施貴寶 (BMY) 2012 Q4 法說會逐字稿

Good day.

Welcome to the fourth quarter 2012 Earnings Release Conference Call.

This call is being recorded.

At this time I would like to turn the call over to Mr. John Elicker, Senior Vice President Investor Relations and Public Affairs.

Please go ahead, sir.

Thank you, Alicia.

Good morning everybody.

Thanks for joining the call this morning to discuss our Q4 results and 2013 guidance.

With me this morning are Lamberto Andreotti, our Chief Executive Officer and Charlie Bancroft, our Chief Financial Officer.

Both Lamberto and Charlie will have prepared remarks.

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

Again, Lamberto and Charlie will have prepared remarks and then Elliot, Beatrice and Giovanni will be here for Q&A.

Before we get started, I'll take care of the legal requirements.

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

Good morning, everyone.

Well we had a strong close to a very important year.

In just the last quarter we grew our inline and new brands by 16% with especially strong performance by ORENCIA, YERVOY, SPRYCEL, ONGLYZA CombiGlide and BARACLUDE.

We made some important clinical advances, most notably with respect to our immune oncology and Hepatitis C abscess.

We had several key regulatory successes with European approval of FORXIGA, and especially important for the Company, most regulatory approvals of ELIQUIS including in the US.

In fact, the regulatory accomplishments underscored the importance of 2012 as a year of significant transition for Bristol-Myers Squibb, one that brought our portfolio of the future into sharper perspective, and laid the ground work for this year's focus on our commercial opportunities.

ELIQUIS was the big story of the quarter, by gaining back to back approvals in Europe, Canada, Japan, the US, and South Korea, this differentiated asset has set us up for a strong start to the New Year.

Next week, along with our partner Pfizer, we will be launching ELIQUIS in the US.

Our teams have been working together, planning for this day, preparing for our launch.

We already are ready to move forward and while we have already launched in a few markets such as the UK, Germany and Denmark.

We are making similar preparations in the other markets, too.

This is an important development for patients and physicians.

For the past 60 years, Warfarin has been the gold standard for these patient population, but now that has changed.

ELIQUIS is the only anticoagulant that has demonstrated superior risk reduction versus Warfarin in the three critical outcomes of stroke prevention, major bleeding, and all caused deaths in patients with nonvalvular atrial fibrillation.

With respect to diabetes, FORXIGA's European approval during the fourth quarter has significantly strengthened our Franchise and kept an important year for Bristol-Myers Squibb in this space.

Central to our expansion in diabetes was our acquisition of Amylin, announced last June, and the announcement of our five-year-old partnership with AstraZeneca.

Both of these developments have reinforced our leadership with respect to Type II Diabetes and has best positioned us to address the significant unmet medical need that still exists for these patients.

Regarding Amylin, our integration continues to go well.

Our cross-strength sales force is already hard at work in the US market.

By the beginning of the second quarter, we should largely assume full commercialization of the two Amylin assets outside the US.

As I said before we also made significant pipeline progress last year, including during last quarter.

With respect to immuno oncology, PD-1 [deobovola], is already in multiple Phase III trials for lung, renal and melanoma.

We presented important data at ASCO last year and we are looking forward to the read out of the very broad Phase III program we had initiated.

Similarly, Elotuzumab for multiple myeloma is also in Phase III trials.

We presented some interesting data at ASH in December.

We suggested that Elotuzumab may be promising for patients with relaxed refractory multiple myeloma.

With respect to Hepatitis C, we continue to advance our portfolio.

Japan, in particular, provide a significant opportunity with its 1.5 million patients.

We expect to file an all oral regimen in Japan by the end of this year and expect to be in the market next year in 2014.

Having presented interesting Phase II data at the AASLD Conference in November, we're also expecting to move our triple regimen into Phase III trials in 2014.

So taken together, 2012 was a very important year for Bristol-Myers Squibb, one that embodied our transition to the portfolio of the future.

One that reflected the continued leadership of our Company in a range of therapeutic areas.

One that sets the stage for sustained long-term growth.

Going forward, I'm optimistic.

2013 will be a year of clinical advances, launches, commercial execution, investment, all of which will allow us to deliver our full long-term potential.

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

Charlie?

Thank you, Lamberto.

Overall, we had a good fourth quarter, while building a solid foundation for sustained long-term growth.

In addition to the important regulatory approvals for ELIQUIS and FORXIGA that Lamberto mentioned, we also saw strong sales growth among our key products as we continue to move toward our portfolio of the future and a more diversified global footprint.

During the fourth quarter we delivered non-GAAP EPS of $0.47.

For the full year, we delivered non-GAAP EPS of $1.99.

This includes the dilution due to the acquisition of Amylin in August.

Net sales for the fourth quarter were $4.2 billion, down 23% compared to the fourth quarter last year, primarily due to the loss of exclusivity of PLAVIX and AVAPRO/AVALIDE.

Price was favorable by 1% and foreign exchange had a negative 1% impact on sales in the quarter.

Excluding PLAVIX and AVAPRO, global sales grew 13% lead by gains in key brands that are important to our future, YERVOY, ONGLYZA, ORENCIA and SPRYCEL.

