Bristol Myers Squibb Reports Second Quarter 2020 Financial Results

On August 6, 2020 Bristol Myers Squibb (NYSE:BMY) reported results for the second quarter of 2020, which reflect strong product sales, continued advancement of the pipeline and robust operating performance (Press release, Bristol-Myers Squibb, AUG 6, 2020, View Source [SID1234563139]).

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"Our second quarter results reflect the passion and focus of our employees, who continue to introduce new medicines, support patients with serious diseases and deliver strong results during the COVID-19 pandemic," said Giovanni Caforio, M.D., chairman and chief executive officer, Bristol Myers Squibb. "Our teams drove strong commercial execution while continuing to progress our integration initiatives. With several new product launches and the achievement of multiple milestones from our late-stage pipeline, I am confident that we are building a leading biopharma with a renewed portfolio of transformational medicines. Our financial flexibility and continued opportunities to invest in innovation position us well to deliver for the long-term."

* The pro forma revenues assume the company’s acquisition of Celgene (Celgene Acquisition) and its divestiture of Otezla to Amgen Inc. (Otezla Divestiture) occurred on January 1, 2019 and exclude foreign currency hedge gains and losses. Management believes that measuring revenue rates on a comparable pro forma basis is an appropriate way for investors to best understand the underlying performance of the business. See "Worldwide Pro Forma Revenue" in Quarterly Package of Financial Information for this quarter, which is available on bms.com/investors/financial-reporting/quarterly-results, for information on the revenue of the company and Celgene on a stand-alone basis for the prior-year period. Otezla is a trademark of Amgen Inc.

SECOND QUARTER FINANCIAL RESULTS
All comparisons are made versus the same period in 2019 unless otherwise stated.

•Bristol Myers Squibb posted second quarter revenues of $10.1 billion, an increase of 61% on a reported basis, or 63% when adjusted for foreign exchange. The increase was driven primarily by the impact of the Celgene Acquisition, which was completed on November 20, 2019. Revenues remained consistent on a pro forma basis, as sales were estimated to be negatively impacted by approximately $600 million due mainly to COVID-19 related channel inventory work downs from the first quarter, as well as lower demand resulting from reduced new patient starts and fewer patient visits to physicians in the pandemic.

•U.S. revenues increased 77% to $6.5 billion in the quarter. International revenues increased 40% to $3.6 billion in the quarter. When adjusted for foreign exchange impact, international revenues increased 43%.

•Gross margin as a percentage of revenue increased from 68.6% to 73.4% in the quarter primarily due to product mix, partially offset by the unwinding of inventory purchase price accounting adjustments.

•Marketing, selling and administrative expenses increased 51% to $1.6 billion in the quarter primarily due to $600 million of costs associated with the broader portfolio resulting from the Celgene Acquisition.

•Research and development expenses increased 90% to $2.5 billion in the quarter primarily due to $1.1 billion of costs associated with the broader portfolio resulting from the Celgene Acquisition.

•Amortization of acquired intangible assets was $2.4 billion in the quarter primarily due to the Celgene Acquisition.

•Income taxes were $1.7 billion on pre-tax earnings of $1.6 billion in the quarter primarily due to tax charges resulting from an internal transfer of certain intangible assets and the Otezla Divestiture and purchase price adjustments. The effective tax rate was 19.0% in the same period a year ago.

•The company reported net loss attributable to Bristol Myers Squibb of $85 million, or $0.04 per share, in the second quarter, compared to net earnings of $1.4 billion, or $0.87 per share, for the same period a year ago. The results in the current quarter include costs and expenses resulting from purchase price accounting, contingent value rights fair value adjustments and other acquisition and integration expenses.

•The company reported non-GAAP net earnings attributable to Bristol Myers Squibb of $3.8 billion, or $1.63 per share, in the second quarter, compared to net earnings of $1.9 billion, or $1.18 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.

