Bristol-Myers Squibb Company Price & Performance (BMY)

Thank you, and good morning, everyone. We appreciate you joining our first quarter twenty twenty five earnings call. Joining me this morning with prepared remarks are Chris Boerner, our Board Chair and Executive Officer and David Elkins, our Chief Financial Officer. Also participating in today's call are Adam Lankowski, our Chief Commercialization officer and Samit Hirawat, our Chief Medical Officer and Head of Global Drug Development. Earlier this morning, we posted our quarterly slide presentation to BMS.com that you can use to follow along with Chris and David's remarks. Before we get started, I'll remind everybody that during this call, we will make statements about the company's future plans and prospects that constitute forward looking statements. Actual results may differ materially from those indicated by those forward looking statements as a result of various important factors, including those discussed in the company's SEC filings. These forward looking statements represent our estimates as of today and should not be relied upon as representing our estimates as of any future date. And we specifically disclaim any obligation to update forward looking statements even if our estimates change. We'll also focus our comments on our non GAAP financial measures, which are adjusted to exclude certain specified items.

Reconciliations of certain non GAAP financial measures to the most comparable GAAP measures are available at bms.com. Finally, unless otherwise stated, all comparisons are made from the same period in 2024 and sales growth rates will be discussed on an underlying basis, which excludes the impact of foreign exchange. All references to our P and L are on a non GAAP basis. And with that, I'll hand it over to Chris.

Thanks, Chuck.

Good morning and thank you all for joining our first quarter earnings call. We had a strong Q1, driven by solid execution across the business and continued focus on our strategic priorities. Maximizing our growth portfolio, accelerating our R and D pipeline driving operational excellence, strategically allocating capital. Our plans to transition the portfolio to deliver long term sustainable growth are underway. Today, I will begin with some comments on our first quarter performance and highlight our recent accomplishments. Then I will discuss our pipeline and upcoming catalysts that can further strengthen our long term growth potential. I'll end by addressing the current operating climate. Starting with performance on slide four. Our growth portfolio again delivered double digit sales growth driven primarily by strength in key marketed products, including our IO portfolio, BRYONZI, REBLOZYL and CHEMZIOZ. And as expected, our legacy portfolio performance primarily reflected the impact of generic entries for certain older brands. So turning back to our growth portfolio, let me speak to our recent launches. As you'll recall, in October, we launched Cobenfi, the first truly novel mechanism for the treatment of schizophrenia in decades And we are pleased with the early prescription trends. Patient and physician feedback is very positive, reflecting its favorable tolerability and efficacy profile and noting that patients are observing cognitive benefits.

In January, we launched Opdivo plus Yervanti the subcutaneous formulation of nivolumab which is also receiving promising early feedback from practices and patients. And based on our performance in the first quarter, we are increasing our top and bottom line guidance. David will provide more detail We continue to advance our pipeline during the quarter with several recent announcements. Opdivo plus Yervoy received FDA and EMA approvals for the treatment of first line liver cancer and FDA approval for use in MSI high colorectal cancer in The U. S. Further solidifying its leadership in immuno oncology. BRYONZI was approved in The EU for treatment of follicular lymphoma. Expanding our cell therapy presence in blood cancers. Kymzios received approval in Japan and a favorable label update in The U. S. Which reduces the REMS echo monitoring requirement in the maintenance phase. In addition, Milvexian reached an important milestone in the quarter. With the completion of enrollment in the Librexia atrial fibrillation trial. This event driven study remains on track to read out in 2027. Turning to slide five, and our two recent top line readouts. While we're disappointed that the KEMZIAOS OHDIESY study in non obstructive HCM and the COBINFY Arise study in adjunctive schizophrenia did not meet their primary endpoints, I want to put the results in proper context.

Although these are not the results that we had hoped for, neither outcome meaningfully alters our strategy or growth trajectory. For Kamsiyos, study strongly suggests that non obstructive and obstructive HCM behave distinctly. We do not expect these data to significantly impact peak sales, and our focus remains on our existing obstructive HCM indication, which represents the vast majority majority of the market opportunity. For CoBINFI, although it did not demonstrate a statistically significant improvement, as an adjunctive treatment in the ARRISE trial, These data are encouraging. Showing a noteworthy improvement for the majority of patients as well as a tolerable safety profile. As we noted earlier this week, we will complete a full evaluation of the Phase III trial data and will plan to engage with the medical community and regulators to discuss these results and potential next steps. Also, it's important to remember there are no currently approved adjunctive therapies for schizophrenia. Our commercial strategy remains focused on monotherapy, which accounts for 7080% of the market, where our goal is for CoBINFI to become the foundational treatment. As I mentioned earlier, CoBINFI's differentiated profile is resonating. We're seeing strong early update. Looking ahead, we're confident in the strength of our portfolio and the breadth of opportunities in our pipeline.

