On October 25, 2022 Bristol Myers Squibb (NYSE:BMY) reported that results for the third quarter of 2022, which reflect strong in-line and new product portfolio growth (Press release, Bristol-Myers Squibb, OCT 25, 2022, View Source [SID1234622386]).
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"Our strong results reflect growth of our in-line and new product portfolios," said Giovanni Caforio, M.D., board chair and chief executive officer, Bristol Myers Squibb. "Our teams continue to progress our pipeline and achieve significant regulatory and clinical milestones, including the approval of Sotyktu, a first-in-class, TYK2 inhibitor, to treat moderate to severe plaque psoriasis. Our nine new product launches over the last three years including three first-in-class launches this year, combined with progress in our robust and diverse product pipeline, have built a strong foundation for our company. Combined with our financial strength and talented employees, Bristol Myers Squibb is well positioned for growth and to advance new medicines for patients."
1Acquired IPRD refers to certain in-process research and development ("Acquired IPRD") charges resulting from upfront or contingent milestone payments in connection with asset acquisitions or licensing of third-party intellectual property rights.
Third Quarter
* GAAP and non-GAAP earnings per share include the net impact of Acquired IPRD charges and licensing income which increased by $0.02 per share in the third quarter of 2022 compared to a reduction of ($0.09) per share in the third quarter of 2021.
THIRD QUARTER FINANCIAL RESULTS
All comparisons are made versus the same period in 2021 unless otherwise stated.
Bristol Myers Squibb posted third quarter revenues of $11.2 billion, a decrease of 3%, driven by recent LOE products (primarily Revlimid) and foreign exchange impacts, partially offset by in-line products (primarily Eliquis and Opdivo) and our new product portfolio (primarily Opdualag, Abecma and Reblozyl). When adjusted for foreign exchange impacts, third quarter revenues remained consistent. Our in-line and new product portfolio increased 8% to $8.6 billion, or 13% when adjusted for foreign exchange impacts.
U.S. revenues increased 9% to $7.9 billion in the quarter. International revenues decreased 24% to $3.3 billion in the quarter. When adjusted for foreign exchange impacts, international revenues decreased 14%, primarily due to lower demand of Revlimid as a result of generic erosion, partially offset by in-line products (primarily Opdivo) and our new product portfolio.
Gross margin decreased from 80.3% to 79.0% and on a non-GAAP basis, decreased from 81.1% to 79.8% in the quarter primarily due to product mix, partially offset by foreign exchange impacts and related hedging settlements.
Marketing, selling and administrative expenses increased 8% to $1.9 billion in the quarter, primarily due to higher costs to support new product launches and cash settlement of Turning Point Therapeutics, Inc. ("Turning Point") unvested stock awards, partially offset by foreign exchange impacts. On a non-GAAP basis, marketing, selling and administrative expenses increased 4% to $1.9 billion primarily due to higher investments to support new product launches, partially offset by foreign exchange impacts.
Research and development expenses decreased 19% to $2.4 billion in the quarter, primarily due to an in-process research and development (IPRD) impairment charge in 2021, timing of clinical development spend and foreign exchange impacts, partially offset by cash settlement of Turning Point unvested stock awards. On a non-GAAP basis, research and development expenses decreased 5% to $2.3 billion in the quarter primarily due to timing of clinical development spend and foreign exchange impacts.
Acquired IPRD decreased from $271 million in the same period a year ago to $30 million in the current quarter. Acquired IPRD in the current quarter is related to the GentiBio licensing transaction. Acquired IPRD in the same period a year ago was primarily related to the Agenus licensing transaction ($200 million).
Amortization of acquired intangible assets decreased 5% to $2.4 billion in the quarter, primarily due to a change in the expected expiration of the market exclusivity period for Pomalyst to the first quarter of 2026.
The GAAP effective tax rate changed from 28.0% to 27.2% in the quarter and non-GAAP effective tax rate changed from 14.6% to 16.9% in the quarter due to changes in previously estimated annual effective tax rates due to jurisdictional earnings mix.
The company reported net earnings attributable to Bristol Myers Squibb of $1.6 billion, or $0.75 per share, in the third quarter, compared to $1.5 billion, or $0.69 per share, for the same period a year ago. In addition to the items discussed above, the results include the impact of fair value adjustments on equity investments in both periods.
The company reported non-GAAP net earnings attributable to Bristol Myers Squibb of $4.3 billion, or $1.99 per share, in the third quarter, compared to non-GAAP net earnings of $4.3 billion, or $1.93 per share, for the same period a year ago.
In addition to the items discussed above, the earnings per share results in the current period include the impact of lower weighted-average common shares outstanding.
