施貴寶 (BMY) 2014 Q1 法說會逐字稿

Good day, and welcome to the Bristol-Myers Squibb 2014 first-quarter earnings call.

Today's conference is being recorded.

At this time, I would like to turn the conference over to Mr. John Elicker; please go ahead.

Thanks, Jamie, and good morning, everybody.

Thanks for joining us.

With me this morning are Lamberto Andreotti, our Chief Executive Officer; Charlie Bancroft, our Chief Financial Officer; Francis Cuss, our Chief Scientific Officer; and Giovanni Caforio, our Chief Commercial Officer.

Lamberto, Francis and Charlie will have prepared remarks, and then we'll go to your questions.

So, before I turn it over to Lamberto, let me [cover] the safe harbor language.

During this call, we will make statements about the Company's future plans and prospects that constitute forward-looking statements.

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 earnings estimates as of any subsequent date.

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

During the call, we will also discuss non-GAAP financial measures, adjusted to exclude certain specified items.

Reconciliations of these financial measures to the most comparable GAAP measures are available at www.bms.com.

Lamberto?

Thank you, John.

Good morning, everyone.

We have a lot to discuss today.

First, I want to mention our nivolumab study in third line squamous non-small cell lung cancer, known as study 063, because I know this is something you are all interested in.

We had productive discussions with the FDA regarding this study, and we will be initiating a rolling submission for this indication in the next few days.

I feel extremely good about it.

Having said that, we'll switch to our first-quarter results; our good first-quarter results.

Our non-GAAP earnings per share improved 12% to $0.46 compared to last year.

And our top-line performance was [meaningful], excluding our diabetes franchise, (inaudible) increased 5%, while our new and [in-line] brands increased 8%.

Our core products performed well, with double-digit growth in Sprycel, 19%; Yervoy, 18%; Orencia, 13%; and Baraclude, 11%.

Sales of Eliquis passed the $100-million threshold, with positive momentum in the US, as well as in other markets around the world.

Last year we identified and executed against some key opportunities to accelerate the growth of Eliquis, focusing on cardiologists, increasing our investment behind medical education, driving improvements in access, and launching direct-to-consumer advertising in the US.

Our increased investments are driving results, as we see improvement in prescription trends in all areas.

Together with Pfizer, we are committing even more resources to Eliquis this year.

And we are pleased that the FDA approved Eliquis for the prevention of deep vein thrombosis in Q1, and hope to be able to further expand the label in both the US and Europe with the inclusion of [DTE] treatment later this year.

As far as immuno-oncology is concerned, Charlie and Francis will give you details of how we are performing, and what we're doing and planning.

Let me just say that I'm glad about how Yervoy continues to grow around the world, and that it had its best quarter in the US since launch.

We strengthened demand among community oncologists.

And I'm equally or even more excited about nivolumab.

During the quarter, we added new trials for nivolumab in monotherapy and combination in several new tumor types.

And I've already mentioned our decision on the rolling submission of 063.

Also, our earlier-stage portfolio continues to advance through our own R&D efforts, and through [extensive] collaborations, such as the recently announced agreement with Five Prime.

In summary, we made meaningful progress across our growth [I-O] portfolio, and we continue to build and advance our leadership position.

Moving to HCV, Hepatitis C, we also made good, important progress.

In fact, we have potential HCV approval for daclatasvir-based regimens in all of the major regions before the end of the year, beginning with Japan, and continuing in both Europe and the US.

With respect to the US, our possible approval is based on the recent NDA submission that followed the breakthrough therapy designation for our dual regimen of daclatasvir and asunaprevir.

Finally, I will briefly mention our progress in the development of an early-stage portfolio addressing genetically defined diseases, or GDD.

Our focus on GDDs is part of the redefined R&D strategy that we announced in November of last year.

Our research and development teams are currently working to identify key targets to prioritize for future development, and our business development people are pursuing [expanded] opportunities in this area.

We just announced acquisition of iPierian, a company discovering and developing new treatment for certain kinds of diseases of the brain called Tauopathies, is a first result of their [offers].

Growing our marketed products and continuing to advance the development of our pipeline has been central to our balanced approach of driving results today while setting the stage for tomorrow.

The divestiture of our diabetes business to AstraZeneca that we completed in the first quarter is allowing us to further improve this approach and accelerate our evolution to specialty biopharma.

Our operating model is getting simplified and streamlined throughout the entire Company.

At the same time, we are increasing investment and focus behind our priority areas of anti-coagulation, immuno-oncology and HCV, as well as in certain geographies wherever we can be most competitive.

Taken together, our first-quarter results, along with the work we have been doing to drive our specialty evolution, signified a strong start to what should be an important year for us.