We expect several of these opportunities to come this year. Such as the first look at one of the phase three trials for cobinfi in Alzheimer's disease psychosis where there is significant unmet need. We also plan to initiate several new pivotal studies this year. Including seven phase three studies for COBINFI across three indications, Alzheimer's agitation, Alzheimer's cognition impairment, and bipolar one. All expected to be underway by mid year. At the same time, in oncology, we're advancing two next wave solid tumor programs. First, our EGFR PER3 antibody drug conjugate Isobren, is expected to begin enrollment in a pivotal study in first line triple negative breast cancer in the coming months. And second, our androgen receptor degrader program in prostate cancer has begun enrolling patients in a pivotal study. We also expanded our registrational program for a potential first in class CELMoD for lymphoma. The Goal Seek four study in second line plus follicular lymphoma, will explore the combination of gulcotamide with rituximab where we know effective chemo free regimens are needed for patients. In total, we believe these programs represent significant opportunities over the back half of the decade, given the unmet medical need. The numerous pivotal data readouts in the coming years have the potential to meaningfully enhance the long term strength of our growth portfolio.

Our commitment to innovating for patients remains strong, as we advance first and or best in class medicines. Both through internal discovery and business development, which remains a top priority. In terms of BD, we're actively pursuing opportunities that can enhance our growth profile where there's strong strategic alignment and financial rationale. With our renewed organizational agility and balance sheet in a solid position, we have the flexibility to act decisively when we find the right opportunities. As we've said, maximizing long term growth starts with strong execution this year and over the mid term. The growth portfolio is performing well and our pipeline is advancing. At the same time, we're taking deliberate actions to right size our cost structure and become a more efficient company. Overall, I'm confident we will deliver on disciplined execution as we position the company for top tier growth by the end of the decade. Before I turn it over to David, I'll just say a few words on the current global operating climate. There's a lot of uncertainty whether related to tariffs, a potential economic downturn or restructuring at the FDA and HHS. This backdrop notwithstanding, our focus continues to be on building a strong and resilient company that can navigate and manage through operating complexities.

We remain confident in our ability to deliver for our patients, employees and shareholders. Our strategy is clear and we're executing. We have a rich pipeline with strong growth potential. We act swiftly when we see opportunities. Whether it's business development to bring in great science, or pursuing efficiencies in our business. And finally, we are laser focused on execution, as you can see by our strong performance this quarter. With that, I'll turn it over to David. Thank you, Chris, and good morning, everyone.

Our performance in 2025 is off to a strong start. We are executing our growth strategy in terms of driving revenue for key products, while also rightsizing our cost structure. Our persistent focus on execution is strengthening our foundation and positioning the company to deliver long term sustainable growth. This morning, I'll provide highlights of our performance in the first quarter, and then review our outlook for the year. Now turning to the first quarter on Slide seven. Total company revenues were approximately $11,200,000,000 reflecting strong demand across our growth portfolio including the launch of Cobenfee, offset by the impact of generics and Medicare Part D redesign. Primarily in our legacy portfolio. Global sales of the growth portfolio increased approximately 18%. Led by key brands including our IO portfolio, BRYANZI, REBLOZYL and KEMZIAOS. Turning to key product performance on Slide eight, Opdivo had a solid first quarter. With global revenue up 12%. Driven primarily by volume growth. Separately, initial sales of Opdivo plus Kuventig were approximately $9,000,000 in the quarter. The U. S. Launch is progressing well. With early adoption across multiple tumor types, We continue to believe that physicians will convert approximately 30% to forty percent of patients to this new product.

Let's turn to hematology on slide nine. Red blood cell global sales reflect the continued strength across first and second line MDS associated anemia. Higher sales in The U. S. Were related to increased use in first line setting. Outside of The U. S, REBLOZYL's strong double digit sales growth was driven by demand across newly launched markets in Europe and Japan. In cell therapy, BRYANZI was another key contributor to our strong growth portfolio performance in the quarter, driven by demand across all indications. U. S. Sales more than doubled and international sales tripled. Moving to cardiovascular on Slide 10, let's start with Kymzayas. Sales in the first quarter nearly doubled benefiting from strong global demand. Brand momentum in the quarter was driven by new patient starts and a 19% increase in total prescriptions for the three months ended March 31. We continue to expect steady growth of KamsiOS in 2025 due to its compelling efficacy and safety profile in obstructive HCM. Turning to Eliquis, global sales were down 3% in the quarter. Mainly due to the impact of Medicare Part D redesign in The U. S. We continue to expect total Eliquis revenue to be stronger in the second half of the year primarily due to Part D redesign and elimination of the coverage gap.

Moving to immunology on slide 11, Across our immunology portfolio, we saw higher commercial rebates. As previously discussed, related to improved access and Medicare Part D redesign. First quarter 12, in its first full quarter on the market, Kobenti is off to a solid start with sales of approximately $27,000,000 driven primarily by demand. During the quarter, weekly total prescriptions remained strong, tracking ahead of all branded schizophrenia launch benchmarks. Now let's move to the P and L on Slide 13. Gross margin was approximately 73% primarily due to product mix. Operating expenses were more than $500,000,000 lower compared to the same period last year. Primarily reflecting the results of our strategic productivity initiative. Our effective tax rate in the quarter was 15.1%. Primarily driven by earnings mix. And overall diluted earnings per share were 1.8 Turning to the balance sheet and capital allocation highlights on Slide 14. Our financial position remains strong. With approximately $12,100,000,000 in cash equivalents and marketable securities as of March 31. We generated cash flow from operations of approximately $2,000,000,000 in the first quarter. In terms of capital allocation, we maintain our strategic and balanced approach. As Chris highlighted earlier, business development remains a top priority.