Beginning with the first quarter of 2022, significant R&D charges or other income resulting from upfront or contingent milestone payments in connection with asset acquisitions or licensing of third-party intellectual property rights are no longer excluded from non-GAAP results. These R&D charges that were previously specified are now presented in a new financial statement line item labeled Acquired IPRD. GAAP and non-GAAP earnings per share include the net impact of Acquired IPRD charges and licensing income which increased by $0.02 per share in the third quarter of 2022 compared to a reduction of ($0.09) per share in the third quarter of 2021. For purposes of comparability, the non-GAAP financial results for the third quarter of 2021 have been updated to reflect this change. A discussion of the non-GAAP financial measures is included under the "Use of Non-GAAP Financial Information" section.
* In excess of +100%
** Includes over-the-counter (OTC) products, royalty revenue and other mature products.
REVENUE HIGHLIGHTS
In-Line Products
Revenues for in-line products in the third quarter were $8.1 billion compared to $7.7 billion in the prior year period, representing an increase of 5% or 10% when adjusted for foreign exchange. In-line products revenue was largely driven by:
Eliquis revenues grew 10% compared to the prior year period. U.S. revenues were $1.7 billion compared to $1.3 billion in the prior year period, representing an increase of 31% driven primarily by demand growth and favorable gross to net adjustments. International revenues were $926 million compared to $1.1 billion in the prior year period, representing a decrease of 16% driven by foreign exchange impacts and lower average net selling prices. When adjusted for foreign exchange impacts, Eliquis’ international revenues declined 2%.
Opdivo revenues increased 7% compared to the prior year period. U.S. revenues were $1.2 billion compared to $1.1 billion in the prior year period, representing an increase of 17% driven by higher demand across multiple indications, including Opdivo plus Yervoy-based combinations for non-small cell lung cancer, Opdivo plus Cabometyx combination for kidney cancer, and Opdivo-based therapies for various gastric, bladder and esophageal cancers, partially offset by declining second-line eligibility across tumors and increased competition. International revenues were $804 million compared to $843 million in the prior year period, representing a decrease of 5% driven by foreign exchange impacts, partially offset by higher demand as a result of launches for additional indications and core indications. When adjusted for foreign exchange impacts, Opdivo’s international revenues increased 8%.
New Product Portfolio
New product portfolio revenues grew to $553 million compared to $344 million in the prior year period, representing growth of 61% driven by the launch of Opdualagand higher demand for Abecma and Reblozyl. Excluding foreign exchange, new product portfolio revenues grew 66%.
Recent LOE Products
Revlimid revenues declined by 28% compared to the prior year period. U.S. revenues decreased 6% to $2.2 billion as compared to the prior year period primarily driven by lower demand as a result of generic erosion. International revenues were $250 million compared to $1.0 billion in the prior year period, representing a decrease of 76% driven by lower demand as a result of generic erosion and to a lesser extent, foreign exchange impacts.
PRODUCT AND PIPELINE UPDATE
Cardiovascular
Category
Asset
Milestone
Regulatory
Camzyos
(mavacamten)
The U.S. Food and Drug Administration (FDA) has accepted our supplemental new drug application for Camzyos for an expanded indication for the treatment of adults with symptomatic New York Heart Association class II-III obstructive hypertrophic cardiomyopathy to improve functional capacity, improve symptoms and reduce the need for septal reduction therapy. The FDA assigned a Prescription Drug User Fee Act goal date of June 16, 2023.
Clinical & Research
Milvexian
Phase 2 AXIOMATIC-SSP trial showed that milvexian had an approximate 30% relative risk reduction in recurrent symptomatic ischemic strokes (accepted regulatory endpoint) and favorable safety profile in three arms compared to placebo when used in combination with background dual antiplatelet therapy in patients with an acute non-cardioembolic ischemic stroke or transient ischemic attack. The primary objective of this trial was to detect a dose response for the composite endpoint of symptomatic ischemic stroke + MRI detected covert brain infarction across a 16-fold dose range; a dose response was not observed for the composite endpoint. The trial was conducted by The Bristol Myers Squibb-Janssen Collaboration.
Oncology
Category
Asset
Milestone
Regulatory
OpdualagTM
(nivolumab and relatlimab-rmbw)
The European Commission (EC) approved the fixed-dose combination of Opdualag for the first-line treatment of advanced (unresectable or metastatic) melanoma in adults and adolescents 12 years of age and older with tumor cell PD-L1 expression < 1%. The EC’s decision is based upon an exploratory analysis of results from the Phase 2/3 RELATIVITY-047 trial.
Clinical & Research
Opdivo
(nivolumab)
Phase 3 CheckMate -76K trial evaluating Opdivo as a single agent in the adjuvant setting in patients with completely resected stage IIB/C melanoma met its primary endpoint and demonstrated a statistically significant and clinically meaningful benefit in recurrence-free survival versus placebo at a pre-specified interim analysis.
Part A of the Phase 3 CheckMate –914 trial, evaluating Opdivo plus Yervoy as an adjuvant treatment for patients with localized renal cell carcinoma who have undergone full or partial removal of the kidney and who are at moderate or high risk of relapse, did not meet the primary endpoint of disease-free survival as assessed by Blinded Independent Central Review. The safety profile was consistent with previously reported studies of the Opdivo plus Yervoy combination in solid tumors.
