Bristol-Myers Squibb Company - Q2 2023

Transcript

Operator (participant)

Good morning everyone. Welcome to the Bristol Myers Squibb 2nd quarter 2023 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one on your telephone keypad. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Tim Power, Vice President of Investor Relations. Mr. Power, please go ahead.

Tim Power (VP of Investor Relations)

Thank you. Good morning everyone, thanks for joining us this morning for our 2nd quarter 2023 earnings call. Joining me this morning with prepared remarks are Giovanni Caforio, our Board Chair and Chief Executive Officer, and David Elkins, our Chief Financial Officer. Also participating in today's call are Chris Boerner, our Chief Operating Officer, Adam Lenkowsky, our Chief Commercialization Officer, and Samit Hirawat, our Chief Medical Officer and Head of Global Drug Development. As you'll note, we've posted slides to bms.com that you can follow along with for Giovanni and David's remarks. Before we get started, I'll read our forward-looking statement. During this call, we'll make statements about the company's future plans and prospects that constitute forward-looking statements. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the company's S.E.C. 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. 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. With that, I'll hand it over to Giovanni.

Giovanni Caforio (Board Chairman and CEO)

Thank you Tim, and good morning everyone. Starting on slide 4. As you will have seen in our press release this morning, today, we updated our outlook for 2023. The updates were driven by a significant change in our expectations for Revlimid, and to a lesser extent, Pomalyst, for the year. Let me say that we do not take an adjustment of this magnitude lightly. Before I provide you with more detail, when I look at the company overall, I'm encouraged by the strength of the in-line and new products, as well as the progress with our pipeline. These are the drivers that will enable us to renew our portfolio and strengthen our business in the future.

The impact we are discussing today is limited to Revlimid and to a lesser extent, Pomalyst. We expect it to be relevant only to this year, as I'll discuss shortly. Importantly, our in-line and new product portfolios remain on track. We are pleased with continued strong performance from our in-line business and are confident in our ability to roughly double revenue from our new products this year. In fact, our new product portfolio is already annualizing at $3.5 billion as of Q2. As a result of these strong trends, we are reaffirming all our financial commitments for the 2020, 2025 period. Given our confidence in our future, this morning, we also announced our intention to execute a $4 billion accelerated share repurchase in the 2rd quarter. Let me now provide some details on today's update.

Our revised guidance reflects a $1 billion decrease for Revlimid, and we are now guiding to approximately $5.5 billion in 2023. Combined with a roughly $300 million impact for Pomalyst, these changes account for our revised guidance on revenue and EPS ranges. As you know, we are navigating generic entry for Revlimid, though this is not the driver of our revision in outlook. Concurrent with entry of the most recent wave of generic volumes, we saw some softness in Revlimid sales beginning at the end of the 1st quarter. As we looked into its drivers, we recognized there had been an unusual increase in utilization of free drug provided by the independent BMS Patient Assistance Foundation, starting at the same time. In Q2, the number of patients on free drug continued to increase and reached a level significantly higher than normal.

The impact on Revlimid and Pomalyst revenues also accelerated in Q2. This issue is the main driver of our revised guidance. The situation is complex, and to explain it, I'll turn to slide 5 to remind everyone of some of the ways we meet our commitment to support eligible patients who can't afford their medicines. For commercially insured patients, we provide copay support to eligible patients. Under US law, however, we cannot provide copay support to government-insured patients, such as Medicare patients. There are third-party independent charitable foundations that provide financial assistance to patients to help with out-of-pocket costs, including Medicare patients. These charitable foundations are supported financially in a variety of ways. This includes contributions from donors, including BMS, consistent with HHS guidance. Additionally, we donate BMS products to the independent BMS Patient Assistance Foundation, which provides free medicine to all qualified patients who are not financially supported elsewhere.

Importantly, to comply with government guidance, once patients enter this program, the BMS Patient Assistance Foundation provides free product through the end of the calendar year. Earlier this years, funds at independent third-party charitable foundations, the ones that provide financial assistance to eligible multiple myeloma patients, closed for a period of time. This was because the collective funding from donors was not sufficient to meet the need for copay assistance for the patients taking the variety of medicines that the multiple myeloma funds support. We believe the funds closing for a period of time was the primary driver for an increase in patients requesting free product from the independent BMS Patient Assistance Foundation. During the 2nd quarter, the level of free product utilization continued to increase and ultimately reached a level that was significantly higher than normal.

These dynamics were building while we were also navigating the most recent wave of generic volumes for Revlimid. Today, we are able to provide you with an update on our company guidance for the year that incorporates the impact from both Revlimid and Pomalyst. I want to underscore that we do not expect these dynamics to continue into next year. This is based on two key factors. First, the BMS Patient Assistance Foundation has seen applications for free product returning to normal levels. Second, changes in Medicare Part D coverage, taking effect in 2024, will help improve patient affordability. This should directly impact the number of patients needing to access the free drug program.

To sum up what this means financially, we estimate the impact of the increase in patients receiving free product to be approximately $330 million for Revlimid and Pomalyst in Q2, with about 80% of that being Revlimid. Because the BMS Patient Assistance Foundation provides free drug for the calendar year, the impact for Revlimid and Pomalyst will be more significant for the full year, approximately $1 billion and $300 million, respectively. Since revenues for Revlimid are lower than expected this year, we now expect a lower step-down of approximately $1.5 billion in 2024, and $2 billion in 2025. Turning back to the products that will be key to our future, let me turn to slide 6 and our new products.

Here you can see that we continue to deliver very strong growth and remain on track to roughly double revenue for this portfolio this year. David will provide more details in a few minutes, and we see good momentum and growth opportunities across the portfolio, including progress with accelerating access for Sotyktu, building demand and conversion to commercial dispense for Camzyos in the US, and achieving approval in Europe, continuing to build capacity for our cell therapy assets, as well as growing Reblozyl in its current indications in advance of an exciting future launch with COMMANDS. On slide seven, I would like to remind you of the targets we've provided for our new product portfolio. The process of renewing our portfolio and growing the business for the long term centers first on our nine recently launched products.

The combination of our scientific innovation and commercial execution gives us great confidence in the growth trajectory of this set of products. We continue to expect to deliver $10 billion-$13 billion of revenue from this portfolio in 2025, and the opportunity remains significant, with $25 billion-plus of potential revenue in 2030 on a non-risk-adjusted basis. Importantly, we are continuing to further de-risk these products with opportunities such as COMMANDS for Reblozyl, CLL, and follicular and mantle cell lymphomas for Breyanzi, and many more. Which brings me to our scorecard, outlining our strong pipeline execution on slide 8. As I mentioned, we are making progress de-risking our new products, as well as accelerating our pipeline more broadly, and we achieved some important clinical milestones this quarter. During the 2nd quarter, we presented exciting data for our LPA1 agonist in idiopathic pulmonary fibrosis.

The Phase II data for this drug showed more than a 60% reduction in the rate of decline in lung function without any of the GI tolerability issues associated with existing drugs. With the proof of concept also achieved in progressive pulmonary fibrosis, we look forward to presenting more data for this asset. We are rapidly moving to Phase III trials. ASCO and EHA were important meetings for us this year. In addition to presenting the Reblozyl COMMANDS data, strong data was presented for Opdivo in first-line classical Hodgkin lymphoma and for our GPRC5D cell therapy program in multiple myeloma. We are excited to move this into registrational trials. These underpin the growth potential of our IO franchise and the incredibly exciting opportunities we see ahead for our leading cell therapy platform, including into new areas such as immunologic diseases.

