On October 27, 2021 Bristol Myers Squibb (NYSE:BMY) reported that results for the third quarter of 2021, which reflect solid sales, strong commercial execution and continued progress of the company’s pipeline (Press release, Bristol-Myers Squibb, OCT 27, 2021, View Source [SID1234592022]).
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"Our strong results reflect increased adoption of our new product portfolio and continued demand growth across all four core therapeutic areas," said Giovanni Caforio, M.D., board chair and chief executive officer, Bristol Myers Squibb. "Our teams advanced the product portfolio and achieved significant regulatory and clinical milestones, including for the fixed-dose combination of relatlimab and nivolumab. Our deep and diverse product pipeline, commercial execution and financial flexibility provide a strong foundation that is enabling the company to bring new medicines that benefit patients with serious unmet needs, drive in-line product performance and deliver sustained growth."
THIRD QUARTER FINANCIAL RESULTS
All comparisons are made versus the same period in 2020 unless otherwise stated.
Bristol Myers Squibb posted third quarter revenues of $11.6 billion, an increase of 10%, driven by Revlimid, Eliquis, Opdivo and our new product portfolio.
U.S. revenues increased 12% to $7.3 billion in the quarter, driven by higher demand for Revlimid, Eliquis and our new product portfolio. International revenues increased 8% to $4.3 billion in the quarter, driven by higher demand for Eliquis, Revlimid and Opdivo. When adjusted for foreign exchange impact, international revenues increased 6%.
Gross margin increased from 76.3% to 80.3% in the quarter primarily due to lower unwinding of inventory purchase price accounting adjustments.
On a non-GAAP basis, gross margin increased from 80.6% to 81.1% in the quarter primarily driven by lower royalties.
Marketing, selling and administrative expenses increased 5% to $1.8 billion in the quarter on a GAAP and non-GAAP basis primarily due to investments to support new product launches.
Research and development expenses increased 30% to $3.3 billion in the quarter primarily due to an in-process research and development (IPR&D) impairment charge.
On a non-GAAP basis, research and development expenses increased 7% to $2.4 billion in the quarter primarily due to higher costs associated with the broader portfolio and lower spending in the prior year due to COVID-19.
Amortization of acquired intangible assets increased $55 million to $2.5 billion in the quarter.
The effective tax rate was 28.0% in the quarter, compared to 16.8% in the third quarter last year. The higher tax rate was primarily due to a non-deductible IPR&D impairment charge in the third quarter this year and non-taxable contingent value rights fair value adjustments in the third quarter last year.
On a non-GAAP basis, the effective tax rate decreased 2.2% to 14.9% in the quarter primarily as a result of changes in previously estimated annual effective tax rates in 2020 due to jurisdictional earnings mix.
The company reported net earnings attributable to Bristol Myers Squibb of $1.5 billion, or $0.69 per share, in the third quarter, compared to net earnings of $1.9 billion, or $0.82 per share, for the same period a year ago.
The company reported non-GAAP net earnings attributable to Bristol Myers Squibb of $4.5 billion, or $2.00 per share, in the third quarter, compared to non-GAAP net earnings of $3.7 billion, or $1.63 per share, for the same period a year ago.
A discussion of the non-GAAP financial measures is included under the "Use of Non-GAAP Financial Information" section.
THIRD QUARTER PRODUCT REVENUE HIGHLIGHTS
*In excess of +100%.
