施貴寶 (BMY) 2015 Q2 法說會逐字稿

Good morning.

My name is Mike and I will be your conference operator today.

At this time I would like to welcome everyone to the Bristol-Meyers 2015 second quarter results conference call.

(Operator Instructions)

I will now turn the call over to John Elicker.

You may begin your conference.

Thanks Mike and good morning everybody and thank you for joining our second quarter earnings call.

With me this morning are Giovanni Caforio, our Chief Executive Officer, Charlie Bancroft, our Chief Financial Officer, Francis Cuss, our Chief Scientific Officer, and Murdo Gordon, head of our worldwide markets.

Giovanni and Charlie will have prepared remarks and then Francis and Murdo will be available in addition for Q&A.

I'll take care of the legal requirement before I turn it over to Giovanni.

During the 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 our estimates as of any subsequent date.

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

We will also discuss non-GAAP financial measures adjusted to exclude certain specified items.

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

Giovanni?

Thank you, John, and good morning everyone.

It is a privilege to be here as CEO to lead today's call with you and to tell you how excited I am about our future.

About the opportunities we have before us.

Building on our success over the past few years, we are beginning an exciting new chapter.

One characterized by the opportunity for growth for leading a transformation in the way cancer is treated and for strengthening and expanding our diversified portfolio of specialty medicines.

And we are starting this next chapter from a position of strength.

We have an established, proven strategy.

We have a strong portfolio of marketed products.

We have a promising pipeline and exceptional talent.

I am fully confident that we are well positioned to build on and further strengthen our leadership position in Immuno-Oncology through Opdivo.

I'm also confident we can deliver on the promise of our portfolio and our pipeline with Immuno-Oncology and beyond Immuno-Oncology.

As I mentioned, we're about to begin a period of growth.

Over the next five years, we expect growth to come primarily from Opdivo and Eliquis with important contribution from the rest of our existing portfolio of innovative medicines.

With Opdivo, we will leverage our leadership position in gland, melanoma and renal cancers.

[In squamous cell] we are extremely well positioned given the two positive Phase III studies demonstrating improved overall survival.

In melanoma, Opdivo+

Yervoy are currently marketed and we believe the combination regiment will be an important treatment option for patients.

In renal cancer, the early stop of study -025, announced this Monday due to an advantage in overall survivor, confirms the promise of Opdivo in this important disease where med need remains high and where we have a significant time advantage versus other competitors.

This morning we announced that the European commission validated two Opdivo applications, one for non-squamous-cell lung cancer and the other in combination with Yervoy for metastatic melanoma.

Additionally as you know, our Opdivo program is extremely grown with a number of ongoing studies across many tumors.

We are confident these will add to the opportunity over time.

With Eliquis, given the breadth of its label and the strength of its prescription trends, we are very encouraged and look to build on our moment.

And regarding the rest of our marketed products, trends are good and we have the right resources in place to continue to compete and grow.

Longer term, we are committed to a diversified portfolio.

This starts with and includes diversification within Immuno-Oncology into new mechanisms and new combinations as well as outside of I-O in key areas such as fibrosis, heart failure immunology and certain genetically defined diseases.

Over the last several months, I have reviewed our growth opportunities and they are, for us, unprecedented.

I have also focused on what we need to do to maximize them and I am fully committed to making the right strategic investments.

In that context, and as indicated in April, we have identified areas of incremental investment beginning in the second half of the year.

Investments in commercial, to make sure we are well resourced globally to compete specifically for Opdivo, Eliquis, and Elotuzumab.

And investments in R&D, particularly in I-O.

In development, to accelerate and grow the programs where possible.

In early discovery, to accelerate new mechanisms and combinations.

And in our medical organization in terms of new data generation and increasing field medical resources.

Now, with respect to our second quarter, I am very pleased with our performance.

Sales were strong and we had significant and meaningful clinical and regulatory milestones in the quarter.

We delivered 7% overall sales growth year-over-year demonstrating the strength of our products across all markets.

Charlie will describe key elements of our performance in more detail.

Let me spend a moment on Immuno-Oncology.

For Opdivo, we have had an incredible year so far with three early study stops, significant data presented at ASCO, three filings, three approvals and commercial launches in both the US and Europe.

In the US, we are seeing early encouraging trends for Opdivo in terms of access, reimbursement and adoption.

And I feel really good about where we are headed.

Lung cancer is a very important opportunity for our company.

We were first to market with squamous-cell and Opdivo has already been added to NCCN guidelines for non-squamous.

In Europe, we have received approval for Opdivo in both first and second line metastatic melanoma.

Just this week we were also approved for squamous lung cancer.

While the vast majority of data from our program [setting] I-O to date has been positive, we know that not everything we study will be successful as evidenced by the two studies for Yervoy in prostate and small cell lung cancer that did not meet the primary end points.

