering sales of growth of 22%.

Sales of Sustiva and Reyataz were up 5% and 3% respectively.

International sales of Reyataz were positively impacted by timing of orders from both Russia and Brazil.

Ongylza franchise sales were $172 million, up 54% compared to last year.

Going forward, we are focused on driving adoption earlier in treatment, as the first add-on to metformin, leveraging our head-to-head data versus SUs and our label update for the use of Onglyza in combination with insulin.

Sprycel was up 26% in the quarter.

We continue to make share gains in both first line and the continued expansion of the second line opportunity.

The Orencia franchise was up 27%.

Our IV volume continues to outperform the market, up 4% in the quarter.

Orencia SubQ, which was launched in the US at the end of last year, had sales of $44 million in Q2, up 42% sequentially compared to Q1.

Given the CHMP positive opinion, we are preparing for potential launch of SubQ in Europe later this year.

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

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

As John mentioned, reconciliations to our GAAP results are available in our press release and on our website.

Gross margin was 75.3%, up 220 basis points compared to second quarter last year.

This favorability was primarily driven by foreign exchange.

Marketing, selling, and administrative expenses decreased 3%.

Increased investment behind new brands was offset by spending related to Plavix and Avapro.

Looking forward, you may recall that in Q4 2011, we increased investment spend and recorded certain one-time expenses, which we do not expect to recur this year.

Advertising and promotion expenses were down 11%, reflecting decreased spend behind Plavix and Avapro, partially offset by investment in new brands.

R&D increased 5%, driven by overall portfolio spend.

The effective overall tax rate was 25.3% in the quarter.

The decrease compared to second quarter 2011 is primarily due to earnings mix.

Now, turning to guidance, you have seen that we have confirmed our 2012 non-GAAP EPS guidance of $1.90 to $2, which includes the estimated $0.03 dilution related to the planned acquisition of Amylin.

Given the P&L impact from the acquisition after we close, we are not updating our line item guidance at this time.

I will point out that our year-to-date sales and expenses are generally in line with our expectations.

We plan to provide an update to our line item guidance on our third-quarter call.

We still expect full-year Plavix sales to be approximately $2.7 billion.

I will now turn it over to your questions.

Thanks, Charlie.

Debbie, I think we're ready to go to questions.

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

Debbie?

(Operator Instructions)

Jami Rubin, Goldman Sachs.

Thank you.

Lamberto, you mentioned that you recently met with the FDA on Eliquis and now have a path forward.

Can you please share that with us, specifically what the FDA is requiring?

And if you could please give us a sense of the timeline.

And secondly, maybe Elliott is on the phone.

If you could talk to the recent anti-PD-1 trial that was just posted on clinicaltrials.gov.

I understand this is a lung cancer study.

If you could talk about the timeline, the trial design, and if there are any interim analysis built in so that we can just think about the potential for the timing of commerciality?

Thanks.

Yes.

Good morning, Jamie.

Thank you for your questions.

I will elect Elliott go into more details.

What I want to say is that we are confident in the path forward, as I said.

And very important, we are also confident in the differentiated profile we have for Eliquis in atrial fibrillation, which is an area of high unmet medical need.

So we have double confidence here.

And Elliot, what you want to elaborate a little bit more on what we see in front of us from regulatory point of view and then take the PD-1 question for Jamie.

Yes, Jamie, I'll reiterate Lamberto's statement that our confidence in the results from the ARISTOTLE trial and the AVERROES trial has not changed.

I think it is significant that we've already met with the FDA, that the FDA set a meeting date to discuss how to move forward after the complete response letter on the day that we were issued the complete response letter, and that meeting has already taken place.

I went into the meeting cautiously optimistic that we could move this application forward, and that confidence has increased.

We understand what the FDA is asking for and already working on providing that information.

The FDA, along with both sponsors, are committed to working expeditiously to address the outstanding questions and move the application forward.

As we stated in our press release last month, the complete response letter details the request for additional information on data management and verification from the ARISTOTLE study.

And this was a complex, large trial over multiple years, involving 18,000 patients.

The operational complexity of conducting a program of this size with a significant number of patient records is an important consideration in the FDA's review.

I believe everybody understands the significance of the results and the significance of the differentiated profile, and so their due diligence on every detail and their meticulous aspect of the review, I think, is understandable.

