On February 6, 2020 -Bristol-Myers Squibb Company (NYSE:BMY) reported results for the fourth quarter and full year of 2019, which highlight continued strong sales and robust operating performance, along with the ongoing advancement of the company’s pipeline (Press release, Bristol-Myers Squibb, FEB 6, 2020, View Source [SID1234553914]).

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"By all measures, 2019 was a transformative year for Bristol-Myers Squibb as we progressed our strategy through the acquisition of Celgene, delivered strong operational and financial performance, and continued to drive important science for patients," said Giovanni Caforio, M.D., chairman and chief executive officer, Bristol-Myers Squibb. "With an expanded portfolio of high-performing brands, eight potential commercial launch opportunities, a deep and broad early pipeline, and the financial flexibility to continue to invest in innovation, the company enters 2020 uniquely positioned to transform patients’ lives through science and create long-term sustainable growth."

Fourth Quarter

$ amounts in millions, except per share amounts

*Includes Celgene results from November 20, 2019 through December 31, 2019.

FOURTH QUARTER FINANCIAL RESULTS

All comparisons are made versus the same period in 2018 unless otherwise stated.

Bristol-Myers Squibb posted fourth quarter revenues of $7.9 billion, an increase of 33%, primarily due to the Celgene acquisition (closed on November 20, 2019). Revenues increased 34% when adjusted for foreign exchange impact.
U.S. revenues increased 42% to $4.8 billion in the quarter. International revenues increased 21% to $3.2 billion in the quarter. When adjusted for foreign exchange impact, international revenues increased 23%.
Gross margin as a percentage of revenue decreased from 72.0% to 68.6% in the quarter primarily due to unwinding of inventory purchase price accounting adjustments, partially offset by product mix.
Marketing, selling and administrative expenses increased 30% to $1.7 billion in the quarter primarily due to $400 million costs associated with the Celgene acquisition.
Research and development expenses increased 52% to $2.1 billion in the quarter primarily due $500 million related to the Celgene acquisition.
Amortization of acquired intangible assets was $1.1 billion in the quarter primarily due to the Celgene acquisition.
Income taxes were $931 million despite pre-tax loss of $129 million in the current quarter primarily due to the Otezla (apremilast) divestiture, certain non-deductible expenses and purchase price adjustments. The effective tax rate was 23.1% in the same period a year ago.
The company reported net loss attributable to Bristol-Myers Squibb of $1.1 billion, or $0.55 per share, in the fourth quarter, compared to net earnings of $1.2 billion, or $0.71 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 right fair value adjustments and other acquisition and integration expenses.
The company reported non-GAAP net earnings attributable to Bristol-Myers Squibb of $2.4 billion, or $1.22 per share, in the fourth quarter, compared to net earnings of $1.5 billion, or $0.94 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 $16.2 billion and debt was $46.7 billion as of December 31, 2019.
ACQUISITION OF CELGENE CORPORATION

In November, the company announced the completion of its acquisition of Celgene Corporation following the receipt of regulatory approval from all government authorities required by the merger agreement. (link)
As announced in August 2019, in connection with the regulatory approval process of the acquisition of Celgene, Celgene entered into an agreement to divest the global rights to Otezla to Amgen Inc. for $13.4 billion in cash. On November 21, 2019, the Otezla divestiture was completed.
Otezla is a trademark of Amgen Inc.

FOURTH QUARTER PRODUCT AND PIPELINE UPDATE

Product Revenue Highlights

Global product revenue increases in the fourth quarter of 2019, as compared to the fourth quarter of 2018, drove revenue increases.

Product

Quarter Ended
December 31, 2019

* Represents product revenues for Celgene products only from November 20, 2019, which was the date of the closing of the acquisition, through December 31, 2019. See "Worldwide Product Revenue," which is available on bms.com/investors, for information on the revenue for these products and other products of the company and Celgene presented on a quarterly basis for 2018 and 2019.

Oncology

Opdivo

Regulatory

In January, the company announced that the U.S. Food and Drug Administration (U.S. FDA) has accepted for priority review its supplemental Biologics License Application (sBLA) for Opdivo plus Yervoy for the first-line treatment of patients with metastatic or recurrent NSCLC with no EGFR or ALK genomic tumor aberrations with an FDA action date of May 15, 2020.
In January, the company announced that it has withdrawn its European application for Opdivo (nivolumab) plus Yervoy (ipilimumab) for the first-line treatment of advanced non-small cell lung cancer (NSCLC).
In November, the company announced that the U.S. FDA accepted its sBLA and granted Breakthrough Therapy Designation for Opdivo plus Yervoy for the treatment of patients with advanced hepatocellular carcinoma (HCC) previously treated with sorafenib with an FDA action date of March 10, 2020.
Clinical

In November, the company announced results from CheckMate -915, a randomized Phase 3 study evaluating Opdivo plus Yervoy versus Opdivo alone for the adjuvant treatment of patients who have had a complete surgical removal of stage IIIb/c/d or stage IV (no evidence of disease) melanoma. The study did not meet one of its co-primary endpoints of recurrence-free survival (RFS) in patients whose tumors expressed PD-L1 <1%. The study will continue to assess the other co-primary endpoint of RFS in the intent-to-treat population. (link)
Cardiovascular