Hematology
Category
Asset
Milestone
Clinical & Research
Abecma
(idecabtagene vicleucel)
Positive topline results from the Phase 3 KarMMa-3 trial showed treatment with Abecma compared to standard combination regimens in adults with relapsed and refractory multiple myeloma after two to four prior lines of therapy and refractory to the last regimen met its primary endpoint of demonstrating a statistically significant improvement in progression-free survival. Treatment with Abecma also showed an improvement in the key secondary endpoint of overall response rate compared to standard regimens. The trial was conducted with 2seventy bio (NASDAQ: TSVT).
Immunology
Category
Asset
Milestone
Regulatory
SotyktuTM
(deucravacitinib)
The FDA approvedSotyktu, a first-in-class, oral, selective, allosteric tyrosine kinase 2 (TYK2) inhibitor, for the treatment of adults with moderate-to-severe plaque psoriasis who are candidates for systemic therapy or phototherapy.
In addition, Japan’s Ministry of Health, Labour and Welfare approved Sotyktu for the treatment of patients with plaque psoriasis, generalized pustular psoriasis, or erythrodermic psoriasis, who have had an inadequate response to conventional therapies. The approvals are based on results from the pivotal Phase 3 POETYK PSO-1 and POETYK PSO-2 clinical trials.
Clinical & Research
Sotyktu
Two-year results from the POETYK PSO long-term extension trial demonstrated that clinical efficacy was maintained with continuous Sotyktu treatment in adult patients with moderate-to-severe plaque psoriasis.
Zeposia
(ozanimod)
New post hoc analyses from the Phase 3 True North trial evaluating duration of response following continuous Zeposia treatment for up to one year and following treatment interruption in patients with moderately to severely active ulcerative colitis showed that Zeposia prevents disease relapse over one year of continuous treatment and maintains disease control even in the event of temporary interruption.
Business Development
In August, the company announced that it had completed its acquisition of Turning Point in an all-cash transaction. Through the transaction, the company gained repotrectinib, a next-generation, potential best-in-class tyrosine kinase inhibitor targeting the ROS1 and NTRK oncogenic drivers of non-small cell lung cancer (NSCLC) and other advanced solid tumors. (link)
Environmental, Social & Governance (ESG)
As a leading biopharma company, we understand our responsibility extends well beyond the discovery, development, and delivery of innovative medicines. Our evolving Environmental, Social, and Governance (ESG) strategy builds on a legacy of comprehensive and global sustainability efforts. To learn more about our priorities and goals, please visit our latest ESG report.
In September, the company issued our 2021 Global Inclusion and Diversity Report which outlines our strategy and the progress we have made toward our 2025 Inclusion & Diversity and Health Equity Commitments, among others. To learn more, please visit our latest Global Inclusion & Diversity Report.
Financial Guidance
Bristol Myers Squibb is adjusting its 2022 GAAP line-item guidance as follows:
Adjusting GAAP EPS guidance primarily due to the acquisition of Turning Point and reaffirming non-GAAP EPS guidance.
Key 2022 GAAP and non-GAAP line-item guidance assumptions are:
1 Key LOE Products = Revlimid and Abraxane
2 Operating Expenses = MS&A and R&D, excluding Acquired IPRD and Amortization of acquired intangible assets
3 July guidance includes YTD net impact of ($0.24) from Acquired IPRD and licensing income; October guidance includes net impact of ($0.22) from Acquired IPRD and licensing income
The 2022 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 and impact of future Acquired IPRD charges. To the extent we have quantified the impact of significant R&D charges or other income resulting from upfront or contingent milestone payments in connection with asset acquisitions or licensing of third-party intellectual property rights, we may update this information from time to time on our website, www.bms.com, in the "Investors" section. GAAP and non-GAAP guidance assume current exchange rates. The 2022 non-GAAP EPS guidance is further explained 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.
Conference Call Information
Bristol Myers Squibb will host a conference call tomorrow, Wednesday, October 26, 2022 at 8 a.m. ET during which company executives will review the quarterly financial results 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." target="_blank" title="View Source." rel="nofollow">View Source Investors and the public can also access the live webcast by dialing in the U.S. toll free 888-330-2388 or international +1 240-789-2707, confirmation code: 24168. Dial-in participants can register for the conference call here and once registration is complete, will not require operator assistance to connect. Materials related to the call will be available at View Source prior to the start of the conference call.
A replay of the webcast will be available on View Source approximately three hours after the conference call concludes. A replay of the conference call will be available beginning at 11:30 a.m. ET on October 26 through 11:30 a.m. ET on November 9, 2022, by dialing in the U.S. toll free 800-770-2030 or international +1 647-362-9199, confirmation code: 24168.