I will review some of the product highlights.

YERVOY had a very strong quarter.

Global sales were $211 million up 18% sequentially from the third quarter.

In less than two full years on the market, YERVOY global sales topped $700 million for 2012, making YERVOY one of the best oncology launches of the last decade.

In the US, we are focused on the efficacy message of YERVOY, shifting the focus of treatment in metastatic melanoma to the potential for long-term survival and expanding the prescribing base beyond large institutions.

Both of these initiatives seem to be gaining traction.

US sales rose to [$141 million] in the quarter, up nearly 15% from the third quarter.

We are also in the process of fully launching YERVOY in Europe and continue to work with health authorities in other regions to ensure patients have access.

We believe there is still ample opportunity for YERVOY to grow.

In diabetes, worldwide sales for the ONGLYZA franchise rose 29% to $198 million during the quarter.

The DPP-4 class is becoming more crowded, but we expect ONGLYZA to be competitive in this class and we expect the class to continue to grow.

In the US, we now have the combined strength of the Bristol-Myers Squibb, Amylin, and AstraZeneca diabetes sales forces promoting both ONGLYZA and exenatide franchises.

The launch of CombiGlide's XR in Europe during the quarter strengthens our competitive position there as well.

We reported $152 million in revenues for BYDUREON and BYETTA.

This includes just $5 million in royalties from international markets.

We will begin reporting direct sales for exenetide outside the US after completing the transition of commercial responsibilities from Lilly.

We expect that to occur by April 1.

The ORENCIA franchise was up 26% in the quarter to $325 million.

Full year sales were nearly $1.2 billion.

ORENCIA SubQ now accounts for 25% of full year ORENCIA sales in the US.

And, we recently launched SubQ in Europe.

SPRYCEL sales grew 24% to $281 million in the fourth quarter compared to last year and surpassed $1 billion in annual sales for the first time.

We continue to see strong growth for SPRYCEL in the US and international markets with sustained first line adoption in CML and our continued market leadership in second line CML treatment.

ABILIFY sales were up 11% to $819 million.

ABILIFY sales during the quarter benefited from a reduction in the estimated amount of certain managed Medicaid rebates attributed to prior periods.

As you think about ABILIFY for 2013, I want to remind you that our share of ABILIFY revenues in the US will be lower in 2013 as we shift from a flat 51.5% to the new tiered revenue structure, which we approximate to be 35% in 2013.

Finally, HIV franchise sales were down 6%.

While global sales were $777 million for the fourth quarter and $3 billion for the year, we continue to see increased competition in many markets.

Now, let me highlight a few items 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 76.4% during the quarter, up 120 basis points compared to the same period last year.

This improvement is mostly attributable to favorable foreign exchange and a one-time benefit from the renegotiation of a supply agreement.

Marketing, Selling and Administrative expenses were $1.1 billion, down 5% from the same quarter last year.

This was driven by no PLAVIX or AVAPRO spend in the quarter and certain one-time expenses incurred in the fourth quarter of 2011.

This was somewhat offset by increased investment due to the Amylin acquisition and the launches of new products, including ELIQUIS and FORXIGA.

Our non-GAAP tax rate of 15% during the quarter was driven by two factors, the evolution of our earnings mix and our tax planning initiatives.

Regarding mix, PLAVIX has a relatively higher tax rate as compared to the rest of our portfolio.

Secondly, in Q4, we restructured some legal entities which improved our earnings mix.

We saw the impact of these changes in Q4 and we expect this impact to be sustained going forward.

The Q4 rate does not include the R&D tax credit approved Congress in January.

Before I turn to our 2013 guidance, I will briefly comment on our capital allocation strategy.

We have a balanced approach to capital allocation with business development remaining a top priority.

We are also committed to the dividend.

In December, we increased the Company's dividend by 3% demonstrating our confidence in our near- and long-term business and our focus on creating value for shareholders.

This is the fourth consecutive year that we have increased our dividend.

Turning to guidance.

You will see that we have set our 2013 non-GAAP EPS guidance range from $1.78 to $1.88.

I will now provide some color on select line items.

We expect our gross margin as a percent of sales to be between 72% to 73%, a decrease of approximately 300 basis points compared to last year.

This is driven by expected growth for ELIQUIS and the diabetes portfolio where we book our respective partners' share and cost of goods sold causing downward pressure on gross margins.

We project MS&A to be flat and A&P to increase in the high single digits as we will continue to invest in our growth brands and our portfolio of the future.

Remember that in 2012, we had virtually no spending related to PLAVIX or AVAPRO as we had pulled back on commercial investments in those products in 2011.

Moving into 2013, we are committed to making the right commercial investments and important new product launches, such as ELIQUIS and FORXIGA, and we have a full year of investment behind the exenetide franchise.

We also need to ensure continued growth of our key brands and we will appropriately invest to optimize our portfolio.

While we continue to drive efficiencies throughout our P&L as part of our every day business, we believe there is a balance between short-term results and building a solid foundation for sustained long term growth.