I will emphasize the questions raised do not relate to the primary or key secondary end points and do not contest the validity of our database.

Importantly, the complete response letter does not request that we conduct any additional studies.

I can't be too predictive about timelines other than to say that the FDA regulations are that they have the option to take up to six months to review our response once it's submitted.

We are working ferociously to submit this application and know exactly what to do.

We're already working with the agency in a collaborative manner, and I think that it's possible our submission can be completed within a shorter timeframe than the allowable six months after submission.

I will say we are proud to have been able to get Eliquis filed in all three major markets -- the US, Europe, and Japan -- within several months of each other.

We are working on all three continents with health authorities to bring this differentiated profile to patients as soon as possible.

Jami, you also asked a question about PD-1 and you must have picked up something that just came across the wire from clinicaltrials.gov, and this is our first Phase Three trial for anti-PD-1, this time in lung cancer.

I will step back and mention that the mechanism involved here is to unleash the immune system to attack the cancer cells that are invading the body.

This is a natural mechanism and cancer has a way of putting this mechanism into check.

Anti-PD-1 removes that break and allows the immune system to attack cancer cells.

This is true with Yervoy and this is true with anti-PD-1 by a different mechanism.

The data we presented from our Phase One-Two study at ASCO are very important and we have acted in a data-driven manner to accelerate and expand the anti-PD-1 program.

Interim results showed that this therapy is clinically active in non-small cell lung cancer, metastatic melanoma, and renal cell carcinoma, importantly with durable responses in many patients, and an acceptable and manageable safety profile.

And we have seen activity at multiple dose levels.

So we have designed multiple Phase Three programs and are working with health authorities around the world.

Today, it's become public that our first Phase Three study in lung cancer will address the significant unmet medical need in the histology of squamous cell, non-small cell lung cancer, and in second-line.

Importantly, this is a monotherapy trial involving over 250 patients.

It is compared in a controlled manner with a active control, dose of Taxol.

The primary outcomes are both response rates and overall survival.

This Phase Three program will also include earlier lines of therapy and different histologies and other tumor types, including renal cell and melanoma, and these Phase Three programs will begin this year in all three tumor types.

Thanks.

Debbie, next question, please?

David Risinger, Morgan Stanley.

Hello.

Thanks very much.

And thanks for that pipeline detail, Elliott.

I have another pipeline question.

If you could just provide updated commentary on dapagliflozin and then with respect to Yervoy, when should we expect to see the prostate Phase Three results?

And then finally, a commercial question, regarding Yervoy in the US, how should we think about the second half US outlook versus the first half of '12?

Should we expect growth in the second half of this year versus the first half US Yervoy sales?

Thanks very much.

Yes, David.

Lamberto?

No, if you're ready with the pipeline answers, why don't you go ahead, Elliott?

I want to say a couple things about Yervoy later.

Well, Lamberto, I was going to update people on dapagliflozin and then Yervoy prostate results.

Dapagliflozin -- we're pleased to have received a positive opinion from the CHMP in Europe in April and we have always believed in the benefit/risk of the drug and we're glad to see this is recognized in Europe.

The next step is EU approval decision, which we expect to occur in the second half of this year, 2012.

I would add that it's very exciting, with our potential acquisition of Amylin to be a Company that looks to the future with all three modern mechanisms -- SGLT2, DPP-4, and GLP-1 -- in a franchise to offer patients and physicians options across the spectrum of the disease and these three offerings may well occur first in Europe.

In the US, we are disappointed to have received a complete response letter.

In the CRL, the FDA is requesting more clinical data to allow better a assessment of the overall benefit/risk profile.

In contrast to Eliquis, the path forward is not as clear as I would like.

However, we are collaborating with the FDA to define our options for a path forward in this important mechanism.

Yervoy's lifecycle management program continues beyond melanoma, and our prostate trial that began several years ago.

We think we will have results at least internally in the second half of next year.

Thanks, Dave.

Oh, sorry.

Yes.

Eventually, we'll move to you but before moving to Yervoy, just one additional comment on Forxiga.

We are -- we as a Company, all of us at the Company -- we are very convinced of the good benefit [reached by] Forxiga.

So we are all behind moving this product forward in the US and elsewhere.

