Bristol-Myers Squibb Company (NYSE:BMY)
Morgan Stanley Healthcare Conference
September 11, 2017 14:15 ET
Giovanni Caforio – Chairman & CEO
David Risinger – Morgan Stanley
Okay. So thank you, everybody for joining us for the Bristol-Myers session. I need you to first — I need to first refer you to disclaimers at www.morganstanley.com/researchdisclosures. It’s very much my pleasure to welcome the Chairman and CEO of Bristol-Myers, Giovanni Caforio. Giovanni originally joined Bristol in the year 2000 and he took on positions of increasing responsibility, eventually becoming Chief Commercial Officer in 2013 and Chief Operating Officer in 2014, and prior to joining Bristol he spend 12 years with Abbott in a number of leadership position.
And I thought it would be great Giovanni since you were named Chairman earlier this year to talk about really your high level vision for Bristol-Myers, how you see the Company evolving in coming years and how you want to develop the business from where it stands today.
Sure. Thank you, David. Good afternoon, everyone. So first of all, let me say there is really strong momentum in our business today and so one of my priorities obviously is to continue to drive execution from R&D all the way to the commercial organization and other parts of the Company.
Now with respect to long-term vision, we are a biopharma company that has a unique focus on science, innovation and transformative medicines; that has been our strategy for a few years and I don’t see that changing. In fact, I see our focus on innovative medicines only strengthening going forward. Then there are a number of things that we are doing in the Company today to execute against that vision. So first of all, we have today what I would describe as the most promising early pipeline than we’ve had in a long time and so we’re working really hard to make sure that we continue to advance that pipeline as quickly as possible to bring more medicines to more patients, faster.
Our R&D organization and our R&D approach is changing, in the sense that it is becoming — I would say I describe it as much more open in terms of focusing increasingly on partnerships with Academia, the providers, prescribers, patients and payers and increasingly we’re bringing forward programs that are brought in the approach that we have to every disease. So you may know that earlier this year I decided, we decided to bring onboard Tom Lynch to be our new Head of R&D. The objective for Tom has really been from the very beginning to strengthen the investment we are making in translational research data and analytics capability, real world data as part of our integrated R&D effort. I see that continuing to accelerate going forward because science is moving really quickly and it requires a company like us to be thinking about R&D very differently.
Similarly, I would say that our commercial organization has evolved and is continuing to evolve. I’m quite proud that commercial execution has been very strong. Clearly, in the last couple of years all of our brands have continued to do well competitively and grow significantly in their markets. At the same time we are investing incrementally to make sure that we interact with payers, more and more effectively around the world because clearly the need to demonstrate value to payers is only increasing overtime and so our focus is to take what is already highly performing commercial organization and making — make it even more competitive, particularly with respect to the interaction with payers and providers.
You may remember that about a year ago, I announced significant reorganization in the Company, a transformation effort that was meant to be doing two things; first one, it was meant to be really accelerating execution behind key priorities in the Company. Second, it was meant to be enabling us to maintain our expenses roughly flat between 2016 and 2020 while significantly increasing investment behind R&D. And we are one year into the transformation effort and I’m actually really pleased with what I’m seeing; we are continuing to increase investment in R&D, we are maintaining a very clear control in terms of our total OpEx but execution, speed, agility in the Company has already increased very significantly and I think that’s part of executing against the vision that I described.
Q – David Risinger
That’s great. And maybe to talk a little bit more about how Tom Lynch is changing the R&D organization?
Yes. Again, Tom has — and some of you I’m sure know him. Tom has a fairly unique profile because he is clearly an experienced oncologist that has treated thousands of patients, he is a really good clinical investigator that has run some of the most important trials that have shaped the treatment of lung cancer. He has also had a lot of experience as an administrator of a provider network, and finally, he has worked with thousands of researchers in the industry. And I think these four dimensions are really critical to what I was discussing before with respect to the evolution of the R&D model because you do need to have a 360 degree understanding of the marketplace today to be good ahead of R&D. And some of the areas in which Tom is focusing are aligned with those.
First, a very clear focus on translational medicine, increasing our understanding of the biology of cancer, increasing our focus on biomarkers to be able to accelerate the development of our early pipeline. Second, a very clear focus on data and analytics, we’ve signed a number of agreements in partnerships in the last few months under his leadership to be able to access real world data from provider networks that can hopefully help us accelerate our own internal development efforts. And third, a very clear focus on partnership with Academia and the recruitment of talent for those capabilities that as a Company we need to be able to.
So I see Tom focusing on all of those areas and again, accelerating the way we bring our pipeline forward.
That’s very helpful. And I think just to update us on your M&A agenda; and how you think about external opportunities?