We have also announced a positive outcome from our CheckMate901 trial of Opdivo and chemotherapy in cisplatin-eligible first-line metastatic bladder cancer. Not only is this a very positive development for these patients, it speaks to the breadth of opportunity in our pipeline beyond what's shown on this slide. We have a rich and broad pipeline that we continue to advance rapidly. We are looking forward to sharing more about the opportunities we see coming from our scientific research at our R&D Day in September. I'd like to spend a minute to take stock of where we are on our portfolio renewal journey.

Turning to slide 9, with 60% of the Revlimid erosion behind us at the end of 2023, we are well on track to meet our commitment of growing revenue low to mid-single digit CAGR from 2020-2025, when, as we have told you, our recent LOEs will represent at most 10% of our revenue. The profitability of our business, with operating margin of at least 40%, provides us with the financial flexibility needed to continue to invest in our future. Turning now to slide 10. I want to reiterate that our focus and our confidence in the renewal of our portfolio are as strong as ever.

This rests on our in-line and new product portfolios and our pipeline as the key drivers of our performance beyond 2025, and we are pleased with where we are. There are four important levers which will enable us to renew our portfolio in the second half of the decade as Eliquis and Opdivo lose exclusivity. The continued growth of the nine medicines in our new product portfolio from $10 billion-$13 billion in 2025 to realization of their full potential of at least $25 billion of non-risk-adjusted revenue by the end of the decade, the potential launch of six registrational stage assets with meaningful contributions before the end of the decade, continued progress with our early-stage pipeline, and potential external innovation through business development. We are executing well on all 4 fronts.

I'm excited and confident about what the future holds for Bristol-Myers Squibb. Before I turn the call over to David, I want to thank our teams globally for the commitment to our patients and focus on our business. David will now walk you through our product performance and financial results in more detail. David?

David Elkins (CFO)

Thank you, Giovanni, and thank you all for joining our 2nd quarter earnings call. Let's turn to slide 12 to discuss our top-line performance. Unless otherwise stated, all comparisons are made versus same period in 2022, and sales growth rates will be discussed on an underlying basis, which excludes the impact of foreign exchange. Total company sales in the 2nd quarter were $11.2 billion, driven by continued strength of our in-line and new product portfolio, offset by the Revlimid decline that Giovanni discussed earlier. At the same time, we continue to be pleased with the strong growth of our new product portfolio, which grew 79% in the quarter. Moving to our new product portfolio on slide 13, I'm incredibly proud of the strong momentum in the quarter and pleased with the growth.

The portfolio generated $862 million in sales in the quarter, already annualizing approximately $3.5 billion. New products grew significantly in the quarter and year to date, with 79% and 91% growth, respectively, versus last year. This strong performance was driven by several of our key products across the portfolio, including Opdualag, Reblozyl, and our cell therapies, Breyanzi and Abecma, as well as Camzyos and Zeposia. Moving to our solid tumor performance on Slide 14, global Opdivo sales year to date were strong, growing 11% versus prior year, primarily driven by a continued demand for our newly launched and core indications. In the US, Opdivo grew 2% in the quarter versus last year, driven by demand in first-line lung, gastric, and adjuvant bladder cancer indications, offset by customer buying patterns.

Sequentially, we estimate these buying patterns to be about $50 million-$100 million. Importantly, year-to-date revenues were up 9% versus last year, with continued growth expected this year. Outside the U.S., 2nd quarter revenues increased 10%, driven by demand for recently launched indications and expanded access. Moving to the strong launch of Opdualag, sales in the quarter grew significantly over prior year, with revenues of $154 million. This also represents 31% growth versus prior quarter. We're extremely pleased with the launch of Opdualag in first-line melanoma, with market share approaching 25% and continuing to be primarily sourced from PD-1 monotherapy. Positive experiences are driving repeat and expanded use across patients. This momentum gives us confidence in the ability for Opdualag to become the new standard of care in first-line melanoma.

Transitioning to our cardiovascular portfolio on slide 15, beginning with Eliquis, we continue to be pleased with our leading of rack, which generated sales of approximately $3.2 billion globally, largely driven by the U.S., where sales grew 7% year-over-year, driven primarily by demand. Sequentially, as is typical in the 2nd quarter, we started to experience unfavorable gross-to-net adjustments as patients enter into the donut hole. As a reminder, these dynamics are more acute in the third and fourth quarters, with the second half revenues being lower than the first half, as we see each year. Outside the U.S., sales continue to be impacted primarily by generic entries in Canada and the U.K., as well as government pricing measures we've mentioned in the past.

Turning to Camzyos, which generates sales of $46 million in the quarter, we are pleased with our continued progress. We are seeing healthy increases in patients being treated week over week, with approximately 3,800 patients in our hub, of which approximately 2,500 patients are on commercial drug at the end of the quarter. We continue to make great progress with centers of excellence and broadening our prescriber base into the community setting. Patients have highlighted significant improvement in symptoms, which has resulted in strong adherence and minimal drop-off. We are delighted to have updated the label for Camzyos based upon the VALOR study, which reinforces the strong data seen in EXPLORER study and further strengthens the clinical profile of Camzyos.

Outside of the US, we're excited to have received European approval last month and look forward to making this first-in-class medicine available to more patients once we secure reimbursement. Turning to our hematology portfolio on slide 16. I won't go into details on Revlimid and Pomalyst, since Giovanni already discussed them earlier. I'll turn to Reblozyl. We had a strong quarter, with revenues of $234 million, growing 35% versus prior year, primarily driven by demand. In the US, revenues grew 24%, primarily due to continued total prescription share growth, driven by longer duration of treatment. Internationally, Reblozyl roughly doubled as we continue to secure reimbursement in additional countries.

We have a strong foundation in place and look forward to the upcoming PDUFA date for Reblozyl in first-line ESA-naive MDS patients on the COMMANDS data, which will further accelerate growth of the band upon anticipated approval at the end of next month. Moving on to our transformative cell therapy products Abecma and Breyanzi. We continue to make progress at expanding capacity, which has enabled robust sales of $232 million, growing 81% versus prior year, driven by strong demand. Abecma booked sales of $132 million globally, growing 48% versus last year, primarily due to demand and an increase in manufacturing capacity. We expect 2rd quarter revenues to be lower than 2nd quarter revenues, due in part to planned manufacturing maintenance in June, with growth expected in the fourth quarter.

Having said that, we continue to be pleased with the reproducibility of our efficacy and safety data in the real world and the reliability of our manufacturing processes, which were reinforced at ASCO. We also look forward to the upcoming PDUFA date in December for Abecma in earlier lines, based on the KarMMa-3 trial. Turning to Breyanzi, which generates sales of $100 million globally, more than doubling versus prior year and 41% sequentially, primarily driven by demand in second-line and third-line large B-cell lymphoma and increased manufacturing capacity. We are pleased with our success in increasing supply. While factor constraints will result in third and fourth quarter revenues being largely similar to 2nd quarter, we are further building out our capacity for growth next year.

Outside the US, we are excited about the EU approval of Breyanzi in second-line large B-cell lymphoma and look forward to bringing this treatment to earlier line patients in Europe. Let's turn to our immunology portfolio on slide 17. Global sales as opposing a quarter, were $100 million, growing 52% compared to prior year and 28% sequentially. In the US, growth was primarily driven by demand in multiple sclerosis and expanding contribution from ulcerative colitis. Outside the US, sales increased year-over-year, primarily due to demand in multiple sclerosis and securing reimbursement in additional countries. Lastly, turning to Sotyktu. We are extremely pleased with the launch and progress we've made to date. Since launch, we have a greater than 23,000 script equivalents across bridge and commercial drug, nearly doubling volume in Q2 versus Q1.