Speaking of Yervoy, I will let Giovanni elaborate on what we have done and what we are going to do in the US.

But before asking you to do that, Giovanni, the one thing I want to remind everybody is that we had particularly strong launch last year.

We established Yervoy with a very strong launch last year and Yervoy continues to perform.

So when you look at the $162 million of reported sales this quarter, we are encouraged by those sales on top of a strong launch last year.

Yervoy is growing in the US, growing in Europe, or especially -- well, it's growing in Europe in the countries where access is established and elsewhere, we are working elsewhere in Europe and elsewhere in the world, we are working at establishing access to reimbursement.

So Yervoy is doing well and though the BRAF positive segment is highly competitive, we see continuous growth in the future, both in the US and internationally.

So Giovanni, why don't you elaborate on the US?

Yes.

Thank you, Lamberto and good morning.

As Lamberto mentioned, we are building on a very successful launch in the first 12 months, and in Q2 in the US specifically, we've made progress, and grew sequentially our sales 4% and our demand 7% versus the previous quarter versus Q1.

Yes, we believe that Yervoy can grow further in the US and we are very focused on continuing to educate physicians about the long-term survival benefit.

And there are different ways you can look at the melanoma market.

So from the perspective of the institutional and the hospital setting, we have been very successful in that segment and we have good penetration with Yervoy.

Physicians and patients in the US are increasingly understanding within that setting, the value of the long-term survival benefit of Yervoy and we do see continued opportunities for growth in that segment building on a very strong base.

The process of educating physicians in the community setting is also progressing, but that is a slower and a longer process, because many physicians see only very few patients a year.

So the community setting is also an area of focus for us and where when we can make significant in roads, but over time.

There are also obviously very significant dynamics, different dynamics in the market, depending on the BRAF status.

The BRAF positive segment, as Lamberto mentioned, remains very competitive, and we believe that physicians, as they continue to gain experience with the two novel agents and they continue to focus on long-term outcomes, will actually -- Yervoy will play an increased role in this segment over time.

In the BRAF negative population, Yervoy has a good penetration, but older agents are still getting usage, and so there is still room to grow and in that population as well, and this is the immediate priority for us.

So in summary, as we think about the second half, we are building a very strong base.

The market will continue to evolve over time.

We will continue to focus on the long-term survival profile of Yervoy through our customer model, and we see the room for continued adoption of the product in the US.

Great.

Thanks, Dave.

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

Tony Butler, Barclays.

Good morning, and thank you.

Lamberto, I have two questions.

Lamberto, the first one is really around how should we think about both Reyataz and Sustiva for the remaining part of this year and maybe even into 2013, given the assumption of a quad sometime in the next couple of months, and more importantly, what are you doing commercially to actually increase that share [voice in] those, for those two products?

And then the second question, I suspect is for Elliott.

Elliott, could you comment on what data sets you may be willing to share with us that would be presented at AALSD later this year?

Thanks very much.

Yes, Tony, when we think about HIV, one thing that we must remind people of is that we have been leaders in this space for many years.

And we have two of the leading products in HIV.

Reyataz is the number one PI in the US and Atripla is the number one HIV regimen in the US.

So we have continued to establish these products, despite a competitive market.

There have been increasing competition over the years and these products still hold and hold very well.

So you're right.

There will be increased competition in the future, but we believe that these two products, well-supported as they are, established among physicians and patients, are going to hold and hold very well.

Giovanni, do you want to add something here?

I would just like to reiterate and confirm.

Yes, the market is extremely competitive and we also understand the level of competitive pressure will increase, because of the in roads that recently launched products will, are making and also the potential entry of new products in the next 12 to 24 months.

I would say given that physicians and patients are very experienced and satisfied, the existing agents and the existing regimens, new products will need to meet a high threshold for differentiation in order to be accepted broadly.

Having said that, we do believe that new entrants will have a place and especially in the treatment of naive patients, and will have an impact in the market.

From our perspective, as Lamberto mentioned, we have a very strong franchise with two leading agents.

Atripla continues to be the first, most prescribed regimen in the US, and Reyataz is the most prescribed protease inhibitor in the market, and they are clearly supported by very strong clinical data.

Physicians are used to prescribing those two agents and patients are very comfortable with them.

Now, given how important the franchise is to us, we are absolutely not underestimating the pressure that will come from new competitors.