Eliquis

Clinical

In November, the company and its alliance partner Pfizer announced the initiation of a new randomized, controlled study, GUARD-AF (ReducinG stroke by screening for UndiAgnosed atRial fibrillation in elderly inDividuals). (link)
Immunology

Orencia

Regulatory

In December, the company announced that the U.S. FDA granted Breakthrough Therapy Designation for Orencia (abatacept) for the prevention of moderate to severe acute graft-versus-host disease in hematopoietic stem cell transplants from unrelated donors.
Clinical

In November, at the 2019 American College of Rheumatology and Association of Rheumatology Professionals Annual Meeting, the company announced new data from the randomized Phase IIIb Assessing Very Early Rheumatoid arthritis Treatment (AVERT)-2 trial exploring de-escalation of therapy in early, seropositive rheumatoid arthritis patients who achieved sustained Simplified Disease Activity Index remission following induction with Orencia and methotrexate. (link)
Hematology

Conferences

In December, at the 2019 American Society of Hematology (ASH) (Free ASH Whitepaper) Annual Meeting, the company announced important new data and analysis from its hematology portfolio:

QUAZAR AML-001: a study evaluating investigational agent CC-486 as maintenance therapy in a broad population of patients with front-line, newly diagnosed acute myeloid leukemia who have achieved complete remission with intensive induction chemotherapy. (link)
TRANSCEND NHL 001: an evaluation of lisocabtagene maraleucel (liso-cel) in patients with in relapsed/refractory large B-cell lymphomas. (link)
TRANSCEND CLL 004: a study evaluating liso-cel in relapsed or refractory chronic lymphocytic leukemia or small lymphocytic lymphoma. (link)
PILOT: a study evaluating liso-cel in second-line patients with relapsed or refractory large B-cell non-Hodgkin’s lymphoma patients who were ineligible for high-dose chemotherapy and hematopoietic stem cell transplant. (link)
An analysis of patients with relapsed/refractory large B-cell non-Hodgkin lymphoma who received liso-cel in the outpatient setting across three studies. (link)
The following data were also presented at the ASH (Free ASH Whitepaper) Annual Meeting by the company and its partners:

The company and its partner Acceleron Pharma Inc. presented data evaluating Reblozyl in patients with anemia associated with a range of serious and rare blood diseases. Data included the initial results from a Phase 2 study in myelofibrosis-associated anemia, and long-term results from two pivotal Phase 3 studies—the MEDALIST study in adult patients with anemia associated with very low to intermediate-risk myelodysplastic syndromes (MDS) who have ring sideroblasts and require red blood cell (RBC) transfusions, and the BELIEVE study in adult patients with anemia associated with beta thalassemia who require regular RBC transfusions. (link)
The company and its partner bluebird bio, Inc. presented updated safety and efficacy results from the ongoing Phase 1 study, CRB-402, evaluating bb21217, an investigational BCMA-targeted chimeric antigen receptor (CAR) T cell therapy being studied in patients with relapsed/refractory multiple myeloma. (link)
The company and its alliance partner Pfizer announced results from retrospective real-world data analyses reporting outcomes on the safety and effectiveness of Eliquis (apixaban) compared to low molecular weight heparin or warfarin for the treatment of venous thromboembolism in patients with active cancer. (link )
Revlimid

Regulatory

In December, the company announced that the European Commission approved a new indication for Revlimid (lenalidomide), in combination with rituximab, for the treatment of adult patients with previously treated follicular lymphoma.
Reblozyl

Regulatory

In November, Celgene and partner Acceleron Pharma Inc. announced the FDA approved Reblozyl for the treatment of anemia in adult patients with beta thalassemia who require regular red blood cell transfusions. The company is also seeking approval of Reblozyl for the treatment of anemia in adult patients with very low- to intermediate-risk myelodysplastic syndromes (MDS) who have ring sideroblasts and require red blood cell (RBC) transfusions and has an FDA action date of April 4, 2020.
Clinical

In January, the company and its partner Acceleron Pharma Inc. announced that the New England Journal of Medicine published results from MEDALIST, the pivotal Phase 3 study evaluating the use of Reblozyl to treat anemia in patients with very low- to intermediate-risk MDS who have ring sideroblasts and require RBC transfusions, and who had failed, were intolerant to, or ineligible for/unlikely to respond to treatment with erythropoiesis-stimulating agents. (link)
ide-cel

Clinical

In December, the company and its partner bluebird bio, Inc. announced that KarMMa, a pivotal, open-label, single arm, multicenter, Phase 2 study evaluating ide-cel (bb2121) in patients with R/RMM, met its primary endpoint and key secondary endpoint. (link)
liso-cel

