Bristol-Myers Squibb Co. Bottom Line Advances 64% In Q4 

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The FINANCIAL — Bristol-Myers Squibb Company on January 26 reported results for the fourth quarter and full year of 2016, which were highlighted by strong sales for key products Opdivo and Eliquis , regulatory approvals for Opdivo in the U.S. and Europe, and strategic transactions in oncology and fibrosis that further strengthened the company’s pipeline.

“Bristol-Myers Squibb achieved outstanding operating and financial results in 2016, driven by strong commercial performance across our portfolio,” said Giovanni Caforio, M.D., chief executive officer, Bristol-Myers Squibb. “In 2017, we will continue to advance our pipeline, drive strong commercial execution across the business and progress our broad portfolio of Immuno-Oncology medicines.”

FOURTH QUARTER FINANCIAL RESULTS

Bristol-Myers Squibb posted fourth quarter 2016 revenues of $5.2 billion, an increase of 22% compared to the same period a year ago. Global revenues increased 24% adjusted for foreign exchange impact.

U.S. revenues increased 20% to $2.7 billion in the quarter compared to the same period a year ago. International revenues increased 25%. When adjusted for foreign exchange impact, international revenues increased 28%.

Gross margin as a percentage of revenue decreased from 77.8% to 73.6% in the quarter primarily due to product mix.

Marketing, selling and administrative expenses decreased 3% to $1.5 billion in the quarter.

Research and development expenses decreased 27% to $1.4 billion in the quarter due to lower charges resulting from business development transactions and in-process research and development impairments.

The effective tax rate was 17.3% in the quarter, compared to a benefit of 54.1% in the fourth quarter last year. Income taxes in both periods include net tax benefits attributed to specified items.

The company reported net earnings attributable to Bristol-Myers Squibb of $894 million, or $0.53 per share, in the quarter compared to a net loss of $197 million, or $0.12 per share, a year ago. The results in the fourth quarter of 2015 included per share after tax charges of $0.24 from the Five Prime Therapeutics, Inc. and Cardioxyl Pharmaceuticals, Inc. business development transactions and $0.08 for the transfer of the Erbitux business in North America to Eli Lilly and Company.

The company reported non-GAAP net earnings attributable to Bristol-Myers Squibb of $1.1 billion, or $0.63 per share, in the fourth quarter, compared to $647 million, or $0.38 per share, for the same period in 2015. An overview of specified items is discussed under the “Use of Non-GAAP Financial Information” section.

Cash, cash equivalents and marketable securities were $9.1 billion, with a net cash position of $2.4 billion, as of December 31, 2016.

FOURTH QUARTER PRODUCT AND PIPELINE UPDATE

Product Sales/Business Highlights

Global revenues for the fourth quarter of 2016, compared to the fourth quarter of 2015, were driven by:

Opdivo , which grew by $835 million

Eliquis , which grew by $346 million or 57% increase

Orencia , which grew by 16%

Sprycel , which grew by 15%

Yervoy , which had sales of $264 million

Opdivo

Litigation

In January, the company and Ono Pharmaceutical Company, Ltd. (Ono) announced they signed a global patent license agreement with Merck & Co., Inc. to settle all patent-infringement litigation related to Merck’s PD-1 antibody Keytruda®. The agreement will result in the dismissal with prejudice of all patent litigation between the companies pertaining to Keytruda®.

Regulatory

In November, the company announced the U.S. Food and Drug Administration (FDA) approved Opdivo for the treatment of patients with recurrent or metastatic squamous cell carcinoma of the head and neck (SCCHN) with disease progression on or after platinum-based therapy.

In November, the company announced the European Commission approved Opdivo for the treatment of patients with relapsed or refractory classical Hodgkin lymphoma (cHL) after autologous stem cell transplant (ASCT) and treatment with brentuximab vedotin.

In December, the company and Ono announced Opdivo was approved in Japan for the treatment of patients with relapsed or refractory cHL.

In December, the company and Ono announced that Ono submitted a supplemental application for Opdivo for the treatment of unresectable advanced or recurrent gastric cancer.

In January, the company announced it decided not to pursue an accelerated regulatory pathway for the regimen of Opdivo plus Yervoy in first-line lung cancer in the U.S. based on a review of data available at this time. Because these are ongoing registrational studies, the company will not be providing additional details.

Clinical

In November, the company announced that ONO-4538-12, a Phase 3, randomized, double-blind clinical trial evaluating the efficacy and safety of Opdivo in patients with unresectable advanced or recurrent gastric cancer refractory to, or intolerant of, standard therapy, met its primary endpoint of overall survival. In January, the company announced the results from the trial.

In November, at the Society for Immunotherapy of Cancer Annual Meeting, the company announced new data and analysis from studies evaluating urelumab, lirilumab, Opdivo and the Opdivo + Yervoy regimen:

Safety and efficacy data from a Phase 1/2 study of urelumab in combination with Opdivo in patients with hematologic and solid tumors, including biomarker analyses by level of PD-L1 expression.

Interim efficacy analysis, announced by the company and Innate Pharma S.A., from a Phase 1/2 study of the combination of lirilumab and Opdivo in the cohort of advanced platinum refractory squamous cell carcinoma of the head and neck, including exploratory biomarker analyses of patient response by level of PD-L1 expression.

