Earnings Call: Q4 2020

Feb 4, 2021

Good day, and welcome to the Bristol Myers Squibb 2020 4th Quarter Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Tim Power, Vice President, Investor Relations. Please go ahead, sir. Thanks, Lauren, and good morning, everyone. Thanks for joining us today for our Q4 2020 earnings call. Joining me this morning with prepared remarks as usual are Giovanni For you, our Board Chair and Chief Executive Officer and David Ellikins, our Chief Financial Officer. And also taking part in today's call are Chris Vernon, our Chief Commercialization Officer and Sanathiro Wach, our Chief Medical Officer and Head of Global Drug Development. You'll note that we've posted slides to bms.com that you can use to But before we get started, let me read our forward looking statements. During today's call, we'll make statements about the company's future Plans and prospects to 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 under non GAAP financial measures, which are adjusted to exclude certain specified items. Reconciliations of those non GAAP financial measures to the most comparable GAAP measures or available at dms.com. And with that, let me hand over to Giovanni. Thank you, Tim, and good morning, everyone. I hope you all are staying safe and healthy. I want to open by saying I'm really proud of what we accomplished in 2020. Our teams Executed important business development activities. We did this while managing through the complexities of the pandemic, keeping our teams safe and our patience at the center of everything we do. Turning to Slide 4. In Q4, we delivered another strong quarter. Commercial performance was strong with sales increasing 10% compared to pro form a sales for the same period in the prior and we made significant progress to advance our pipeline. Of note, we continue to make progress with our Including good momentum for Opdivo Classier Invo in FirstLine, which supports our confidence in the return to growth of Opdivo this year. In first line AML response maintenance. We closed the acquisition of MyoKardia, bringing us Navarro Canton and strengthening our existing presence in cardiovascular. During the quarter, we also continued to advance our Including regulatory filings and approvals in our IO, immunology and hematology portfolio, Most recently, with positive top line results for dupravacitinib in psoriasis. We demonstrated Strong financial results enabling an increased non GAAP earnings per share outlook for 2021. As you would have just seen, we have entered into a licensing arrangement with the Rockefeller University for the development of a dual antibody combination for the treatment We are pleased to partner with Ockefeller University and leverage our expertise in antibody technology and strength in development, manufacturing and distribution to bring this potential option to patients. Moving to Slide 5. Let me put the performance from the quarter and full year 2020 into context. Thanks to excellent execution throughout the year, we have continued to deliver on all value drivers of the Celgene acquisition And laid a strong foundation for future growth of our new contracts. We are well positioned to accelerate the renewal of our portfolio and support the long term growth of our business. Last month at JPMorgan, I shared why I have confidence in the future of Bristol Myers Squibb. The integration of Celgene has gone very well. Based on progress last year, we now expect total synergies to be close to EUR 3,000,000,000 by the end of 2022. We have proven commercial capabilities, which enable us to fully realize the opportunities to grow Our in line portfolio and support strong execution of our launches. The breadth and depth of our late stage pipeline is reflected in the significant number of milestones delivered last year. Finally, our financial strength makes Overall, we are in a strong position to unlock the potential of the company we planned to build when we acquired Celgene. We're building a company with a younger, more diversified portfolio of medicines, better positioned in the second half Let me remind you when we believe we are heading. We are confident we can more than offset The impact of near term tariff expires, including Revlimid. We expect to grow our revenue and earnings through 2020 With low to mid single digit revenue CAGR for 2025, driven by the significant growth We see strong momentum for this portfolio, which excludes Revlimid and POMALYST with low double digit revenue CAGR during the same period. Looking out to 2025, we expect the continuing business will represent approximately 90% of the With 30% of that revenue from our newly launched products. Importantly, looking out to the second half of the decade on Slide 7, We have multiple sources of portfolio renewal. Our recently launched products will continue to grow. Most Have significant expansion opportunities beyond the launch indication. We have a rich mid to late stage With assets such as our Factor XI inhibitor and our multiple myeloma cell modes, caberdamide and CC92, for Eivi. We will continue to advance our diverse early R and D portfolio and further reinvest in this business development opportunity, Just as we have done with MyoKardia, we can while maintaining Very strong conference with operating margins expected in the low to mid-40s. Turning to execution scorecard on Slide At JPMorgan, I outlined several important milestones that would support our success. And as mentioned, we've already delivered on a number of those. Opdivo Plasgaba was recently approved by the FDA for patients with first Supporting the filing of this potential new therapy to help authorities in the near term. Zepozia was filed for the treatment of ulcerative colitis in the U. S. And we look forward to launching that indication later this year. Moving to Slide 9. As we think about this year, based on the strength of our business and the exciting opportunities ahead, But let me offer some perspective on key areas of focus in 2021. Commercially, we expect revenue growth across Key