Finally, we expect our effective tax rate to be approximately 16%.

There are three main reasons for the decrease in the 2013 tax rate.

First, 2013 reflects the impact of the R&D tax credit for both 2012 and 2013.

This has an impact of about 2.5 percentage points compared with 2012.

Second, as I've said previously, we have seen an evolution in our earnings mix with PLAVIX having a relatively higher tax rate.

Lastly, in 2012, we did a restructuring of some legal entities, which has a positive impact on earnings mix.

You saw the impact of this in Q4 and we expect the impact to be sustained going forward.

In summary, and as Lamberto mentioned, 2012 was an important year for the Company as we begin the transition to a more diversified portfolio and the potential for longer term growth.

We believe our guidance for 2013 reflects the appropriate investments to help position the Company for that longer term growth.

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

Thanks, Charlie.

And Alicia, if we could go to questions and if I could just remind everybody to try to keep them focused, as we will try to get through as many questions as possible.

Alicia?

Thank you.

(Operator Instructions)

Gregg Gilbert, Merrill Lynch.

Thanks, I have two.

I'll ask them up front.

Charlie, can you talk a little bit more about the massive tax change -- at least massive relative to what we and I think the market were expecting going forward -- and make sure we're all on the right place in terms of the ongoing sustainable rate?

And perhaps a commercial question on ELIQUIS.

J&J talked about strong Tier II access for XARELTO, and even though you have the best profile, is it your and Pfizer's plan to pay up to ensure access is similar to the competition?

Or do you have another strategy in that regard?

Thanks.

Thanks, Gregg.

This is Charlie.

As I mentioned in my comments, there were three main reasons for the drop in our overall tax rate.

Let me go through each one and take you through which ones are sustainable, as we think about our rate going forward.

So in regard to the R&D tax credit, which we have a double dip in 2013, as we have the 2012 benefit as well, obviously the piece that relates to 2012 is not sustainable going forward.

As we've talked about Plavix, Plavix is now out of our Business as that benefit we also see going forward.

But remember, earnings mix will always play a role as we think about our tax rate.

And then lastly, the restructuring we did that had a positive impact on our earnings mix, we expect that this impact will be sustainable going forward.

As to your question on ELIQUIS -- well, Giovanni will address specific question.

Let me repeat a couple things about ELIQUIS and add a few things.

First of all, as I said before, the approval of ELIQUIS last year was a significant accomplishment for us.

We had the approvals in all those geographies -- the US, Europe, Japan, Canada, South Korea -- all in just over one month's time.

This is an achievement per se.

And, as I said before, we continue to believe that, based on the data from our clinical trials, ELIQUIS has a real differentiated profile.

We were very encouraged to see that the approvals in different parts of the world reflects the risk reduction versus Warfarin in all three important outcomes of stroke reduction, major bleeding, and all cause of death.

So, good clinical data and labels reflecting that clinical data.

This unique and differentiated profile of ELIQUIS will resonate, we believe so; and will position us well against Warfarin and against all other anticoagulants including the one you mentioned.

We are working to secure pricing and access.

As I said, launch will happen -- is happening in these very weeks, in these very days.

So, one last point.

There is a quality of the product, as I said.

There is a strength of the label, as I said.

But, there is also the fact that we both, Bristol-Myers Squibb and Pfizer, have a strong experience and we are leader in the cardiovascular space.

All these make me very confident that we will be very successful.

Giovanni, why don't you continue from here.

Yes, good morning.

This is Giovanni.

Just pulling off of what Lamberto said, we are getting ready for launch in early February.

But in fact, access is our number one priority.

Our access teams are actually already working.

They're in the field.

We've scheduled many meetings with all of the key plans, both commercial and Medicare.

Some of those meetings have taken place already.

To echo what Lamberto said, we believe that the strong profile and the quality of the label will be extremely important to access.

We don't expect significant barriers.

We also have put in place, specifically for commercial patients, a very good set of programs in place to manage the out-of-pocket costs for patients.

That will be important in the commercial space at the beginning as we improve our access situation.

Then it will, of course, continue to be important going forward.

We are very focused on this and the profile on the label will be very important.

Thanks, Gregg.

Can we go to the next question, Alicia?

Jami Rubin, Goldman Sachs.

Thank you.

John, I don't know if Elliott's on the call, but I wanted to ask a big picture question on PD-1.

Obviously, this is going to be an important year for further disclosure of PD-1 read-outs.

I'm wondering if you could just update us on where you are with your Phase III program?

What other additional trials do you have planned?

How you see the competitive dynamics playing out?

You're not alone in this field.

There are other companies also pursuing PD-1 and PDL-1.

And, specifically what can we expect to see at ASCO this year?

Thanks.

Thank you, Jami.

This is Elliott.

Yes, we continue to advance our leadership position in immuno-oncology; and PD-1, as you state, clearly is an important part of our platform.

We were quite encouraged last year by the data that we presented at the Clinical Oncology meeting and that appeared in the New England Journal of Medicine, showing that mono therapy with this agent is clinically active in non-small cell lung cancer, metastatic melanoma and renal cell carcinoma with durable responses in most patients and in an acceptable and manageable safety profile.