Sotyktu's share of the oral market is now approaching 40%, continuing to source more business from systemic naive patients, as well as our Tezspire and biologic experienced patients. I'm also very pleased to report that we've made progress accelerating access. Most notably, half of CVS plans with 0 step edits effective mid-July. CVS indication-based plans account for approximately 30 million people, or roughly 15% of the commercial covered lives, and we look forward to securing broader formulary access in 2024. Outside the US, we continue to be pleased with the strong launch performance in Japan and are working with various countries across Europe to secure reimbursement. Moving to our 2nd quarter PNL on slide 18. I will focus my remarks on a few non-GAAP key line items, having just covered the $11.2 billion of sales in the quarter.

In the quarter, gross margin of approximately 75% was primarily impacted by product mix. Operating expenses of $4.2 billion, excluding acquired in-process R&D, increased approximately 2% versus last year, largely driven by an increase in spend to support our new product portfolio. Acquired in-process R&D in the quarter was $158 million, which was partially offset by $20 million of licensing income. Overall, 2nd quarter earnings per share was $1.75. Turning to the balance sheet and capital allocation on slide 19, cash flow generation on our balance sheet remained strong. Cash flow from operations in the quarter was approximately $1.9 billion, with over $8.7 billion in cash and market securities on hand as of June thirtieth.

Cash flow from operations in the quarter was primarily impacted by a $3 billion tax payments in the quarter, which is dynamic, as we've seen in previous years. Our priorities for capital allocation remain unchanged. Our business development continuing to be a top priority and a focus on balance sheet strength, as well as returning capital to shareholders. In the quarter, we repaid approximately $240 million of debt and $1.9 billion year to date, with an additional $2 billion maturing this year. As Giovanni mentioned, we intend to execute a $4 billion ASR in the 2rd quarter of this year, with approximately $2 billion remaining in our share repurchase authorization after the ASR.

Turning to our updated 2023 non-GAAP guidance on slide 20, our updated guidance reflects the decline of Revlimid, and to a lesser extent, Pomalyst revenues, Giovanni mentioned earlier. We now expect 2023 revenues to decline in a low single-digit range on a reported and ex FX basis, and gross margin is expected to be approximately 76%. Excluding the impact of acquired in-process R&D, we continue to expect low single-digit decline in operating expenses, which reflects efficiency initiatives in MSNA as we continue to invest in our new product portfolio. For the 2rd quarter, we expect total operating expenses to be largely similar to the 2nd quarter at approximately $4.2 billion.

Our tax rate is now expected to be 17.5%, reflecting changes in product mix, and our earnings per share is now expected to be in the range of $7.35-$7.65. Lastly, turning to slide 21. Despite Revlimid dynamics this year, the future of our company will be driven by our in-line and new product portfolio. Importantly, the robust growth of this business remains unchanged. We continue to expect the new product portfolio to roughly double versus prior year. We are continuing to diversify our business and have become less concentrated as a result. As you can see, and as Giovanni mentioned earlier, in 2025, greater than 90% of our business is expected to come from our in-line and new product portfolios.

We continue to expect low to mid-single-digit CAGR from 2020-2025 and reaffirm our midterm outlook. Before we move to Q&A, I want to reiterate and recognize the strong execution of our teams to accelerate momentum of the future of our company, our new product portfolio. Remain laser focused on bringing these transformational medicines to patients around the globe. I'll now turn the call back over to Tim and Giovanni for Q&A.

Tim Power (VP of Investor Relations)

Great. Thanks very much, David. Jamie, can we go to the first question, please?

Operator (participant)

Ladies and gentlemen, we will go to the question-and-answer session. To ask a question, once again, you may press star and one. To withdraw your questions, you may press star and two. If you are using a speakerphone, we do ask that you please pick up your handsets before pressing the keys to ensure the best sound quality. To withdraw your questions, you may press star and two. Our first question today comes from Chris Shibutani from Goldman Sachs. Please go ahead with your question.

Chris Shibutani (Senior Analyst and Managing Director of Biotechnology Equity Research)

Thank you very much. Good morning. When we think about the new product portfolio, particularly, slide 7, where you outline your objectives for 2025 into 2030, Camzyos sits at the top of that list in terms of being able to factor and to contribute. The initial journey, I think, it's pretty clear that outlining some of the challenges of developing a new market, there's the REMS, et cetera. When do you think we're going to be able to get the kind of inflection that will build confidence in achieving those numbers, particularly approaching that $4 billion range? Many factors go into this. Can you highlight sort of the most important and the potential timing there?

Chris Boerner (COO)

Hey, Chris, it's Chris. I'll start, then I'll turn it over to Adam to provide some specifics. Since you mentioned the new product portfolio, let me just highlight a few things at a macro level. First, we continue to be very confident in the progress of the new product portfolio. As you heard in the prepared remarks, we remain on track to roughly double the revenue of that portfolio. We're very much on track toward the $10 billion-$13 billion in 2025, as Adam will highlight, I think we've made some very good progress really across that portfolio, not just Camzyos, but certainly Adam can provide additional details on Camzyos. Adam?

Adam Lenkowsky (Chief Commercialization Officer)

Yes, Chris, thanks for the question. Let me say about Camzyos, you know, we're very pleased with the performance of Camzyos, which is on track with our launch expectations. We're seeing, as you heard from David, week over week, in patients treated with Camzyos, and we expect to see continued steady and consistent growth through this important brand. You know, remember that the launch trajectory of Camzyos is akin to what you'd see from a CV product, and I use the analogy, it's more similar to a product like Eliquis, so it continues to grow steadily. Now, year to date, we have great momentum for both patients coming into the hub and a commensurate increase in commercial patients. As patients continue to accumulate, we expect these patients to be on drug now for many years, multiple refills in 2023 and beyond.

I think most importantly, patient feedback as well as physician feedback continues to be extremely positive. We're also excited about the VALOR approval, which happened in the quarter, which further strengthens and solidifies the profile of Camzyos and will continue to increase adoption. We're also happy about the approval in Europe as well, so we're just getting started there. Taken together, we're very confident this will lead to continued and sustained growth in 2023 and beyond.

Chris Shibutani (Senior Analyst and Managing Director of Biotechnology Equity Research)

Thanks, Adam.

Tim Power (VP of Investor Relations)

Great. Thanks very much, Adam. Jamie, can we go to the next one, please?

Operator (participant)

Our next question comes from Evan Seigerman from BMO. Please go ahead with your question.

Evan Seigerman (Managing Director, Head of Healthcare Research and Senior Biotechnology & BioPharmaceutical Analyst)

Hi, guys. Thank you so much for taking my question. I'd love for you to walk me through a little bit more of the rationale to do an accelerated share repurchase, just given, you know, what's happening with Revlimid and the potential to maybe you need to reinvest more in the business to grow revenues, near term. Would love some color there. Thank you.

Giovanni Caforio (Board Chairman and CEO)

Thanks, Evan. This is Giovanni. First of all, the decision to execute the $4 billion ASR, and as you know, we had a $6 billion authorization outstanding, is really driven by the great confidence we have in the future of the company, and importantly, the strong financial position we are in and the financial flexibility we have. We remain in a position in which we are investing in the future of our company, and that's in terms of supporting a great pipeline that we have internally, but also continuing to be committed to business development as the central pillar of the capital allocation strategy. I think, you know, as David has mentioned many times, we are in a strong position and the capital allocation strategy of the company remains very balanced.