businesses, driven in large part by the continued execution of our recent launches of Vivo's return to growth and Equis. We will continue to advance our pipeline and have important milestones ahead this year, such as filing malacamten, Phase 2 data for Factor XI A, proof of concept data for lutravacitinib in ulcerative colitis and initial data for a hypertonide in our Factor VIII multiple We will maintain a balanced approach to capital allocation. Disciplined business development is a top priority provides an opportunity to further invest in future growth. David will provide more color This year, we also anticipate the U. S. Policy environment will continue to And I'm confident the diversification of our portfolio will help us navigate potential changes. We agree that patient effort Believe it needs to be improved, and we are supportive of policies that can address this issue. We look forward to working with the new administration and congressional leaders to foster an environment that supports innovation and enhances patient access to medicines. To close, I am encouraged by the strength and momentum across the company. Across our 4 key therapeutic areas of hematology, oncology, Cardiovascular and Immunology, we have leading in line medicines, significant short term launch opportunities and the rich pipeline. Our diversified portfolio and leading position in each business allows us I'm also immensely proud of our employees. Their talent is second to none and their commitment is inspiring. I feel very good about the future of I will now hand it over to David to walk you through the financials. David? Thank you, Giovanni, and hello, everyone, and thanks again for joining our call today. If you turn to Slide 11, I'd like to discuss our robust Top line performance for the quarter. Our teams continued to operate well in a virtual environment, delivering very strong quarterly and full year results. For the Q4, revenues grew 10% on a pro form a basis versus prior year, reflecting strong execution across the world. During the quarter, we also saw approximately $250,000,000 of favorable inventory build versus the Q3, primarily driven by Eliquis and REVLIMID, as well as a 2% favorable impact from foreign exchange. Full year revenues were equally strong and reflect the pro form a growth of 7%. I'll now provide additional color on performance of our key brands and new launches. Now starting with Eliquis on Slide 12. Global sales continue to perform very well, growing double digit for both the Q4 and the full year. In the U. S, 4th quarter sales increased 6% versus prior year driven by robust 17% TRx growth and an inventory build partially offset by Expected higher gross to net impact from the coverage gap. Inventory build versus prior quarter was approximately $100,000,000 We saw total new scripts for oral anticoagulant declining during last year due to COVID. We are starting to see naive volumes return to at pre COVID levels. Internationally, sales remained strong with revenue of approximately $1,000,000,000 growing 19% versus prior year. Eliquis continues to be the number one NOAC in multiple key markets internationally, including Germany, France in the U. K. Both in the U. S. And internationally, we believe that the growth outlook for Eliquis remains strong as we continue to grow the oral anticoagulant class as well as increasing our share within the class. Turning to Slide 13. Global sales of Opdivo grew 2% in the 4th quarter versus prior year, primarily driven by strong growth in international markets. In the U. S, the teams continue to execute well, largely through remote engagement. During the Q4, we We saw an expected unwind of favorable inventory we discussed last quarter. Importantly, our first line lung cancer continues to go very well With our share now in the low double digit range. This is visible by the strong 20% sales growth of the year avoiding the quarter versus prior year. We continue to work through the pressure of our second line indication, which is stabilizing and now starting to be balanced out by the momentum we are building in 1st line lung. We remain very confident in the return to growth for Opdivo in the U. S. This year. We expect continued growth in first line lung, combined with launches and additional indications, including first line renal with the recent approval of Opdivo plus cabo and the opportunity to be the 1st ILE agent in Firstline Gastric as well as several new adjuvant launches. Internationally, we continue to see strong commercial execution with growth primarily driven by first line melanoma and RCC as we continue to secure reimbursement around the world. We are pleased with the recent Japanese approvals and the launch in first line loan with a broad label in all comers, as well as the EU approval of 9LA and we'll be working on securing reimbursements in various countries throughout 2021. Now moving to our in line multiple myeloma portfolio on Slide 14. REVLIMID and COMLETS continue to perform very well with strong double digit quarterly growth on a pro form a basis. Globally, REVLIMID grew 18%, primarily driven by continued increase in treatment duration. In the U. S, 4th quarter revenues increased 15%, primarily driven by solid demand and inventory builds compared to prior year. The inventory build versus prior quarter was approximately $100,000,000 and we expect this inventory build to reverse in the Q1. Outside the U. S, Revenues were strong with growth of 24% in the 4th quarter versus prior year due to growth in the triple combinations, which A tender of approximately $80,000,000 Tomlin's global pro form a revenues continue to reflect significant growth, up 21%. In the U. S, pro form a revenues increased 18% and internationally up 27%, driven by increased usage in earlier lines and longer treatment durations. As we look to the Q1 of 2021, our inventory in addition to the inventory build in U. S, I would like to remind you of the typical seasonality of revimid and pomelo's experience due to patients entering the Medicare coverage path earlier in