We've had experience now in multiple dose levels.

We believe the activity is encouraging, because it is significant in heavily pre-treated patients.

We showed some updated results at the end of the year.

So, we basically have moved on this data from a Phase I/Phase II compound into five significant Phase III studies that are all ongoing now.

There are two lung studies, in second line squamous and second line non-squamous.

Our strategy to stratify, based on that histology, is based on data that we've seen.

We are also doing extensive analysis looking for biomarkers, which could be a distinguishing aspect of the program.

We have a renal cell carcinoma study in Phase III.

We now have two melanoma studies in Phase III, one in advanced patients post-ipilimumab and one in untreated patients versus chemotherapy.

Also, we have a Phase I combination study with YERVOY.

I think one of the exciting aspects of our program is getting early experience with combinations, particularly with different mechanisms to boost the immune system.

That will be, I think, very interesting data that we'll be able to present hopefully at ASCO this year.

At ASCO, we'll be giving updates of the Phase I/Phase II, in terms of survival data, in terms of biomarkers.

And, all these five Phase III studies will be ongoing.

We clearly acknowledge that there's competition in this field.

We are gratified to be in the position we are in.

We're not going to be complacent.

We think it's important to move fast in this area with high quality molecules that are well-characterized with biomarker studies, And, I would say with combinations that we're in a very good position to administer and to explore.

We do have a PDL-1 mechanism, and that's respectable competition from Genentech, in Phase I in their program, I believe.

Our view is there may be a theoretical advantage to targeting anti-PD-1, because you can cover both the PDL-1 and the PDL-2 ligands.

We'll have to see whether that matters.

Essentially, we had enough information, and extensive information, on PD-1 to move as we have.

Great, thanks, Elliott.

Thanks, Jami.

Can we go to the next question, please?

Mark Schoenebaum, ISI Group.

Hey, guys, thanks a lot for taking the questions.

Maybe just a question for Charlie on the tax, just to push a little bit.

So if we just add back the 1.25%, which would be half of the 2013 total R&D tax credit, would it be roughly that 17% to 18% that you advised us to use as sustainable?

Or would it be something -- or might it be something slightly more than that?

Then I was wondering if you could maybe give us general thoughts on how we should be thinking about share repurchases in 2013?

Thank you.

Okay, thanks, Mark.

This is Charlie.

Regarding the rate, I think your basic math that you use there is reasonable, to think about it going forward.

Always in a business our size and diversified global footprint, earnings mix will always play a role in the rate.

But overall, I think that your math makes sense to me.

Regarding to the share repurchase program, as you know, we had two authorizations totaling $6 billion.

Year-to-date, we're through $4.2 billion, so we have $1.8 billion remaining on that authorization.

As you know, we have the ability to suspend or utilize our share repurchase program on the discretionary basis.

Thanks, Charlie.

Thanks, Mark.

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

Tim Anderson, Sanford Bernstein.

Thank you.

If I can just go back to tax rate again.

Presumably, all drug companies try to optimize their legal entities to take their tax rate as low as they can, yet your rate is markedly lower than any of the other companies, that I cover at least.

So, I'm wondering why your tax rate might be unique in that regard?

And can you explain a little more on the legal entity restructuring and how much Amylin played into that?

If I'm not mistaken, Amylin had a bunch of NOLs and I'm wondering if that helps take the rate lower?

Then on ELIQUIS, can you just give us your thoughts about the potential competitor, Edoxaban?

In your long range planning assumptions for ELIQUIS are you assuming that Edoxaban will be a viable competitor?

Let me first talk about the tax rate.

In regard to the NOLs for Amylin, we did mention when we purchased Amylin we utilized the NOLs almost fully when we then basically sold a portion of the business to AstraZeneca.

So that worked as a capital gain for us, offset by the NOLs.

So there's no benefit of the Amylin NOLs going forward.

As far as our tax rate vis-a-vis our competitors, I really don't have visibility into their earnings mix, their own tax planning strategies, and that's something that I don't feel is appropriate that we talk about in any real detail.

Yes, Tim, this is Elliott, and perhaps Giovanni would corroborate some of our joint feeling about this.

First of all, we're very happy to be in the position we are globally with the label that we have.

It's impossible for us to know what profile any compound will have short of knowing the Phase III data, so Edoxaban is considered a very important compound for us to watch.

It will clearly depend on their data as to what the opportunities are for that compound.

We have been under the belief, scientifically, that because the half-life of this drug is similar to both rivaroxaban and ELIQUIS, that adhering to what we think we have shown, pretty well, of a rather stable blood level and low peak-to-trough ratio by going BID, would be part of the reason that you're seeing the differentiated profile with ELIQUIS.

And, very significant reduction in risk in stroke, very significant decrease of bleeding, which is very important to the practicing community, and for the superiority we've seen in all-cause death.

So, I think we need to wait and see.

And of course, we are prepared for the competition for that.

But, once-a-day dose, which I think is going to now have to meet the bar of superiority in all those three outcomes.

Yes, and from my perspective, from a commercial perspective, we will have to see data and label.