David, that really hasn’t changed. And what I would say is that business development from partnerships all the way to M&A, external development I should say has always been a key priority for us, it’s clearly been one of our pillars in terms of capital allocation strategy; that will continue to be the case.
In fact, I think one of the real competitive advantages for us as a Company is that we size our internal discovery to deliver only part of the innovation we need in order to ensure we have a sustainable growth because we want to make sure that our scientists, all the way from discovery understand the value of external development and look very openly at external opportunities. I see that as one of the strengths of the Company and I see that continuing going forward, where we are applying that is continuing to broaden our pipeline in the areas where we have deep expertise. And so for example, we did oncology, we want to broaden our pipeline, our portfolio beyond just a checkpoint inhibitors and you remember we recently signed an agreement with Clovis to embark in a joint development program within PARP. We acquired — in fact, we closed just a few days ago; we acquired a Company called IFM which takes us into innate immunity.
Those are example of broadening within oncology but also we’ve had activity in new immunosciences and fibrosis in heart failure to strengthening our programs there. I think that is going to continue, it’s very importance for us.
That’s helpful. And — maybe you could just give us a sense through what you think investors may under-appreciate about Bristol-Myers. You obviously hear questions on certain topic lines and you get to see things a lot differently. Being the CEO of the Company, so it would be great your thoughts.
Yes, I mean I — we’re don’t speculate in on investors views, I can tell you what my view is and I think that my view is that our pipeline is extremely exciting. As I said at the beginning, it’s probably the most exciting it’s been in a very, very long time in Company. When you look at the breadth of the target we are studying and progressing in just immune oncology, we have programs on going against ’18, really promising targets in immune oncology when you look at molecules outside of oncology from FGF21, BTK [ph], tick to a number of other programs that we have. They are very, very exciting, it’s obviously relatively early and so it is natural that interest and particularly external interest in those programs will increase as proof-of-concept data becomes available and every one of those programs progress, the real value of our early pipeline will come to like more and more. So we’re working very diligently to make sure that happens. I think this year has been really important year for us.
I think about the activity we have ahead of us between now and the end of the year; we will have registrational studies ongoing, not only with our late stage molecules but with the ideal program, both ours and the program we have in partnership with insight, FGF21, LOG3 [ph]; these are a number of acceleration of our programs potential registrational steady start which really bow into the progress we’re making with the other pipeline.
That’s very helpful. Maybe you could just update us on takeaways out of ASMO [ph] and then how we should think about your Opdivo [ph], the flexi side of that you’ll be moving into phase 3.
Sure, ASMO [ph] was — I mean is a really important meeting for us. We had a lot of data that was presented at ASMO and a lot of that data was really important and potentially practice changing. I would point to the following dataset, so obviously the survival advantage demonstrated by Opdivo and Yervoy in the first line renal cancer setting for study 214, we think that’s really important, the data was very compelling — is very compelling. The mathematical need in first line renal is very important and I think that is the second tumor in which Yervoy and Opdivo in combination show the ability to impact survival. I’m also encouraged by the fact that the tolerability of the regiment was quite good, clearly improved versus the schedule we have studied in the past in melanoma, so I think that’s a very, very important dataset.
Second, Opdivo in the adjuvant setting really important, we had introduced the first immune oncology agent in the adjuvant setting with Yervoy melanoma in the past. Opdivo has significantly better results than Yervoy, I think that’s practiced changing again for high risk patients that require an intervention in the adjuvant setting with melanoma, these are two good examples of our science moving forward, we presented some really interesting data again with the combo formulae to Leoma [ph] which is a very difficult disease to treat, again, nothing really has worked. And presented to new data on our own ID, sorry, on — like three program which was a broader patient set which confirmed the data we had seen at ASCO [ph] and I’m sure I’m forgetting a lot of really important data but there were several important datasets at ASCO which really demonstrates the breadth of our program and the different approaches that we are taking.
With respect to the IDO, we’ll see some more data at a Congress called fits [ph] later this year. We know we do have preclinical data which points the fact that our IDO has the potential to be a best-in-class molecule but we also know it is preclinical data and so I think it’s important to wait for some clinical evidence that that translates into a clinical benefit. Beyond that the mechanism IDO is really interesting, it’s early days and we think it’s useful to be able to have our own program because it gives us a lot of flexibility in terms of the ability to combine with other mechanisms of action and that’s why we are advancing our IDO program into registrational trials by the end of the year.
And how broad will that initiative be, the registrational trial?
I think we’ve originally — we are originally as far as our program is concerned, we are going to be starting trials in first time in melanoma in lung cancer, as you know, we have a totally separate partnership with Insight [ph] where we are studying advanced second line melanoma, first line lung cancer and head and neck cancer and that’s a different program.