For some time, we have been talking about our portfolio of the future, but many significant ways that future has already started.

And many important things will happen for the Company during the rest of the year, starting very soon with the presentation of a lot of data as ASCO.

And continuing with all of the other potential developments that I've mentioned with respect to Eliquis, HCV and immuno-oncology.

Some of these developments will lead to increased sales in the near term, while all of them should generate growth in the longer term.

We are working hard to continue to deliver success.

So with that, let me turn it over to Francis.

Thank you, Lamberto.

Good morning, everyone.

Today I'll discuss the progress we're making within R&D, including an update on our immuno-oncology portfolio.

It's crucial for our R&D organization to execute on the near-term delivery of our pipeline, while investing to maintain a robust portfolio of future opportunities.

I'm confident in the progress we've made, including the work we've done to accelerate our Hepatitis C program with the potential for approvals in Japan, the EU, and the US before the end of this year.

We continue to believe that we have some interesting opportunities in this very large market.

Looking ahead, we have some important opportunities stemming from our decision last year to evolve our strategic focus in R&D, and moving to areas that support the Company's evolution to a specialty care biopharma company.

One new component of our R&D strategy is an explicit focus on genetically defined diseases.

By genetically defined, we mean diseases caused by a mutation that we can identify and design a therapeutic approach specifically to address it.

By directly targeting the genetic basis of a disease, we believe we have the opportunity to significantly advance the standard of care.

We are developing an early-stage portfolio that addresses genetically defined diseases through the identification of key targets.

Our acquisition of iPierian and its elite Tau antibody, is actually a good example of this approach.

iPierian's anti-Tau approach provides us with an opportunity to develop an innovative disease-modifying treatment for certain new genetic defined neurodegenerative diseases known as Tauopathies.

Our initial development focus would be in progressive supranuclear palsy, a rare brain disease with tau dysfunction; and this could possibly extend to other neurodegenerative diseases.

Let me now turn to immuno-oncology.

I'm convinced that immuno-oncology could be transformational in the treatment of cancer, with the potential for durable responses and long-term survival, offering significant [promises for patients].

Building on the important body of research and the experience we have with Yervoy, we have seen significant progress in our clinical development programs for nivo and the rest of our immuno-oncology portfolio.

After more than 35 nivo trials ongoing, in many different tumors, about a third are potentially registrational.

Important data sets are now maturing, and we expect significant data readouts over the next 12 to 18 months.

We have the first such data readout now.

We have the data from study 063, and as you know, this study assessed a highly pre-treated patient population where there are no other approved or recommended treatment alternatives.

Our review of the results of our study 063 reinforces our belief in the potential of nivo to offer durable responses and demonstrate an improvement in long-term survival.

We've had positive discussions with the FDA regarding study 063, and this study will be the basis for a rolling submission that we will be initiating in the next few days.

We expect to complete the rolling submission by year's end, which will allow the FDA to consider additional data that will become available in the remainder of 2014.

We hope to present the data at the 2014 multi-disciplinary symposium in thoracic oncology in October later this year.

The results from 063 marked the beginning of our data flow in lung cancer, where our clinical development program has made significant progress.

Our program in lung cancer addresses multiple lines of therapy, different histologies, the use of biomarkers, and potential therapy with both monotherapy and combination regimens.

For example, there are two ongoing second-line Phase III trials in non-small cell lung cancer; one in squamous and one in non-squamous; a recently initiated first-line Phase III trial with nivo as monotherapy in lung cancer for PD-L1 positive patients; and we plan to begin a Phase III program to study the combination regimen of nivo and Yervoy by the end of this year.

ASCO will be a very important meeting, where we will present data from new studies as well as more mature data from ongoing studies.

Specifically, there'll be additional monotherapy and combination data for nivo in lung, melanoma and renal, as well as data for Yervoy in adjuvant melanoma.

Looking to the second half of 2014, we expect to have data in-house from our second-line lung cancer studies.

We're also looking forward to the first presentation of nivo data in hematological tumors at ASH in December.

Based upon the data, we believe there is significant opportunity for IO broadly across other tumor types.

We have started potentially registrational trials in follicular and diffuse B-cell lymphoma, as well as glioblastoma, colorectal cancer, and head and neck cancer.

We have initiated signal-detection trials in pancreatic, gastric, small cell lung, and breast cancer.

For many of these tumors, we are exploring both nivo monotherapy, as well as the combination regimen of nivo plus Yervoy.

We are also pursuing additional IO assets with different mechanisms in both monotherapy and in combination.

Key clinical-stage assets in our early portfolio include anti-LAG-3, anti-KIR and urelumab.

