On January 24, 2019 Bristol-Myers Squibb Company (NYSE:BMY) reported results for the fourth quarter and full year of 2018 which were highlighted by strong demand for Opdivo (nivolumab) and Eliquis (apixaban) and a robust operating performance across the portfolio (Press release, Bristol-Myers Squibb, JAN 24, 2019, View Source [SID1234532880]).
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"I am proud of our results in 2018, which were based on superior commercial performance for our prioritized brands and important scientific advances that continue to diversify our R&D pipeline. We are beginning 2019 with good momentum in our current business, with Opdivo and Eliquis continuing as strong and growing franchises," said Giovanni Caforio, M.D., chairman and chief executive officer, Bristol-Myers Squibb. "Our planned acquisition of Celgene will position us to create a leading biopharma company, with best-in-class franchises, significant near-term launch opportunities and a deep and broad pipeline, creating an even stronger foundation for long-term sustainable growth."
Fourth Quarter
$ amounts in millions, except per share amounts
2018
2017
Change
Total Revenues $5,973 $5,449 10%
GAAP Diluted EPS 0.73 (1.42) **
Non-GAAP Diluted EPS 0.94 0.68 38%
Full Year
$ amounts in millions, except per share amounts
2018
2017
Change
Total Revenues $22,561 $20,776 9%
GAAP Diluted EPS 3.03 0.61 **
Non-GAAP Diluted EPS 3.98 3.01 32%
**In excess of +/- 100%
FOURTH QUARTER FINANCIAL RESULTS
Bristol-Myers Squibb posted fourth quarter 2018 revenues of $6.0 billion, an increase of 10% compared to the same period a year ago. Revenues increased 12% when adjusted for foreign exchange impact.
U.S. revenues increased 16% to $3.3 billion in the quarter compared to the same period a year ago. International revenues increased 3%. When adjusted for foreign exchange impact, international revenues increased 7%.
Gross margin as a percentage of revenue increased from 69.2% to 71.7% in the quarter primarily due to higher inventory write-offs and startup charges in the fourth quarter last year.
Marketing, selling and administrative expenses increased 2% to $1.3 billion in the quarter.
Research and development expenses decreased 29% to $1.4 billion in the quarter primarily due to license and asset acquisition charges of $377 million in the fourth quarter last year.
The effective tax rate was 23.1% in the quarter, compared to 433.7% in the fourth quarter last year. The tax rate in the fourth quarter last year was impacted by a one-time $2.9 billion charge resulting from U.S. tax reform.
The company reported net earnings attributable to Bristol-Myers Squibb of $1.2 billion, or $0.73 per share, in the fourth quarter, compared to a net loss of $2.3 billion, or $1.42 per share, for the same period in 2017. The results in the fourth quarter last year included the transitional impact of U.S. tax reform.
The company reported non-GAAP net earnings attributable to Bristol-Myers Squibb of $1.5 billion, or $0.94 per share, in the fourth quarter, compared to net earnings of $1.1 billion, or $0.68 per share, for the same period in 2017. An overview of specified items is discussed under the "Use of Non-GAAP Financial Information" section.
Cash, cash equivalents and marketable securities were $10.7 billion, with a net cash position of $3.3 billion, as of December 31, 2018.
ACQUISITION OF CELGENE CORPORATION
In January, the company and Celgene Corporation announced they have entered into a definitive merger agreement under which the company will acquire Celgene. (link)
FOURTH QUARTER PRODUCT AND PIPELINE UPDATE
Product Sales/Business Highlights
Global revenues for the fourth quarter of 2018, compared to the fourth quarter of 2017, were driven by:
Opdivo , which grew by $443 million or a 33% increase
Eliquis , which grew by $342 million or a 25% increase
Yervoy , which grew by $115 million or a 43% increase
Orencia , which grew by 10%
Sprycel , which grew by 2%
Opdivo
Regulatory
Following recent discussions with the U.S. Food and Drug Administration (FDA), the company reported the voluntary withdrawal of the U.S. supplemental Biologics License Application (sBLA) for the Opdivo and low-dose Yervoy (ipilimumab) combination for treatment of first-line advanced non-small cell lung cancer (NSCLC) in patients with tumor mutational burden (TMB) ≥10 mutations/megabase (mut/Mb).
In October 2018, the company announced the submission of an exploratory overall survival (OS) analysis for the TMB <10 mut/Mb subgroup to the FDA. The FDA determined at that time, that the submission of this new information constituted a major amendment to the sBLA and extended the review period by three months, moving the Prescription Drug User Fee Act date to May 20, 2019.
After recent discussions with the FDA, the company believes further evidence on the relationship between TMB and PD-L1 is required to fully evaluate the impact of Opdivo plus Yervoy on OS in first-line NSCLC patients. This analysis will require availability of the final data from Checkmate -227, Part 1a (Opdivo plus low-dose Yervoy or Opdivo monotherapy versus chemotherapy in patients whose tumors express PD-L1), which the company anticipates will be available in the first-half of 2019. Since these data from Checkmate -227, Part 1a, will not be available within the review cycle of the current application the company decided to withdraw.