**Included as part of the new product portfolio
THIRD QUARTER PRODUCT AND PIPELINE UPDATE
Cardiovascular
Eliquis
Legal
In September, the Bristol Myers Squibb-Pfizer Alliance announced that the Court of Appeals for the Federal Circuit affirmed the U.S. District Court’s August 2020 decision finding the composition of matter patent (US 6,967,208) and formulation patent (US 9,326,945) covering Eliquis(apixaban) valid and infringed. Given the decision, the earliest that generic manufacturers are permitted to launch their apixaban products is April 1, 2028, subject to additional appeals and challenges. (link)
mavacamten
Regulatory
In October, the company announced that the European Medicines Agency (EMA) has validated its Marketing Authorization Application (MAA) for mavacamten for the treatment of patients with obstructive hypertrophic cardiomyopathy (oHCM). The application is based on the results of the pivotal Phase 3 EXPLORER-HCM trial. (link)
Medical Meeting
In September, at the Heart Failure Society of America Annual Scientific Meeting, the company presented findings from a global real-world evidence study that showed the risk of mortality increases with worse New York Heart Association functional class (NYHA class) for patients with oHCM. The study represents one of the largest, multi-centered studies that specifically focuses on the oHCM patient population. (link)
Oncology
Opdivo
Regulatory
In October, the company announced that the European Commission (EC) has approved Opdivo(nivolumab) in combination with fluoropyrimidine- and platinum-based combination chemotherapy for the first-line treatment of adult patients with HER2-negative advanced or metastatic gastric, gastroesophageal junction (GEJ), or esophageal adenocarcinoma (EAC) whose tumors express PD-L1 with a combined positive score ≥ 5. The EC’s decision is based on results from the Phase 3 CheckMate -649 trial. (link)
In September, the company announced that the U.S. Food and Drug Administration (FDA) has accepted the supplemental Biologics License Applications (sBLA) for both Opdivo in combination with Yervoy (ipilimumab) and Opdivo in combination with fluoropyrimidine- and platinum-containing chemotherapy as first-line treatments for adult patients with unresectable advanced, recurrent or metastatic esophageal squamous cell carcinoma (ESCC). The application is based on results from the Phase 3 CheckMate -648 trial. The FDA assigned a Prescription Drug User Fee Act (PDUFA) goal date of May 28, 2022. (link)
In August, the company announced that Opdivo was approved by the FDA for the adjuvant treatment of patients with urothelial carcinoma who are at high risk of recurrence after undergoing radical resection, regardless of prior neoadjuvant chemotherapy, nodal involvement or PD-L1 status. The approval is based on the Phase 3 CheckMate -274 trial. (link)
In August, the company announced that the EMA has validated its Type II Variation MAA for both Opdivo in combination with Yervoy and Opdivo in combination with fluoropyrimidine- and platinum-containing chemotherapy as first-line treatments for adult patients with unresectable advanced, recurrent or metastatic ESCC. The application is based on results from the Phase 3 CheckMate-648 trial. (link)
In July, the company announced that the EC has approved Opdivo for the adjuvant treatment of adult patients with esophageal or GEJ cancer who have residual pathologic disease following prior neoadjuvant chemoradiotherapy. The EC’s decision is based on results from the Phase 3 CheckMate -577 trial. (link)
Medical Meetings
In September, the company presented new data and analyses across its cancer portfolio (link) at the European Society for Medical Oncology (ESMO) (Free ESMO Whitepaper) 2021 Virtual Congress, including results from the:
Phase 3 CheckMate -214 trial, which showed that Opdivo plus Yervoy continued to demonstrate durable, long-term survival compared to sunitinib at five years in patients with previously untreated advanced or metastatic renal cell carcinoma. (link)
Phase 2 CheckMate -743 trial that demonstrated a durable survival benefit at three years with first-line treatment of Opdivo plus Yervoy compared to platinum-based standard-of-care chemotherapy in patients with unresectable malignant pleural mesothelioma, regardless of histology. (link)
relatlimab
Regulatory
In September, the company announced that the FDA has accepted for priority review the Biologics License Application for the relatlimab and nivolumab fixed-dose combination for the treatment of patients 12 years and older with unresectable or metastatic melanoma. The application is based on the Phase 2/3 RELATIVITY-047 trial. The FDA assigned a PDUFA goal date of March 19, 2022. (link)
