Good morning, everyone. Welcome to the Bristol-Myers Squibb Second Quarter 2023 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask question. [Operator Instructions] 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.

Thank you. Good morning, everyone, and thanks for joining us this morning for our second 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. But before we get started, I'll read our forward-looking statement. During this call, we will 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 SEC 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 were 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.

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 and 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 third 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…

Thank you, Giovanni. And thank you all for joining our second 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 second 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 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 to a $100 billion. Importantly, year-to-date revenues were up 9% versus last year, with continued growth expected this year. Outside the US, second quarter revenues increased 10%, driven by demand for…

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

Ladies and gentlemen, we will go to the question-and-answer session. [Operator Instructions] Our first question today comes from Chris Shibutani from Goldman Sachs. Please go ahead with your question.

Thank you very much. Good morning. When we think about the new product portfolio, particularly Slide 7, where you outlined your objectives for 2025 and to 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, outlining some of the challenges 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?

Hey, Chris. It's Chris. I'll start and then I'll turn it over to Adam to provide some specifics. But 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 to $13 billion in 2025. And 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. So Adam?

Yes. Chris, thanks for the question. Let me say about Camzyos, 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 for this important brand. Remember that the launch trajectory of Camzyos is akin to what you 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. So, 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. And 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. So taken together, we're very confident this will lead to continued and sustained growth in 2023 and beyond.

Thanks, Adam.

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

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

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 what's happening with Revlimid and the potential to maybe need to reinvest more in the business to grow revenues near term? Would love some color there? Thank you.

Thanks, Evan. This is Giovanni. So 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. So 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 as David has mentioned many times, we are in a strong position and the capital allocation strategy of the company remains very balanced. But 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.

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

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

Thanks guys for the question. Just had a couple. So Giovanni went over the Revlimid dynamic in 2Q. Maybe just talk about the risk of recurrence of this co-pay assistance looking to 2024 for Revlimid or for Pomalyst? And then real quick on Sotyktu you guys with, obviously, CVS and maybe some other payers removing step edit. How should we think about kind of demand and share looking to second half of this year and going into 2024?

Thank you. Sure. Thank you, Geoff. Let me take the first question and then we'll move to Sotyktu. So we do expect the dynamics that I discussed for Revlimid and to a lesser extent for Pomalyst to be limited to this year. And our confidence is based really on two factors. First of all, we are seeing that three drug applications to the BMS Patient Assistance Foundations have been returning to normal level. And 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. And so, as a result of that, we see this one being very much of a -- we expect this one to be very much an issue that has impacted this year for Pomalyst and to lesser degree -- sorry for Revlimid and a lesser extent Pomalyst. Adam?

Yes. Thanks for the question, Geoff. So we're very pleased with the Sotyktu launch. Our Sotyktu oral market share is nearing 40% of the oral new demand market. We're making great progress towards our goal, which we have stated becoming the standard of care for oral product. We now have over 23,000 prescriptions since launch and that means we've doubled the volume of TRx equivalents from the second quarter versus the first quarter. And as you mentioned, we're very, very pleased that we're able to secure and pull forward an access win as [CVS] (ph) moves Sotyktu into preferred position in the middle of the month. So that brings roughly 30 million lives or 15% of the total commercial lives covered in the United States. So, being able to pull that forward we are [indiscernible] takes around two to three months to move patients from bridge to commercial drug. So 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. And 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.

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

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

Great. Thanks so much for taking the question. Maybe two for me. I was just wondering if [Samit] (ph), if you can talk about your confidence in Reblozyl securing a broad label in first line MDS. I know there been some discussion here post the ASCO presentation. And then, I was wondering if there's any update on the Opdivo Hodgkin's lymphoma indication in the frontline setting for NCCN guidance -- guideline updates? Thank you.

Thank you, Terrence. So let me ask Samit to start and then Adam will cover the Opdivo question.

Thank you, Terrence. Thank you for the question. For Reblozyl, of course, we cannot comment specifically on the label and discussions with the regulatory agencies. But I just want to remind again on how this study was conducted with the intent to treat principles apply to this study where all comer population was engaged in the first line setting comparing versus ESA for RS positive and RS negative patients and you saw the data in all comer patient population as well as in the subset analysis and 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 half of transfusion. And in all subsets, you see that consistently across the board that patients who benefit, benefit, as well as they offer contributions for a long duration. So 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. But Adam, do you want to add something?