In closing, let me remind you that our goal is to deliver to patients the potential for long-term survival across a wide range of tumors.

We'll continue to drive our programs and our trials forward as quickly and robustly as possible.

Based on our investment, our leadership, and our experience in this area, I'm confident that we are, and will continue to be, well positioned to accomplish this.

Now, let me turn this over to Charlie.

Thank you, Francis.

Good morning, everyone.

Overall, we had a good quarter.

First-quarter revenues, excluding diabetes, were strong, led by Eliquis, Yervoy, Sprycel and Baraclude.

Let me provide a few highlights from the quarter.

As Lamberto noted, we are pleased by the progress we are making with Eliquis.

The investments that we and Pfizer made at the end of last year, along with additional investments this quarter, have accelerated Eliquis's growth around the world.

In the US, net sales of Eliquis were $61 million, up 27% from the fourth quarter.

We are seeing encouraging prescription trends, and our new-to-brand share among cardiologists is now over 35%.

Outside the US, net sales were $45 million.

In the EU, we saw particularly strong performance in Germany, and had recent launches in Italy and France.

Japan also had a good quarter, as the prescription limitation was recently lifted.

Yervoy sales grew 18% to $271 million.

US net sales were $146 million.

You will recall that there was a $25-million one-time reversal of a sales deferral during the first quarter of last year.

On a demand basis, Yervoy had its best quarter in the US.

While Yervoy continues to grow at academic institutions, we are also seeing good growth coming from community hospitals and practices.

In the EU, we saw strong performance in both France and Germany, where we have reimbursement in the first-line setting.

Orencia sales grew 13% to $361 million.

While we continue to see solid growth, there is increasing competition for first-line use and [switches], which slowed the pace of growth from the prior quarter.

We are focused on improving our execution, particularly in the first-line setting.

One final note on sales: Our US business during the quarter was negatively impacted by wholesaler inventory workdown, particularly with the Sustiva franchise and Abilify.

This impact was somewhat offset by an inventory build in Japan.

We expect inventory levels to normalize over the next several months.

Let me spend a few minutes on the diabetes franchise, and the impact this quarter and the rest of the year.

We completed the sale of our global diabetes business on February 1. Our first-quarter results, therefore, reflect one month of the historical diabetes business prior to closing, and two months of impact to our P&L of the ongoing terms related to the transaction.

Let me provide some color.

Total diabetes revenues were $179 million, including $153 million in product sales during January.

The other $26 million for February and March is primarily related to our ongoing product supply agreement with AstraZeneca.

We expect these product supply sales to be about $10 million per month in 2014.

We will record royalty income on sales made by AstraZeneca in the other income line of our P&L.

These royalties were $48 million in the first quarter.

We are also providing certain transitional services to AstraZeneca.

These service fees were $31 million in the first quarter, and are included in other income.

The income from transitional services is expected to taper throughout the year, and most services should be completed by year end.

We will continue to conduct and fund certain pre-defined clinical trials in diabetes through 2016.

The cost of these trials will be included in R&D expense.

During the quarter, we received $3.3 billion from AstraZeneca for our global diabetes business.

We also received an additional $100 million in April for the approval of Forxiga in Japan.

This has significantly improved our cash balances, particularly in the US, which gives us increased financial flexibility.

Now, let me highlight a few items from the rest of our non-GAAP P&L.

Gross margin was 75.8% during the quarter, up 130 basis points compared to the same period last year.

This is mostly due to product mix following the divestiture of our diabetes business.

Marketing, selling and admin expenses were down about 4%, as our increased investments in Eliquis, Yervoy, and our pre-launch assets in immuno-oncology and hepatitis C were offset by reduced expenses in diabetes.

Our non-GAAP tax rate was 23% during the quarter, which is higher than the same period last year.

You will recall that in Q1 2013, we booked five quarters of the R&D tax credit.

This quarter does not include the impact of the 2014 R&D tax credit, since it has not yet been extended.

Regarding guidance for 2014, we are adjusting our full-year 2014 non-GAAP EPS guidance range to $1.70 to $1.80, which assumes current exchange rates, and the extension of the US R&D tax credit.

Now that we have closed the diabetes transaction, we are able to provide certain non-GAAP line item guidance, which you will have seen in our press release.

Now we would be happy to address your questions.

Okay, Jamie, I think we are ready to go to questions for Lamberto, Charlie, Francis and Giovanni.

Thank you.

(Operator Instructions)

And we'll take our first question from Chris Schott with J.P. Morgan.

Please go ahead.

Great.

Thanks very much.

I just had two questions here.