the year. Now moving on to our recent launches on Slide 15, our new launches contributed just over $300,000,000 in 2020. Rev LaSalle is off to a great start with global revenues in the year of $274,000,000 In the U. S, we experienced Significant pent up demand from the MDS launch in Q2 and Q3. And during the Q4, we began to see expected evolution from the original bolus The true underlying demand. We continue to expect growth through new patient starts early in their treatment in Germany. Internationally, Initial launches in Germany and Austria are doing very well. We continue our launches in various markets globally over the course of 2021 as we receive reimbursement. Now turning to symposia, strong commercial access has been secured with greater than 90% of U. S. Commercial lives covered. We remain focused on driving demand and establishing Zeposia as the leading S1P modulator in multiple sclerosis. Outside U. S, we have now launched in Germany, Switzerland, Canada, the Netherlands and Norway, and we'll continue to secure reimbursement in other markets throughout the year. In addition to our MS launch, we now have a PDUFA date for CYPOGIA in UTC in May and look forward to building momentum of this differentiated medicine. And we will work with the European Health Authorities to bring this medicine to patients as soon as possible. Moving on to Onuray, Initial feedback from physicians has been very positive in establishing Onurag as the first and only oral treatment to demonstrate an overall survival benefit for first line AML maintenance patients. With the data now published in the New England Journal of Medicine, we are focusing on educating physicians on this new maintenance therapy for patients. The MAA remains under review in EU with approval expected this year. Now moving to our balance sheet and capital allocation on Slide 16, you'll see we continue to generate significant amount of cash from operations Approximately $3,400,000,000 in the 4th quarter. We ended the quarter in a strong liquidity position with approximately $16,000,000,000 in cash and marketable securities. Our capital allocation priorities are unchanged. The business development remains top priority. We're committed to reducing our debt and returning capital to shareholders. With respect to business development, we plan to focus on strengthening our pipeline on midsized bolt on deals that further strengthen the company into the second half of the decade. We will remain disciplined with respective deals that we execute and consistent with our criteria of being strategically aligned, scientifically sound and financially attractive. As it relates to reducing debt, we will continue to be focused on this further strengthening our ability to invest for growth. This morning, we announced a debt reduction transaction of up to $4,000,000,000 The bonds we are targeting, we still expect to see our leverage We are committed to a strong investment grade credit rating, which is apparent through our willingness to use excess cash to proactively accelerate debt reduction. Last, We are committed to returning capital to shareholders through continued dividend growth and share repurchases. We have increased our dividend for the 12th year We recently increased our share repurchase authorization with plans to execute a total of $3,000,000,000 to $4,000,000,000 in share repurchases by the end of this year. Now let's turn to our guidance for 2021 on Slide 17. Let me Start by giving you a quick update on our synergies. As Giovanni mentioned, the integration has gone very well. And we increased our total expected Synergies to approximately $3,000,000,000 by the end of 'twenty two. We achieved about $1,400,000,000 in 2020 and expect the remaining synergy capture to be split evenly through this year and in 2022. With that in mind and considering the momentum we saw in the business in 2020, with our non GAAP diluted EPS guidance for 2021. Now touching on our non GAAP expectation at constant exchange, we expect High single digit revenue growth over 2020 based on the strength of our in line products and the launches we are executing. We expect to sustain a high enterprise gross margin of approximately 8.5%. Now I want to take a moment to touch on NS and A. In 2020, We had the opportunity to make a number of incremental and accelerated investments in our prioritized brands and product launches. Also with COVID recovery and higher expenses due to myocardia are reflected. For 2021, we expect NSNA to increase mid single digit increase in R and D as we invest behind a robust pipeline, COVID recovery plans in preclinical and clinical studies and incorporate spend of We expect our tax rate to remain about 16%. And finally, to strengthen the minimum business, We are now increasing our non GAAP 2021 diluted EPS to $7.35 to $7.55 I I would also like to provide some color on OI and E and share count. It is likely we'll see royalty income and net interest To roughly offset each other in 2021, resulting in net neutral OI and E. Regarding our share count, We ended 2020 with approximately $2,300,000,000 shares outstanding, which will decrease based upon the $3,000,000,000 to $4,000,000,000 repurchase activity we're planning in the year. Now before we move on to Q and A session, want to thank our teams around the world for delivering such outstanding results in 2020. These results demonstrate a resiliency of our portfolio and position us well for strong growth in 2021 and into the future. I'll now turn the call back over to Tim Giovanni for Q and A. Thanks very much, David. Lauren, can we go for the first question, please? Thank Our question comes from Jeff Meacham with Bank of America. Good morning, guys. Thanks for the question. Just have two quick ones. For Curtis, when you look at the new launches on Slide 15, these are the LOE offset over So the question is, what do you see the tipping point in demand for these three products? And how should we think about initial adoption for Development question for ducrebsitinib, Fox on safety Having a black box