Given the confidence we have in where we are and the future of the company, we made a decision to execute the ASR of $4 billion in Q3.

Tim Power (VP of Investor Relations)

Great. Thanks Giovanni. Jamie, could we go to the next one?

Operator (participant)

Our next question comes from Geoff Meacham from Bank of America. Please go ahead with your question.

Geoff Meacham (Managing Director)

Thanks guys for the questions. Just had a couple. Giovanni, you went over the Revlimid dynamic in 2Q. Maybe just talk about, you know, the risks of recurrence of the copay assistance looking to 2024 for Revlimid or for Pomalyst. Real quick on Sotyktu, you guys with obviously CVS and maybe some other payers removing step edit, how should we think about, you know, kind of demand and share looking to the second half of this year and going into 2024? Thank you.

Giovanni Caforio (Board Chairman and CEO)

Sure. Thank you Geoff. Let me take the first question, then we'll move to Sotyktu. We do expect the dynamics that I discussed for Revlimid, and to a lesser extent for Pomalyst to be limited to this year. Our confidence is based really on two factors. First of all, we are seeing that free drug applications to the BMS Patient Assistance Foundations have been returning to normal levels. Second, remember, there are significant changes to the Part D design next year, which will improve patient affordability. In fact, patient contributions to the catastrophic phase are eliminated, and there is an expansion to the pool of patients that qualifies for LIS.

As a result of that, we see this one being very much. We expect this one to be very much an issue that has impacted this year for Pomalyst. Sorry, for Revlimid and a lesser extent Pomalyst. Adam?

Adam Lenkowsky (Chief Commercialization Officer)

Yep. Thanks for the question, Geoff. We're very pleased with the Sotyktu launch. Our Sotyktu oral market share is nearing 40% of the oral new brand market. We're making great progress towards our goal, which we have stated becoming the standard of care for oral products. We now have over 23,000 prescriptions since launch, and that means we've doubled the volume of TRX equivalents from the 2nd quarter versus the 1st quarter. you know, as you mentioned, we're very, very pleased that we're able to secure and pull forward an access win as CVS moves Sotyktu into preferred position in the middle of the month. That brings roughly 30 million lives, or 15% of the total commercial lives covered in the United States.

Being able to pull that forward, we expect that it takes around 2 to 3 months to move patients from bridge to commercial drugs. We would expect a ramp for Sotyktu commercial product in the back end of the year. We're also in continued negotiations with payers right now to work to secure improved commercial access in January. For all those reasons, I feel very good not only about our launch performance, but our execution and continued growth in the second half of the year as well as into 2024.

Tim Power (VP of Investor Relations)

Great. Thanks very much, Adam. Jamie, can we go to the next question, please?

Operator (participant)

Our next question comes from Terence Flynn from Morgan Stanley. Please go ahead with your question.

Terence Flynn (Equity Research Analyst)

Great, thanks so much for taking the question. Maybe two for me. Was just wondering if, if Summit's on, if you can talk about your confidence in Reblozyl, securing a broad label in first-line MDS. I know there's been some discussion here post the ASCO presentation. Was wondering if there's any update on the Opdivo, Hodgkin lymphoma indication, in the front-line setting, for NCCN guidance, guideline updates. Thank you.

Giovanni Caforio (Board Chairman and CEO)

Thank you, Terence. Let me ask Samit to start, and then Adam will cover the Opdivo question.

Samit Hirawat (Chief Medical Officer and Head of Global Drug Development)

Thank you, Terence. Thank you for the question. For Revlimid, of course, we cannot comment specifically on the label and the discussions with the regulatory agencies, but I just want to remind again on how the study was conducted, with the intent to treat principles applied to the study, where all comer patient population was engaged in the first line setting, comparing versus ESA for RS positive and RS negative patients. You saw the data in all comer patient population, as well as in the subset analysis. We repeatedly, certainly tried to convey that if you think about the efficacy of the drug, what is most important for the patients is to stay off of transfusion.

In all subsets, you see that consistently across the board, that patients who benefit, benefit as well as stay off of transfusion for a long duration. We are confident in our data, but of course, we will continue to wait for when the label is finalized and is able to share, and we are able to share that. Adam, you want to add something?

Adam Lenkowsky (Chief Commercialization Officer)

Sure. Thanks Samit. You know, we're excited about what we're seeing for Revlimid for the quarter. The growth is coming both from the US and internationally. As it relates to the COMMANDS approval, remember, this is certainly an important launch for us. The PDUFA is in 4 weeks, our US team is launch-ready. You know, what we're hearing from physicians, post ASCO, post EHA, physicians tell us they want to use Revlimid, regardless of RS status, because of the durability and the opportunity for transfusion dependence. Taken together, I think we're well positioned to be, you know, really the new standard of PR in the first line setting. As it relates to the second question, which is Opdivo in CHL.

We also were very pleased with the data presented at ASCO, where Opdivo demonstrated superiority versus Atezolizumab in a head-to-head study. Similarly, we've heard from oncologists that this data is practice changing. As a reminder, this was a confirmatory study for our current indication under accelerated approval, and we will work with SWOG on next steps to analyze the full data set, and we also look forward to discussing this with regulators. I would also expect to see NCCN guideline adoption over the coming weeks to months as well.

Tim Power (VP of Investor Relations)

Thanks very much, Adam. Let's go to the next question, please, Jamie.

Chris Schott (Managing Director)

Our next question comes from Chris Schott from JPMorgan. Please go ahead with your question.

Great, thanks so much. Just two for me. Maybe first on the sales guidance, just so I'm clear, did anything else change in your revenue outlook beyond this update for Revlimid and Pomalyst, or is that really the only change in the overall top-line numbers? My second question was just on Breyanzi and Abecma. I'm just trying to get a sense of how to think about the capacity ramp from here. You've obviously had a nice, you know, kind of build in the first half of the year, but it seems like the guidance is pointing to sales kind of flattening out in the second half. I guess, when can we think about the next kind of leg up for capacity for these products?

How much of a ramp can we think about as we look out to 2024? Thanks so much.

Giovanni Caforio (Board Chairman and CEO)

Thank you Chris. David and, and Adam.

David Elkins (CFO)

Yeah. Thanks, Chris. The only change to our guidance was related to the Revlimid and Pomalyst dynamic that we discussed before.

Adam Lenkowsky (Chief Commercialization Officer)

Yeah. Chris, I'll take the second part of your question. You know, we, you know, we're very pleased with what we're seeing across our cell therapy franchise. You know, this year we've made very good progress on increasing capacity for both Abecma and Breyanzi. When you look at our, you know, our approach to the market, number one, you know, our focus is rapidly expanding our footprint, both in the US and internationally, based on our increase in supply. When you look at the approach we're taking overall for CAR T manufacturing, you know, there are really two components to, you know, cell therapy. That's drug, product, and vector. For drug product, we have increased capacity with successfully executed ramps at both our existing sites for Breyanzi and Abecma, and additional ramps planned for each product in the back end of 2023.

We're building new state-of-the-art facilities, as we talked about in Devens, Massachusetts, online this year, as well as Leiden, in the Netherlands, which will come on board in 2025 to further increase and accelerate capacity. The second area is really around vector. We continue to both internalize and externalize vector. Our fastest path to increase capacity of our current vector is to partner with existing third-party manufacturers. You've heard about our new vector manufacturing plant in Libertyville, Illinois. It's part of our dual sourcing strategy to internalize vector, which complements our existing partnerships with external third parties. We're accelerating our transition to next gen vector technologies as well. Taken together, you know, we're making very good progress in increasing our capacity across both Abecma and Breyanzi.

