Bristol-Myers Squibb Reports Third Quarter Financial Results

On October 31, 2019 Bristol-Myers Squibb Company (NYSE:BMY) reported results for the third quarter of 2019, which were highlighted by strong sales and a robust operating performance, along with the continuing advancement of the company’s pipeline (Press release, Bristol-Myers Squibb, OCT 31, 2019, View Source [SID1234550096]).

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"In the third quarter, we delivered strong business performance and made important progress with our pipeline, including the potential to bring our dual Immuno-Oncology combination to patients with lung cancer, a disease where the unmet need remains high," said Giovanni Caforio, M.D., chairman and chief executive officer, Bristol-Myers Squibb. "With strong momentum in our R&D and commercial organizations, I am looking forward to the tremendous opportunity when Bristol-Myers Squibb and Celgene come together as one, to deliver innovative medicines and transform patients’ lives."

Third Quarter

$ amounts in millions, except per share amounts

2019

2018

Change

Total Revenues

$6,007

$5,691

6%

GAAP Diluted EPS

0.83

1.16

(28)%

Non-GAAP Diluted EPS

1.17

1.09

7%

THIRD QUARTER FINANCIAL RESULTS

Bristol-Myers Squibb posted third quarter revenues of $6.0 billion, an increase of 6% compared to the same period a year ago. Revenues increased 7% when adjusted for foreign exchange impact.
U.S. revenues increased 7% to $3.5 billion in the quarter compared to the same period a year ago. International revenues increased 3%. When adjusted for foreign exchange impact, international revenues increased 7%.
Gross margin as a percentage of revenue decreased from 71.0% to 69.9% in the quarter primarily due to product mix.
Marketing, selling and administrative expenses decreased 4% to $1.1 billion in the quarter.
Research and development expenses increased 8% to $1.4 billion in the quarter.
The effective tax benefit rate was 1.3% in the quarter, compared to an effective tax rate of 11.8% in the same period a year ago. The decrease in the effective tax rate was due to jurisdictional tax rates and other tax impacts attributed to pension settlement charges and the UPSA business divestiture gain in 2019.
The company reported net earnings attributable to Bristol-Myers Squibb of $1.4 billion, or $0.83 per share, in the third quarter, compared to net earnings of $1.9 billion, or $1.16 per share, for the same period a year ago.
The company reported non-GAAP net earnings attributable to Bristol-Myers Squibb of $1.9 billion, or $1.17 per share, in the third quarter, compared to net earnings of $1.8 billion, or $1.09 per share, for the same period a year ago. An overview of specified items is discussed under the "Use of Non-GAAP Financial Information" section.
Cash, cash equivalents and marketable securities were $33.5 billion as of September 30, 2019. The net cash position was $8.5 billion as of September 30, 2019.
ACQUISITION OF CELGENE CORPORATION

In August, the company announced Celgene Corporation entered into an agreement with Amgen under which Amgen would acquire the global rights to OTEZLA. (link)
In July, the company announced the European Commission (EC) has granted unconditional approval of the company’s pending acquisition of Celgene Corporation. The company expects to close the Celgene transaction by the end of 2019. (link)
OTEZLA is a trademark of Celgene Corporation.

THIRD QUARTER PRODUCT AND PIPELINE UPDATE

Product Sales/Business Highlights

Growth in global revenues for the third quarter of 2019, compared to the third quarter of 2018, was driven by:

Eliquis , which grew by 22%
Opdivo , which grew by 1%
Orencia , which grew by 14%
Sprycel , which grew by 14%
Yervoy , which decreased by 8%
Opdivo

Regulatory

In October, the company announced the EC approved Opdivo (nivolumab) flat dosing schedule of 240 mg infused over 30 minutes every two weeks or 480 mg infused over 60 minutes every four weeks for the adjuvant treatment of adult patients with melanoma with involvement of lymph nodes or metastatic disease who have undergone complete resection.
In August, the company and Nektar Therapeutics announced the U.S. Food and Drug Administration has granted Breakthrough Therapy Designation for investigational agent bempegaldesleukin in combination with Opdivo for the treatment of patients with previously untreated unresectable or metastatic melanoma.
Clinical