•Cash, cash equivalents and marketable debt securities were $22.2 billion and debt was $46.7 billion, as of June 30, 2020.
* Products were acquired as part of the Celgene Acquisition.
** Pro forma product revenues assume the Celgene Acquisition and the Otezla Divestiture occurred on January 1, 2019 and exclude foreign currency hedge gains and losses. Management believes that measuring product revenue rates on a comparable pro forma basis is an appropriate way for investors to best understand the underlying performance of the business. See "Worldwide Pro Forma Revenues" in the Quarterly Package of Financial Information for this quarter, which is available on bms.com/investors/financial-reporting/quarterly-results, for information on the product revenue of the company and Celgene for the prior-year period.

* Products were acquired as part of the Celgene Acquisition.
** Pro forma product revenues assume the Celgene Acquisition and the Otezla Divestiture occurred on January 1, 2019 and exclude foreign currency hedge gains and losses. Management believes that measuring product revenue rates on a comparable pro forma basis is an appropriate way for investors to best understand the underlying performance of the business. See "Worldwide Pro Forma Revenues" in the Quarterly Package of Financial Information for this quarter, which is available on bms.com/investors/financial-reporting/quarterly-results, for information on the product revenue of the company and Celgene for the prior-year period.

SECOND QUARTER PRODUCT AND PIPELINE UPDATE

Cardiovascular

Eliquis

Patent Update
•In August, the Bristol-Myers Squibb-Pfizer Alliance announced the U.S. District Court decision to uphold both the composition of matter patent (US 6,967,208) and formulation patent (US 9,326,945) covering Eliquis (apixaban). (link)

Oncology and Hematology

Opdivo

Regulatory
•In June, the company announced the U.S. Food and Drug Administration (U.S. FDA) approval of Opdivo (nivolumab) for the treatment of patients with unresectable advanced, recurrent or metastatic esophageal squamous cell carcinoma (ESCC) after prior fluoropyrimidine-and platinum-based chemotherapy. (link)
•In May, the company announced Opdivo plus Yervoy (ipilimumab) given with two cycles of platinum-doublet chemotherapy was approved by the U.S. FDA for the first-line treatment of adult patients with metastatic or recurrent non-small cell lung cancer (NSCLC) with no EGFR or ALK genomic tumor aberrations. This approval was based on the Phase 3 CheckMate -9LA study. (link)
•In May, the company announced the U.S. FDA approved Opdivo plus Yervoy for the first-line treatment of adult patients with metastatic NSCLC whose tumors express PD-LI>1% as determined by an FDA-approved test, with no EGFR or ALK genomic tumor aberrations. This approval was based on data from Part 1a of the Phase 3 Checkmate -227 study. (link)

Reblozyl

Regulatory
•In June, the company and Acceleron Pharma Inc. announced the European Commission (EC) approved Reblozyl (luspatercept) for the treatment of transfusion-dependent anemia in adult patients with myelodysplastic syndromes (MDS) or beta thalassemia. (link)

ide-cel

Regulatory
•In July, the company and bluebird bio, Inc. announced that the companies submitted the Biologics License Application (BLA) to the U.S. FDA for idecabtagene vicleucel (ide-cel; bb2121) for patients with heavily pre-treated relapsed and refractory multiple myeloma. This submission follows the company’s receipt of a Refusal to File letter from the U.S. FDA in May 2020 following the original BLA submission from March 2020. (link)
•In May, the company announced that the European Medicines Agency (EMA) validated its Marketing Authorization Application (MAA) for ide-cel; bb2121, the company’s investigational B-cell maturation antigen (BCMA)-directed chimeric antigen receptor (CAR) T cell immunotherapy co-developed with bluebird bio, Inc., for the treatment of adult patients with multiple myeloma who have received at least three prior therapies, including an immunomodulatory agent, a proteasome inhibitor and an anti-CD38 antibody. (link)