Okay. And then I was hoping up to 227; could you just frame for us how investors should think about that dataset ahead of it being revealed? So just give us a framework for the components of the trail and how you’re thinking about it at this point just to set the stage?
Sure. So David, as we’ve said before we think about 227 as a program much more than as an individual trial and looking at our program in first line lung cancer as you know, that is the first part of 227 which is the largest component of that trial. 1,200 patients [indiscernible] positive patients where we are studying Opdivo combo of chemotherapy. The final results of this study should be available in the first half of next year. Interim analysis as we’ve discussed are dependent in terms of their timing on events that could happen at the end of this year, it could happen at the beginning of next year but nothing really has changed there. We are also studying Opdivo in combination with chemotherapy, we have one arm of that trial which looks at PDL-1 negative patients, there is another component to that trial which is all comers [ph] and I would say that the first one, the one that looks at PDL-1 negative patients is the one that enrolled first in about 500 patients and it’s fair to expect that that trial may hurt — may read at approximately the same time as the final analysis of the PD-1 positive patients so in the first part of next year for the negative. But all of those trails as you know are event driven and there is a degree of flexibility with timing depending on the speed at which the events happen.
The other thing that I would say as you may remember that we decided to also study another approach which is combining two cycles of chemotherapy to Opdivo and Yervoy; and as we communicated before, we wanted to do a safety leading with that regiment before beginning to a roll into the larger trial, that safety leading has been completed and the study now is at early [ph] and we think that’s an interesting approach as well. So when you look at that and you combine that with the comments we made before on IDO and some of the other programs we have, we actually have really broad program in first line lung cancer and I think the next 12 months will be really important from that perspective.
Very good. Yes, a question in the front here. Just hold on a minute for the microphone please.
Just the — renal cell carcinoma data presented at ASMO is very compelling with survival, can you discuss how bigger global opportunity this presents for Bristol-Myers Squibb and the leads you have? And could you also discuss as it’s an unmet medical need, can it be expedited through the FDA in the next coming months?
So I think it is a significant unmet need. We estimate that when you look at Europe, the top European markets in Japan, it’s close to 40,000 patients a year. About 75% of them are in what we call intermediate and higher risk population, that’s where the unmet medical need is the highest and we do see the data is quite compelling. Now as you know, we actually received and disclosed the overall survival data, just a few days ago it was actually really helpful to be able to present at ASMO, the team did a great job enabling us to be able to share it with the scientific community so quickly, and as we always do for a new study, we discussed it with regulatory authorities as quickly as possible. So it’s early for me to speculate on timing but it is an important dataset, clearly.
Great. Are there any other questions from the audience. Okay. I thought it would be helpful to talk about Opdivo and the momentum, obviously, it’s moderating in the U.S., it’s growing substantially ex-U.S., could you just talk about the growth prospects at you see them for Opdivo?
Sure. So I would say when you look at 2017 in this year, it’s been a really important year for Opdivo, we have broadened the label to include new tumor types, we have continued to advance the clinical development program I mentioned, the really important data presented at ASMO as an example. And commercially execution has been very strong, you may remember at the end of — at the beginning of the year, as there was significant new data being presented by us and others, in lung cancer we said Opdivo would grow globally but we were forecasting that it could be flat in the U.S., in reality the performance across all indications has been very, very strong and the brand will grow in the U.S. next year, as well as internationally.
That has been driven by a number of factors; so in the U.S. the performance of melanoma, renal, head and neck cancer, bladder, all of the indications outside of lung cancer has continued to be really strong. I expect that to continue going forward because we clearly have a leadership position that is very well established and has strong trends. We have maintained a very high share of second line lung cancer in the U.S. in the neighborhood of 40% and that has been really important. Obviously, going into the last quarter and then into 2018, we expect the opportunity in second line lung cancer to decrease because of the number of patients that we have received an immune oncology agent in first line that overtime make their way into second line, that’s what we had forecast and that’s what we expect still to happen.
Internationally, I think we have similar dynamics but they are delayed because of the time required in order to obtain reimbursement. So we have very strong reimbursement and very good commercial performance for the first indications that were approved. So lung cancer, melanoma and renal; that growth will continue but ultimately beginning in 2018, the lung cancer dynamics would play out internationally as well. And internationally we are still working to secure final reimbursement for melanoma in some countries, for head and neck, for bladder, so there would be growth opportunities in the international markets coming from the continued expansion of the label.
Adjuvant is an incremental opportunity for us because as you know we were approved with Yervoy at 10 milligram only in the U.S., now we do have an opportunity to have better regimen international — globally I would say and clearly first line will be a really meaningful opportunity going forward. So there will always be dynamics with respect to trends in different segments of the market but commercial execution has been really extremely strong this year and I expect many of those trends to continue into next year.