But we are very focused on executing our launch of the data we have versus Warfarin in terms of superiority with stroke, bleeding, and mortality, is very compelling.

We are focused on our launch and the significant opportunities we have.

And you may also mention something, Elliott, about the other [roys] data, which is an interesting element of differentiation of ELIQUIS, right?

Yes, our Company did something that was not all that conventional at the time, and I am very pleased with how it turned out.

That is, to look at the unmet medical need of the patients that are judged to be not suitable for Warfarin, which is a size of the AF population -- perhaps 40% to 50% -- and these patients are often given aspirin.

So, the Abaroa study that went head-to-head to aspirin does two things for us.

And, I don't think a study like this could now ever be done again, and that is to show the power of efficacy of the agent in its full form.

But most importantly, to have a comparator of bleeding; and there is no statistical difference in major bleeding rate between ELIQUIS and aspirin.

I think that was part of our development plan.

It was part of our evaluation with payers and their opinion while we were designing the Phase III, and I think it's a strong part of our label and competitive position.

Thanks, Tim.

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

Tony Butler, Barclays.

Good morning.

This is Alison Young asking a question on behalf of Tony.

Coming back to the oncology franchise, a couple questions.

For YERVOY, can you discuss your current share in a market, in first line, second line, relative to some of the [oral's] small molecules?

Also, looks like there may be some additional indications in Phase III wrapping up, prostate cancer, chemo-refractory prostate cancer.

Can you discuss your vision for the other indications of YERVOY?

A second question on oncology, on elotuzumab -- can you discuss the strategy and vision for multiple myeloma?

Also could we expect to see any of the ELOQUENT-2 refractory data this year?

Thank you so much.

Giovanni, why don't you start.

Yes, this is Giovanni.

With respect to our performance with YERVOY and our share, we were very pleased with the performance in Q4 in the US with significant growth versus Q3 and previous year and as Charlie mentioned before.

Our share, in first line, is we estimate at this point to be above 30% when you look at the total market, in the 10% range in BRAF-mutant patients.

And, clearly significantly higher in the BRAF wild type population.

The utilization in first line continues to grow and it's really one of the drivers of growth that you've seen in the fourth quarter versus previous periods.

And also -- Beatrice speaking.

We're also very pleased with the growth in Europe, where the product is now commercially available and reimbursed.

The [induction] has been very good.

Our sales trajectory in countries like Germany and UK have been better than all other oncology launch of recent years.

So very satisfactory [both trends].

Obviously, that's taken time to get national formulary across Europe.

We have been very pleased with the progress we have made, and during recent months we have added to our key markets, countries like Spain.

We also got approval from NICE in the UK.

Now we have ongoing discussion with the remaining markets, which will conclude in the coming months.

So, we are looking forward on the progress we have made, and continue building the products.

We are aligning with, obviously, the global strategy, working hard on the long-term survival data.

And, that data is going to be key for us to continue growing our market share across the world for that product.

And before Elliott speaks about the new indications, let me add something here.

Obviously, YERVOY is supported by great data, okay?

But what is very important to me and I'm very proud of the fact that our analysis shows that YERVOY has been the best oncology launch in the US and Europe for the past ten years.

We showed combination of a good product, well developed, and good commercial execution.

Yes, so to the question of the life cycle management, which we're working on very hard for YERVOY, we do have Phase III trials in multiple indications, including [adrenal]melanoma, two trials in prostate cancer.

And you mentioned, yes, one of them should have data internally at BMS in the first half of the year.

Hopefully we'll find a way to present that this year at a conference.

The one that will be coming due first is a Phase III trial in castrate-resistant post-docetaxel prostate cancer.

These are patients who have progressed on that taxane.

It was initiated in 2009.

We project to have the number of events to analyze and present this year.

The other trial will take longer.

We have two trials also in lung cancer, one in non-small cell lung cancer, one in small cell lung cancer.

We are doing combination therapy with other chemotherapy agents.

We are actively exploring studies in other tumor types with the National Cancer Institute.

With regard to your question on Elotuzumab, this too is a form of immunotherapy using a different non-T-cell based mechanism.

We've been very excited about the updates we get from the Phase II study.

One such update was presented last December at the ASH meeting.

These are patients that have relapsed or refractory multiple myeloma and are being treated with the combination of lenalidomide and low dose Dexamethasone, with and without the addition of Elotuzumab.

That ELOQUENT study, we won't have data for this year.

It's a Phase III study now.

We are also looking at earlier lines of therapy and that will take a little longer.

Thanks.

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

Catherine Arnold, Credit Suisse.

Hello.

Good morning?

We lost you, Catherine, there for a minute.

Okay, I wanted to ask you about the Amylin integration and how we should be interpreting the sales trajectory of that franchise?

For instance, 2014 you'll be launching the Dual Chamber Pen.

I'm wondering, as we look at your results from US this year, should we be thinking about the sales trajectory having another very important inflection point, such that the sales curve is really probably not completely visible and projectable until we see the Pen, because of the convenience?

Then, also, with the transition happening in Europe, I think you guys take full control in the second quarter.