will obviously be a big commercial driver, but it's possible that recent safety data for Xeljanz and a somewhat related mechanism Sure. Let me start with the question on the tipping point and then also your question with respect to Liso cel, maybe I'll start with a question on Liso cel and how we're thinking about the launch there. We're obviously very excited about the opportunity to Launch lisovel in DLBCL, we expect that to end in a week. We are obviously going to be very much focused on Ensuring at launch that sites are activated very quickly, that we're able to get patients efficiently moved on to therapy. And then As we stated repeatedly, really the tipping point with respect to me is going to be our ability to continue to expand the CAR Market by driving referrals and expanding the site footprint and then ultimately being able to leverage we believe to be a differentiated Product profile in order to drive brand care, and so that's going to be very important. And a similar story will be For Idezol, obviously, we have a very strong position in multiple myeloma field coverage. With respect to staying in hematology The 3 products that were on the slide, Revlisil. Obviously, Revlisil is off to a very good start. We're very pleased with the launch so far. The execution for this project has gone very well and we continue to believe that Brazil is going to play in a very important role in both MDS and beta thalassemia. As we look at where the launch is at this point, we think thus far we had very good Demand some of that demand frankly has been pent up. And as we get into the Q1 and certainly into this year, we think we'll be tapping into the true underlying demand. We'll continue to see real opportunity to grow this brand both in its labeled indication, as well as potentially to expand into the first line ESA naive with the And then for onurig, onurig is obviously off to a very good start. As David mentioned, There remains a very high unmet need for patients in first line AML who've achieved a CR post intensive chemo, but aren't candidates for stem cell. We believe that really the HEAR is going to be to continue to drive the benefit that we see from an overall And we're going to have to do is continue to build What we're going to have to do is continue to build that market and convince physicians that It's a new paradigm to patients and if there's a real urge to seek to treat. And then finally, to pick up on the question on Zepozia, We are very pleased with what we have seen with the opportunity for Zepozia, not only in MS, but particularly in IBD. The MS launch we think is going well in spite of the situation with COVID. We've seen good take from physicians in terms of willingness to prescribe. Importantly, the percentage of physicians who now believe that Zepozia is The best S1P is very much on track with what we had hoped for. And given the data that we saw with True North, we think there's considerable opportunity for us So very excited about the opportunity with ZECOSIA. Maybe I'll turn it over to, to Samit. Thanks, Chris, and thanks, Jeff, for the question. For the Cabozantin, let me just start first by saying that for the for ARTIK-two inhibitor, the Cabozantinib, this is not And the reason I say that is because of the specificity and selectivity in terms of targeting Type 2, Downstream inhibition of IL-twelve twenty three and interferon alpha, which leads to a profile that is differentiated. We do not see the signals of lab abnormalities that are generally associated with JAK inhibitors. We do not see the signals for VTEs that are generally associated with, jackal ligamentous. What we have are 2 very well conducted Phase 3 trials showing remarkable efficacy. We are very pleased with the data that we've seen, meeting the primary and secondary endpoints. And we are now looking forward to the data evolving as Giovanni mentioned on one of the slides in the next generation of Thanks so much. Lauren, can we go to the next question please? Our next question comes from Terence Flynn with Goldman Sachs. Great. Thanks for taking the question. I just maybe 2 parts. First on Opdivo, Chris, I was just wondering if you can help us think about The cadence of contribution from some of the new approvals, CheckMate 9ER and then maybe on the adjuvant side when we could start Seeing some pull through there, is this more the growth going to be weighted to the second half of the year? And then on Factor 11A Summit, Maybe you could just opine here on kind of what you're hoping to see on the profile from the initial Phase 2 trial later this year? Thank you. Let me start, Terrence, and then I'll turn it over to Sumit. So yes, so we're excited for the outlook for Opdivo, as was mentioned earlier in the call, we do see continued confidence that Opdivo is going to return to the growth in 2021 and contribute meaningfully As part of the IO franchise to company growth beyond that, what I would say to answer your question on 9ER is, first of all, 9ER needs to be put within the context First of all, a very stable business that we're starting to see in the U. S, a strong business as you saw in the numbers in Q4 ex U. S. And then as David mentioned, we've seen good uptake in the first line lung launch in the U. S. And it's still very early days outside of the U. S. We do see that there is A nice opportunity with 9ER and first line renal. Again, as we've talked about, we've got an establishment with Opdivo for Sure Boy there, and we think that by Giving us the opportunity to combine with what we believe to be a best in class TKI with cabo, there's opportunity to grow that, but we're not getting into the favorable Patient population, still very early days since we were just approved on 22nd. And then with respect To the additional opportunities, as you note, we have de risk launch opportunities with gastric cancer in the First line metastatic space as well as in the adjuvant space as well as with adjuvant bladder. We do think that those are going to be More indexed to the latter half of this year and then as