Sure. Thanks Samit. So we're excited about what we're seeing for Reblozyl 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 four weeks and our US team is launch ready. And so, what we're hearing from physicians, post ASCO, post EHA, physicians tell if they want to use Reblozyl regardless of our status because of the durability and the opportunity for transfusion dependent. So taken together, I think we're well positioned to be really the new standard of care in the first line setting. So as it relates to second question, which is, Opdivo in CHL. We also -- we're very pleased with the data presented at ASCO, where Opdivo demonstrated superiority versus [indiscernible] in a head-to-head study. Similarly, we've heard from oncologists that this data is practice changing. And as a reminder, this is a confirmatory study for our current indication under accelerated approval and we will work with [SWOG] (ph) 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 as option over the coming weeks to months as well.

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

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? And then 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 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. So I guess, when can we think about the next kind of leg up for capacity for these products and how much of a ramp can we think about as we look out to 2024? Thanks so much.

Thank you, Chris. David and Adam.

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

Yes. Chris, I'll take the second part of your question. We're [indiscernible] see across our cell therapy franchise. This year we made very good progress on increasing capacity for both of Abecma and Breyanzi. And so, when you look at our approach to the market: number one, 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, there are really two components to cell therapy, that is a drug product and vector. So 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 Devon, Massachusetts, online this year, as well as Liden in the Netherlands, which will come on board in 2025 to further increase and accelerate capacity. The second area is really around vector, and we continue to both internalize and externalized vector in our fastest path to increase capacity of our current vectors to partner with existing third-party manufacturers. So 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. And we're accelerating our transition to next-gen vector technologies as well. So taken together, we're making very good progress in increasing our capacity on both Abecma and Breyanzi.

Chris, the only thing I would add is just that the manufacturing investments that Adam alluded to are part of a broader strategy that we have that I think is going to be important for us as we think about this platform more generally. And 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 [NEX-T CD19] (ph). And so these investments will be critical for those as well.

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

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

Great. Thanks for the questions. So just a couple here. First, in terms of the pipeline assets, you guys are focusing in on LPA1. Just wanted to get a sense for the pace of development for that program? And what you see as a market opportunity for -- in IPF and PPF specifically? And then 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 is potential for a preliminary injunction to be issued because of the pressure points around the 5th amendment. I would be very interested to hear your thoughts along those lines around the IRA, as well as some of the positive influences of IRA in 2024 and 2025 that could positively impact your revenue lines. Thanks.

Thanks, Seamus. Let me just start maybe with a short comment on IRA, and then Samit and Adam will answer your question on LPA1, which is a really exciting program. So on IRA, I'm not going to comment on litigation and I 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 there is an expansion of the definition for LIS eligibility. These are good examples of things that go very much in the right direction. And of course, the impact parts of our business, including Eliquis, as an example. Samit?

Thank you, Giovanni, and thanks for the question, Seamus. So 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 terms approved for IPF and only one approved for PPS, so -- and 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 VA1 and the other two studies that recently completed. We've shown the efficacy of the oral drug, our 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 that -- in the SVC, 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 will be able to share the data at a medical conference for EPF as well. Both of these datasets are giving us confidence that we will be launching two Phase 3 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. But Adam, do want add about...

Yes, Samit. Thanks. From a commercial standpoint, we're very encouraged by LPA1 asset. As Samit alluded to, it's a very high unmet need in IPF and PPF. And the prognosis for these diseases are not too dissimilar to some metastatic cancer diagnoses. And so, we generated, as Samit mentioned, very encouraging efficacy and safety data. There was no GI toxin with the current treatments, no liver toxicity that we saw in the early phase. And this gives us confidence, as Samit mentioned, to move into Phase 3. 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 rates, which are pretty low today. They range around 30% to 40%. And 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.