Couple of things I would say is we are well-resourced commercially and we are fully committed to support the two products appropriately.

We also are very well prepared to respond, and so we will continue to focus on this.

Tony, you asked a question about what we might present at the liver meetings on our Hepatitis C program.

We will be presenting -- because we now have safety data from the Phase Two study called 003 that was started by Inhibitex with the Inhibitex nucleotide 189 on top of standard of care in genotype 2 and 3 patients.

And we expanded this study in May to include arms that combine our 5A inhibitor, daclatasvir, ribavirin, and 189, as well as an exploratory cohort of daclatasvir plus 189 all in genotype 1. So we expect to present initial data from the study 003 and that will be, I think, significant in terms of our assessment of safety.

We also expect to present additional data from the daclatasvir plus the nucleotide from Gilead in the combination trial.

Specifically, we expect to present the SVR12 data from 24 weeks of treatment.

We may well have SVR4 data from the 12-week arm from the study, and it will be unclear at this time whether it will be available for the presentation, but we will try to make it available if we have it and if we meet the timelines.

I will say that you may have noted that we also recently posted our internal Phase Two-B trial on 189 plus daclatasvir.

That will begin recruiting soon.

Thanks, Tony.

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

Tim Anderson, Sanford Bernstein.

Thank you.

If I can go back to Eliquis, can you frame out the earliest best case timeline for answering the complete response letter?

I'm wondering if it could be as quick as something like two to three months.

I would imagine there are certain physical limitations on how long it would take to validate data and trial sites, but I just don't know what that would be.

And then going back to dapagliflozin in Europe, given the positive opinion in April, it seems like you should have already received final approval, and I'm wondering if additional questions have come up in Europe kind of like they have in the US.

And can you confirm that the major regulatory issue at this point in the US is the cancer signal?

Tim, this is Elliott.

With regard to dapagliflozin, Forxiga, in Europe, we're waiting for the EU decision that follows the CHMP positive opinion.

That decision takes a variable amount of time.

We are expecting it now in the second half of '012.

The issue in the US is the judgment of benefit versus risk and as I mentioned before, we're working with the FDA on paths forward for that.

With regard to the timelines on Eliquis, again, I think it's difficult to predict.

I'll have to restate the fact the once we submit and we're working very hard over the next six weeks to answer as many, if not all, the questions as we can.

There could be up to a six-month review period, but the way the engagement is occurring, it is possible that the FDA will not require that full six months.

Thanks, Tim.

Can we go to the next question, please, Debbie?

Seamus Fernandez, Leerink Swann.

Oh, thanks very much.

So just to follow up on, Elliott, on those last comments, on Eliquis, you mentioned it's -- there was a -- I believe you mentioned a six-week timeframe and then possible that they are working diligently with the FDA.

In terms of that diligence with FDA, does FDA physically have to participate in any of that work process or work-up, i.e., is there a necessity for any site inspections, really is the question, at the end of the day.

And then separately, on anti-PD-1, just to follow up on Jami's question, can you -- I think she asked about the possibility of an interim analysis and whether that would be incorporated into the study or not.

But I guess, my question is, could response rate -- are those co-primary end points, and could response rate possibly be the driving force behind an earlier-than-expected approval?

Thanks.

Seamus, this is Elliott.

I'll take the questions in reverse order.

We don't have any more to announce today, other than the Phase Three trial that is starting to recruit in August.

I did say that in a data-driven way, we are looking at accelerating the program and broadening the program since that is required both by the unmet medical need and the data and we have a good working relationship with health authorities.

With regard to Eliquis, I think you specifically asked -- site inspections, as far as I know at this time, are well behind us, and I believe it's a matter of working together on what we will submit, hopefully sometime in early September.

Okay, thanks, Seamus.

Can we go to the next question, please?

Marc Goodman, UBS.

Thanks.

First, for the 2013 $1.95 guidance that you've given us, can you talk about the push/pulls that have occurred since then that we should be thinking about and how we should think about that number?

Second, can you just give us an update on Eliquis, what's happening [O-US] and where we are there and how we should be thinking about reimbursement?

And then third, just on Yervoy, can you give us some numbers behind just what's happening there with share?

What percent are actually getting BRAF tested these days and what is your share in the positive and negative patients?