First, on the 063 study, can you help frame our expectations for that data relative to the response rates and survival rates we saw from the 003 study last fall?

Just trying to understand how we should be -- obviously very positive data -- but how should we are thinking about that?

And then just on timing.

Can you update on ex-US filing for Nivo?

Any comments there, as well as filing timelines for second-line lung for Nivo?

Thanks very much.

Thank you, Chris.

Let me just reemphasize, we have productive ongoing discussions with the FDA.

The 063 data will be the basis for the rolling submission that we're going to initiate in the next few days.

And we will expect to complete that by the end of the year.

You will understand that we don't normally talk about the data before we present it in a scientific forum.

And we are planning to present this data at the Multidisciplinary Symposium in Thoracic Oncology in October of this year.

But what I would say is our view of the 063 data really reinforces our belief in the potential of Nivo to demonstrate an improvement in the long-term survival, which we believe will be important for lung cancer patients.

Personally, I'm very happy that we are moving forward with our first submission.

As far as our program outside the United States, the whole nivolumab program is a global program.

The requirements differ in different parts of the world.

And we are looking at providing -- we won't be talking about specific timing details -- but we are looking at submissions once we've seen the data from the squamous and non-squamous non-small cell lung second-line data, which we believe we will get the topline towards the end of the year.

Thanks, Chris.

Great.

Chris, thanks for the question.

Can we go to the next one, Jamie, please?

Our next question is from Vamil Divan with Credit Suisse.

Please go ahead.

The first one around ELIQUIS seems like you are making some traction there.

Obviously, the news around Pfizer has generated a lot of excitement and interest.

Just your thoughts around ELIQUIS and your commitment there.

I think a lot of people are wondering, would you do something similar to what you do with your diabetes product in giving to Astra.

Any thoughts if Pfizer would approach you around ELIQUIS?

Would you be willing to give that back?

The second one, a little more general on the I/0 side (inaudible) on 063.

You're moving very quickly here; all of your competitors are as well.

Just how comfortable are you with the decisions, for example, with the frontline lung cancer, or you've moved that into Phase III?

The amount of data and diligence you're able to do before making these decisions to move forward.

How comfortable are you with the amount that you have there relative to maybe other programs where you can take a little time and do a little more careful analysis before deciding to make such a big decision?

If you could talk to that, that would be helpful.

Thanks.

I will start.

It will vary, the answer to your ELIQUIS question.

No, we are not going to sell ELIQUIS to Pfizer.

Yes, we are very committed to ELIQUIS.

We, the people sitting around this table, follow ELIQUIS with great attention.

We are extremely pleased of how our prescription trend is improving.

We are looking with particular attention with new prescriptions (inaudible) cardiologists because we believe that that is our primary focus now.

And by building a solid position of our product in that group of specialists, it will generate prescriptions also in primary care.

This is Giovanni.

Let me just make a couple comments to go into some further detail on the performance of ELIQUIS in the first quarter.

We had a really good quarter across the board in all markets, specifically with respect to the US.

As Charlie mentioned, we continue to see really good trends in cardiology.

We also are seeing a significant improvement in trends in the primary care setting.

In cardiology, our new patient share is now at 37%.

And in primary care, it's in the 25% range.

All of those represent significant growth versus the previous quarter and really good developments.

We are, obviously ahead of products in these settings, and we are continuing to strengthen our position overall there.

That's the result of the investments we made beginning with the second part of last year that are really generating positive momentum and good results for us.

With respect to international markets, I'll just make a couple of comments there.

Germany is clearly one of our key areas of focus.

And we are seeing acceleration of our growth in Germany, where our new patient share now is about Pradaxa and growing very nicely.

And then the third market, I'll mention again, is Japan where, as of the end of February, our limitations in terms of reimbursement was lifted twelve months after approval.

We've seen a very significant acceleration of our growth in Japan, where our new patient share is already about Pradaxa.

In the switch market, we have a leading share of new patients, with switches coming from all agents there currently in the market.

And then, obviously, we have a number of countries where we've launched more recently, like France and Italy.

And the trends are quite solid in those markets as well.

And we keep ELIQUIS.

Vamil, thank you very much.

I would say we're very comfortable with the work we've put in our exploratory programs in lung to support the first-line Phase III study.

This comes from the depth and the breadth of our experience starting with Yervoy and the very broad portfolio of studies we now have with Nivo, specifically around lung cancer.

As you're aware, we have four registrational studies, three Phase III studies, two in second-line on in first-line.

And one thing I've learned in my career is that the time you spend trying to understand the medicine at the beginning of the exploratory phase really does save time later on.

And I would comment around the combination of Yervoy/Nivo in lung that the 012 study continues.