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

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

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 [EYLEA] (ph). I mean, basically, your confidence on reacceleration in the back half of the year given the sequential decline in US and flat ex-U.S. And then just quickly on Opdualag, you talked about potentially becoming standard of care in melanoma. Can you talk a little bit about -- maybe just a little more color on kind of what's a reasonable kind of market share assumption? Or how -- what really would that need to be in terms of market share or some further color on that front? Thanks you.

Sure. Adam?

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 second 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. And thirdly, 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 myeloma with 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%. So 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. And so, 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%. And our share is coming both from PD-1 monotherapy and from Opdivo-Yervoy combination. But now 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 BF-mutant patient population, and it removed BRAC Nec [ph] inhibitors as a preferred treatment in the first line setting. So as a result, we're seeing a really nice inflection in the BF-mutant patient population for both Opdualag and for Opdivo-Yervoy, and that's why we're continuing to focus our efforts on that segment. So in fact, when I think about the total DMS share in the overall metastatic melanoma market, our share -- if you look at Opdualag, Opdivo-Yervoy and Opdivo monotherapy, our share is now greater than 55%. So I'm very proud of our continued leadership in metastatic melanoma.

And 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 3 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. And 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 hepatocarcinoma in the first and the second line in 2024. So there is a large program behind the melanoma metastatic disease.

Thanks, Samit. Let’s go to the next question please, Jamie.

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

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. So you guys have talked about the positive being less out-of-pocket spending, but there's a negative to contemplate, too, which is manufacturers hasn’t to pick up a healthy portion of catastrophic spending that has not been part of the equation before. So, on a net basis, when you're thinking about Part D redesign starting next year, is that going to be a net drag to earnings? It seems to me like it could be. So that's the first question. And then second question is on Opdivo. The press release mentions lower average net selling prices, I think, in Europe in Q2 and Merck has forewarned something similar for a while now. I'm wondering what's driving this? Thank you.

Chris.

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 going to be very much product specific. And so there will be pushes and pulls depending upon which product you're talking about. And 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. So that's very much how we think about the Part D redesign. Adam, do you want to pick up on the Opdivo question?

Yes. Tim, thanks for the question. As it relates to Opdivo internationally, what we're seeing is continued strong growth in our international market. In fact, when you look at year-over-year and quarter-to- quarter, we grew 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. And when I think about the kind of the decline of price in Europe, any time you get a new indication in many of our markets you start to take slight price decreases. But the volume that we see for Opdivo as we add these tumors and get reimbursement, we look to continue to increase our sales and our volume will certainly offset any price decline.

Yes. And 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. So the dynamics that Chris described don't meaningfully impact our P&L and our outlook in 2024 and 2025.

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

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

Hi. It's [indiscernible] from Citi on behalf of Andrew. 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 the dynamics? And are there any other factors you would flag competition [indiscernible]? Thanks very much.

Yes. [Emily] (ph), thanks for the question. So we're pleased with what we saw with Opdivo through the first half of the year, and we anticipate continued growth through to the back end of the year. In fact, Opdivo grew 11% overall year-to-date. And so, what we see internationally, we're also seeing our growth coming from same core tumors. First-line lung, our share is now approximately 15%. On gastric indication first line, where our share is approximately 50%, and across our early adjuvant indications. As you noted, sequentially, in the second quarter, the demand growth in the US from our core business was offset by impact from unfavorable customer buying patterns. And so, we expect that to normalize and continue to grow based on the strength across multiple tumors. And we continue to lead all competitors in every tumor in the US that were 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. So we've got some nice catalysts including our stage 2 melanoma indication, which is -- has a PDUFA date of October of this year. And you also read our press release in first-line cis-eligible bladder, CheckMate-901, and that's really exciting in multiple IO failures there. So we expect that to be a nice catalyst next year along with pending readouts next year in CheckMate-77P, CheckMate-73L, among several others. So for those reasons, we remain very confident in Opdivo's ability to grow in 2023.

Thanks, Adam. Let’s go to the next question please, Jamie.

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

Thank you very much. I'd like to ask a question about Revlimid. So 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. So what was the error in that assumption? You noted that 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. And just to be clear, generic competitors have nothing to do whatsoever with this cut today. And then the second question is Takeda noted weakness in the US GI market this morning, what -- are you seeing this? And if yes, to what do you attribute it? Thank you.