Thanks.

[We can't sir,] on the guidance for 2013, we, as we stated at our last earnings call, we are less than a year away from 2013 and we will plan to provide guidance for 2013 in January of next year.

Yes.

Marc, there are some, obviously some pluses and minuses.

BD, if we think of Inhibitex and Amylin acquisitions.

FX is a headwind to US-based multi-nationals.

We've had pipeline pluses and minuses as well.

And then also, the progression, I would say, of our in-line product sales.

So there are some of the key dynamics as we look at 2013.

With regard to Eliquis regulatory activity, as I mentioned, we are working hard on all three continents, so we're interacting with health authorities in Japan and Europe, as well as in the US.

Regarding international [in return of manza] is that we have introduced Eliquis in PTP in Europe.

So we are commercializing the product today in 14 countries, including the top 5 EU.

We are expecting to launch in the majority of them by the late '012.

Reimbursement is going through.

We have getting [most] reimbursement on a country-by-country basis.

It's an interesting challenges, as we are negotiating at the same time as our competitor are negotiating their A-fib, an indication and obviously we will be finding hopefully and will be getting our funding for A-fib soon, but at the moment, things are going well for DTP.

It's creating an important milestone for the team, because it not only validates the benefit/risk profile in the hospital setting but it also it gives a partnership between us and Pfizer, a favorable experience, as we are preparing in our relationship to launch the A-fib with key customers.

And with respect to the segments of the melanoma market and our share, BRAF testing at this point is -- the penetration is very high.

We estimate that to be between 70% and 80% in the market.

With respect to our business with Yervoy, 70% approximately of our business is coming from first-line, 30% of the business is coming from the second-line setting.

We see approximately the same percentage of the business, 50%, 50% coming from community and hospital, and it's very difficult to give a precise answer on shares in any of those segments, because the numbers are very small so we work through ranges.

In the BRAF positive segment, we clearly have a lower share, which we estimate to be in the 10% to 20%.

And we have a significantly higher share, of course, above 50%, in the BRAF negative patient population.

But again, these are ranges based on very small number of patients.

Thanks.

Can we go to the next question, please, Debbie?

Gregg Gilbert, Bank of America.

Yes, hello.

Two quick ones.

First, on anti-PD-1 in melanoma.

Elliott, will you share whether this will be first or second-line?

And then I have a question about the GLP-1 market.

Not about market growth, which is obviously good, but on share.

The BYETTA, BYDUREON franchise share has been slipping in the last few months.

So can you put some color around, at least at a high level, how you plan to reverse that trend and whether reversing that trend was assumed in the deal model assumptions.

Thanks.

Just quickly, Gregg, on anti-PD-1, we have plans for both first and second-line melanoma.

And on GLP-1s, we are clearly very excited with the opportunity to be able to promote the Amylin portfolio after the closing and the fact that BYETTA and BYDUREON added to Onglyza and Kombiglyze, position us with a very broad portfolio of agents in diabetes, potentially across all of the important classes.

So with respect to our plans, upon closing of the acquisition, we will be immediately focusing on building on a successful initial launch by Amylin and revamping the sales trajectory of BYDUREON, by further advancing the access position and increasing the focus on educating primary care physicians of the value of BYDUREON.

We think that today the GLP-1s have been used and prescribed primarily by endocrinologists in the US but there are many patients that are not treated by endocrinologists that could benefit from GLP-1s and BYDUREON.

And with respect to our plans with AstraZeneca and the Amylin teams, we are actually very well-positioned to accomplish this objective.

We will be able to leverage, as Lamberto mentioned earlier, our commercial experience, we have significant capabilities to improve access and affordability programs.

We have existing diabetes sales forces, which can be deployed rapidly, and we expect that we will be able to significantly broaden the prescriber base and increase the adoption of the products.

So this is in line with our plans from the beginning.

Finally, we also believe that the successful launch of BYDUREON does not necessarily need to come at the expense of BYETTA and we see the potential of the two formulations of exenatide to be quite complimentary.

Because of the fact that the twice-daily formulation has better effects on post-meal spikes and the indications of BYETTA, over time, we would expect to see BYETTA usage as an adjunct to patients taking daily insulin to treat their disease and that's clearly later stages of the disease.