Regulatory

In December, the company announced the submission of its Biologics License Application (BLA) to the U.S. FDA for liso-cel, its autologous anti-CD19 CAR T-cell immunotherapy for the treatment of adult patients with relapsed or refractory large B-cell lymphoma after at least two prior therapies.
BUSINESS DEVELOPMENT UPDATE

In February, the company and its partner BioMotiv announced the launch of Anteros Pharmaceuticals, a biotechnology company focused on developing a new class of drugs for fibrotic and other inflammatory diseases, as part of its strategic partnership agreement.
In January, the company and its partner Nektar Therapeutics announced that the companies amended the strategic collaboration agreement for bempegaldesleukin plus Opdivo.
In January, the company announced that it completed the divestiture of its oral solid, biologics, and sterile product manufacturing and packaging facility in Anagni, Italy, to Catalent Inc.
CAPITAL ALLOCATION

Bristol-Myers Squibb maintains a balanced approach to capital allocation focused on future business development and sourcing external innovation as a priority, de-leveraging in the near term to maintain strong investment grade credit ratings and less than 1.5x debt/EBITDA by 2023, planning for annual dividend increases, subject to board approval, and disciplined share repurchases.

In that context, the company reported its board of directors approved an increase of $5 billion to the share repurchase authorization for the company’s common stock. This is incremental to the current share repurchase program announced in October 2016 under which the company has approximately $1 billion remaining and increases the company’s total outstanding share repurchase authorization under the company’s share repurchase program to approximately $6 billion.

The specific timing and number of shares repurchased will be determined by the company’s management at its discretion and will vary based on market conditions, securities law limitations and other factors. The share repurchase program does not obligate the company to repurchase any specific number of shares, does not have a specific expiration date and may be suspended or discontinued at any time. The repurchases may be effected through a combination of one or more open market repurchases, privately negotiated transactions, transactions structured through investment banking institutions and other derivative transactions.

FINANCIAL GUIDANCE

Bristol-Myers Squibb is providing 2020 GAAP EPS guidance range of $0.75 to $0.95 and non-GAAP EPS guidance range of $6.00 to $6.20. In addition, the company is providing for 2021, a non-GAAP EPS guidance range of $7.15 to $7.45. Both GAAP and non-GAAP guidance for 2020 and non-GAAP guidance for 2021 includes the impact of the Celgene acquisition and the Otezla divestiture and assume current exchange rates. Key 2020 GAAP and non-GAAP line-item guidance assumptions are:

The 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. The 2020 and 2021 non-GAAP EPS guidance further excludes other specified items as discussed under "Use of Non-GAAP Financial Information." A reconciliation of non-GAAP financial measures to the most comparable GAAP measure and the reasons why management believes the use of these measures is important are provided in supplemental materials available on the company’s website. For 2021 non-GAAP EPS guidance, there is no reliable or reasonably estimable comparable GAAP measure as discussed below. The financial guidance is subject to risks and uncertainties applicable to all forward-looking statements as described elsewhere in this press release.

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.

There will be a conference call on February 6 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 888-204-4368 or international 786-789-4797, confirmation code: 5605395. 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 February 6, 2019 through 11:45 a.m. ET on February 20, 2020. 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: 5605395.

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. Reconciliations of these non-GAAP financial measures to the most comparable GAAP measures are available on the company’s website at www.bms.com .

These non-GAAP 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 amortization of acquired intangible assets beginning in the fourth quarter of 2019, including product rights that generate a significant portion of our ongoing revenue, unwind of inventory fair value adjustments, 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, costs of acquiring a priority review voucher, divestiture gains or losses, stock compensation resulting from accelerated vesting of Celgene awards, certain retention-related compensation charges related to the Celgene acquisition, pension, legal and other contractual settlement charges, interest expense on the notes issued in May 2019 prior to our acquisition of Celgene and interest income earned on the net proceeds of those notes and amortization of fair value adjustments of debt assumed from Celgene, 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. We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.

Amortization of acquired intangible assets were previously included in non-GAAP earnings and EPS information. These amounts have become significant to the financial results subsequent to the Celgene acquisition and as a result, have been excluded in the non-GAAP results to better reflect our core operating performance. Comparable prior period non-GAAP results have not been revised to include this adjustment as the related amounts were insignificant ($97 million in 2018).

In connection with presenting our outlook, we are also providing non-GAAP EPS guidance for 2021. There is no reliable or reasonably estimable comparable GAAP measure for this because we are not able to reliably predict the impact of specified items beyond the next twelve months. As a result, the reconciliation of this non-GAAP measure to the most directly comparable GAAP measure is not available without unreasonable effort. In addition, the company believes such a reconciliation would imply a degree of precision and certainty that could be confusing to investors. The variability of the specified items may have a significant and unpredictable impact on our future GAAP results.

Website Information

We routinely post important information for investors on our website, BMS.com, in the "Investors" section. We may use this website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor the Investors section of our website, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts. We may also use social media channels to communicate with our investors and the public about our company, our products and other matters, and those communications could be deemed to be material information. The information contained on, or that may be accessed through, our website or social media channels are not incorporated by reference into, and are not a part of, this document.