Francis can comment further as we are thoroughly committed to Yervoy, which is an important part of our Immuno-Oncology strategy in combination with Opdivo in multiple tumors.

Just a couple of additional Immuno-Oncology highlights.

In the coming weeks, we expect to complete the filing of -057 data in the year US and Europe.

And we are working on submissions for Elotuzumab based on Eloquent-2.

I want to spend a moment now on Hepatitis C. Here we had a very strong second quarter.

Performance was good in both Japan and Europe and we had a one-time impact from previously deferred revenues in France.

Additionally, we have made significant progress in the US.

We have filed Daklinza in combination with sofosbuvir for the treatment of genotype 3 patients and our PDUFA date is August 13.

And we plan to add supplemental filings later this year in other difficult to treat areas.

The Hepatitis C market continues to evolve rapidly.

Given our focused strategy and the evolving competitive landscape, we do not plan to seek regulatory approval for our triple regimen, or trio, in the US or Europe.

We will continue to evaluate our filing strategy on a country by country basis and we'll make decisions based upon the specific needs of patients in each country.

Going forward, we expect competitive launches later this year to effect our business, particularly in Japan.

That said, we will continue to execute our HCD strategy, focused on addressing the needs of specific, challenging to treat HCD patient populations, which may vary by market.

So, with all of that, let me now turn the floor over to Charlie, who will walk you through key elements of our performance in Q2 as well as the financial implications reflected in our updated guidance.

Thank you, Giovanni, and good morning everyone.

As Giovanni mentioned, we had a very good quarter which was driven by strong sales growth of 7%, or 16% excluding the impact of foreign exchange.

Overall, FX had a negative impact on EPS of approximately $0.06.

Let me provide a few highlights.

Eliquis sales were $437 million, up 23% sequentially from the first quarter, with good growth both in the US and international.

We continue to see strong new-to-brand prescription trends with both cardiologists and primary care physicians across the broad market.

Opdivo sales were $122 million for the quarter.

We are seeing strong performance metrics with the approval in lung cancer with encouraging early trends in terms of access, reimbursement and abandonment of chemo in second-line squamous lung cancer in the US.

Additionally, we received EU approval in both first-line and second-line melanoma last month and it launched in Germany where early trends are strong.

And as noted by Giovanni, we just received approval for squamous lung cancer in the EU as well.

Opdivo has now been approved in over 30 countries.

Yervoy sales in the US were $136 million in the second quarter, a 21% decrease from prior year.

Outside the US, sales totaled $160 million, which is a 28% increase, excluding FX.

And as expected, we are seeing an impact on Yervoy from the PD-1 class in the US.

This will likely continue in the short-term until the Opdivo+

Yervoy combo regimen is approved later this year.

Longer term, we believe Yervoy could have an important role to play in combination with Opdivo in multiple tumors.

Hep C sales were very strong for the quarter at $479 million.

Included in sales for the quarter is a one-time positive impact of $170 million related to an early-access program in France that had previously been deferred until pricing was finalized.

This now happened in Q2.

Hep C sales performance in Japan were strong, but as you know the competitive landscape continues to evolve.

We continue to see solid growth for both Orencia and Sprycel, which grew 15% and 10% respectively.

HIV sales were down 14% as the HIV market is increasingly competitive and having an impact on our business.

Now let me highlight a couple of items from our non-GAAP P&L.

Gross margin was favorable 80 basis points compared to prior year, primarily due to the positive impact from foreign exchange, partially offset by product mix related to higher sell of Eliquis and lower sell of Abilify.

Compared with our first-quarter, gross margin is down 360 basis points.

Recall that last quarter we had a one-time benefit of previously accrued royalties and a full quarter of Abilify sales.

Operating expenses were somewhat higher than last year as we had been investing behind Eliquis, Hep C and Opdivo.

Our tax rate for the quarter is 2 percentage points higher than last year.

Our quarterly tax rate will fluctuate based on earnings mix.

And remember that the R&D tax credit has yet to be passed by Congress.

Now, let me provide some comments on our revised guidance.

For revenues, we have increased our guidance range based on strong overall sales trends with our key growth products including Eliquis, Hep C, Orencia and Opdivo.

In thinking through sales for the remainder of 2015, I would like to highlight a few dynamics.

In Hep C, I mentioned there was a one-time positive impact of $170 million from France.

This will not recur.

Additionally, Hep C will become increasingly competitive for us, particularly in Japan where we expect a significant impact in our sales going forward.

And as I commented earlier on Yervoy, we are seeing an impact on the US from the PD-1 class.

Also remember that we have restructured our Erbitux agreement.

We expect Lilly to take over full commercialization in October, at which point we will no longer quote sell but will instead record the royalties we received in other income.

I will now move on to operating expenses for the remainder of this year.

As Giovanni mentioned, we are committed to making the right investments to capitalize on what we think are real growth opportunities.