And with the weekly convenience and the better nausea profile of BYDUREON, we think that will be valued by patients at an early stage of disease.

So we will be thinking about both agents within the franchise and we'll be focusing on supporting the performance of both.

Yes, and outside of the US, the responsibility of these products is in the hands of Lilly -- we had some good initial contacts with Lilly.

I spoke myself to their CEO and soon after the closing, we will go into the details of transition the products from Lilly to Bristol-Myers Squibb and AstraZeneca.

There is a transition plan already agreed upon between Amylin and Lilly and we will do our best to accelerate the transition so far and Lilly has been very cooperative and I don't expect them to change in the interest of everybody and especially of the patients that need this GLP-1 product -- to for the three companies, Lilly, AstraZeneca, and Bristol-Myers Squibb to move past.

Thanks, Greg.

Can we go to the next question, please, Debbie?

Catherine Arnold, Credit Suisse.

Thanks very much.

I wondered if -- I want to go back to anti-PD-1.

What's the earliest that we might see the sequential work you're doing with Yervoy in melanoma?

And then secondly, what is the -- what's your current thinking on inclusion/exclusion criteria regarding tumor expression of PD-1 in any of the solid tumor trials that are beginning, ongoing, in any way, and then even, for instance, in a future non-squamous lung trial, for instance, so obviously a lot of competition in the space.

I'm sure everybody is thinking about that?

Thanks.

Thanks, Catherine.

Elliott?

Catherine, if I understood the questions right, the sequential data on anti-PD-1 would -- I don't have a specific date when you'll see that information, but we will start our Phase Three trials in melanoma, we first thought by the end of the year or early next year, I think it's going to happen this year and we'll be finalizing those trials with the appropriate health authorities and publishing them as soon as they are finalized on clinicaltrials.gov.

I believe your second question had to do with biomarkers and we have a very robust approach to biomarkers in the PD-1 space.

And including PDL-1, as a marker.

So patients are getting biopsied.

We're looking at whether there's a subgroup of patients that will help personalize this approach as precision medicine.

And then the PD-1 and other solid tumors will -- is being evaluated.

I think this is a very exciting opportunity in multiple solid tumors.

Thanks, Katherine.

Can we go to the next question, please?

Mark Schoenebaum, ISI Group.

Hello, guys.

Thanks a lot for taking the question.

I had one question on a -- well, obviously business development has been very -- has been instrumental in all the success you guys have had over the last many years.

And I know Jeremy Levin departed the Company several months back.

So I was just wondering if you could give us an update on what's happening with leadership within that part of the Organization?

And then number two, I was wondering if you can give us your view on, if you have one, your view on the outcomes trial for, for BYDUREON, whether you think that's likely to work and also an update on timing and how important that may be to adoption?

And then finally, maybe just to press a little bit more on Eliquis, you've obviously had lots of back and forth with the FDA now, Elliott.

What would be your advice to investors, in terms of -- assuming -- in terms of thinking about whether or not they will actually give you a superiority claim on efficacy and bleeding, and I recognize that you may not go very far in answering that, but I wanted to ask?

Thanks.

Maybe I should take Elliott out of the embarrassment of saying that we will not answer this question but up to you to decide, Elliott.

Your question about business development, we have a very good team in charge of business development here.

Elliott Sigal is the interim head of that team.

As you can imagine, we are all very focused on business development here at Bristol-Myers Squibb.

This quarter we have announced one of the biggest acquisitions of our recent past -- probably the biggest acquisition of our recent past.

So our BD machine is working very effectively and Senior Management of this Company, including myself, we are all very involved in business development.

Mark, you had two questions that I might be able to help with.

The outcomes trial with BYDUREON is certainly a focus of ours once the transition -- once the acquisition closes.

We will talk with the Duke investigators that we're quite familiar with and heavily involved in.

They have reached out to us.

I think the way to look at this is all three of our mechanisms have an opportunity to modify CV risk and all three of our mechanisms with AstraZeneca will have outcome studies, because it's not enough these days just to lower sugar.

One must do so as safe as possible with few hypoglycemic events and offer something in addition, glucose-plus is what we call it.

The weight reduction, the blood pleasure reduction, and the biochemical activities of all three of those mechanisms give us hope that the outcome trials will document CV reduction and so we will be working on that outcomes trial.