In October, the company announced that CheckMate -9LA, a pivotal Phase 3 trial evaluating Opdivo plus low-dose Yervoy (ipilimumab) given concomitantly with two cycles of chemotherapy for the first-line treatment of advanced non-small cell lung cancer, met its primary endpoint of superior overall survival at a pre-specified interim analysis. (link)
In September, at the European Society for Medical Oncology 2019 Congress, the company announced important new data and analysis from four studies evaluating Opdivo as monotherapy and in combination with Yervoy:
ATTRACTION-3: Results from the Phase 3 study evaluating Opdivo versus chemotherapy (docetaxel or paclitaxel) for the treatment of patients with unresectable advanced or recurrent esophageal squamous cell carcinoma. The trial was sponsored by Ono Pharmaceutical Co. Ltd. (link)
Checkmate -227: Results from Part 1 of the Phase 3 study evaluating Opdivo plus low-dose Yervoy as first-line treatment for patients with advanced non-small cell lung cancer. (link)
Checkmate -067: Five-year results from the Phase 3 study evaluating the first-line combination of Opdivo plus Yervoy or Opdivo monotherapy, versus Yervoy alone, in patients with advanced metastatic melanoma. (link)
Checkmate -238: Three-year results from the Phase 3 study evaluating adjuvant use of Opdivo versus Yervoy in patients with Stage III or Stage IV melanoma who were at high risk of recurrence following complete surgical resection. (link)
In September, at the 20th World Conference on Lung Cancer of the International Association for the Study of Lung Cancer, the company announced long-term pooled efficacy and safety results from the Phase 3 CheckMate -017 and CheckMate -057 studies in patients with previously treated advanced non-small cell lung cancer. (link)
In September, the company announced results from the Phase 3 CheckMate -548 trial evaluating the addition of Opdivo to the current standard of care (temozolomide and radiation therapy) versus the standard of care alone in patients with newly diagnosed glioblastoma multiforme that is O6-methylguanine-DNA methyltransferase-methylated. The study did not meet its primary endpoint of progression-free survival. The study remains ongoing for OS. (link)
Eliquis

Clinical

In September, at the European Society of Cardiology Congress 2019, the company and its alliance partner Pfizer announced findings from NAXOS (EvaluatioN of ApiXaban in strOke and Systemic embolism prevention in patients with nonvalvular atrial fibrillation in the real-life setting in France), the largest real-world data analysis on oral anticoagulant effectiveness and safety in Europe among patients with non-valvular atrial fibrillation. (link)
Empliciti

Regulatory

In August, the EC approved Empliciti (elotuzumab) plus pomalidomide and low-dose dexamethasone for the treatment of adult patients with relapsed and refractory multiple myeloma who have received at least two prior therapies, including lenalidomide and a proteasome inhibitor, and have demonstrated disease progression on the last therapy.
2019 FINANCIAL GUIDANCE

Bristol-Myers Squibb is decreasing its 2019 GAAP EPS guidance range from $3.73 – $3.83 to $3.46 – $3.56 and increasing its non-GAAP EPS guidance range from $4.20 – $4.30 to $4.25 – $4.35. Both GAAP and non-GAAP guidance assume current exchange rates. Key revised 2019 GAAP and non-GAAP line-item guidance assumptions are:

An effective tax rate of 13% to 14% for GAAP and approximately 16% for non-GAAP
The financial guidance for 2019 excludes the impact of any potential future strategic acquisitions and divestitures, including any impact of the pending Celgene acquisition other than expenses incurred in 2019, and any specified items that have not yet been identified and quantified. The non-GAAP 2019 guidance also excludes other specified items as discussed under "Use of Non-GAAP Financial Information." Details reconciling adjusted non-GAAP amounts with the amounts reflecting specified items are provided in supplemental materials available on the company’s website.

Guidance inclusive of the Celgene acquisition will be provided after the close of the transaction.

Use of Non-GAAP Financial Information

This earnings release contains non-GAAP financial measures, including non-GAAP earnings and related EPS information that are adjusted to exclude certain costs, expenses, gains and losses and other specified items that are evaluated on an individual basis. These items are adjusted 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 future operating results. Similar charges or gains were recognized in prior periods and will likely reoccur in future periods, including 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, pension, legal and other contractual settlement charges, interest expense on the new notes issued in May 2019 in connection with our pending acquisition of Celgene and interest income earned on the net proceeds of those notes and debt redemption gains or losses, among other items. 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. This earnings release also provides international revenues excluding the impact of foreign exchange. Non-GAAP information is intended to 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 facilitate comparisons among current, past and future periods. For example, non-GAAP earnings and EPS information is an indication of the company’s baseline performance before items that are considered by us to not be reflective of the company’s ongoing results. In addition, 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. This information is not intended to be considered in isolation or as a substitute for net earnings or diluted EPS 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.

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. For more information about Bristol-Myers Squibb’s pending acquisition of Celgene, please visit View Source

There will be a conference call on October 31, 2019 at 8:30 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 calling the U.S. toll free 800-458-4121 or international 786-789-4772, confirmation code: 532230. 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 11:45 a.m. ET on October 31, 2019 through 11:45 a.m. ET on November 14, 2019. The replay will also be available through View Source or by calling the U.S. toll free 888-203-1112 or international 719-457-0820, confirmation code: 532230.