And as you recall, I mentioned in April that we were in the process of reviewing additional new investments.

We have since made strategic choices investing programs that we feel are necessary to maintain the leadership position in Immuno-Oncology as well as to support other important growth products including Eliquis and Elotuzumab.

These investments are included in our revised guidance.

Commercially, we are adding resources globally to fully support the launches of Opdivo and Elotuzumab and also behind Eliquis to support continued strong growth.

For Opdivo, we are making additional investments in R&D, medical, A&T.

And we are increasing investments to accelerate Opdivo development programs where possible and also to accelerate the development of new mechanisms and additional combination regimens.

We are adding resources in our medical organization which include additional trials to generate data and also increase to field medical resources, which will be important for driving awareness of Opdivo both in the US and around the world.

These investments are not discrete.

These are programs that are beginning in the second half of this year but will continue into 2016.

In summary, we are encouraged by our good clinical results and strong underlying sales trends and metrics from our key brands that are important to our future growth outlook.

And in order to capitalize on our growth opportunities, we're making the right strategic investment.

I would be happy now to address your questions.

Thanks Charlie and Giovanni.

Mike, I think we are ready to go to the Q&A and let me just remind you that in addition to Giovanni and Charlie both Francis and Murdo are here to take any questions you might have.

Mike?

(Operator Instructions)

Steve Scala with Cowen.

Thank you, I have a couple questions.

First, in Bristol's all commerce trials versus its PD-L selected trials, is there a meaningful difference in the rate of patient enrollment?

And if yes, is that due to challenge of finding patients who have that level of selectivity or is it due to physician reluctance to do the screening for expression in the first place?

And secondly, Roche implied this morning that the chemo combo data they will show at ESMO will continue to show strong results.

Has Bristol considered taking another look at chemo combos based on Roche's continued success with those combinations?

Thank you.

Good morning Steve.

It is Francis Cuss here.

Thank you very much for that question.

We've not seen any difficulty in recruiting patients for any of our studies with Opdivo, or indeed the combination.

And certainly it is not related to the ability to look for PD-L1 expression or not.

I would say as a physician, obviously the less one has to do to be able to treat the patient and really have a good idea of the benefit that makes a lot of sense.

So we are very happy that we are heading towards broad labels for the tumors we are looking at.

And we fully characterize the PD-L1 expression.

Moving to the combinations with chemotherapy, we believe we have very comprehensive data set now with various chemotherapy-nivo combinations, probably with the longest follow-up in the industry.

Based on our comprehensive data from CheckMate -012, combinations of Opdivo and conventional chemo regimens may sometimes achieve high endurable responses.

But we've seen with longer follow-up that the survival at a year was actually no different for Opdivo combinations of chemo compared to Opdivo monotherapy.

In effect, what we saw was additive but non-durable response rate at the cost of additional toxicity.

Now, just to put this in context, we showed at ASCO last time one year survival for Opdivo monotherapy of 70% to 85%, regardless of PD-L1 expression.

So we are focused on the Opdivo+

Yervoy combo and will, in addition, continue to explore other scientifically proven combinations to advance our first-line strategy and our position.

We are additionally interested in non-traditional chemo combo regimens including innovative approaches to sequences and maintenance.

So, let me just remind you, our strategy for first-line to improve survival and replace platinum doublet.

And to do this we are exploring multiple Opdivo combinations, as well as monotherapy and earlier IO-assets targeted therapies and chemo, both internally and externally.

Thank you.

Steve, let me just add to what Francis just said, this is Giovanni.

With respect to your first question, we are actually very excited that we are enrolling ahead of schedule, as Francis said.

That's clearly an indicator of the interest in the first-line trial with Opdivo.

And, with respect to your chemotherapy question, just to add again to what Francis said, what's really interesting that we are seeing in the marketplace, in the very early days of our launch in second-line, is the speed at which chemotherapy is being abandoned.

There's clearly concerns with the limitations in terms of long-term efficacy and obviously the side effects are something that physicians and patients are actually being really excited about abandoning as well.

So I think that's an important first early learning from the marketplace.

Thank you Steve.

Mike, can we go to the next question please

Andrew Baum with Citi.

Three questions, if I may.

Firstly, I'm just interested in your reaction to the negative news in relation to the Yervoy trial in small-cell lung cancer.

My understanding is the achievement of very high mutational loads with smokers.

They may have had (inaudible) therapy.

All the factors that you may increase the probability of response.

Any additional insights you have on that and what it means would be interesting.

Second, I saw some commentary that the Aristotle data may allow for approval in some subtypes of basal or AF, which is not possible for your competitors in that space.

To what extent to you intend to prosecute this and could it be used as an additional competitive tool in that market?

And then finally, your guidance, although raised, continues to look more than achievable.

Are there any additional headwinds that have to be looked to be considering the we're not taking into account?