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. So, 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. So 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 skewed to progress. The number of patients on free drug started to increase, continue to increase eventually reaching significantly higher levels than we had seen historically. And also the impact on Revlimid and Pomalyst revenue accelerated during the course of Q2. So 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 patients consistent with HHS guidance, we provide that free drug for the totality of [indiscernible]. And so, what we looked at was not only the impact on the quarter, but also the impact on the full year. And 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 the question -- so the generic dynamics that we've discussed for a while, which really accounts for month-to-month and quarter-to-quarter variability are not a factor in what we are – what we've disclosed today. But obviously, they were at play as we were looking at the development of Revlimid revenue during the second quarter. You asked a question as to why we are expecting now the step down for Revlimid to be lower next year. And a couple of things that I'd like to say again. So 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 BMS Patient Assistance Foundation is returning to normal. And importantly, because of the Part D redesign dynamics that I covered before. And so, 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 have 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. So that's the number of dynamics at play here.

And second question for Adam.

The second question that you asked, Steve, was around the -- what we're seeing in the GI marketplace. And so overall, we're seeing for Zeposia is really strong growth, 28% quarter-over-quarter growth as well as approximately 50% growth versus same time last year. When we look at the GI market, 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, look at our business shift now, about 60% of our business for Zeposia is in the first-line use. And we're continuing to make good progress on the access front, where now 40% of lives have either zero or one step at it, and we're working to continue to improve that in 2024. So for those reasons, we're pleased with our growth in the GI market with Zeposia. We're also seeing strong performance in MS, when -- our share of at an all-time high. And so we expect continued growth for Zeposia in the back end of this year and certainly into 2024 as well.

Thanks, Adam. Let's just try to squeeze a couple more in here, if you don't mind me, let’s go to the next one, please, Jamie.

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

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, so what might drive that, especially if cell therapies are flat? And then 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. So just confirmed you haven't seen that data in-house yet to make that addition?

Maybe I'll start, Matt, and then I'll turn it over to Adam before going to Samit. So 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 to $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 going to continue to be important. And 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. But more importantly, we've seen a really nice continued growth with Breyanzi as well. But Adam, anything you would add?

I guess just to put a finer point, what we said was, through the first half we are 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. So just -- and as Chris mentioned, with Reblozyl first line, we're looking forward to the PDUFA date for COMMANDS. As Dave mentioned, we're also pleased with our -- really to pull forward a large PBM this year for Sotyktu, and those patients will shift to commercial product from Bridge over the next two to three months. And also, as Chris mentioned, Camzyos, we expect a continued steady flow patients coming into our hub and then moving out to commercial product in the back end of the year. Remember, that take around eight to 10 weeks for patients to move from our hub into commercial product. And finally, we're continuing to increase supply for Abecma in advance of our KarMMa-3 launch, as well as ramping [indiscernible] for Breyanzi in the back end of the year. And for those reasons, we remain committed to roughly doubling our sales of new products this year.

Thanks, Adam, and thanks, Matt, for the question on Opdualag, non-small cell lung cancer randomized Phase 2 study is continuing to enroll and ongoing. We have not seen the data, and that decision will be based on meeting -- proceeding to Phase 3 will be based on looking at the overall data set from both overall response rate, but also the PFS directionally where it goes. So that's why I was saying that we'll get to see that data set more so in early part of 2024.

We're really a little short in time. So maybe we'll squeeze a few more in. If you can just keep it one question so that we get to as many people as possible that will be great. Can we go to the next one please, Jamie.

Our next question comes from [indiscernible] from Credit Suisse. Please go ahead with your question.

Hi, guys. One, I guess, on Eliquis total sales decline this quarter for the first time, I think. So 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?

Great. As you heard from David, Eliquis had unfavorable gross to net adjustments in the quarter. We saw is 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 second quarter. So really, that's an unfavorable adjustment. But 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 OAC market, which is also accelerating since the beginning of the year. Now you also mentioned about ex-U.S. dynamics, international dynamics. We are seeing demand increases, but 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 [indiscernible] both those markets. But overall, we're very pleased with Eliquis' performance, and we would expect continued strong growth.