Hematology
Abecma
Regulatory
In August, the company announced that the EC has granted Conditional Marketing Authorization for Abecma(idecabtagene vicleucel; ide-cel), a first-in-class B-cell maturation antigen-directed chimeric antigen receptor (CAR) T cell immunotherapy, for the treatment of adult patients with relapsed and refractory multiple myeloma, who have received at least three prior therapies, including an immunomodulatory agent, a proteasome inhibitor and an anti-CD38 antibody and have demonstrated disease progression on the last therapy. The approval of Abecma is based on the pivotal Phase 2 KarMMa trial. (link)
Immunology
Zeposia
Regulatory
In October, the company announced that the CHMP of the EMA has recommended approval of Zeposia(ozanimod) for the treatment of adults with moderately to severely active ulcerative colitis (UC) who have had an inadequate response, lost response, or were intolerant to either conventional therapy or a biologic agent. The recommendation is based on results from the pivotal Phase 3 True North trial. (link)
Medical Meetings
In October, the company presented new data from the Phase 3 DAYBREAK trial reinforcing the long-term efficacy and safety profile of Zeposia in patients with relapsing forms of multiple sclerosis. (link)
Orencia
Regulatory
In August, the company announced that the FDA has accepted its supplemental sBLA for Orencia (abatacept) for the prevention of moderate to severe acute graft versus host disease in patients six years of age and older receiving unrelated donor hematopoietic stem cell transplantation. The FDA granted the application Priority Review and assigned a PDUFA goal date of December 23, 2021. The submission is based on results from the Phase 2 GVHD-1 trial, also known as ABA2, and a non-interventional (observational) study known as GVHD-2. (link)
deucravacitinib
Clinical
In October, the company announced the Phase 2 LATTICE-UC study evaluating deucravacitinib compared to placebo in moderate to severe UC did not meet the primary efficacy endpoint of clinical remission at week 12, nor secondary efficacy endpoints. The safety profile of deucravacitinib was consistent with previously reported studies in psoriasis and psoriatic arthritis, and no new safety signals were observed. The potential of deucravacitinib in UC continues to be evaluated in IM011-127, a second Phase 2 trial that also includes a higher dose. (link)
Medical Meetings
In September, the company presented new data and analyses highlighting the breadth and depth of our research on deucravacitinib as well as the emerging dermatology pipeline at the European Academy of Dermatology and Venereology (EADV) 30th Anniversary Congress. (link)
Diversity, Equity and Inclusion
In August, the company announced a collaboration with five Historically Black Colleges and Universities (HBCU) to launch Tomorrow’s Innovators—a multimillion dollar strategic alliance to attract top HBCU-affiliated talent to the bio-pharma industry. (link)
Financial Guidance
Bristol Myers Squibb is updating its 2021 GAAP EPS guidance range of $2.77 – $2.97 to $2.68 – $2.83 and its non-GAAP EPS guidance range of $7.35 – $7.55 to $7.40 – $7.55. Both GAAP and non-GAAP guidance assume current exchange rates. Key 2021 GAAP and non-GAAP line-item guidance assumptions are:
Worldwide revenues increasing in the high-single digits.
Gross margin as a percentage of revenue is expected to be approximately 79% for GAAP and approximately 80% for non-GAAP.
Marketing, selling and administrative expenses to be in-line with 2020 levels for GAAP and increasing in the low-single digits for non-GAAP.
Research and development expenses increasing in the low-single digits for GAAP and increasing in the mid-single digits for non-GAAP.
An effective tax rate of approximately 26% for GAAP and approximately 16.5% for non-GAAP.
The 2021 financial guidance excludes the impact of any potential future strategic acquisitions and divestitures, and any specified items that have not yet been identified and quantified. The 2021 non-GAAP EPS guidance is explained and further excludes other specified items as discussed under "Use of Non-GAAP Financial Information." The financial guidance is subject to risks and uncertainties applicable to all forward-looking statements as described elsewhere in this press release.
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, Facebook, and Instagram.