Many thanks.

Good morning Andrew.

Obviously I am disappointed that the studies in small cell and prostate didn't meet their primary endpoints with Yervoy.

And I think it's really important to say we never expected that every I-O agent in every tumor was going to be successful.

But again, we are here to follow the science and generate the data.

Now I think it's also fair to say that based on the preclinical science and the promising clinical data we've seen, our strategy is rapidly evolving to studying combinations of Yervoy and Opdivo in multiple tumors.

So, just to talk about small cell for a moment, we presented data at ASCO about the CheckMate -032 study that showed activity in platinum-sensitive and platinum-resistant patients in both monotherapy, but even more interestingly in combination.

And with very good tolerability.

I think it's also important to say, we've shown activity in prostate cancer with Yervoy even though we didn't actually meet our primary endpoint.

So, let me say that I think we believe in the importance of the complementary mechanism actions in I-O.

We are firmly committed to Yervoy, which I think is a very important part of our combination strategy combined with Opdivo and multiple tumors.

And I think it's important to say that we are making very good progress at the moment in melanoma, with validation of our EU combo filing just this week.

And we have the upcoming PDUFA data at the end of September for the US -069 filing.

Turning to the Aristotle data.

I'm not going to get into the details of our strategy around this but we are looking at every opportunity to use what we believe is a very important data set talking to KOLs and the rating authorities in terms of providing additional information for this very important area.

Andrew, this is Charlie.

I will briefly touch on your guidance question.

We've raised guidance because we feel very strongly and encouraged about our sales trends of the key products that have, not just towards now but as we look into the future.

We did have some one-off items where -- the French APU, which helped us in the first half.

And remember that we had a Abilify basically in the first quarter that doesn't replicate.

I would also mention that gross margin, at first half of the year, we were averaged at 78%.

I've got it to 76%.

We're starting to see behind line of the favorable foreign exchange we see in the first half.

And also remember that the expenses that both Giovanni and I spoke about earlier, by and large, grew to us in the second half of this year.

And just to add onto that, Andrew, I would say, as I mentioned at the beginning, we really are entering in a period of exciting growth.

I am very encouraged by the fact that we have very strong clinical momentum, good progress on the regulatory front, commercial execution is strong.

And you see the trends for our growth products continue.

Obviously Charlie described some of the dynamics in the second quarter.

But we've made a decision to make a number of strategic investments at a time in which we really are in a position of strength, beginning an important phase of growth.

And I think I'm really confident in how this chapter that I described between now and 2020 will play out for us.

Thanks, Andrew, for your questions.

Mike, can we go to the next question please?

[Neil Diamond] with Credit Suisse.

Yes, thanks so much taking the questions, two I'd like.

One is, you've mentioned the diversification you want to do both within I-O but also outside of I-O.

My question is just, given how large most of us feel the I-O opportunity is going to be for you, to remain well diversified outside of I-O, I'm curious if you feel you need to do some sort of a larger acquisition in order to gain a presence in some of the areas you talked about that matches up to what you're going to be getting in the I-O side of things?

And second, you touched on this a little bit earlier, but in terms of the combination approaches in the front-line setting for lung cancer, obviously a lot of focus has been on Opdivo and Yervoy.

Can you just at a high level, Francis, maybe just give us a sense of some of the other combinations that you're working on?

Which ones are you most excited about?

I know you have a number that are in progress.

Based on your early data, again, which ones would you say that you would get the most optimism for potentially giving us positive data in the future?

Thanks.

Yes, Ron, and thank you.

This is Giovanni let me just answer the first question on diversification and then Francis will make some comments on combination strategies.

My perspective is that, obviously, at the center of our strategy is Immuno-Oncology.

And as I said at the beginning, when we think about the next period of growth between now and 2020, the next five years, our growth will come disproportionately from Opdivo and Eliquis.

And within Opdivo obviously there is an element of diversification as well because our starting strategies really focused on lung and melanoma and renal cell, but then we are expanding into a large number of other tumor opportunities.

Longer term, we believe we have an exciting early pipeline within Immuno-Oncology and in a select number of areas in which we are focused that can drive our growth in the medium-term and the long-term.

And the areas are the ones we have discussed before, so CV with a focus on heart failure, immunology and the areas of fibrosis and genetically defined diseases.

In all of those areas, we have ongoing programs which are early but are potentially transformative.

And, with respect to how we complement that, our business development strategy does not change and it's really the strategy that we have articulated before.

I think that one of our core strength as a company is really our ability to complement internal R&D with business development.

We've clearly demonstrated that in fibrosis, with the recent agreements we had, and even in CV, through our deal with uniQure.

So you will see us continue to execute our strategy in business development to complement our internal programs there.

Good morning.

So, let me just draw you back a little bit just to talk about our first-line lung strategy, because I think its very important.

We have two studies in first-line, two registration potential studies.