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

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

Yes. Thanks very much. So my question is on Revlimid volume expectations. So 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.

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

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

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

Great. Thanks for taking my question. My question is regarding the in-line portfolio. How confident do you feel about the growth trends you -- 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. And considering you are being growing 2% including FX and 3% excluding FX so far, just wanted to understand if you still feel wondering about that growth outlook at this point? Thank you.

Mohit, yes, we -- so remember, the discussions that we had -- and I'll ask Adam to jump in. But 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 million for this year and 20% roughly of the $330 million that we saw for Revlimid [indiscernible] for the first 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. And 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.

Thanks, Giovanni. Next on please, Jamie.

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

Hi. This is Yihan on for Colin. Thanks for taking our question. So we all know like you will have your R&D Day on September 14, so 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? And the [indiscernible], it is on your CAR-T [indiscernible]. So we recently noted you initiated a Phase 1 trial of [indiscernible] CAR-T in SLE, which has a primary completion date in 2028. So you previously noted you would go first on this program, so just wondering if there's any guidance on the timing of the data readout? Thank you so much.

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 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 going to be an important opportunity for us to talk about some of those catalysts in more detail. So we're really looking forward to hosting the event on September 14. Samit?

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 1 study. There is going to be dose escalation and dose expansion. What you will also see later this year, and possibly we might be able to talk about it in September, we will be adding additional indications. So we are taking that into account and putting the dates into the system in [indiscernible]. But certainly, there will be earlier data readouts and earlier data sharing prior to that date. So, we'll seek to inform as we progress with the study conduct.

Thanks, Samit. I think we may have time for one or two more. Let’s go to the next one please, Jamie.

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

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 in 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 pay for drug product is 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? And then 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.

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

Yes. Thank you, Dane. Yes, it is included in our guidance. As we said, we anticipate doing about $4 billion ASR in the third quarter. And 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?

Yes, Dane, thanks. As it relates to Sotyktu, as I mentioned, 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. And we feel very good about where our market share is trending towards the back end of the year. Our objective is to surpass Otezla. And so, 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, two to three months. So that ramp will happen in the back end of the year. And as we start to unlock other plans starting in January of next year, we'll also see that start to take place as well, more patients moving into commercial supply. So we feel very good about our continued growth prospects for Sotyktu in the back end of this year and certainly into 2024.

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

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

Hi, good morning, guys. And thank you for the question. I wanted to follow up on Abecma's manufacturing capacity going forward. I know you had that shutdown in June, but is that a headwind that we should be factoring in for most years? And is there a way to minimize the revenue disruption from future shutdowns going forward? And then just quickly on LAG-3 in lung, how are you thinking about the bar for success in that Phase 2? And what's the strategy and timing for moving into registrational studies? Thanks.

I'll take the first question, Olivia. Thanks for the question. So 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 [indiscernible] where Abecma is manufactured. And so, all of our shutdowns are planned, accounted for in our capacity plans. This is routine shutdown to execute maintenance at our site for approximately one month. And the ramp for Abecma is really tied to overall supply plans with KarMMa-3 being one important aspect of that ramp. And that's important because we now have over 90% manufacturing success rates and multiple ramp since launch. So, this routine manufacturing maintenance process are really important for us to continue our strong success rate and build our readiness for increase capacity in advance of the KarMMa-3 launch. So as David mentioned, that will have some impact in Q3, and we expect our Abecma sales to accelerate in Q4 and certainly into 2024.

Yes. And very quickly on the question on LAG-3 non-small cell lung cancer. The Phase II study is combining of Opdualag with chemotherapy, comparing versus [indiscernible] plus chemotherapy. But for the Phase 3 trial, we intend to do the combination comparison versus nemolizumab plus chemotherapy. So we have to keep that in mind as we look at the data evolution and the outcome so that we have the appropriateness in terms of the magnitude of effect that we need to see in Phase 2. So that's our bar. And in terms of the start of the study, it depends on when the study reads out, and then we are ready and prepared to quickly launch the Phase 3 program [indiscernible].

So thank you, everyone. So 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. And wish everyone a good day.

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