In January, the company announced the European Commission approved the combination of Opdivo plus Yervoy for the first-line treatment of patients with intermediate- and poor-risk advanced renal cell carcinoma.
Clinical
In November, the company announced top-line results from the Phase 3 CheckMate -451 trial in patients with extensive-stage small cell lung cancer without disease progression after completion of first-line platinum-based chemotherapy treatment with Opdivo plus Yervoy versus placebo. (link)
Eliquis
Clinical
In November, at the American Heart Association Scientific Sessions 2018, the company-Pfizer alliance presented new real-world evidence from a sub-analysis of the ARISTOPHANES study comparing the safety and effectiveness of non-vitamin K antagonist oral anticoagulants, including Eliquis, in non-valvular atrial fibrillation patient populations aged 80 and older. (link)
Sprycel
Regulatory
In January, the company announced the U.S. Food and Drug Administration (FDA) expanded the indication for Sprycel (dasatinib) tablets to include the treatment of pediatric patients one year of age or older with newly diagnosed Philadelphia chromosome-positive (Ph+) acute lymphoblastic leukemia (ALL) in combination with chemotherapy.
In December, the company announced the Committee for Medicinal Products for Human Use of the European Medicines Agency recommended the expanded approval of Sprycel, in combination with chemotherapy, to include the treatment of pediatric patients with newly diagnosed Ph+ ALL.
Empliciti
Regulatory
In November, the company announced the FDA approved Empliciti (elotuzumab) in combination with pomalidomide and dexamethasone for the treatment of adult patients with multiple myeloma who have received at least two prior therapies, including lenalidomide and a proteasome inhibitor.
FOURTH QUARTER BUSINESS DEVELOPMENT UPDATE
In December, the company announced Taisho Pharmaceutical Holdings Co., Ltd. offered to purchase the company’s UPSA consumer health business for $1.6 billion.
In December, the company and Boston Medical Center announced a multi-year joint research study to identify and analyze potential sensitivity and resistance markers in patients treated with standard-of-care checkpoint inhibitors.
In December, the company, Eisai Co., Ltd. and its U.S.-based precision medicine research & development subsidiary H3 Biomedicine, Inc. announced a multi-year research collaboration to explore modulating RNA splicing to develop potential first-in-class therapies that would direct the immune system to target cancer cells and help more patients experience the benefits of immunotherapy.
In December, the company and Vedanta Biosciences announced a clinical trial collaboration to evaluate Opdivo in combination with Vedanta Biosciences’ VE800 in patients with advanced or metastatic cancers.
In November, the company and Infinity Pharmaceuticals, Inc. announced a clinical trial collaboration to evaluate Opdivo in combination with Infinity’s IPI-549 in patients with advanced urothelial cancer.
2019 FINANCIAL GUIDANCE
Bristol-Myers Squibb is confirming its 2019 GAAP EPS guidance range of $3.75 – $3.85 and its non-GAAP EPS guidance range of $4.10 – $4.20. Both GAAP and non-GAAP guidance assume current exchange rates. Key 2019 GAAP and non-GAAP line-item guidance assumptions are:
Worldwide revenues increasing in the mid-single digits.
Gross margin as a percentage of revenue to be approximately 70% to 71% for both GAAP and non-GAAP.
Marketing, selling and administrative expenses decreasing in the mid-single digit range for both GAAP and non-GAAP.
Research and development expenses decreasing in the mid-single digits for GAAP and increasing in the high-single digits for non-GAAP.
An effective tax rate of approximately 15% for GAAP and approximately 17% for non-GAAP.
The financial guidance for 2019 excludes the impact of any potential future strategic acquisitions and divestitures, including any impact of the Celgene acquisition, and any specified items that have not yet been identified and quantified. The non-GAAP 2019 guidance also excludes other specified items as discussed under "Use of Non-GAAP Financial Information." Details reconciling adjusted non-GAAP amounts with the amounts reflecting specified items are provided in supplemental materials available on the company’s website.
Use of Non-GAAP Financial Information
This press release contains non-GAAP financial measures, including non-GAAP earnings and related EPS information, that are adjusted to exclude certain costs, expenses, gains and losses and other specified items that are evaluated on an individual basis. These items are adjusted after considering their quantitative and qualitative aspects and typically have one or more of the following characteristics, such as being highly variable, difficult to project, unusual in nature, significant to the results of a particular period or not indicative of future operating results. Similar charges or gains were recognized in prior periods and will likely reoccur in future periods, including restructuring costs, accelerated depreciation and impairment of property, plant and equipment and intangible assets, R&D charges in connection with the acquisition or licensing of third party intellectual property rights, divestiture and equity investment gains or losses, upfront payments from out-licensed assets, pension charges, legal and other contractual settlements and debt redemption gains or losses, among other items. Deferred and current income taxes attributed to these items are also adjusted for considering their individual impact to the overall tax expense, deductibility and jurisdictional tax rates. Non-GAAP information is intended to portray the results of our baseline performance, supplement or enhance management, analysts and investors overall understanding of our underlying financial performance and facilitate comparisons among current, past and future periods. For example, non-GAAP earnings and EPS information is an indication of our baseline performance before items that are considered by us to not be reflective of our ongoing results. In addition, this information is among the primary indicators that we use as a basis for evaluating performance, allocating resources, setting incentive compensation targets and planning and forecasting for future periods. This information is not intended to be considered in isolation or as a substitute for net earnings or diluted EPS prepared in accordance with GAAP and may not be the same as or comparable to similarly titled measures presented by other companies due to possible differences in method and in the items being adjusted.