But, I'm wondering how we should be thinking about interpreting the ex-US sales once you start booking them additionally?

So, if you could elaborate there it would be great.

Okay, Catherine, good morning.

Let me start here with a couple of comments about our diabetes franchise, and maybe revealing a little bit why we bought Amylin and why we expanded our AstraZeneca partnership event.

Giovanni and Beatrice will give you specific comments on the Amylin products and what we are planning to do with that.

The morning of, I feel good, I feel good, I feel good, in fact I feel good about also our diabetes franchise.

We have now this strong, diversified, comprehensive franchise.

With, I think, we are the only company with three novel classes of diabetic agents.

We have the ONGLYZA component.

We have FORXIGA that has moved in Europe.

I was very pleased to see that Europeans recognize the need of additional agents when they approved FORXIGA.

And I was pleased to see that they included in this additional agents, product like FORXIGA with an entry independent mechanism.

We both, Amylin which gives us the third leg, the GLP-1 leg, in our franchise.

So, we have a good portfolio, a diversified portfolio.

And, with this portfolio, and not only focusing on glycemic control within diabetes, but we're also looking at [CB] protection.

I'm sure that we're all following the fact that we have CB outcomes programs in place for all three classes of products.

The Amylin acquisition made a lot of sense to us to make this program more complete.

We start seeing first indicators of how we are doing with the product in the market.

The long premise is what Giovanni is going to now to elaborate on as far as Amylin products are concerned.

Yes, Catherine, this is Giovanni.

From a US perspective, as we mentioned before, in Q4 we have virtually completed the integration of the teams in the US with Amylin, AstraZeneca.

We now have fully integrated sales marketing and medical teams that are promoting the entire portfolio.

When we started working on the integration, we clearly articulated three objectives for 2013 for the GLP-1 franchise.

The first one was to increase and improve access.

The second one was to have a competitive share of voice.

And the third one, important in order to enable growth, was to broaden the prescriber base.

We've made good progress in these areas.

I will give you an example about access, when beginning January 1 at Aetna, we now with BYDUREON have a preferred position in both the commercial and Medicare spaces, which we think is very, very important.

As we think about GLP-1, there clearly is opportunity for significant growth in the market, given the availability of a weekly product, the efficacy profile, the reduced nausea of BYDUREON.

The product can and will be adopted more broadly in other lines of therapy.

And, we are very focused on that.

Obviously, the availability of the Pen will be later important to continue to fuel the growth of BYDUREON.

Overall, we have a really good organization in place.

We're very focused on executing against the three objectives and optimistic about the performance of that franchise going forward.

So you were asking also the transfer in international market, Catherine.

It is clear that it may take some time in terms of the transfer of the marketing integration and also non-commercial responsibilities.

That is likely to go on for a few quarters.

However, with our partner AstraZeneca, we are expecting to have full control of the commercial operation at the end of the quarter, and we should book sales starting in Q2 of '13.

You heard Giovanni mentioning the potential.

I think we all agree, behind the gross potential of that product.

As surely our teams across the world are very impatient outside of the US to get control of the products with a mind set of launching those products, BYETTA and BYDUREON.

We need to do that.

It's clear the transition period was not optimizing the sales of the products.

So, the team are currently being fully trained and we will be fully operational as of Q2 to take over and grow that franchise in international market.

Thanks, Catherine.

Alicia, can we go to the next question please?

David Risinger, Morgan Stanley.

Thanks very much.

I have two questions, one for Charlie and one for Elliott.

Charlie, I was hoping that you could just talk any 2015 inflections in the tax rate, when Abilify and Sustiva go generic?

So, I don't know if they are, in 2013, being taxed above that corporate average of 16%, or below that corporate average of 16%, to understand if there's an inflection to anticipate for 2015?

And then, Elliott, could you just discuss the transition of the PDL-1 development strategy away from cancer and to virology?

Then, how you expect to develop that product in virology?

Thanks very much.

So I think that your good work, your info '13 on taxes makes you work a lot this morning on answering questions and such.

Thanks, David.

Without commenting specifically on Abilify and Sustiva, I do want to point out the differences of those products and the rest of our portfolio actually, vis-a-vis Plavix which did have the ability to decrease our rate given it was higher relative to the rest of our portfolio.

Plavix, we had the unique structure with Sanofi, where it was a JV and we had the minority interest component.

So, I don't see that there's going to be a major difference in Abilify and Sustiva to the rest of our portfolio, excluding the Plavix component.

David, this is Elliott.

What I could say at this time is that, as I mentioned before, we had a lot of good reason to move forward in oncology with our anti-PD-1.

We have a very valuable asset with our anti-PDL-1.

There's a scientific basis for hypothesizing that the PD-1/PDL-1 mechanisms are irrelevant, not only to oncology but to virology, help clear viruses, for example.

And perhaps to affect cures in viruses that are sustained chronically.

Now, we have studied our PD-1 compound in small number patients with HCV.

At this time our plans are to develop PD-1 in oncology and we're conducting early work on the utility of PDL-1 in the variety of virologic infections.

Hopefully we'll have more to say as time progresses.