CheckMate -032: Results from cohorts of the Phase 1/2 open-label trial investigating two combination schedules of Opdivo plus Yervoy in patients with locally advanced or metastatic urothelial carcinoma previously treated with platinum-based therapy.

In December, at the International Association for the Study of Lung Cancer World Conference on Lung Cancer, the company announced new data from studies evaluating Opdivo and the Opdivo + Yervoy regimen:

Checkmate -012: Updated findings from the Phase 1b trial in chemotherapy-naïve advanced non-small cell lung cancer patients evaluating Opdivo monotherapy, or in combination with Yervoy at different doses and schedules.

CheckMate -032: Updated results for Opdivo monotherapy and in combination with Yervoy in previously treated small cell lung cancer patients, a cohort of the Phase 1/2 open-label trial.

In December, during the American Society of Hematology Annual Meeting, the company and Seattle Genetics announced the first reported data from an ongoing Phase 1/2 clinical trial evaluating Adcetris (brentuximab vedotin) in combination with Opdivo in relapsed or refractory cHL.

FOURTH QUARTER BUSINESS DEVELOPMENT UPDATE

In November, the company and Enterome announced a collaboration agreement for the discovery and development of microbiome-derived biomarkers, drug targets and bioactive molecules to be developed as potential companion diagnostics and therapeutics for cancer. Additionally, the collaboration will seek to identify novel microbiome-derived biomarkers in an effort to improve clinical outcomes for patients treated with Bristol-Myers Squibb’s Immuno-Oncology portfolio.

In November, the company and Infinity Pharmaceuticals announced a clinical trial collaboration to evaluate Bristol-Myers Squibb’s Opdivo in combination with Infinity’s IPI-549 in patients with advanced solid tumors.

In November, the company and Nitto Denko Corporation (Nitto) announced an agreement granting Bristol-Myers Squibb exclusive worldwide rights for the development and commercialization of Nitto’s investigational siRNA molecules targeting heat shock protein 47 (HSP47) in vitamin A containing formulations, which includes Nitto’s lead asset ND-L02-s0201, currently in Phase 1b study for the treatment of advanced liver fibrosis. The agreement also grants Bristol-Myers Squibb the option to receive exclusive licenses for HSP47 siRNAs in vitamin A containing formulations for the treatment of lung fibrosis and other organ fibrosis.

In November, the company announced a five-year research collaboration with the Johns Hopkins University designed to identify mechanisms of response and resistance in patients whose cancer is being treated with checkpoint inhibitor-based immunotherapies, including Opdivo monotherapy, or Opdivo in combination with Yervoy or other investigational immunotherapies.

In December, the company and PsiOxus Therapeutics, Ltd. announced an agreement granting Bristol-Myers Squibb exclusive worldwide rights to NG-348, a pre-clinical stage, “armed” oncolytic virus with the goal of addressing solid tumors.

In December, the company and Calithera Biosciences announced a clinical collaboration to evaluate Opdivo in combination with CB-839 in clear cell renal cell carcinoma.

In January, the company announced a new clinical research collaboration to evaluate the combination of Opdivo and Janssen’s CD38-directed cytolytic antibody Darzalex in Phase 1b/2 clinical studies in multiple myeloma and solid tumors including non-small cell lung cancer, pancreatic cancer, colorectal cancer, triple negative breast cancer and head and neck cancer.

In January, the company and GeneCentric Diagnostics, Inc. announced a research collaboration to explore whether the application of GeneCentric’s Cancer Subtype Platform (CSP) might be able to identify translational biomarkers for Opdivo. Additionally, GeneCentric announced it had secured equity funding from the company to support the clinical development of its CSP and new research laboratory.

2017 FINANCIAL GUIDANCE

Bristol-Myers Squibb is confirming its 2017 GAAP EPS guidance range of $2.47 – $2.67 and is adjusting its non-GAAP EPS guidance range from $2.85 – $3.05 to $2.70 – $2.90. Both GAAP and non-GAAP guidance assume current exchange rates. 2017 GAAP and non-GAAP line-item guidance assumptions include:

Worldwide revenues increasing in the low-single digits.

Gross margin as a percentage of revenue to be approximately 72% to 73% for both GAAP and non-GAAP.

Marketing, selling and administrative expenses decreasing in the mid- to high-single digit range for both GAAP and non-GAAP.

Research and development expenses increasing in the high-single digit range for both GAAP and non-GAAP.

An effective tax rate of approximately 21% for both GAAP and non-GAAP.

As previously announced in the third quarter of 2016, the company’s operating model is evolving, to drive the company’s continued success in the near- and long-term. The majority of costs are expected to be incurred by 2020. Although GAAP operating expenses may increase initially as restructuring and other charges are incurred relating to this evolution, the company expects non-GAAP operating expenses to be roughly flat with 2016 levels through 2020.

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 guidance also assumes no generic entry for Sprycel in Europe following the appeal of the European Patent Office’s decision. The non-GAAP guidance also excludes other specified items as discussed under “Use of Non-GAAP Financial Information.” Details reconciling GAAP amounts to non-GAAP amounts, with non-GAAP reflecting specified items are provided in supplemental materials attached to this press release and available on the company’s website.

Erbitux is a trademark of ImClone LLC.

Keytruda is a trademark of Merck & Co., Inc.

Adcetris is a trademark of Seattle Genetics, Inc.

Darzalex is a trademark of Janssen Biotech, Inc.

 

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