One, in monotherapy, the -026 in PD-L1 expressing patients.

And this provides the quickest way to bring Opdivo to first-line patients and I think based on the data we've presented at ASCO that we are very enthusiastic about that study.

As you noted, we do have a registration study of Opdivo and Yervoy together which has started in both expresses and non-expresses PD-L1.

But that is the next likely potential positive study.

So we believe that Opdivo will be foundational and that Ipi-Nivo combos have the best potential to better improve survival and to replace chemotherapy, as Giovanni mentioned early.

Now, obviously earlier we have a LAG-3 program in combination with nivo that is in early-stage testing.

We hope to see some data on that next year.

And behind that we have a bold initiative to bring forward six additional assets into the clinic in the next 18 months.

And some of these would be certainly natural to expect to combine with nivolumab.

So we have a near medium-term and long-term opportunity to look at different approaches to first-line lung cancer and replace chemotherapy.

Thank you.

Great.

Thank you -- for the questions.

Mike can we go to the next one please?

Jami Rubin from Goldman Sachs.

Thank you, Charlie this is for you.

First, are you signaling higher levels of investment spending now because you think that the opportunity set for I-O is even bigger than you had originally imagined?

Or is it because the market has become more competitive?

And secondly, can you commit to investors that we will see significant bottom-line leverage?

Because it sounds like you're pushing that out a bit.

Is that the right way to look into this?

Is that going to be next year, is it going to be in 2017?

And again, does the renewed need level of spend delay the margin leverage or does it actually accelerate the margin leverage -- or strengthen it, rather.

Thanks very much.

Thank you Jami.

I think the I-O opportunity as we see it, with the continued clinical outcomes of trial, I think we mostly see it as our opportunity to just continue to reinforce our leadership that pushes I-O.

Clearly we recognize that I-O is immensely competitive, and that has a small factor, but I think it is largely due to how we see our competitive position within the overall I-O state.

As it relates to bottom line and how we potentially see leverage, to seize on that opportunity as we continue to see the evolution of data and not only that but our performance in the market.

We see that it's required to continue to invest to maximize that opportunity.

And I don't necessarily see that the leverage, I cannot comment on 2016, but as I look further out to the back end of this decade, I will see that ultimately improve our leverage.

Let me just, Jami, just further reinforce the point that as Charlie has made.

When you look at our Immuno-Oncology opportunity, that is based from momentum from a clinical perspective, I think it is fair to stay our strategy has been validated clearly this year.

There is extremely good execution from a regulatory perspective, not only in the US but in Europe and internationally as well.

Commercial execution is strong, the early indicators are encouraging.

And I think that our decision to incrementally invest is really one that starts from our positional strength and the confidence we have in the magnitude of the opportunity in the medium-term and in the long-term.

And as I said at the beginning, for us this is an unprecedented set of opportunities and we're making the right investments behind them.

Obviously we are very conscious of the comment you made, with respect to leverage and increased profitability.

And I think as we look at this period we see that happening, as Charlie said.

Thanks Jami.

Mike, can we go to the next question please?

Tim Anderson with Bernstein.

Thank you, a few questions on Immuno-Oncology.

Can you talk about how you think the PD-L1 biomarker will play out in Europe in the near term or intermediate term?

There's been several companies that have commented that they think European pairs and maybe even regulators will be more aggressive in pushing the biomarker as a treatment decision tool in lung cancer.

Second question is, in first-line lung and PD-L1 negative patients, do you see any opportunity for PD monotherapy or at this point is it really only looking like combination is going to be the path forward, again, in biomarker negative patients?

The reason I ask is obviously there's some divergence in how it seems to be working in second-line versus how it may work in first-line.

And then, Opdivo pricing in Germany, can you just mentioned where you are relative to the US?

Yes, let me just start on the first part of the question.

Murdo will further expand on Europe, including the pricing in Germany, and then Francis can answer your comments on (inaudible).

I think we are in a very, very strong position globally in having a data set across all patient population that enables us to describe to physicians and patients and payers that all biomarkers.

And I think it is important that our strategy there has been validated that all biomarkers is different and it depends on the line of therapy and it depends on the tumor but we have the right data set to have those discussions.

We are receiving strong feedback from physicians, including in Europe, regarding our strategy and I will ask Murdo to give you more insights there.

Thanks, Giovanni, and thanks Tim for the question.

We are, as Giovanni highlighted, hearing from European thought leaders that, consistent with some of the perspective of US thought leaders post-ASCO, that the role of PD-L1 is unclear in selecting patients.

So that consistent perspective has been played back.

That being said, given the nature of the healthcare systems across Europe, we could end up in discussions with payers in Europe where they are seeking to restrict Opdivo in second-line patients in lung cancer.

So we will work obviously very closely with each of the payers in Europe to help them understand the full breadth of the data that Giovanni has highlighted.