Chris Boerner (COO)

Chris, the only thing I would add is just that, you know, the manufacturing investments that Adam alluded to are part of a broader strategy that we have that I think is gonna be important for us as we think about this platform more generally. As, you've heard us talk about in the past, and we'll talk again about at the R&D day in September, we've obviously got a very exciting portfolio of cell therapy assets, notably GPRC5D, as well as next CD19. So these investments are going to be critical for those as well.

Tim Power (VP of Investor Relations)

Thanks very much, Chris. Let's go to the next question, please, Jamie.

Operator (participant)

Our next question comes from Seamus Fernandez from Guggenheim Securities. Please go with your question.

Seamus Fernandez (Senior Managing Director)

Great, thanks for the questions. Just a couple here. First, in terms of the pipeline assets.

Focusing in on LPA1, just wanted to get a sense for the pace of development, you know, for that program, and what you see as a market opportunity for in IPF and PPF specifically. Separately on the IRA, just hoping that you could give us a little bit of your sense of the pushes and pulls. We've had some conversations recently where experts, expert legal consultants would suggest that there's potential for a preliminary injunction to be issued because of the pressure points around the Fifth Amendment. Would be very interested to hear your thoughts along those lines, around the IRA, as well as some of the positive influences of IRA, you know, in 2024 and 2025, that could positively impact your, your revenue lines.

Thanks.

Giovanni Caforio (Board Chairman and CEO)

Thanks. Thanks, Seamus. Let me just start maybe with a short comment on IRA, and then Samit and Adam will answer your question on LPA one, which is a really exciting program. On IRA, I'm not gonna comment on litigation and can't really comment on what may happen on that front. I think we've been very clear with our concerns with IRA as it relates to the negative impact on innovation and in particular, cancer care in the future, but also with the concerns we have with respect to the process, of course, and the mechanisms for price setting.

Now with respect to the things that are in IRA, of course, as we've always said, there are positive elements to IRA, which include the improvements we see in affordability for patients. In fact, I mentioned earlier that obviously the fact that next year patients will no longer contribute to the catastrophic phase and that there is an expansion of the definition for LIS eligibility. These are good examples of things that go very much in the right directions. Of course, they impact parts of our business, including Eliquis as an example. Samit?

Samit Hirawat (Chief Medical Officer and Head of Global Drug Development)

Thank you. Thank you, Giovanni. Thanks for the questions, Seamus. For LPA1, if you think about IPF and PPF, they both are conditions which have a very high unmet medical need. To date, there are only two drugs approved for IPF and only one approved for PPF. Both of them have their own safety liability, which does not allow patients to continue on treatment for a very long duration. We have now shown in three different studies, the first one with the first generation of LPA1, and with the other two studies that recently completed. We've shown the efficacy of the oral drug, LPA1 inhibitor, in improving the outcomes for these patients in terms of decreasing the reduction of FVC.

You saw the data for LPA1 and IPF, where we showed an improvement in the FVC, both in patient population, which was treated without any background therapy, as well as in patients who were on background therapy. Later this year, we'll be able to share the data at a medical conference for PPF as well. Both of these data sets are giving us confidence that we'll be launching two Phase III trials, starting later this year or very early next year for IPF and PPF, to be able to bring this medicine to patients in the short term. Adam, you may want to add.

Adam Lenkowsky (Chief Commercialization Officer)

Yeah, Samit thanks. From a commercial standpoint, we're very encouraged by LPA1 asset. As Samit alluded to, this is a very high unmet need in IPF and PPF, and the prognosis for these diseases are not too dissimilar to some metastatic cancer diagnosis. We generated, as Samit mentioned, very encouraging efficacy and safety data. There was no GI toxicity with the current treatments, no liver toxicity, we saw in the early studies. This gives us confidence, as Samit mentioned, to move into Phase III. Now, the current products have significant limitations in efficacy and toxicity, and I think from a commercial standpoint, awareness and better diagnosis tools are going to really help accelerate the diagnosis rate with rates, which are pretty low today. They range around 30%-40%.

We think when we bring our LPA1 to market, we'll be able to accelerate that significantly and make a significant impact in patients with these serious diseases.

Tim Power (VP of Investor Relations)

Thanks, Adam. Could we go to the next question please, Jamie?

Operator (participant)

Our next question comes from Carter Gould from Barclays. Please go ahead with your question.

Carter Gould (Senior Analyst and BioPharma Equity Research)

Great. Thank you. Two for me. I guess first, just, hoping to get a little bit more color on some of the trends you're seeing with, with EYLEA. I mean, you know, basically your, your confidence on reacceleration in the back half of the year, given the sequential decline in US and flat, ex-US. Just quickly on Opdualag, you talk about potentially becoming standard of care in melanoma. Can you talk a little bit about, maybe just a little bit more color on kind of, you know, what's a reasonable kind of market share assumption or what really would that, you know, need to be in terms of market share or some further color on that front? Thank you.

Giovanni Caforio (Board Chairman and CEO)

Sure. Adam?

Adam Lenkowsky (Chief Commercialization Officer)

Thank you Carter. To start, let me just say we're very pleased with what we're seeing across our cell therapy franchise. Now, for Abecma, as David mentioned, year-on-year, we grew approximately 50%. There are a few factors that impacted the 2nd quarter for Abecma. The quarter-on-quarter decline was driven mainly by pricing dynamics in Germany. Second, there was a planned impact due to manufacturing maintenance that happened in June, in anticipation of our KarMMa-3 approval, which we expect in the back end of the year. We would also anticipate a significant increase in volume in the fourth quarter.

Thirdly, you know, we anticipate an increase in the use of other BCMA agents in the US, and we know this is a competitive market, but it's a market that we know extremely well, and we're very confident in our ability to compete in multiple myeloma with, you know, this important product, Abecma. I think most importantly, we continue to see and hear from physicians about favorable perceptions for Abecma based on our durable responses in a real-world setting, as well as high manufacturing success rates now that are north of 90%. Taken together, we do remain very confident about Abecma's outlook in the second half of 2023 and beyond. The second question was around Opdualag, for Opdualag, as you heard from David, Opdualag is rapidly becoming the standard of care in the US.

We're continuing to see strong growth in sales. Our share in first-line metastatic melanoma is approaching 25%, our share is coming both from PD-1 monotherapy and from Opdivo + Yervoy combinations, about two-thirds of that share is being sourced from PD-1 monotherapy, roughly 50/50 from Opdivo and Keytruda. As we talked about last quarter, NCCN updated their guidelines and changed Opdualag from Category 2A to Category 1 in the BRAF mutant patient population, it removed BRAF/MEK inhibitors as a preferred treatment in the first-line setting. As a result, we're seeing a really nice inflection in the BRAF mutant patient population for both Opdualag and for Opdivo + Yervoy, that's where we're continuing to focus our efforts on that segment.

In fact, when I think about the total BMS share in the overall metastatic melanoma market, our share, when you look at Opdualag, Opdivo Yervoy, and Opdivo monotherapy, our share is now greater than 65%. I'm very proud of our continued leadership in metastatic melanoma.

Samit Hirawat (Chief Medical Officer and Head of Global Drug Development)

Just to add to what Adam has just talked about, Opdualag, there is obviously a large program behind the approved indication in metastatic melanoma. We have the adjuvant study in melanoma that will read out as the events come through, as well as the Phase III study in colorectal cancer, MSS, that will also be, which is an event-driven overall survival primary endpoint study that will read out over 2024, 2025. Then, of course, behind that, we're looking forward to seeing the data next year for non-small cell lung cancer, as well as for hepatocellular carcinoma in the first and the second line in 2024. There is a large program behind the melanoma metastatic disease.