It's actually providing very important information for us to design our trial.

And we're on track to start that fourth Phase III study by the end of the year.

Thanks, Vamil.

Can we go to the next question, please?

Our next question is from Jami Rubin with Goldman Sachs.

Please go ahead.

Hello.

Francis, if I could follow-up, please, on the rolling submission of the 063.

It sounds like, as you said, that FDA will have the opportunity to consider other studies that are ongoing, the Phase III second-line study.

What is the issue, do you think?

Because we had anticipated that with response rates, durability response, safety, plus the ability to supplement 063 with the data from 003, what is the focus of discussion with FDA?

Is it lack of statistical significance in ORR, given that this is a small patient population?

If you can, please, provide us color on what precisely the FDA is looking at and what additional data you might be able to supply.

Secondly, do you have strategies in place to accelerate the melanoma indication?

Thanks very much.

Thank you, Jami.

I do understand your desire to understand our interactions with the FDA.

And I'm sure you will appreciate that since we have ongoing interactions, I'm not going to talk about the specifics of this.

But what I will say is our review of the 063 data does reinforce our belief in the potential of Nivo in terms of long-term improvements and survival in lung cancer patients.

There is considerable data, which is going to come from the Nivo clinical development in the second half of the year, which will provide opportunities for the FDA should they need it to see that.

Turning to the melanoma program, we have a very comprehensive program; and it's progressing really well.

As you know, we have three registration studies, a second-line study of Nivo monotherapy post Yervoy, and two first-line -- one with Nivo monotherapy and one with Nivo and Yervoy combined.

All the studies are focused on demonstrating the value of survival benefit.

But we do have additional objective response endpoints in all those studies and the option of doing interim analyses.

When we get the data from our interim analysis, if it should be favorable, obviously, we will be talking to the Reg (c) health authorities about that.

Overall, I'm very encouraged by the progress of the Phase III programs.

And we are exploring all the opportunities we have for accelerating those filings.

Thank you, Jami.

Can we go to the next question, please?

Our next question is from Tim Anderson with Bernstein.

Please go ahead.

Hi.

I'm sorry.

I'm just going to ask another question on 063.

Can you at least rule out that the question at hand here is not related to biomarkers and PD-L1 expression?

And then on your general approach to looking at PD-L1 expression, is the current plan to stay with the exact same DACO assay that you've been using?

I'm wondering if it's possible that you might change that assay because the assay so far hasn't really seemed to kind of show the same types of findings that we've seen with Merck and Genentech.

¶ And then on ipilimumab, once we get Merck's PD-1 on the market, what are your expectations for how ipilimumab might be kind of sequenced when physicians are trying to decide which drug to treat a new melanoma patient with

Thank you, Tim.

First of all, let me say we have a comprehensive biomarker strategy where all the patients in our trials have tumor taken and a positivity for PD-L1 taken.

I think it's premature to make any determination yet for any particular tumor, about the relationship between PD-L1 positivity and response, let alone overall response.

But our aim is to understand that better so that we can understand both monotherapy and the combinations across the entire population, not just the PD-L1-positive patients.

As far as the DACO assay is concerned, we are very comfortable with our assay.

It's performing well.

We like very much the partnership with DACO.

And I think they are very different assays between us and everyone else, and I think it's premature to make any determination about which is best.

Certainly, we are comfortable with ours as far as our data sets are concerned.

Let me pass it over to Giovanni.

Tim, this is Giovanni.

Just a couple of comments on Yervoy.

As Lamberto and Charlie mentioned, we had a really strong quarter for Yervoy around the world.

In the US, we had the strongest quarter in terms of sales since launch.

And we are seeing a continuing growth of the use of Yervoy in the academic setting, but an acceleration also the growth of Yervoy in the community setting.

I think that's clearly the result of all the work we've done to communicate the value of the data supporting Yervoy.

Obviously, as you know, at the beginning, PD-1H patients in melanoma will be used primarily in the second-line setting, post-Yervoy.

So in the short-term, we believe that that will be continued growing adoption of Yervoy in the marketplace; and the trends we are seeing today are quite consistent with that.

Obviously, the melanoma market will change significantly over the next few weeks, few months and next few years.

But we believe there will be continued need for the use of Yervoy and continued use of Yervoy.

Some of it may be in monotherapy.

Potentially, Yervoy can have a really important role to play in combination with other agents in melanoma.

Obviously, we will be presenting some data at in the Adjuvant setting at ASCO.

And that is also a very promising area for us with Yervoy.

Thanks.

Can we go to the next question, please?

Our next question is from Seamus Fernandez with Leerink.

Thanks for the questions.