There will be a conference call on October 27, 2021 at 10 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 using this link which becomes active 15 minutes prior to the scheduled start time and entering your information to be connected. Investors and the general public can also access the live webcast by dialing in the U.S. toll free 800-263-0877 or international +1 313-209-7315, confirmation code: 8911662. 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 on View Source or by dialing in the U.S. toll free 888-203-1112 or international +1 719-457-0820, confirmation code: 8911662. The replay will be available beginning at 1:30 p.m. ET on October 27 through 1:30 p.m. ET on November 10, 2021.
Use of Non-GAAP Financial Information
In discussing financial results and guidance, the company refers to financial measures that are not in accordance with U.S. Generally Accepted Accounting Principles (GAAP). The non-GAAP financial measures are provided as supplemental information to the financial measures presented in this press release that are calculated and presented in accordance with GAAP and are presented because management has evaluated the company’s financial results both including and excluding the adjusted items or the effects of foreign currency translation, as applicable, and believes that the non-GAAP financial measures presented portray the results of the company’s baseline performance, supplement or enhance management, analysts and investors overall understanding of the company’s underlying financial performance and trends and facilitate comparisons among current, past and future periods. For example, non-GAAP earnings and EPS information are indications of the company’s baseline performance before items that are considered by us to not be reflective of the company’s ongoing results. 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. In addition, non-GAAP gross margin, which is gross profit excluding certain specified items as a percentage of revenues, non-GAAP marketing, selling and administrative expenses, which is marketing, selling and administrative expense excluding certain specified items, and non-GAAP research and development expenses, which is research and development expenses excluding certain specified items, are relevant and useful for investors because they allow investors to view performance in a manner similar to the method used by our management and make it easier for investors, analysts and peers to compare our operating performance to other companies in our industry and to compare our year-over-year results.
This earnings release and the accompanying tables also provide certain revenues and expenses as well as non-GAAP measures excluding the impact of foreign exchange. We calculate foreign exchange impacts by converting our current-period local currency financial results using the prior period average currency rates and comparing these adjusted amounts to our current-period results.
Non-GAAP financial measures such as non-GAAP earnings and related EPS information are adjusted to exclude certain costs, expenses, gains and losses and other specified items that are evaluated on an individual basis 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 past or future operating results. These items are excluded from non-GAAP earnings and related EPS information because the company believes they neither relate to the ordinary course of the company’s business nor reflect the company’s underlying business performance. Similar charges or gains were recognized in prior periods and will likely reoccur in future periods, including amortization of acquired intangible assets, including product rights that generate a significant portion of our ongoing revenue and will recur until the intangible assets are fully amortized, unwind of inventory fair value adjustments, acquisition and integration expenses, restructuring costs, accelerated depreciation and impairment of property, plant and equipment and intangible assets, R&D charges or other income resulting from up-front or contingent milestone payments in connection with the acquisition or licensing of third-party intellectual property rights, divestiture gains or losses, stock compensation resulting from accelerated vesting of Celgene awards, certain retention-related employee compensation charges related to the Celgene transaction, pension, legal and other contractual settlement charges, equity investment and contingent value rights fair value adjustments (including fair value adjustments attributed to limited partnership equity method investments beginning in 2021) and amortization of fair value adjustments of debt acquired from Celgene in our 2019 exchange offer, among other items. Certain other significant tax items are also excluded such as the impact resulting from internal transfer of intangible assets and the Otezla* divestiture in the second quarter 2020. 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.
Because the non-GAAP financial measures are not calculated in accordance with GAAP, they should not be considered superior to and are not intended to be considered in isolation or as a substitute for the related financial measures presented in the press release that are 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. We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.
Reconciliations of the non-GAAP financial measures to the most comparable GAAP measures are provided in the accompanying financial tables and also available on the company’s website at www.bms.com. Within the attached financial tables presented, certain columns and rows may not add due to the use of rounded numbers. Percentages and earnings per share amounts presented are calculated from the underlying amounts.
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.