We are in a position to describe the efficacy of Opdivo across a broad range of second-line patients across a broad range of pathologies.

In Germany we've been fortunate, we got a very quick start.

As you know, reimbursement is not a barrier to initial launch in Germany and we have a tax lowered public price of EUR7,421 roughly per month and that was listed July 15.

Good morning Tim.

I think it's absolutely clear that the bar is higher in first-line because of the benefits seen with double therapy and as a result we have focused on the PD-L1 monotherapy population.

And in our combination therapy, sorry our Yervoy combination study, we have looked predominantly at that.

That being said, we do believe we've seen some interesting data we have learned at ASCO in terms of durable responses in PD-L1 negative patients in first-line.

Don't think we've got to a point yet where we're comfortable understanding whether it is appropriate to go directly against the platinum doublet.

But of course there's lots of other combinations, too, as I mentioned.

Beyond if epi-nivo there are other I-O assets, targeted therapies and these non-traditional chemo combo regiments I talked about.

So I think there's a lot of opportunity if we are looking at all of them but we're leading off with the Yervoy/Opdivo combination in the negative patients population, that is the nearest test for us.

Think you

And Tim, also we feel very strongly about our first-line lung strategy.

As we said at the beginning, I think answering the first question, the enrollment of the monotherapy trial in PD-L1 positive ahead of schedule.

As you know we've fostered the combo trial on clinicaltrials.gov.

And that study on the combination is one that is clearly very, very important for us.

As you know, we've done a lot of early work in that space, in understanding the regimen -- the combination regimen that can be most effective in patients in lung cancer.

And I think you'll see some of that data when we go to the world lung meeting in September from further analysis of study as well.

Thanks Tim for the questions.

Mike, can we go to the next one please?

John Boris with SunTrust.

First one, just Opdivo related on renal cancer.

Just any -- I know this is probably early since you just top lined but any thoughts around the publication and presentation strategy along with your repertory strategy for renal?

In addition, it would seem like, can we get an update on your hematology, glioblastoma, multi forma and head and neck trials?

It seems as though those trials seem to be enrolling with potentially data sometime in 2016.

So any update there?

On HCV, on $170 million, can you provide any update on what the price was per patient that you secured in the French market?

And then lastly, on Eliquis, just any quantitative metrics that you have the new to branch here and cardiology and primary care would be helpful, thanks.

Sure.

So why don't Francis start with your questions on renal and hematology and then we'll take the Hep C questions.

Good morning John.

We were obviously very excited when the study was stopped early based on the top line data from the instrument analysis.

And the fact that Opdivo demonstrates an improvement in overall survival versus the standard care of [erlymus].

We believe from previous studies it is just about unique.

Can't talk more about the data before it's presented, but I will say we are working with the investigators on a future presentation in a publication results as soon as possible.

As far as the oracia stashi, I'm not going to go into detail but I think as you've seen, we have shown recently in melanoma and lung, we can work together and very quickly with the FDA and other health authorities.

And we will be looking to submit that data as soon as possible.

Let me just talk about the other data that might be coming out.

I think in addition to the nine registration studies in the last year that we've had positive data we have a further 25 either ongoing or planned.

You mentioned some of them.

As we look forward, obviously it depends on the data, although I will say recruitments is going well.

But we may see information next year, in 2016, in Hodgkin's, non-Hodgkin's lymphoma and bladder potentially.

And potentially some others.

So it's going to be, we're going to continue seen differentiated data, which is what we are trying to do.

But I think in the near term with all the differentiated data we've had we're certainly focusing on getting those submissions in and getting the broadest label we can as quickly as possible.

And John, the other question you asked regarding the ATU trends is a program that was open from beginning of March til the end of October.

We accrued roughly 4,000 patients in that program and the price for a 12-week supply was EUR25,500, and that's public.

Great, thanks John for the questions.

Can we go to the next one, Mike please?

Mark Schoenebaum with Evercore ISI.

Just a couple questions.

One, on World Lung, we're obviously going to see the updated data from the nivo/epi phase II, that presumably it informed the dose selection for phase III.

And I was wondering, I realize you can't give us any data, but I was just wondering if we would see one year overall survival data from the phase III regimens?

And if so, should we hold those data to the benchmark that you provided for nivo monotherapy, which you stated was 70% to 85% overall survival in the first-line setting?

And second of all, this has sort of been asked -- by other analysts, I don't mean to be redundant.

But -- there's been so much deal activity out there this year, especially gobbling up some of these biotechs.

And you guys have chosen, generally speaking, to do smaller stuff.

I'm just wondering is that -- your strategy to -- generally speaking, smaller stuff?

Or do you feel that there is valuation disconnect in this mid-cap biotech universe?

I ask this because an hour ago John Lechleiter over at Lilly actually stated on his earnings call that he thinks that mid-cap biotech is in a bubble.