Maybe first off, as we think about the prospect of the survival study that's ongoing in squamous non-small cell lung cancer and non-squamous, can you just update us on the timing?

Do you still expect both studies to complete toward the end of this year in the head to head versus docetaxel studies?

Can you clarify the primary endpoint in those studies?

I realize that they are ongoing survival studies, but, particularly the squamous study is quite small.

So I'm wondering if the primary end point is response rate there.

If you can just clarify that for us.

And then, lastly, as we think about the expectations of what we could see disclosed and discussed as it relates to CheckMate 012 at ASCO, I think, really, the question is, can you just offer us the reasons why CheckMate 012 did not make it as an oral abstract session presentation unlike some of your data in kidney cancer and your data in melanoma?

Thanks so much.

Good morning, Seamus.

So as far as the non-small cell lung second-line squamous and non-squamous studies, the primary endpoints were overall survival, although objective response rate is included in that.

As you know, this is an event driven study.

But our projection is that we will see topline data at the end of the year.

As far as CheckMate 12 is concerned, I just remind you that this was an exploratory study.

It had many arms, as you know.

It's actually still ongoing.

So not all the data is yet mature for presentation.

And we took the view of separating the different arms with different treatments into different presentations to allow a little more detail to appear in the presentation.

What I would reiterate is that it's a very informative study for us in terms of designing our Phase III combination study of Nivo and Yervoy.

And we are on track to initiate that study in lung by the end of the year.

Thank you, Seamus.

Can we go to the next question, please?

Our next question is from John Boris with SunTrust Robinson Humphrey.

Please go ahead.

Thanks for taking the question.

It'll be really just directed on ATV.

Question for Lamberto -- It would appear that you could be in a position to be able to launch not only in Japan but potentially in Europe and the US.

Can you maybe just give some commentary on the readiness of your commercial organization and the importance of this opportunity?

And then, more specifically, for Giovanni, in Japan, with your product concept testing of the combination agent that you have there and with the Japanese market being a more safety-conscious market, how are you prepared to potentially position that compound in that marketplace?

The second part of it for Giovanni would be on usefulness pricing.

Are you anticipating premium pricing going into that market?

And what's the range that you might be able to attract on usefulness pricing?

Lastly, I think you have more than 300 reps in that market.

What's the crossover with selling Baraclude in that market, and are you rightly scaled?

Thanks.

Okay.

Long question.

Let me start, and Giovanni will continue.

I think we have a good opportunity in hep C. I think we have good opportunity in hep C in Japan.

But the more I look into the products we have and the data we have, the opportunities in the US and Europe are significant and meaningful.

We are ready.

We are ready to launch in Japan.

And we are getting ready to launch in all of the other geographies, but we are not going to talk about pricing.

This is, obviously, something that we will talk about only after we launch or the day we launch; but we're ready.

We believe that we have a good opportunity here.

Giovanni?

John, let me expand on what Lamberto said and start from a more general comment about launch readiness.

As you know, we have a very strong presence in virology.

We have a global brand with Baraclude that has given us a lot of experience with working in hepatology, and obviously have a commercial footprint which is promoting our HIV products.

That is really the core of the organization and the resources that we will deploy to launch the hepatitis C portfolio around the world.

But, obviously, in every one of our geographies, we will make incremental investments, strengthen and broaden our teams and investments to launch hep C when we have approval.

That's very much the case in Japan.

As a reminder, Japan is really one of the most successful Baraclude markets for us.

We have an extremely high market share and really good penetration in the marketplace there.

And so the sales and medical teams that we have promoting Baraclude will be deployed to promote the Dual when we get approval potentially later in this year.

We also have incrementally staffed the organization in Japan by increasing the number of reps and added a team in order to be really well resourced.

And we are ready to launch from a commercial perspective.

With respect to the profile of the product, as you know, we have executed a Japanese specific development program for the dual with Japanese patients.

We have a strong data set.

And at the same time, the thought leader community in Japan is very knowledgeable about this combination and the profile of the two products.

Clearly, we are conducting testing to be ready for launch; and the results have been encouraging.

So we're quite excited about the opportunity in Japan.

As Lamberto said, it's too early for us to comment on pricing.

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

Our next question is from Andrew Baum with Citigroup.

Please go ahead.

Good afternoon.

A couple questions.

Number one with regards to the adjuvant Yervoy data in melanoma.

Do you believe this data is filable?

I just want to confirm that you've seen the full dataset.

Second, following on from that question, can you provide an update of the real-world experience related to immune-related adverse events with Yervoy?

Obviously, as you move into advanced testing, that has additional relevance.

And then, finally, just on Japan.

My understanding is Iliad is maybe 12, 18 months behind.