Very good. And maybe transitioning to ELIQUIS, obviously the commercial execution there has been quite strong as well, so it would be helpful for you to discuss that and the prospects ahead for ELIQUIS?
Yes, ELIQUIS is another really important medicine and is a really good product for us. I think that the reason for the success of ELIQUIS commercial is really two-fold. First of all, the profile is very strong in terms of the stroke prevention data but also the bleeding and I think that precision to develop a BID agent was the right decision, it enabled us to do the right study and to have very, very good results. I also believe commercial execution has been really good, we have decided to be very deliberate with our strategy with ELIQUIS. We have focused in every country, originally on cardiology. We have aimed at obtaining cardiology leadership first and then broadened the investment for primary care and began to measure our ability to become the leader in NBRx’s first and then TRXs within the Novax [ph] in primary care as well. We’ve accomplished that in many markets around the world already and now the objective is to become the leader in TRx in what we call the OAC market which includes warfarin as well.
And I think that the next wave of growth for ELIQUIS can come and is coming from continued erosion of the use of warfarin in that indication because when you look at warfarin in the US, I believe that TRx in the total market are still in the 40% range, NBRx’s are still in the 25% range. There is clearly further opportunity to grow by making sure that every patient uses a better agent and warfarin and then ultimately there are a number of patients that are either undertreated or not diagnosed and over time as we’ve become the clear leader in the existing market, we think there is opportunity to grow the market to make sure that more of the diagnosed patients are treated and more patients with a relation are diagnosed because both represent unmet opportunities.
Thank you. And can you just remind us about your role versus Pfizer’s and the promotion of ELIQUIS? My understanding is that Bristol promotes to the cardiologist, Pfizer promotes to primary care, but you basically net out as such that it’s a 50-50 spending when it comes to income statement. Is that the right way to think about it?
I think it’s probably the right way to think about it. It is 50-50 and it varies by country. So first of all I would say, we only are involved in working with Pfizer on the commercial side. In the top markets around the world and I would say, obviously the US, Canada and the majority of the large European markets all of the smaller countries around the world, primarily outside of the US, Japan and Europe Pfizer commercializes ELIQUIS on their own.
Those are small market opportunities where there is really no need for two companies to be working together and as a bigger company they have a larger footprint. So we’ve already made that choice, which I think happened a couple of years ago and was really the right choice for us.
In the countries where we operate together, which represent about 95% of the global commercial opportunities for ELIQUIS, we do 50-50 and then in every market it’s a little bit different. I would say that on average, we have a stronger presence – we have big proportion focused on cardiology and Pfizer has a broader reach into primary care. But we do see some primary care physicians, particularly in the US and Pfizer sees some cardiologists. So it’s not just black and white cardiology versus primary care, but it goes in that direction.
Okay. That’s very helpful. And then maybe I could ask you a more point of question on 568. So, 568 was an Opdivo plus Yervoy study and lung cancer patients open label, you double the size of that trial last summer. I think originally last year you were thinking about conveying the results from the first 170 patients in 2017 which you chose not to do.
Could you just update us on that and help us think through the 568 trial and whether it should influence our confidence or lack in 227?
Yes. I would say that you are right. We included 170 patients first. We broadened the trial to about 300 patients and then we took that trial as you said further evolved into a new trial that is the trail that is now looking at chemo, [indiscernible]. The data on the 300 patients is less mature than the data on the 170 patients.
We have really not decided when we will present that data and when we decide to present it, I’m sure you will know but we’ve not made that decision yet.
Okay. And then maybe you can talk. You mentioned some of these earlier stage pipeline opportunities, which the market may underappreciate. You just talk to some of the next events or read outs or new trial starts that we should be watching over the next year or so?
Sure. So, I mean obviously in oncology the next conference I would point to a [indiscernible]. There we will show some of our data on the ideal program, some data on OX40 [ph] I believe. And then over the course of the next few months, you will continue to see data on like three — there will be some data presented on GTR [ph], I believe at the end of the beginning of next year and over the course of the next 12 months there will be more of the early assets that need to emerge with initial data and oncology. With respect to the non-oncology portfolio, two important programs that should see data in the next 6 months or so; 6 to 12 months are the BTK program and the TICK-2 [ph] program, respectively in RA and psoriasis. And then with respect to the beginning of registrational programs between the now and the end of this year, the two ideal programs, LINE-3 [ph] and FGF-21, they should all be in phase 3 by the end of 2017.
Great. That’s a great way to finish. Thank you so much for your time.
Thank you, David. Thanks very much.
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Bristol-Myers Squibb (BMY) Presents at Morgan Stanley Healthcare Conference (Transcript)