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    Bristol-Myers Squibb Co (BMY)

    Q1 2024 Earnings Summary

    Reported on Jan 10, 2025 (Before Market Open)
    Pre-Earnings Price$48.86Last close (Apr 24, 2024)
    Post-Earnings Price$47.39Open (Apr 25, 2024)
    Price Change
    $-1.47(-3.01%)

    What went well

    • Bristol-Myers Squibb's growth portfolio delivered double-digit growth, now comprising approximately 40% of total revenue, highlighting a diversified and robust potential for future growth.
    • Cost-saving initiatives are expected to generate approximately $1.5 billion by the end of 2025, allowing reinvestment into high ROI programs and strengthening the company's long-term growth profile.
    • Launch preparations for KarXT are underway, with plans to make it a very big product for Bristol-Myers Squibb, indicating significant commercial potential and future growth opportunities.

    What went wrong

    • Potential significant impact on future profits due to Eliquis price negotiations under the Inflation Reduction Act (IRA) and upcoming patent expirations. Eliquis, a major revenue generator, faces price negotiations that will become public in September, and its patent expires in 2028. Opdivo also faces loss of exclusivity in December 2028, which could lead to decreased revenues in the latter half of the decade. ,
    • Declining revenues from key drugs due to loss of exclusivity and increased generic competition. Revlimid sales are expected to decrease by approximately $1.5 billion to $2 billion this year and the same next year, with increased volumes of U.S. generics starting in March. The company anticipates variability in Revlimid sales and expects to be through its loss of exclusivity by the end of next year. ,
    • The need for significant cost-cutting measures including discontinuation of clinical assets and workforce reductions. The company plans to achieve cost savings of approximately $1.5 billion by the end of 2025, including eliminating about 2,200 positions and discontinuing about 12 clinical assets. These actions may reflect challenges in the pipeline and pressure on margins. , ,

    Q&A Summary

    1. Impact of IRA on Eliquis Pricing
      Q: How will IRA affect Eliquis pricing and profits?
      A: The company acknowledges that the impact of the IRA on Eliquis pricing is a significant uncertainty that will be clarified when the price becomes public in September. They expect to see an impact starting in 2026 and will provide more details on the top line and EPS effects at that time. Their plan is to return to growth before the end of the decade.

    2. Timing of Earnings Trough
      Q: When will earnings trough occur and growth resume?
      A: The company expects to see an impact on earnings starting in 2026 due to factors like IRA effects on Eliquis. They plan to return to growth before the end of the decade and are focused on accelerating both the timing and pace of growth in the back half of the decade.

    3. Cost Savings Allocation
      Q: How will the $1.5B cost savings be allocated?
      A: The company plans to redeploy the $1.5 billion in cost savings primarily into R&D, with about two-thirds allocated there and one-third in SG&A. The savings come from streamlining legacy BMS operations, including impacting 2,200 employees, and will be invested in key acquisitions like Mirati, Karuna, and RayzeBio to strengthen the growth profile.

    4. Discontinuation of Clinical Assets
      Q: Which clinical assets are being discontinued or externalized?
      A: The company is discontinuing about 12 programs, including CTLA-4, SIRP alpha, and BET 158, due to evolving science and strategic focus on growth drivers. These programs did not meet the thresholds for investment or competitive advantage.

    5. Opdualag Expansion into Lung Cancer
      Q: What is the status of Opdualag in lung cancer?
      A: The company has found encouraging results for Opdualag in a subgroup of first-line non-small cell lung cancer patients and plans to initiate a Phase III trial in the second half of the year. They will present data and are optimistic about expanding Opdualag's indications.

    6. KarXT Commercial Strategy
      Q: What is the commercial rollout plan for KarXT post-PDUFA?
      A: The company is preparing to launch KarXT, expecting it to effectively be a 2025 launch. They are building a large neuroscience sales team, focusing on prelaunch activities, and engaging with payers to ensure rapid access, especially in Medicaid markets.

    7. Camzyos REMS Modification
      Q: Is there potential to modify Camzyos REMS program?
      A: Positive real-world data from Camzyos may support future discussions with the FDA to modify the REMS program, potentially reducing patient burden and expanding access. Upcoming study results in nonobstructive hypertrophic cardiomyopathy will also provide opportunities to engage on this topic.

    8. Performance of Growth Products
      Q: Which growth products show the greatest potential?
      A: The company sees significant potential in growth products like Opdualag (grew 76%), Reblozyl (grew over 70%), SOTYKTU, Breyanzi, and Camzyos. Investments are focused on these key brands to drive future growth.

    9. Abecma and CAR-T Franchise Outlook
      Q: What is the outlook for Abecma and the CAR-T franchise?
      A: With the KarMMa-3 approval, the company aims to return Abecma to growth by expanding into a larger patient population. They are focused on educating physicians about Abecma's differentiated safety profile and expanding their site footprint globally.

    10. Other Income Prospects
      Q: What is the outlook for other income and anticipated step-downs?
      A: The company anticipates a significant step-down in other income due to reductions in PD-1 royalties and diabetes income. Additionally, interest expenses from recent debt issuance will impact other income, shifting it from a $250 million income to a $250 million expense this year.

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