we get into 2022 in terms of their contribution to growth. Maybe with that, I'll turn it over to Tom Nick. Thanks, Chris, and thanks, Darren, for the question. For Factor 11a, we expect to As the data from the first of the 2 proof of concept studies that are ongoing, the first one being in the total knee placement population and there we did a dose ending study and we are evaluating safety and efficacy of the oral Factor XI A single agent versus enoxaparin administered securitinously for these subjects. So What we are trying to see is the profile that emerges from a bleeding perspective, whether we can have a similar or better efficacy with Leptin. More importantly than there will be the 2nd study next year looking at the combination of the background therapy of the antiplatelet agents where again It is very important to notice that profile, what impact it will have on bleeding. And if we are able to combine that, it opens up additional indications that we can pursue the following We'll be watching how early we're finding the dose, looking at the safety and of course efficacy will also be a point to review. Thank you. Can we go to the next question please, Mark? Our next question comes from Seamus Fernandez with Guggenheim. Seamus, are you on mute? We'll take our next question that will come from Steve Scala with Cowen. Thank you. I have two questions. First on To Wilbruck, a large long term cardiovascular outcomes trial to fully convince physicians that there is no CD risk. Why not? Bristol's view is clear, but prescribers don't seem convinced. And then on Opdivo, does Bristol See any risk from potential new PD-one entrants such as Lilly's Tivit or Novartis, Cetozilizumab or now the Jiangsu Coherus antibody, I assume their primary angle will be price. So what is the risk from that? Thank you very much. Maybe I can start off Steve with the first question on the glabastinib. So we have just had the readout Of the first Phase 3 studies in psoriasis, data will continue to evolve as we look at the long term studies from psoriasis. We will continue to follow these. We have additional indications ongoing. We do not see the profile that As we described for Jack and the various from a MACE perspective, VTE perspective, etcetera. We have to continue to evaluate. We'll have the discussion with the These are the priorities. In order to understand what profile is that we need to further investigate, this is not a commercialized drug yet. So in terms of talking about the prescribing of the mid semab, I think that is still got to be further evaluated when we are able to So I think it's too early to define what additional studies to be conducted and we'll continue to follow that very closely. Let me pick up on the question on sort of new entry law and then particularly the concern about price. So First of all, we watch the competitive dynamics of the PD L1 marketplace extremely carefully, as you can imagine. Something that we've been looking at considerably It has been the question of commoditization. That's been with us really since we were approved with Opdivo. From a U. S. Standpoint, we actually don't see considerable risk from these new entrants, in part driven by a number of factors. First, Oncology continues to be a very data driven field in the U. S. And so we've Got a wealth of data covering both OPDIVO and NURALI, which gives us confidence. 2nd, we've established a very strong position across tumors. And of course, we've built very significant capabilities to operate in a competitive context, and I think we're demonstrating that now in both renal cell and lung cancer, for example. Ex U. S, again, it's something that we're going to continue to stay very focused on. We see that in some markets, you may see some risk of commoditization, but those tend to be relatively small markets But in general, I would say we're very confident with our competitive position. We don't see meaningful risk with respect to commoditization from where we sit today, but it's something we'll continue to monitor. Thanks, Chris. Lauren, can we go to the next one, please? We'll take our next question from Seamus Fernandez with Guggenheim. Thanks. Sorry about that. My phone got cut off. So I wanted to just kind of walk through the strategy in multiple myeloma given the number of mechanisms that You guys have in play and how you see the market evolving. Chris, I think this is likely falling under urospices, more so than anything. So I was just wondering if you could help us understand How you see the treatment of multiple myeloma evolving, amidst the transition away from or towards Obviously, there's lots of opportunities out there, bispecific cell therapy, your cell mods. Is this Simply about segmenting the market or do you see transformational opportunities for Potential internal combinations. And then a bigger picture question for Giovanni. Giovanni, We're continuing to see a lot of activity on the BD front from your team. As we think about The next sort of leg of opportunities, are you most focused on sort of Phase twothree opportunities And again, continuing to build out the pipeline in that regard, is it more additional life for the stool? Just trying to More fully understands how you're continuing to focus on enhancing the pipeline and growing and returning the company with growth, but extending the growth profile post come from time. Thanks, Seamus, for the questions. It's Amit. Let me start with the R and D aspect of multiple myeloma strategy and then certainly Chris can fill in the commercial aspects of it. So as you know, beyond the MS, there are 4 classes of medicines that are being developed in multiple myeloma primarily. Cell therapies, certainly the ADC that have recently been approved and more to follow, there are the cell mods And then there are going to be the combinations as you have also talked about. Then right now, What we're trying to do is to get to a stage where dose disease, which is interval and in patients who are heavily pretreated In the 4th line class, we have progression free survival