Thanks, Dave.

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

Seamus Fernandez, Leerink Swann.

Thanks very much.

So a couple of quick questions.

One for Lamberto.

Lamberto, historically when we've talked about the pace and direction of earnings, you had established 2013 as a trough year.

Are you comfortable reiterating that now with the expectation that 2015 would actually be a higher-earning year?

And then separately for Charlie.

Charlie, can you just walk us through a little bit on the gross margin mix going forward, given the high volume of partnerships and then the loss of high-margin Abilify, how should we be thinking about margins post-2015?

Thanks a lot.

Yes, I don't think we are going to give guidance today about years beyond 2014 and '15, which you shouldn't take -- you should just take this as we are giving guidance for 2013.

But at the same time, you should have heard, and let me repeat it, my comment before that we are seriously investing behind many growth drivers.

We have in our portfolio and pipeline, and therefore, our focus of the entire Company is long-term growth while delivering short-term results.

Again, we are giving our guidance today for 2013, and we are committed to deliver according to that guidance.

Thanks, Seamus.

Let me quickly talk about your question on gross margin.

Let me start by saying Plavix overall, which is a major product for us in the US, had roughly the same gross margin as the total Company had.

So, when we have lost now Plavix, which acted as a big stabilizer on our gross margin, we will see more quarter-to-quarter variability.

We'll also see variability related to, as I mentioned in my comments, our partnered products.

So ELIQUIS in our diabetes franchise where we book the partners share up in cost of goods, that has -- those products have clearly a lower gross margin than the rest of our portfolio, which generally had a slightly higher margins than, for example, Plavix.

So, net-net it will be a combination of our product mix; but I do see, in the medium term, more downward pressure on our gross margin related to how we see the growth of our partner products.

Thanks, Seamus.

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

Chris Schott, JPMorgan.

Great.

Thanks very much.

Just had two questions here, both in diabetes.

First, on the GLP-1 space, Lilly recently announced positive top-line data their GLP-1.

Can you talk about how you think about the competitive dynamics with another potential once-weekly product coming to market, as you're looking to build out this franchise over time?

Second, on ONGLYZA.

Just latest timing on the outcome study; and can you just remind us, as you're thinking about ONGLYZA, how important is that outcome study in terms of both the ultimate ramp of the products, as well as your market share within the DPP-4 class?

Thank you.

This is Giovanni.

So let me start by giving a perspective on the potential for BYDUREON and the growth of the GLP-1 class.

I would say a couple of things.

First of all, it's important to remember that less than 10% of patients with diabetes in the US today receive a GLP-1 agent at some point during their treatment continuum.

Given the profile of this products, as I've said before, now that we have a weekly agent available, very good efficacy, good tolerability profile, will reduce nausea, there is opportunity for broader penetration into the primary care setting.

There is an opportunity for earlier use during the treatment continuum, and as a result of that, significant opportunity for growth in the class

We are very well positioned as an exenatide franchise because physicians are experienced with the franchise.

We have the only available weekly agent today, the efficacy is known, understood that tolerability, as I said before, is very good.

As a result of that, we are very well positioned.

We believe we will have a pen available, the Dual Chamber Pen, available well before other weekly agents are available in the market.

We will be able to consolidate our market position ahead of other competitors.

Chris, this is Elliott.

I'll start and Beatrice will complement.

To answer your question about the significance of the outcome trial for ONGLYZA is called SABER.

It's a cardiovascular outcome trial.

Recall that, in this day and age, we expect most diabetes agents to undergo a cardiovascular outcome trial.

It's important to do so to show that there is no cardiovascular harm.

One scenario, and Beatrice will address this commercially, is the significance of showing no cardiovascular harm.

This is a 16,500 patient trial.

It enrolled very well.

We increased the enrollment.

We're able to predict that we'll have some readout this year, based on the number of events and the way the events are being gathered.

We also took the opportunity, however, to add the question of could we see a cardiovascular benefit.

So this is ONGLYZA on top of standard of care, not including GLP-1 or DPP-4s versus standard of care; and is powered to show superiority.

It can also test for non-inferiority on a composite of cardiovascular outcomes.

We have enrolled patients so that we can make statements with regard to primary prevention and secondary prevention as one of the unique aspects of this trial.

The best case would be to show some advantage of using a DPP-4 beyond incurring no cardiovascular harm, which is suspect in many older compounds.

There's two hypotheses, one pre-clinical and one clinical, that makes one want to ask these questions, but this is an experiment.

Pre-clinically, DPP-4 does metabolize a variety of compounds other than GLP-1, and there has been a lot of research done talking about the advantages to cytokines and other inflammatory processes relevant to the cardiovascular plaque.

Second of all, not only ONGLYZA, but every DPP-4 that's been submitted has done meta-analysis as a precursor to make sure there's no cardiovascular harm.

Interestingly, all of these show a benefit.

But, these are just meta-analyses of short-term trials and it is just hypothesis-generating.

A definitive trial for ONGLYZA should read out this year.

And, Beatrice, the two scenarios?

Obviously, commercially, until we see the final results, we are planning for all opportunities and all scenarios.