Tim Power (VP of Investor Relations)

Thanks so much. Let's go to the next question, please, Jamie.

Operator (participant)

Our next question comes from Tim Anderson from Wolfe Research. Please go ahead with your question.

Tim Anderson (Managing Director and Senior Equity Research Analyst)

Thank you. I wanted to go back to IRA, and it's not on the drug price renegotiation piece, it's on the Part D redesign that kicks in in 2025. You guys have talked about a positive being less out-of-pocket spending, but there's a negative to contemplate, too, which is manufacturers having to pick up a healthy portion of catastrophic spending that has not been part of the equation before. On a net basis, when you're thinking about Part D redesign starting next year, is that gonna be a net drag to earnings? It seems to me like it could be. That's the first question. Then the second question is on Opdivo. The press release mentions lower average net selling prices, I think, in Europe, in Q2, and Merck has forewarned of something similar for a while now.

I'm wondering what's driving this. Thank you.

Giovanni Caforio (Board Chairman and CEO)

Chris?

Chris Boerner (COO)

Yeah, maybe I'll start, and then, I'll turn it over to Adam to talk about the Opdivo piece. Thanks for the question, Tim. With respect to IRA, I think this is in some ways very consistent with the way we've been describing IRA's impact generally, which is that when you look at the changes in Part D, it's gonna be very much product specific, and so there will be pushes and pulls, depending upon which product you're talking about. So it's very difficult to make a blanket statement that it's a negative or a positive. I think you really do have to get into the specifics and understand the details as to how it will impact a given product, just given the nature of the patients who are being treated by that product, as well as the concomitant medicines that they're on.

That's very much how we think about the Part D redesign. Adam, do you wanna pick up on the Opdivo question?

Adam Lenkowsky (Chief Commercialization Officer)

Yeah, Tim thanks for the question. As it relates to Opdivo, really internationally, you know, what we're seeing is continued strong growth in our international market. In fact, when you look at year-over-year this quarter, you do 10% for Opdivo internationally, and that's really due to the continued growth of our core business in first-line lung, in gastric, and we're just starting to unlock some of our new indications. We're very pleased to see our approval of CheckMate-816 in Europe. When I think about the kind of the decline of price in Europe, that's anytime you get a new indication in many of our markets, you start to take slight price decreases.

The volume that we see for Opdivo as we add these tumors and get reimbursement, you know, we look to continue to increase our sales and our volume will certainly offset any price decline.

Giovanni Caforio (Board Chairman and CEO)

Just Tim, just to add on what Chris mentioned before on IRA, we have discussed before that we don't see a meaningful impact for us until 2026. The dynamics that Chris described don't meaningfully impact our PNL and our outlook in 2024 and 2025.

Tim Power (VP of Investor Relations)

Thanks Giovanni. Jamie, could we go to the next question, please?

Operator (participant)

Our next question comes from Andrew Baum from Citi. Please go ahead with your question.

Emily Hutchinson (Equity Research Analyst)

Hi, it's Emily Hutchinson from Citi on behalf of Andrew. A question please on Opdivo. Can you talk to the 2% sales growth in the US and give a bit more context there? You mentioned customer buying patterns. Can you elaborate on these dynamics? Are there any other factors you would flag, competition, price comp, or anything like that? Thank you very much.

Adam Lenkowsky (Chief Commercialization Officer)

Yeah, Emily, thanks for the question. We're pleased with what we saw with Opdivo through the first half of the year, and we anticipate continued growth through the back end of the year. In fact, Opdivo grew 11% overall year-to-date. Similar to what we see internationally, you know, we're also seeing our growth coming from the same core tumors. First-line lung, our share is now approximately 15%. Our gastric indication, first-line, where our share is approximately 50%, and across our, our early adjuvant indications. As you noted, sequentially, in the 2nd quarter, the demand growth in the US from our core business was offset by impact from unfavorable customer buying patterns. We expect that to normalize and continue to grow based on the strength across multiple tumors.

We continue to lead all competitors in every tumor in the U.S. that we're indicated in, with the exception of first-line lung, where we're making good progress. We also have a number of significant readouts in the short term. We've got some nice catalysts, including our Stage 2 melanoma indication, which is, has a PDUFA date of October of this year. You also read our press release in first-line CIS eligible bladder cancer, CheckMate-901, and that's really exciting because there's been multiple IO failures there. We expect that to be a nice catalyst next year, along with pending readouts next year in CheckMate-77T and CheckMate-73L, among several others. For those reasons, we remain very confident in Opdivo's ability to grow in 2023.

Tim Power (VP of Investor Relations)

Thanks, Adam. Go to the next question, please, Jamie.

Operator (participant)

Our next question comes from Steve Scala from TD Cowen. Please go ahead with your question.

Steve Scala (Pharmaceutical Analyst)

Thank you very much. I'd like to ask a question about Revlimid. You mentioned that you started to see the weakness at the end of Q1, yet the guidance was reiterated at the end of April, presumably because you thought it was temporary. What was the error in that assumption? You noted the free drug program is expected to return to normal levels in future years. Why then is the expected decline on an annual basis expected to be less than before? I know that you said government support could be an offset, but that seems like a dynamic in which we should not have high confidence. Just to be clear, generic competitors have nothing to do at whatsoever with this cut today. The second question is, Takeda noted weakness in the U.S. GI market this morning.

What are you seeing this? If yes, to what do you attribute it? Thank you.

Giovanni Caforio (Board Chairman and CEO)

Thank you, Steve. Let me, I know we've discussed a lot on Revlimid in our prepared remarks, and I just want to go back to explaining the dynamics at play here. We started to see some softness in Revlimid revenue at the end of Q1, and obviously we needed to understand why. I think it's important to remember that there were a number of dynamics happening at the same time. As you know, the most recent increase in generic volumes had entered in March, and we have seen that drive significant variability in the past.

At the same time, we saw an increase in the number of patients that were receiving free drug from the BMS Patient Assistance Foundation, which also started in Q1. Of course, we looked into this dynamic, and as Q2 progressed, the number of patients on free drug started to increase. It continued to increase, eventually reaching significantly higher levels than we had seen historically. Also the impact on Revlimid and Pomalyst revenue accelerated during the course of Q2. You know, we have been looking at these trends, and one of the things that is important to consider here is that once the BMS Patient Assistance Foundation provides free drug to a patient consistent with HHS guidance, we provide that free drug for the totality of the year.

What we looked at was not only the impact on the quarter, but also the impact on the full year. You know, today, we are in a position to assess those impacts, and that's why we are in a position to give you a clearer picture of what happened beginning at the end of Q1, and most importantly, in Q2. You asked a question. You know, the generic dynamics that we've discussed for a while, which really account for month-to-month and quarter-to-quarter variability, are not a factor in what we are, we disclosed today, but obviously they were at play as we were looking at the development of Revlimid revenue during the 2nd quarter.

You asked a question as to why we are expecting now the step down for Revlimid to be lower next year.

A couple of things that I'd like to say again. First of all, as I mentioned earlier, we don't expect these dynamics to continue next year because we are seeing that the number of patients applying for free product from the Bristol Myers Squibb Patient Assistance Foundation is returning to normal, and importantly, because of the Part D redesign dynamics that I covered before. You know, if you think about it, if you have a lower base coming out of 2023, given that we don't really see a change in the generic erosion assumptions that we had made before, now the step down is lower, and we've estimated that to be $1.5 billion in 2024, and approximately $2 billion in 2025.