Given the existence of mutations conferring (inaudible) your regimen in Japanese patients with the (inaudible) type, should I assume that there's only a window of 18 months for you to monetize before you face significant market share erosion?

Thank you, Andrew.

As far as the adjuvant melanoma study, we are actually very excited that this is part of the ASCO press program.

I want to point out, this is the first study that's being reported for a checkpoint inhibitor in adjuvant therapy for cancer.

And as you know, there are limited other options in adjuvant melanoma for patients.

I think it's premature since we've not even presented the data yet to start talking about filing.

But we have an investor event at ASCO, and I'm sure we will look forward to more discussions then.

I don't think there's anything more to add really about real world adverse events on in Yervoy.

They're very consistent, I believe, with what we showed in our dossier.

As far as the Japanese filing with HCV, personally I would say we're very encouraged about the progress of that filing.

We're looking forward to getting on the market.

I think it's probably premature to start talking about competition.

You know, we are very comfortable with the unmet need it meets and the profile of our Dual.

I'm going to add that it's always interesting to see our companies trying to profile our own products, maybe prematurely and probably based on the lack of information.

We are excited about our Japanese opportunity, and we're excited about it long term.

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

Our next question is from Mark Schoenebaum with ISI Group.

Hey, guys.

I really appreciate you taking my question.

Number one, on hepatitis C, I was just wondering if you would be willing to comment on whether or not your FDA application on the Dual includes a request for approval for use in combination with Gilead's Sovaldi, that would be Dpac plus Gilead's Sovaldi if possible.

And second, just to build on Seamus' earlier question, just to be really clear on this, will the Street -- will you actually show the primary endpoint data of overall survival from the second-line Nivo lung trials to the Street by the end of the year?

Or is that something that we might have to wait until ASCO of 2015 to see?

Finally, at ASCO coming up, in the 012 trial, are we going to see data from the low-dose one plus one arm of the 012 trial?

Or is it still just too early to see it?

Thanks a lot.

Thank you, Mark.

As far as us filing in the US for the Dual, I'm not going to go into details about that because it's under review at the moment.

Certainly, we will be seeking approval for the Dual in genotype 1b in the United States.

I'm not sure I completely understood your question about the survival data.

We will be getting survival data on the two Phase III studies, second-line squamous and non-squamous in-house by the end of the year.

As you know, our custom is to present these data at a scientific meeting before we share it with Wall Street.

I think it's a reasonable expectation that this will be at ASCO next year.

As far as the CheckMate 12 study and the low dose, as I mentioned a little earlier, there are a number of these arms still ongoing.

And that's one that is providing important data for us as we design the Phase III study.

It's not mature yet to present at ASCO.

Mark, just to add one thing on the disclosure of overall survival topline data.

We would work very closely, like we always do, with our General Counsel, securities, lawyers, and other people in senior management, before we determine what disclosure was appropriate.

As usual, we would just need to wait and see what happened.

And we would make the right decisions at that time.

Can we go to the next question, Jamie?

Your next question is from David Risinger with Morgan Stanley.

Please go ahead.

Thanks.

Sorry about that.

I have a number of questions on immuno-oncology, but they should be pretty brief.

I guess the first question is, should we assume the breakthrough designation is unlikely for Nivo at this point?

Second, with respect to 063, the primary endpoint was response rate.

Yet I think you've only talked about long-term survival of Nivo in third-line squamous lung as being encouraging.

So can you just review the study design for us for 063?

Third, with respect to the Phase III second-line squamous trial, www.clinicaltrials.gov indicates that that concludes in August.

So is that just incorrect?

And what is the right date to think about if that's incorrect?

And then, finally, with respect to ASCO, the combo lung trial I think has a little bit over 250 patients with 14 cohorts.

Maybe you could just help us understand how important the Nivo plus Yervoy cohort is, assuming that it's less than 20 patients.

You know, how should we be thinking about how important that very small data set is?

And what weight should we be putting on that small data set when we see it at ASCO?

Thank you.

Thank you, David.

First of all, breakthrough designation.

The FDA has many mechanisms for speeding the development of oncology drugs.

I think, as I've mentioned in the past, we have fast-track designation for lung, for melanoma and for renal.

In fact, we're eligible for a rolling submission, which is what will be started in the next few days.

063, just a word about the study.

It's in a highly-pretreated patient population.

Patients have at least two lines of therapy beforehand; many of them have more than that.

The primary endpoint is, as you say, objective response rate.

Of course, we will be continuing to monitor the patients as the study proceeds.

As far as the second-line squamous and non-squamous studies, as I mentioned, these are event-driven studies.