We continue to actively assess opportunities in line with our strategy. And we remain on track with our plan to pay down $10,000,000,000 of debt relative to our 03/31/2024 balance. Our capital allocations also include rewarding shareholders through the dividend. 2025 marks our ninety third consecutive year of dividend payments. In addition to strategically allocating capital, we are also driving operational excellence through our previously announced strategic productivity initiative. With respect to our 2025 expansion, we expect to realize approximately $2,000,000,000 in annual cost savings by the end of twenty twenty seven and we remain on track to deliver $1,000,000,000 of these savings by the end of this year. Now turning to our outlook starting with revenue on Slide 15. We are increasing our full year revenue guidance to a range of approximately 45,800,000,000.0 to $46,800,000,000 reflecting strong performance of our growth portfolio better than expected legacy sales in the first quarter and a favorable impact of approximately $500,000,000 related to foreign exchange rates relative to our previous 2025 guidance. Additionally, we now expect legacy portfolio to decline approximately 16% to 18% for the year. A more moderate rate than previously anticipated. Due primarily to Revlimid's strong Q1 performance. We now project full year sales of Revlimid to be at the top end of our previously guided range of 2,000,000,000 to $2,500,000,000 We maintain our gross margin guidance at approximately 72%.

We continue to expect underlying operating expenses to be approximately $16,000,000,000 with an additional impact of about $200,000,000 due to foreign exchange rates. Expenses are now anticipated to be higher in the second half of the year compared to the first half. Reflecting timing of investments. Our operating margin target of approximately 37% for the full year remains unchanged. For OI and E, we now expect annual income of approximately 100,000,000 due to higher than anticipated royalties and favorable interest income. Although the first quarter tax rate was slightly lower than our full year projection, we are maintaining our full year tax rate guidance of 18%. As a result of these changes, we are raising the midpoint of our 2025 non GAAP EPS guidance by point $15 per share. With an expected range between $6.7 and $7 Our revised guidance includes the estimated impact of current tariffs on U. S. Products shipped to China but does not account for any potential pharmaceutical sector tariffs. In summary, our strong performance in the first quarter reflects our focus on disciplined execution, We are well positioned to manage the near term uncertainty in the macro environment while advancing our long term growth strategy.

And with that, I'll now turn the call over to Chuck for Q and A. Thank you. We will now begin the question and answer session. And the first question will come from Chris Schott with JPMorgan. Please go ahead. Great. Thanks so much. Maybe just two ones for me. Just first, bigger picture, as we think about tariffs and the $2.32 stuff that's going on right now, can you just provide any color on the company's U. S. Manufacturing footprint ability to shift manufacturing to U. S. Over time, just in general, your ability to navigate this dynamic I know the details are lacking right now, but just just help frame out how you're thinking about this? The second question for me was on Cobenfi Just In Light Of The Adjunctive Results We Saw. Talk A Little Bit About What This Does For Your Outlook On Coventry and just how you think about kind of use in adjunctive given the negative trial results we saw? Thanks so much. So thanks for the questions, Chris.

I will start with your tariff question and I'll turn it over to Adam to address cobenefit. So first, let me just say at the outset that we certainly appreciate the administration's efforts to enhance U. S. Manufacturing. As we think about the pharma sector though, obviously, that needs to be done in a very thought thoughtful and deliberate way. As you can appreciate, there's a lot that we don't know here. We don't have specifics on the outcome of this investigation. But our hope is that wherever this lands, we ultimately end up enhancing the competitiveness of U. S. Companies like BMS. We are significantly U. S.-based company today. We have been up investing in core infrastructure in The U. S. For many years.

So we need to ensure that ultimately our trade policies enhance the sector and support efforts like the ones we've been making. In terms of our exposure, again, what we've said is the tariffs that have gone into place namely around China, have been reflected in the guidance that we provided today. It really is simply too early to provide a lot more on pharma specific sectors. So we'll have to wait for the specifics there. And once have them, obviously, we'll continue to update you. Adam, do want talk about Coventry?

Sure.

As Chris stated in his opening remarks, we don't expect these data to have a meaningful impact on COBEMPY sales, Chris. Recall, about seventy percent to eighty percent of patients are treated with monotherapy. And clearly, that's the most significant commercial opportunity and it's also the treatment goal for psychiatrists. What happens in the real world, psychiatrists exhaust monotherapy options before trying adjunctive use and that's after several failed monotherapy treatments. Happening later in line, third line, fourth line plus. Our focus is moving Coventi earlier in treatment. That's exactly what we've been seeing in the market In fact,