remains very low with our response rates of 30% or so. We are trying to transform that disease. So from that perspective, cell therapies are going to play a major role and that's where IV Cell is coming in to begin with, where we have shown the data, we've Generation of molecules are T cell engagers or cell mass ADT. T cell engagers are going to be also very important. And as we've spoken about earlier, there could be patients who may not be able to receive cell therapies and will be more Of course, there are challenges right now with the formulation that we have available. We've seen data from multiple companies coming up showing that IV administration is associated with good efficacy. There are Challenges in terms of finding the right dose and administration schedule from a Phase 2 perspective. So you have to be careful in terms of how we go forward with that. And so certainly, Many others, I mean, we are now investigating subcutaneous or it seems early data from other presentations that we've seen That the efficacy can be maintained of the commissioning to be evaluated. There are small numbers doing that, but seems to be in the right direction. 3rd part is the sales model, and that's where we will show the first half of the expansion data later this year. And depending on what the durability and the magnitude of the Given the response, we might have an opportunity to convey that to the authorities and have a discussion of how to going forward. To do the current level, How to move these forward? The next phase of development is definitely going to be combinations. We've shown some of the data. If we talk about Our data mine, for example, data at ASH showed us high response rate when combined with the valuval of dexamethasone as well as Balcade with Daximethasone. So those are the strategies moving forward in the earlier line. We are in a similar way going to be investigating combinations with iDACEL. And as the data evolves with the T cell engager, we look for combinations. The ultimate goal is to move CellMOG much earlier in line, so that we can have the comparisons versus image And then of course, try to move the other modalities also further up in line. But ultimately, yes, there will be segmentation of patients. Some may receive cell therapies, some may receive T cell engagers and there could still be an opportunity I think, Simon, you covered most of it. The only thing I would add is, obviously, as Revlimid on the list go generic, our focus is going to continue to be On bringing transformational opportunities forward, as you well know, Seamus, there continues to be a consummate need, Particularly for patients as they get into later lines of therapy and multiple myeloma, Idecel is going to be an important A piece of that innovative pipeline that we bring forward initially in later line therapy and then as we discussed Potentially moving that into earlier lines of therapy in a broader patient population. And then as Amit mentioned, the opportunity to launch next generation BCMA targets T cell endangers and potentially the next generation of small molecules, which we think have the potential to displace today's backbone. And then Over time, you could envision these newer therapies being combined and targeting different patient populations across lines of therapy. And then also thinking about the specific type of drug to the age, performance status or preference of patients. So we're excited about Having all of these promising modalities in our portfolio, we think it gives us a unique opportunity to build on our leadership position. Thank you, Chris. Seamus, this is Giovanni. Let me just rapidly answer your question on business development. So first of all, I see that continuing to be the central pillar of our capital allocation strategy and continue to be focused on Areas that are strategically aligned with our commercial presence and research efforts. Obviously, we'll continue to look at There will always be a part of our business development strategy that will be about Continuing to strengthen and complement our research pipeline and early stage efforts, you've seen us doing a number of deals In that space, last year, I do see that continues. It's clearly our strategy. At the same time, I've been very clear at JPMorgan in my presentation as an example that as we Continue to assess later stage opportunities, deals like the MyoKardi deal, Given the right assets, the opportunity to generate value and the objective to continue to strengthen the growth outlook of the company in the second half of the entire deal, we're always going to be interested in. Thanks, Giovanni. Can we go to the next question please? Our next question comes from Ross Wiegand. Great. Thanks so much. Just building on earlier question regarding the TICC-two commercial dynamics and this kind of balance between Would you assume trial emerging from the JAKs, but there being some perception issue with at least some physicians in terms of the profile of the drug? How are you thinking that from a commercial standpoint? So on one hand, do you largely address through your data presentation And we can think about a quicker ramp here given the superior efficacy you're seeing relative to the oral on the market or you're anticipating this could be a bit slower launch and that it's going A big education component to getting the product established given that over time there seems to be a large opportunity, but more that first And the second question I had was on the Factor XIa. I guess how much will the data from this first study reporting This is your increase or decrease your confidence in the second study. And do we really need to think about both of these Phase Two programs reading out before you'll make a decision on moving the asset forward or based on this first study, could we could you see at least on the if the monotherapy setting the product moving forward? Thank you. Chris, Whitney, I'll start and then I'll turn it over to others to comment on the second part of your question. So with respect to the