That's the number of dynamics at play here. Second question for Adam?

Adam Lenkowsky (Chief Commercialization Officer)

Yep. The second question that you asked, Steve, was around the what we're seeing in the GI marketplace. Overall, what we're seeing for Zeposia is, you know, really strong growth, 28% quarter-over-quarter growth, as well as approximately 50% growth versus same time last year. You know, when we look at the GI market, you know, we continue to see acceleration of demand for Zeposia in UC. What we're hearing from thought leaders is that they continue to emphasize the benefit of using Zeposia in the first-line setting.

In fact, if you look at our business shift now, about 60% of our business for Zeposia is in the first line use. We're continuing to make good progress on the access front, where now 40% of lives have either 0 or 1 step edit, and we're working to continue to improve that in 2024. For those reasons, we're pleased with our growth in the GI market with Zeposia. We're also seeing strong performance in MS, with our shares at an all-time high. We expect continued growth for Zeposia in the back end of this year and certainly into 2024 as well.

Tim Power (VP of Investor Relations)

Thanks, Adam. Let's try to squeeze a couple more in here. If you don't mind, we can go to the next one, please, Jamie.

Operator (participant)

Our next question comes from Matt Phipps from William Blair. Please go ahead with your question.

Matt Phipps (Equity Research Analyst)

Hi, thanks for taking my questions. First, are you still confident in the roughly $4 billion in new product growth guidance for this year for the new product portfolio? It seems about 50% in the second half versus the first half, what might drive that, especially if cell therapies are flat? Samit, you mentioned seeing the Opdualag data in non-small cell next year, but I did notice on slide 7, the first line non-small cell for Opdualag as a key milestone, has officially been added as some of the long-term opportunity. Just confirming, you haven't seen that data in-house yet to make that addition?

Chris Boerner (COO)

Maybe I'll start, Matt, and then I'll turn it over to Adam before going to Samit. As I mentioned earlier, Matt, we continue to be confident in the progress of this portfolio. We remain on track to roughly double revenue for the portfolio this year, and by extension, we have clear line of sight to the $10 billion-$13 billion in 2025. Adam can walk you through a lot of the specifics around the confidence for the remainder of this year. What I would highlight, though, is some of what you've already heard on this call, we continue to see a really nice uptake on Camzyos. We had the access wins that Adam alluded to on Sotyktu. Opdualag is clearly gonna continue to be important.

While we've discussed the dynamics on Abecma with respect to manufacturing, keep in mind that we have a number of catalysts coming with Abecma, more importantly, we've seen a really nice continued growth with Breyanzi as well. Adam, anything you would add?

Adam Lenkowsky (Chief Commercialization Officer)

I guess just to put a finer point, you know, what we said was, right through the first half of the year, we're annualizing at $3.5 billion, but as Chris alluded to, we have a number of catalysts to accelerate growth of our new product portfolio in the second half of the year, which we said we would roughly double sales from last year. You know, just again, as Chris mentioned, with Reblozyl in the first line, you know, we're looking forward to the video update for COMMANDS. As David mentioned, we're also pleased with our ability to pull forward, a large PBM this year for Sotyktu, and those patients will ship to commercial product from Bridge over the next 2-3 months.

Also, as Chris mentioned, Camzyos, we expect to continue steady flow of patients coming into our hub, and then moving out to commercial product in the back end of the year. Remember, that takes around 8 to 10 weeks from a patient to move from our hub into commercial product. Finally, you know, we're continuing to increase supply for Abecma in advance of our KarMMa-3 launch, as well as ramping supply for Breyanzi in the back end of the year. For those reasons, we remain committed to roughly doubling our sales of new products this year.

Samit Hirawat (Chief Medical Officer and Head of Global Drug Development)

Thanks Adam, and thanks Matt, for the question on Opdualag. Non-small cell lung cancer randomized Phase II study is continuing to enroll and ongoing. That decision will be based on, meaning proceeding to Phase III, will be based on looking at the overall data set from both overall response rate, but also the PFS directionally, where it goes. That's why I was saying that we'll get to see that data set more so in early part of 2024.

Tim Power (VP of Investor Relations)

Thanks so much. We're running a little short on time, we'll squeeze a few more in. If you could just keep it to one question, we can get to as many people as possible, that'd be great. Could we go to the next one, please, Jamie?

Operator (participant)

Our next question comes from Trung Huynh from Credit Suisse. Please go ahead with your question.

Trung Huynh (Director Equity Research)

Hi, guys. If it's one, I guess on Eliquis, total sales declined this quarter for the first time, I think. Perhaps can you talk about some of those dynamics you're seeing with the gross-to-net in the US and faster EU erosion? How should we think about the price demand for the rest of the year and then into the future? Cheers.

Adam Lenkowsky (Chief Commercialization Officer)

Great, thanks Trung. You know, as Eric and David, Eliquis had unfavorable gross-to-net adjustments in the quarter. What we saw was an increase in Medicare and PHS patients. As you probably know, there's a lag in getting claims, and those claims came in, in the 2nd quarter. Really, that's an unfavorable adjustment. We're very pleased with what we're seeing with Eliquis in the US. Remember, 75% of Eliquis business remains in the US, and we expect continued strong growth. Our share, our NBRX share, is north of 70% and continues to grow. Our TRX share continues to not only grow strong, but continues with linear growth, coupled with the OAS market, which is also accelerating since the beginning of the year. You also mentioned about ex-US dynamics or international dynamics.

You know, we are seeing demand increases that's offset by the impact of price erosion in a number of our European markets. David talked about the impact of generic penetration in Canada and the UK, with loss of exclusivity in both those markets. Overall, we're very pleased with Eliquis' performance, and we would expect continued strong growth.

Tim Power (VP of Investor Relations)

Thanks, Adam. Let's go to the next one, please, Jamie.

Operator (participant)

Our next question comes from David Risinger from Leerink Partners. Please go ahead with your question.

David Risinger (Senior Managing Director)

Yes, thanks very much. My question, is on, Revlimid volume expectations. Could you please provide some more color on go-forward generic anticipated volumes, specifically any volume inflections to watch over the next 12 to 18 months? Thank you.

David Elkins (CFO)

Yeah. Thanks. Thanks David. yeah, you know, as we talked about before, you know, we saw more volumes come in than were expected in March of this year. The next inflection point will be in March of 2024, and then February of the following year. Those are the two ones which are planned step down. I think it's important, as, as Giovanni had said earlier, as you think about the forecast for Revlimid on a go-forward basis, you know, we changed the guidance this year from $6.5 down to $5.5, with a step down of $1.5 billion next year, $2 billion in 2025, which will get you to essentially where consensus was previously. No change to, to where we were.

Tim Power (VP of Investor Relations)

Thanks, David. Let's go to the next one, please, Jamie.

Operator (participant)

Our next question comes from Mohit Bansal from Wells Fargo. Please go ahead with your question.

Mohit Bansal (Managing Director and Co-Head of Therapeutics Research)

Great, thanks for taking my question. My question is regarding the in-line portfolio. How confident do you feel about the growth trends or expected outlook you provided in the beginning of the year? Asking because by our math, it was about for 8% growth, and if you account for the $300 million down revision for Pomalyst, it seems like 7% growth. Considering you have been growing 2%, including FX, and 3% excluding FX so far, just want you to understand if you still feel confident about that growth outlook at this point. Thank you.