Company and Conference Call Information
Bristol-Myers Squibb is a global biopharmaceutical company whose mission is to discover, develop and deliver innovative medicines that help patients prevail over serious diseases. For more information about Bristol-Myers Squibb, visit us at BMS.com or follow us on LinkedIn, Twitter, YouTube and Facebook.
There will be a conference call on January 24, 2019 at 8:30 a.m. ET during which company executives will review financial information and address inquiries from investors and analysts. Investors and the general public are invited to listen to a live webcast of the call at View Source or by calling the U.S. toll free 800-458-4121 or international 786-789-4772, confirmation code: 9368504. Materials related to the call will be available at the same website prior to the conference call. A replay of the call will be available beginning at 11:45 a.m. ET on January 24, 2019 through 11:45 a.m. ET on February 7, 2019. The replay will also be available through View Source or by calling the U.S. toll free 888-203-1112 or international 719-457-0820, confirmation code: 9368504.
Website Information
We routinely post important information for investors on our website, BMS.com, in the "Investors" section. We may use this website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor the Investors section of our website, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts. We may also use social media channels to communicate with our investors and the public about our company, our products and other matters, and those communications could be deemed to be material information. The information contained on, or that may be accessed through, our website or social media channels are not incorporated by reference into, and are not a part of, this document.
Important Information for Investors and Stockholders
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. It does not constitute a prospectus or prospectus equivalent document. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended.
In connection with the proposed transaction between Bristol-Myers Squibb Company ("Bristol-Myers Squibb") and Celgene Corporation ("Celgene"), Bristol-Myers Squibb and Celgene will file relevant materials with the Securities and Exchange Commission (the "SEC"), including a Bristol-Myers Squibb registration statement on Form S-4 that will include a joint proxy statement of Bristol-Myers Squibb and Celgene that also constitutes a prospectus of Bristol-Myers Squibb, and a definitive joint proxy statement/prospectus will be mailed to stockholders of Bristol-Myers Squibb and Celgene. INVESTORS AND SECURITY HOLDERS OF BRISTOL-MYERS SQUIBB AND CELGENE ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS THAT WILL BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders will be able to obtain free copies of the registration statement and the joint proxy statement/prospectus (when available) and other documents filed with the SEC by Bristol-Myers Squibb or Celgene through the website maintained by the SEC at View Source." target="_blank" title="View Source." rel="nofollow">View Source Copies of the documents filed with the SEC by Bristol-Myers Squibb will be available free of charge on Bristol-Myers Squibb’s internet website at View Source under the tab, "Investors" and under the heading "Financial Reporting" and subheading "SEC Filings" or by contacting Bristol-Myers Squibb’s Investor Relations Department through View Source Copies of the documents filed with the SEC by Celgene will be available free of charge on Celgene’s internet website at View Source under the tab "Investors" and under the heading "Financial Information" and subheading "SEC Filings" or by contacting Celgene’s Investor Relations Department at [email protected].
Certain Information Regarding Participants
Bristol-Myers Squibb, Celgene, and their respective directors and executive officers may be considered participants in the solicitation of proxies in connection with the proposed acquisition of Celgene. Information about the directors and executive officers of Bristol-Myers Squibb is set forth in its Annual Report on Form 10-K for the year ended December 31, 2017, which was filed with the SEC on February 13, 2018, its proxy statement for its 2018 annual meeting of stockholders, which was filed with the SEC on March 22, 2018, and its Current Report on Form 8-K, which was filed with the SEC on August 28, 2018. Information about the directors and executive officers of Celgene is set forth in its Annual Report on Form 10-K for the year ended December 31, 2017, which was filed with the SEC on February 7, 2018, its proxy statement for its 2018 annual meeting of stockholders, which was filed with the SEC on April 30, 2018, and its Current Reports on Form 8-K, which were filed with the SEC on June 1, 2018, June 19, 2018 and November 2, 2018. Other information regarding the participants in the proxy solicitations and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the joint proxy statement/prospectus and other relevant materials to be filed with the SEC regarding the proposed transaction when they become available. You may obtain these documents (when they become available) free of charge through the website maintained by the SEC at View Source and from Investor Relations at Bristol-Myers Squibb or Celgene as described above.