opportunity that we have with TIC and sort of the pace of the commercial execution, We're excited about the opportunity that we have here. We think that based on the data we've seen from the Phase 2 of both PSO-one and PSO-two, we have the Clearly, this is going to be a market where we've got very compelling data versus the only world that's in the space now. So we think that There we're going to have an opportunity to educate physicians relatively quickly. Obviously, we're going to have to work through access and the like, which is any new launch and that We'll typically take a bit of time, but we think with respect to our position versus the existing rural agent, there we think we have a A relatively quick opportunity with a very, very compelling dataset against the only Now as we think about additional opportunities to expand from there, that's probably going to take a bit more time as you have competitors that have been established And Chris, just to be very, very Sure, because we know the time is short here and others also have questions. We do believe that both studies have individually very important goal to play To define the dose and the Phase 2 profile, the time difference being the readout in case studies is not too long. So I think we will obviously be able to build It's not that long, so execution wise, both data sets will be important. Thanks, Simon. Can we go to the next question, please? Our next question comes from Tim Andrews Research. Thank you. Going back to the P1 question About commoditization, I want to ask about China specifically and where is today the cautious picture on the China opportunity due to NRDL and local manufacturer proliferation, I'd be curious to get your view, is this ever going to be a market that's meaningful For Bristol or other multinationals and just as importantly, if it's happening in China in the PD-one category, why would it happen And other disease categories, oncology or otherwise. And then second question on REVLIMID, largest Product now for the company goes off patent next year. The analysts are guessing how to erode it in the 1st year. We don't know $1,000,000,000 or $3,000,000,000 down or what exactly? You have some clarity on how to think about 1st year erosion. Tim, thanks. Let me start on both questions and I'll ask Chris and David if they want to add. So On China, let me say, 1st of all, we have a relatively small business in China that we see an opportunity to continue to strengthen our presence in that market. But yes, our pipeline continues to progress and we have launch opportunities going forward in China. I would agree that from a net NRDL perspective, it is appropriate to be because of the number of PD-one agents that have been launched at the same time, including a number of local players. And so I share the perspective that the opportunity in China I'm I do believe though in a couple of things. So first of all, there are examples of brands in oncology and other therapeutic areas That recently had a more differentiated profile with Local competitors have been able to be included in NRDL reimbursement And being meaningful contributors to growth in the market. So I don't think every therapeutic area is the same and every Cost of revenue is the same and specifically in our portfolio with truly differentiated medicines that can have a Very meaningful presence in China. When you look at the medium and the long term, I think actually The development opportunities in China will continue to go not only through the government channel, but also over time The development of commercial insurance for what is a relatively large population of patients that have So I do see that in the medium term, the composition, if you want, of the marketplace in China In terms of payer dynamics, we'll be more diversified, and I think that will strengthen opportunities across the board. So we continue to be really committed to China. With respect to your question on readiness, as you can imagine, we have a number of We have obligations ongoing with players that are continuing. We're not We're going to be in a position to provide multiple year guidance going into the future, but I think we've been pretty clear So the evolution of that business, I think it's pretty clear. And from my perspective, what's more important is to really look at the total This is the growth for our continuing business and the growth of the total comp between now 2025. Chris, do you have anything To Adam Chiang? Giovanni, I think you covered it. And the only thing is that I agree with Giovanni. In the medium to long term, we see Significant opportunity. The NRDL is only one of the payer channels that are available. As Giovanni mentioned, there's a rapidly emerging commercial and private health And we think it will continue to be an important opportunity for locals and multinational companies. And I wouldn't over extrapolate, the dynamics for PD-one to other therapeutic categories just given the intense level of competition that you see in China with those products. Thanks, Chris. Lauren, can we go to the next question, please? Our next question comes from David Risinger with Morgan Stanley? Yes. Thanks very much. I have two questions. First, Could you discuss why your BCMA Orbicell was dropped? And second, Maybe I can start off on Alcocell and then certainly Pass it on for Chris to comment on RIZZO. For oral results, we always look at our portfolio overall and ensure We are going to develop the best medicines and take it forward. For the Cellar, as you know, with a BCMA directed cell therapy, we have hydrocelle is a front runner, which has the data and has been submitted for review and approval both in the U. S. As well as in EU. When we look at the older cells evolution of the data and we In terms of the landscape and the evolution of data from our side as well, we believe that iDACEL fits perfectly in terms of further development and colza itself through that form becomes very important for the next generation of colza development Rather than the medicine, the particular