Our projection is that we will have topline data from analysis in overall survival at the end of the year.

Finally, I think the way to look at the 012 study is that it's extremely valuable for us.

I want to reiterate that it's proving very informative, the different arms, particularly around Nivo/Yervoy as we come to design our registrational Phase III study for the combination in lung,

Many of the arms are not mature yet.

So one has to consider that when you look at the data at ASCO.

But we are, overall, very excited about all the data; and there's a lot of it at ASCO.

Thank you.

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

Your next question is from Marc Goodman with UBS.

Please go ahead.

Yes, just on the base business, maybe you can give us an update on SPRYCEL and ORENCIA in a little more detail -- what was going on there in market share.

You had mentioned ORENCIA in your prepared remarks.

So I was curious if you could give us a little more detail of what you meant there.

Thank you, Marc.

These are products that we are very proud of.

Why don't we start with SPRYCEL, Giovanni?

Let me start with SPRYCEL.

We had a good quarter, as Lamberto mentioned, with SPRYCEL with strong growth across the world.

Very good performance in the US, good performance in Europe, and acceleration of growth in Japan.

We are continuing to see gains coming primarily from the first-line setting in the US and across both lines of therapies in Europe, depending on the registration in local market dynamics.

We continue in the US to be above to Cigna in terms of our market share and the evolution of that share, particularly in first-line.

We have seen continued erosion of the Gleevec trends in the US over the last few months.

But in the first quarter, that erosion has slowed down.

And we see somewhat of an increase of payers paying attention really to managing this category.

But we are in a really good position from an access perspective.

And as I said, our performance with SPRYCEL continues to be strong.

ORENCIA also is growing quite nicely around the world.

You will remember the launch of the subcu formulation, which is the driver of our growth at this point, happened earlier in the US and later in Europe and Japan.

So the trends of Europe and Japan, where you see more robust growth, is really influenced by the more recent launches of the subcu formulation.

In the US, we have seen somewhat of a decrease in our growth.

And our trends have been softer in Q1.

As you know, there are new agents on the market that are also growing and making that space, and particularly the first-line setting, more competitive.

This is a very crowded market with a lot of action from payers, and so it is a very competitive space.

As Lamberto mentioned, we have good plans in place to continue to focus on positioning ORENCIA as a first-line choice in rheumatoid arthritis.

We have plans in place to strengthen our execution, increase resourcing the brand.

So we're confident that the good-growth brands will continue.

But the first quarter in the US was somewhat slower in terms of the overall trajectory of the brand.

Jamie, can we go to our last question, please?

Your next question is from Alex Arfaei with BMO Capital.

Please go ahead.

Thanks for taking the question.

First, on the competitive landscape I'm sure you're monitoring the situation with AstraZeneca and Pfizer.

Obviously, immuno-oncology is a big reason for it.

We know has a potential to be a large competitive market.

Do you believe you have the commercial skill to compete effectively in immuno-oncology if that merger were to go through?

Or should we expect additional commercial build-up?

And my follow-up for Francis.

On your recent acquisition, could you comment on the extent to which you think you would be exploring the Tau assets in Alzheimer's disease?

Thank you.

Why don't I start?

I think that we are more than ready to compete in immuno-oncology.

And, obviously, we are not only focusing on the possible new competitors that will come, but the more imminent competitors that are already there.

Yes, we are ready.

We are ready in the US, and we are ready all around the world.

Nothing more to add there.

As far as the iPierian Tau monoclonal antibody is concerned, our primary focus is in PSP and potentially in frontotemporal dementia, which also does, at least in 50% of patients, have a genetic link.

Clearly, Tau have a role to play in Alzheimer's.

But I think in the first instance, we are focusing on looking at patients who have particular unmet needs that we can identify from their genetic mutations.

Now, the nice thing about this asset is it fits well into an early-stage portfolio that we've been building in terms of addressing genetic-defined diseases.

In fact, we are hoping it will be in the clinic by the end of the year or the beginning of next year.

So we are very excited about this opportunity.

Let me conclude with three comments on immuno-oncology.

First of all, as I said at the beginning of this call, I'm very happy that we will start very soon with information for 063.

We are very much looking forward to ASCO and the additional data that we will be reviewing in the second half of this year.

Finally, we remain as confident as we've been in the potential for immuno-oncology, as evidenced by the unique scale of our program and its continued expansion.

Thank you for being with us this morning to discuss our good first quarter and the many other things to look forward throughout this year.

Have a good day.

Sorry, Jamie.

Thanks, everybody, for joining.

If you have follow ups, you can get a hold of Ranya, Ryan and I later this morning and through the afternoon.

That concludes today's conference.

Thank you for your participation.