CC-486

Regulatory
•In May, the company announced that the EMA validated its MAA for CC-486 for the maintenance treatment of adult patients with acute myeloid leukemia (AML), who achieved complete remission (CR) or CR with incomplete blood count recovery (CRi), following induction therapy with or without consolidation treatment, and who are not candidates for, or who choose not to proceed to, hematopoietic stem cell transplantation. (link)

Pomalyst

Regulatory
•In May, the company announced that the U.S. FDA approved Pomalyst (pomalidomide) for patients with AIDS-related Kaposi sarcoma whose disease has become resistant to highly active antiretroviral therapy (HAART), or in patients with Kaposi sarcoma who are HIV-negative. (link)

Liso-cel

Regulatory
•In July, the company announced that the EMA validated the MAA for liso-cel (lisocabtagene maraleucel), a CD19-directed chimeric antigen receptor (CAR) T cell therapy for the treatment of adults with relapsed or refractory large B-cell lymphoma after at least two prior therapies. (link)
Medical Conferences

•In May, at the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) 2020 Virtual Scientific Program, the company announced important new data and analysis across its cancer portfolio (link), including:
◦First disclosure of data from the Phase 3 CheckMate -9LA trial evaluating Opdivo plus Yervoy given concomitantly with two cycles of chemotherapy, for the first-line treatment of metastatic NSCLC. (link)
◦Three-year follow-up results from the Phase 3 Checkmate -227 trial, demonstrating that Opdivo plus Yervoy provided sustained improvements in overall survival (OS) and additional efficacy measures as a first-line treatment for patients with metastatic NSCLC. (link)
◦First presentation of data from the Phase 2 KarMMA study with bluebird bio, Inc. evaluating the efficacy and safety of the companies’ investigational B-cell maturation antigen (BCMA)-directed chimeric antigen receptor (CAR) T cell immunotherapy, idecabtagene vicleucel (ide-cel; bb2121), in patients with relapsed and refractory multiple myeloma. (link)
•In June, at the 25th European Hematology Association (EHA) (Free EHA Whitepaper), the company announced important new data and analysis from 60 company-sponsored studies, highlighting the company’s approaches to treating blood cancers and other diseases. (link)

Immunology

Zeposia

Commercial
•In June, the company announced the commercial launch and availability of Zeposia (ozanimod), a new oral treatment for relapsing forms of multiple sclerosis, in the U.S. Zeposia was approved by the U.S. FDA on March 25, 2020. (link)

Regulatory
•In May, the company announced the EC approval Zeposia for the treatment of adult patients in the European Union with relapsing forms of multiple sclerosis. (link)
Clinical
•In June, the company announced results from True North, a pivotal Phase 3 trial evaluating oral Zeposia as an induction and maintenance therapy for adult patients with moderate to severe ulcerative colitis. True North met both primary endpoints of clinical remission in induction at Week 10 and in maintenance at Week 52. (link)

Orencia

Clinical
•In June, at the European E-Congress of Rheumatology (EULAR) 2020, the company announced results from the open-label switch period of Early AMPLE, a Phase IV exploratory biomarker study assessing the differences by which Orencia (abatacept) and adalimumab, interfere with disease progression in moderate-to-severe early rheumatoid arthritis (RA) patients who tested positive (seropositive) for certain autoantibodies. (link)

COVID-19 Pandemic Response
During the current world health crisis, the company continues to take all necessary actions to promote public health by carrying out its mission of providing life-saving medicines to the patients who depend on the company and supporting relief efforts across the globe. (link)

Financial Guidance
Bristol Myers Squibb is updating its 2020 GAAP EPS guidance range from $0.37 – $0.57 to ($0.06) – $0.09. In addition, the company is updating its 2020 non-GAAP EPS guidance range of $6.00 – $6.20 to $6.10 – $6.25. Adjusted 2020 GAAP and non-GAAP line items are:
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scheduled start time and entering your information to be connected. 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 12:00 p.m. ET on August 6 through 12:00 p.m. ET on August 20, 2020. The replay will also be available through View Source or by dialing in the U.S. toll free 888-203-1112 or international 719-457-0820, confirmation code: 8970168.