It will be several years before that's available and I think the advantage of the first weekly diabetes medicine, of BYDUREON will carry it a long way and we're committed to enhancing the delivery of that medicine.

With regard to Eliquis, no, I won't talk about discussions that aren't finalized, but I do believe very strongly that the data should be reflected in the label, that this is a highly differentiated product, with two wonderful studies that document a low bleeding rate and tremendous efficacy, and that's important to reflect to patients and physicians because of the significant unmet need of stroke reduction in atrial fibrillation.

Thanks, Mark.

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

Steve Scala, Cowen.

Thank you.

I have two for Elliott.

First, on Eliquis, is the FDA concern relative to the 380 patients lost to follow-up, and if so, why is this an issue since these cases are equally balanced in the ARISTOTLE trial in the apixaban and control groups?

And if this is the question, are you simply providing the detail on these patients, and that is why the final results are not being questioned?

So that's the first question.

The second question is, if everything were to go extremely well for the PD-1 program, what -- in what year could the first indication be on the market?

Could it be before 2015?

Thank you very much.

Well, Steve, that's a good guess, but not something that I can comment on, nor something I have paid a lot of attention to on Eliquis.

I would just go back to the statement that we are verifying the data management and validating aspects of the trial, that we think the end points are not being questioned, and we think this is a differentiated profile, and I'll be able to explain more at an appropriate time.

With regard to putting PD-1 into Phase Three starting this summer, I think that we're trying everything possible to accelerate, and I don't have a prediction on when the Phase Three trial or the registration will occur at this point, but as we move further, I'll be able to update people on that.

Thanks, Steve.

Can we go to the last question, please, Debbie?

Chris Schott, JPMorgan.

Great.

Thanks very much.

Just three fairly quick ones.

First, could you just update us on your plans for PD-L1, where I think we saw some data at ASCO?

Second, on the PD-1 in melanoma, can you talk from a commercial standpoint, your comfort that the market can support pricing for the use of two immunotherapies, whatever order they come in, as you think about developing the product in that setting?

And then finally, switching gears to the Amylin acquisition, what's the timeline over which you expect to see either an inflection point or some acceleration for the GLP-1 portfolio, given your increased investment, these capabilities you've talked about?

Is a 6 to 12-month process post-deal close a reasonable timeframe, or is this something that is going to take a bit longer to really see this franchise hit the trajectory that you're hoping?

Thanks very much.

Just quickly, on PD-L1 and then I'll turn it over to our commercial colleagues, Beatrice and Giovanni, on the other two questions.

We have multiple options that we're evaluating for PD-L1, given the effort we're putting behind PD-1.

There are some interesting applications of immune modulation that this mechanism may apply to and specifically we're looking at some in virology right now.

Regarding the pricing question about PD-1, it's clear that we will first have to understand the full benefit of the products in terms of survival in melanoma so once we have that and we'll be able to understand those so the approach into the regimen and where the product should be used, you'll have those 0so by] potential biomarkers, so when we fully understand the place of PD-1 in the sequential treatment for melanoma, we will be able to determine what will be the optimal and acceptable pricing for the marketplace.

This is very early days.

We are learning a lot through our current activities with pricing and reimbursement and access into US, obviously, but also around the world, so we will be fully prepared once we see the result of the trials to address those questions.

And on the Amylin portfolio, clearly, immediately after the closing, we will be extremely focused on very rapid integration.

There is good work ongoing in Amylin.

At the beginning, we will focus on strengthening advancing access.

We think that's absolutely essential.

We have a good base to build on in the endocrinology market and that can grow further, and clearly, as I said before, we will focus on the primary care segment and that will be an immediate focus, but obviously increased penetration in primary care will happen over time.

So thank you very much, everybody.

In conclusion, this was an important quarter for Bristol-Myers Squibb.

We are confident that both our new and key products and our pipeline continue to position our Company for long-term growth.

And coupled with our disciplined approach to business development and continuing good work in our clinical trials, we are confident in our Company's progress as we look toward our future.

So thank you, everybody, and have a good one.

Thank you, Lamberto.

Thanks, everybody, for joining the call.

And Tim Power and I are here for your follow-ups.

Thanks, Debbie.

Thank you.

Ladies and gentlemen, thank you for your participation.

This does conclude today's conference.

Have a great rest of your day.