You can understand that if the outcome of the trial is neutral this will strongly reconfirm the ONGLYZA efficacy and safety profile.

As you know, the DPP-4 class has continued to grow, yet less than 80% of the patients in the US, and less than 12% of the EU patients are being treated by that category of agent.

Data from SABER, showing that it is neutral effect on cardiovascular would reinforce the suitability of the product for broad use as a first-line agent to treat with DPP-4 and particularly ONGLYZA.

Now in the second, where we could have demonstrated clinical meaningful benefit in terms of the outcome, no DPP-4 so far of, including the label, has such a benefit.

Given the high rate of heart attack and stroke in a population with Type II Diabetes, this may result in a significant increased adoption for ONGLYZA.

In addition, as we know, the cardiologists are very focused on the prevention.

This will also appeal to a broader segment of the physician, not just on the [diagnotory] physician.

Thanks, Chris.

Alicia, we have less than five minutes left.

I'm not sure how many questions we'll be able to get through, but we'll take the next one, please.

Andrew Baum, Citi.

Good morning.

A couple of questions.

First for Charlie please.

Within your revenue and earnings guidance for next year, what have you factored in for European pricing, as well as potential rebating for the dual eligibles in the US?

Then secondly, with regard to CML, obviously the environment is looking increasingly dynamic in terms of treatment, both with generic Gleevec, new competition from ponatinib, as well as the vast dysfunctional cure trials running.

I understand that you're running a PD-1 combination trial with SPRYCEL; perhaps you could outline your timing and expectations for that?

Thank you.

All right; thanks, Andrew.

In regard to European pricing, we don't see any let up of some of the measures that we have seen.

So, we think it'll be consistent with what we've seen in 2011 and 2012.

In regard to dual eligibles, we view it as a potential risk, but we don't have any impact of dual eligibles in our current guidance.

Yes, this is Giovanni.

Let me just comment on the CML markets, specifically in the US and the current dynamics.

As we mentioned before, we continue to have very strong performance with SPRYCEL.

We had very good sequential growth, from a demand perspective, quarter on quarter and versus prior year.

That's driven by two things.

The profile of SPRYCEL is increasingly valued once-daily, long-term survival data, no food restriction and a good tolerability profile.

As a result of that, and our commercial execution, we have a good share in first-line and maintain our leadership in the second-line setting.

The most important dynamic is that Gleevec business continues to be eroded.

It's now slightly above 70% of the market in the US, down, again, sequentially every quarter.

We continue to be focused on that.

We have not seen significant impact from the launch of bosutinib, which is probably predominantly used in much later lines of therapy.

It's clearly too early to say whether we are seeing any impact from ponatinib, but our performance continues to be strong.

We clearly have strengthened our focus on access in the US, because we understand that over the course of the next few years, the ability of Gleevec generic will have an impact on the market.

But we are very focused on that, early on we have good programs in place and again a strong position in the marketplace.

Thanks, Andrew.

Alicia, I think we have time for one more question.

Alex Arfaei, BMO Capital Markets.

Good morning.

Thank you for taking the question and congrats on a good quarter.

First on ELIQUIS access, would you be able to provide any updates on number of lives covered and how you compare versus competitors?

Finally, do you have any updates for the timeline of the monthly Exenatide formulation?

Thank you.

This is Giovanni.

Let me start with ELIQUIS access.

As I said at the beginning, this is our number one area of focus and we are already working on it.

It's clearly too early to give you any figure on lives covered on access, because we are just at the beginning of our meetings with payers.

As a reminder we, will launch, from a promotion perspective, in early February.

So, we're very, very close to launch.

As I also said at the beginning, the profile is very strong.

The data is very well reflected in a good label, so we don't expect barriers to accent and we expect to be able to execute our plans effectively.

As you know, it will be faster on the commercial space than Medicare.

In Medicare our focus will be on working with Medicare plans immediately in order to insure we have access in 2014.

But we also will be discussing the potential for [all] cycle reviews early on, which could impact Medicare coverage in 2013, primarily in the second half.

Yes, and with regard to the presentation of BYDUREON, we understand to keep competitive on this, now, first once-weekly administration of a GLP-1 preparation, we have to continue to improve the presentation.

The Dual Chamber, we aim to submit this year, should be an improvement on the current presentation.

We started the Phase III last year on the once-weekly suspension.

We're interested the monthly.

We're still working on the technical aspects of it.

I have no significant update at this time.

Thanks, Alex, and thanks everybody for taking the time on the call this morning.

Our apologies if we did not get to all of your questions, but we are out of time.

I'm going to turn it over to Lamberto for some final comments.

Yes, thank you for your questions and congratulations to my team for what they have accomplished in 2012.

In fact, 2012, as I said before, was an important year for Bristol-Myers Squibb, one year that left me feeling very optimistic about our future.

It was a year of transition; it has us set to stage for 2013.

2013 is a year focused on successful commercial execution and further development of our pipeline.

This year of transition, 2012, laid the foundation also for the subsequent years.

Thank you very much and have a good day.

That does conclude today's conference.

We thank you for your participation.