Thank you.

Good morning Mark.

First of all, as you say, you'll be glad to find that you will be hearing about the -012 data on the combination.

These are the combinations, the regimens that we have taken forward into our trial, the -227 trial.

I will say we are excited about it, we've consulted obviously with thought leaders and they also recommend that we should go forward with these.

I'm not going to talk specifically about the regimens, but what I will say is these are pretty large studies of a large number of patients for an early study, approximately 50 per group.

We have data on all patients up to about six months, but obviously as you appreciate as these mature, some of them are further out and they will continue to inform going forward.

But I'm afraid you'll have to wait for specifics until it's presented.

Mark, on business development let me just reiterate what I said for our strategy does not change.

We are indifferent with the size of the opportunities but I will let ask Charlie to comment further.

I would just say that, John, we have a lot of the balance sheet flexibility to deal with various sizes.

I think our sweet spot, if you look back historically has been in the smaller type deal.

I wouldn't necessarily say that that's all we look at, we look at a number of things.

As linked to mid-cap buying prices, if you look at how they've performed over the last several years compared to larger-cap pharma or to the SNP, significantly outpaced.

So there is a significant valuation, I'd hate to call it a bubble because who knows how long it may last but it is, I would say, well out-performing the overall market.

Thanks Mark for the questions can go to the next one please Mike

Seamus Fernandez with Leerink.

Thanks, I have a couple questions.

First, as we thank about the CheckMate -012 data, Francis, can you just give us just generally what features really drove the recommendation internally and by your thought leaders to really utilize this data set, the -012 data set?

Because I think we are all wondering how should we think about this and how has it informed -227 in terms of response rate, survival duration, depth of response.

What were the features that you think were differentiated?

Separately, your comments on the data sets in combination with chemotherapy are helpful.

But when might be actually see that data really showing the diminution of the durable responses over time?

And then, -- last question, just in terms of how uptake is actually occurring in the market today.

What data, if you to have it available, can you share with us with regard to the mix?

So what percentage of Opdivo patients are melanoma patients, what percent are squamous lung and what percent are non-squamous?

And if I could just one final question, there was a second kidney cancer study that announced data and provided the data in their press release with regard to overall survival.

How do you see Opdivo competing with that asset, [capozamnib] in the public market?

Thanks.

Seamus why don't we start with your questions on -012 and land roving for Francis.

Then we'll go to Opdivo uptake and Murdo will give you some insights there.

Okay.

Good morning, Seamus.

So when we look at the dataset we have, we are obviously the focus is really on maintaining the kind of efficacy we have seen in the combination but wanting to get as close in terms of tolerability to nivo monotherapy.

And so the first thing to look at in these two will be the tolerability.

As far as the efficacy is concerned, as you know, we have focused pretty much on the durability of responses, or overall survival, or one year landmark survival.

And as I said, we have six month survival for all patients in this study and its maturing.

So it's really about this therapeutic index, both tolerability and efficacy.

In terms of the keynote data, I believe we have presented some of that.

Obviously, as is important with these exploratory studies, the dates matures and continues to become more informative in time.

I cannot tell you exactly where we will be presenting it, but we will be sometime in the future.

And just a side note on R&D comment on the [cavo] data.

Obviously we haven't seen the full data set, but I think if you look at our phase II monotherapy data for Opdivo in renal cell, I think we showed superior efficacy to TKIs -- with superiority in terms of tolerability also.

And Seamus, for your question regarding uptake, you know we're really excited about what we are seeing into market with Opdivo.

The initial launch in melanoma was a strong launch obviously in second-line.

What we are seeing now is that we are about at parity with key [trudone] in the community setting and we are gaining good market share in the institutional setting.

I will say in melanoma we are also seeing some off label usage since ASCO of PD-1 inhibitors in front-line as you recall from Charlie and Giovanni's remarks, that puts some pressure on [Eryvoid] but Opdivo is seeing lift in a non-promoted sitting.

There and in lung we really had a very rapid penetration of the squamous second-line market.

We are getting two-thirds of new patients there and that happened very rapidly.

And then since NTTN updated June 12 post-ASCO we've also seen a very nice uptick in lung overall.

Clearly that's another off label indication, given that we are only promoting in squamous right now.

So I would say very soon we'll see lung eclipsing our melanoma business and we'll see some nice growth out of Opdivo this year

As it's early but the trends we are seeing are really encouraging.

I should say that our launch in Germany, as we mentioned before, is off to a really strong start as well.

It's even earlier there, but execution so far has been very strong

Thanks Seamus for the questions.

Can we go to the next one please, Mike?

Chris Schott with JPMorgan.

Thanks very much, just a couple additional follow up commercial questions on Opdivo.

Can you just elaborate a little bit more in terms of the lung adoption so far?

Just where are you seeing that in terms of community versus some of the major medical centers?