Giovanni Caforio (Board Chairman and CEO)

Mohit, yes, remember the discussions that we had, and I'll ask Adam to jump in, remember, the discussion that we had was, in fact, we've updated our expectations for Pomalyst and for Revlimid, and for Pomalyst, specifically, about $300 for this year and 20% roughly of the $330 million that we saw for Revlimid twice for the 1st quarter. When looking at the totality of performance for the in-line business, we continue to feel really strongly about the strength of the trends, that's one of the reasons why we feel very confident at reaffirming the guidance for 2025, both for our in-line portfolio and for the new products.

Mohit Bansal (Managing Director and Co-Head of Therapeutics Research)

Thanks, Giovanni.

Tim Power (VP of Investor Relations)

Go to the next one, please, Jamie.

Operator (participant)

Our next question comes from Colin Bristow from UBS. Please go ahead with your question.

Yihan Li (Associate Director Biotech Equity Research)

Hi, this is Yihan, on for Colin. Thanks for taking our question. We all know that you will have your R&D day on September 14th. Just wondering if we could have a teaser trailer, what should we expect here? Are you going to share any new data on this event? Secondly, it is on your CAR-T in lupus. We recently noted you initiated a Phase I trial of your CD19 CAR-T in SLE, which has primary completion date in 2028. You previously noted you would go fast on this program, just wondering if there's any guidance on the timing of the data readout. Thank you so much.

Chris Boerner (COO)

Hi Yihan, it's Chris. I will start and then Samit can very quickly hit on the CAR-T question. Look, we're excited about the opportunity to spend some dedicated time talking about R&D. The focus on the day will be a few things. We'll obviously walk through the R&D strategy. We'll give you an update on the pipeline, and that will importantly include our a discussion around some of the programs and platforms that we're most excited about. When you step back and look at where we are, we are actually entering a catalyst-rich period for the company, and I think this is gonna be an important opportunity for us to talk about some of those catalysts in more detail. We're really looking forward to hosting the event on September 14th. Samit?

Samit Hirawat (Chief Medical Officer and Head of Global Drug Development)

Yeah, thank you Chris, and thank you for the question. For the next gen CAR-T CD19 therapy.

What you're seeing is that we have just started the Phase I study. There is gonna be dose escalations and dose expansion. What you'll also see later this year, and possibly we might be able to talk about it in September, we will be adding additional indications. We are taking that into account and putting the dates into the system in ClinicalTrials.gov. Certainly, there will be earlier data readouts and earlier data sharing prior to that date. We'll keep you informed as we progress with the study conduct.

Tim Power (VP of Investor Relations)

Thanks. I think we maybe have time for 1 or 2 more. Let's go to the next one, please, Jamie.

Operator (participant)

Our next question comes from Dane Leone from Raymond James. Please go ahead with your question.

Dane Leone (Managing Director)

Thanks for taking the questions. As you think about the conversion to commercial pay drug for those patients that you've gained market share with and to Sotyktu, it seems like by our math on the script run rate, you're running around maybe $800 million, close to $800 million, maybe slightly above on an annualized basis, which would imply the actual paid for drug product is, you know, below 25% of total scripts that you're now generating. For your guidance to convert those free drug patients to commercial pay over the next several months, does that take a penalty of continued market share gains that you've already carved out? Or do you expect to continue taking additional market share while converting to free drug into the end of the year?

Just one quick question. Does your ASR agreement, is that included in your EPS guidance, or is that in addition to your EPS guidance for the full year? Thank you.

Giovanni Caforio (Board Chairman and CEO)

Yeah, David. Thank you, Dane. David, why don't you start, and then Adam can answer the question on Sotyktu.

David Elkins (CFO)

Yeah. Thank you, Dane. Yes, it is included in our guidance. As we said, we anticipate doing about $4 billion ASR in the 2rd quarter. Just remember, the dynamics of those ASR is about 80% of the shares retired upon execution of that, and the remaining 20% happens over the contract period. Adam?

Adam Lenkowsky (Chief Commercialization Officer)

Yeah, Dane thanks. As it relates to Sotyktu, as I mentioned, you know, certainly our objective is to continue to grow market share. As I said, it's nearing 40%. We continue to see month-over-month increases, we feel very good about where our market share is trending towards the back end of the year. Our objective is to surpass Otezla. When you think about where we are today, we have doubled the volume of TRx equivalents from Q2 to Q1, and we expect that also to accelerate. It will take time to move patients from bridge to commercial drug, certainly around, as I mentioned, 2 to 3 months. That ramp will happen in the back end of the year.

As we start to unlock other plans in, starting in January, of next year, we'll also see that start to, you know, to take place as well, more patients moving into commercial supply. We feel very good about our continued growth prospects for Sotyktu in the back end of this year and certainly into 2024.

Tim Power (VP of Investor Relations)

Thanks, Adam. Let's go to our last question please, Jamie.

Operator (participant)

Our final question today will come from Olivia Brayer from Cantor Fitzgerald. Please go ahead with your question.

Olivia Brayer (Director and Senior Biotech Analyst)

Hey, good morning, guys, thank you for the question. Wanted to follow up on Abecma's manufacturing capacity going forward. I know you had that shutdown in June, is that a headwind that we should be factoring in for most years? Is there a way to minimize the revenue disruption from future shutdowns going forward? Just quickly on LAG-3 and lung, how are you thinking about the bar for success in that Phase II, and what's the strategy and timing for moving into registrational studies? Thanks.

Adam Lenkowsky (Chief Commercialization Officer)

I'll take the first question. Olivia, thanks for the question. As it relates to manufacturing and the capacity shutdown, so we're making very good progress to increase our capacity across our cell therapy franchise, both Abecma and Breyanzi. I talked about the two components of that, but as it relates to the manufacturing shutdown, that really is limited to Abecma because that shutdown took place in our Devens site where Abecma is manufactured. All of our shutdowns are planned, accounted for in our capacity plans. This was a routine shutdown to execute maintenance at our site for approximately 1 month. The ramp for Abecma is really tied to overall supply plans, with KarMMa-3 being one important aspect of that ramp. That's important because we now have over 90% manufacturing success rates and multiple ramps since launch.

This routine manufacturing maintenance processes are really important for us to continue our strong success rates and build our readiness for increased capacity in advance of the KarMMa-3 launch. As David mentioned, you know, that'll have some impact in Q3, and we expect our Abecma sales to accelerate in Q4 and certainly into 2024.

Samit Hirawat (Chief Medical Officer and Head of Global Drug Development)

Very quickly on the question on LAG-3 non-small cell lung cancer. As you know, the Phase II study is combining up to LAG with chemotherapy, comparing versus nivo plus chemotherapy. For the Phase III trial, we intend to do the combination of Edison versus pembrolizumab plus chemotherapy. We have to keep that in mind as we look at the data evolution and the outcomes so that we have the appropriateness in terms of the magnitude of effect that we'll need to see in Phase III. That's our bar. In terms of the start of the study, it depends on when the study reads out, then we are ready and prepared to quickly launch the Phase III program if the data are supportive.

Giovanni Caforio (Board Chairman and CEO)

Thank you, everyone. As I think about the quarter, first of all, I want to say obviously we provided an important update to our outlook for the year. We don't take that lightly. At the same time, when I look at the future of the company, we remain, and I am very optimistic about where we are, driven by the discussion we had about our in-line products, the performance of the launch portfolio, and the strength of our pipeline. With that, I want to thank you for participating. Our team, as always, remains available to answer any questions you may have. Wish everyone a good day.

Operator (participant)

Ladies and gentlemen, with that, we'll conclude today's conference call and presentation. We thank you for joining. You may now disconnect your line.