Are you seeing good community uptick already in lung or is that still to come?

Second, on the European side of things, just can you elaborate how you're thinking about the ramp ultimately in Europe?

Any other hurdles we should think about or just how should we just think about the broader dynamics beyond Germany over time?

And then the final question was just on the non-traditional chemo dosing with Opdivo and lung.

Just any more color, specifically what you are looking at there and when we could see any initial data?

Thanks so much.

Chris let me take the first couple of questions and then I'll pass it over to Francis for your last one.

In the US, we are seeing very balanced uptake.

So we are seeing very rapid adoption in second-line squamous in the community and in the academic setting.

As you may recall, we did a large amount of education around Immuno-Oncology when we launched Uruguay and I think having a broad understanding of how the immune checkpoint inhibitors work, the safety profile being particularly good with nivolumab, has helped us have a very rapid penetration in the community.

And so, I think we'll expect that to continue with broadening indications.

In Europe we are very encouraged by what we have seen, as Giovanni mentioned in Germany.

I would say that the enthusiasm and interest in second-line squamous and in first-line and second-line melanoma is very high.

I think obviously, as you know, that the rate limits are in many European markets will be how quickly we can secure market access.

And we have a lot of people on the ground working very closely with the payers and reimbursement authorities across Europe to expedite that as best as possible while still securing a good reimbursement price.

So I would say, either you probably see, obviously as always in Europe, a very similar sequence as we saw for Yervoy and we see for other new products with rapid launch and uptake in compress what that process is short but continuing significant number of launches over the next 12 months to 18 months across all European markets.

Good morning Chris.

So the thinking really behind the sequencing is sort of two potential hypotheses.

One is that you might generate more antigens from side to toxicity of the tumor, and that might be a good thing, and you might want to get that in before the I-O.

The opposite one is that you might actually be causing some immunosuppression with chemotherapy and actually reducing the benefit of I-O.

And of course, what we have seen is probably better one year survival in our exploratory studies in first-line with Opdivo than with second-line.

But the other features involved with that too.

So we think it is very important to understand, as we are with I-O agents, the sequence and actually explore exactly what the right approach to this might be.

Those studies are ongoing.

We don't have any plans at the moment, we have no data, but no plans to present yet.

But obviously sometime in the future we will be doing that.

Thank you.

Great.

Thanks Chris for the questions.

Mike, I think we have time for one more.

We are at the bottom of the hour here.

Gregg Gilbert with Deutsche Bank.

Just a couple of quick ones.

First Giovanni, just so I'm clear on your theme of diversification, which has been quite clear since you took over.

It sounds like you think the portfolio will naturally diversify as it is now combined with your pipeline and licensing efforts.

Am I missing something?

Are you suggesting that Bristol needs to do more of something to diversify faster than it already is?

I just want to be clear on that.

And my second question on Opdivo.

I'm curious if any payers have tried to get you into a contracting environment yet with two similar therapies out there now, albeit with different data sets and others to come.

Thanks.

Let me comment quickly on the diversification issue.

I think that when we look at our business the period between now and 2020, the next five years, the growth, as I said, is clearly -- will clearly come disproportionately from the growth of Opdivo, the potential of Eliquis.

Within Opdivo there is a degree of diversification.

Long-term, as we think about a second cycle, we are thinking about our early pipeline generating opportunities that are more diversified for us within Immuno-Oncology, because as Francis mentioned we have clearly assets in the clinics, we are bringing six more assets into the clinics.

So there is an element of diversification which is already within Immuno-Oncology.

But then we have exciting early programs -- in the other areas.

So it is a concept that does not require us to change our approach, and in fact what I mentioned at the beginning, importantly, is that our business element strategy remains pretty much the same.

Let me ask Murdo to give you some perspective on payers

Thanks Giovanni, thanks Gregg.

We have really been fortunate with the quality of data that have been generated behind Opdivo, how to use it.

We've been able to establish more patients with mass-type melanoma and non-small cell lung cancer.

And I think that's been recognized by pairs we've -- established very broad and very rapid access in the US.

The breadth of indications that we hope will follow will also further strengthen our ability to weather any attempt that any payers may have to try to restrict these agents, which is very difficult to do in the oncology arena with drugs like Opdivo with overall survival benefits.

So we feel very good about our current access and our ability to sustain that going forward

So thanks everyone, let me just close the call and say again, we had a very strong quarter.

We have good momentum with our long-term growth drivers, significant clinical progress, strong regulatory developments, very good commercial execution and trends in the marketplace.

We are making the right investments.

It is clear to me that we are well on our way and entering an exciting period of growth for the Company.

So thanks everyone and have a good day.

Okay, thanks everybody.

Mike, that's going to conclude the call.

As always, if you have follow-ups you can reach me or Randy or Bill later today or tomorrow.

Thanks.

This concludes today's conference call, you may now disconnect.