medicine itself. So therefore, we have not taken Orbiselt forward as a heading the current form And we'll use the platform for evolution of the cytokines. David, with respect to roblozil in terms of the opportunity, the way I think about it is our Initial indication in MDS, remember that's a relatively smaller percentage of the overall MDS incident. So in the U. S, for example, the incidence of MDS is roughly 21,000. The on label population is a relatively small percentage of that and that's because the indication Obviously, focused on those patients who are lower risk, ESA eligible, RS positive and in the second line. So the way we think about it is 1st and foremost, we've got to continue to drive utilization in the existing indication we have. We think there's continued opportunity there. Then obviously, there is an opportunity to expand within the NAS and that the COMMAND study gives us a meaningful opportunity to both Include those patients who are as negative and moving to earlier lines of therapy. And then obviously beyond NDS, there are other opportunities, beta thal, which is on label today, but then also we have additional opportunities in areas like myelofibrosis. Thanks, Sesh. Lauren, can we go to the next question please? Next question comes from Ronny Galm with Bernstein. Good morning and thanks for putting me in. Two questions, if I may. First, about the Part D restructuring. You mentioned your Support for the patients from paying pocket. In Congress, discuss 20% to 30% responsibility for pharma in the Graphic part of the insurance and obviously for giving you a portfolio in oral oncology medicine, it will be material. I was wondering if you can just give us a quick update where you believe the biggest standing, where you're concerned around that issue heard and is this considered And second, as we think about the kind of IL-twenty three, take 2 next of these and coming to IBD, I was wondering if you were able to compare the kind of the assets And if the gaps are small enough that you think could be head to head with the IL-twenty three, Thank you. Let me start with your question on Part D redesign. So first of all, there is a real Need to think about redesigning benefits in a way that is more aligned with the treatments of today and most importantly, that addresses significant affordability issues that are faced by patients because of inappropriate design of benefits and the high co pay And high, I will talk about exposures that patients have. I think it's premature to say exactly where potential legislation in Congress would evolve. We've been very clear that we are supportive of thinking about the evolution of the design. And I think when you look at our portfolio, there is we have a very diversified portfolio. So Depending on how the coverage gap contribution of the industry evolves, that's Currently 70% and that may actually have an impact on Eliquis should that be reduced. On the catastrophic side, you are right, some of the specialty oral medicines will be impacted by changes in that area. So it really depends and when you have a diversified portfolio that may be areas that are impacted Negatively, there are areas that are actually impacted positively in terms of patients, but also in terms of the contribution we already make. So when we look at concrete proposals, we'll be able to assess the impact on our portfolio better. But I think it's important to remember The different medicines in our portfolio today are impacted differently in the various phases of coverage Chris? Sure. So Ronnie, we're obviously very enthusiastic about the opportunity that we had to play with Potentially multiple drugs in IVD initially with ZYPOSIAN and then pending the data with tick, potentially an opportunity with ducravasitinib as well. The thing to keep in mind is that while IBD is a competitive space, there continues to be a need for applications drugs that have a manageable safety profile. Ultimately, we believe that The competitive dynamics are going to play out along a few dimensions. Obviously, efficacy, safety, route of administration is very important here. And because this is a chronic disease where patients are going to cycle through multiple products, we think having a novel mechanism of action is important. And so When you look at the 2 broad categories of treatments that are available today, notably biologics and JAK inhibitors, We think our initial foray into this space with Zepozia is favorably positioned. For example, we think Zepozia demonstrates efficacy that is competitive With biologics in an oral formulation with an improved safety profile certainly versus the TNF inhibitors. So we think we play very well there. And similarly, with respect to the JAKs, the ProSBI administrative efficacy that's generally competitive with JAKs as well. And again, And improved safety profile and across both of those categories being a novel S1P in this space, we think it's going to be important. Thanks, Chris. I know we're running short on time, but it's a good few minutes extra maybe to get you a few more questions. If we can go to the next one, please, Laura. Thank you. Our next question comes from Louisa Hector with Berenberg. Hello. Thank you for taking my questions. One just a clarification on the inventory build. You gave the numbers quarter on quarter. Can you confirm the year on year impact? And then also on the TYK2, we've seen a very positive headline press release within psoriasis. I'm wondering when we might see the data, how soon you could file and whether you expect an FDA panel. And just a quick comment perhaps because in the press releases, you do mention the secondary endpoints, some were net, which implies some are not met. And I just wondered how crucial they were to their competitive profile of the drug. Thank you. So on the first question, the year over year impact is about $200,000,000 in the 4th quarter of inventory build and that was mainly related to Eliquis And Revlimid. We expect all of that to come out in the Q1. So David, I can take the second part of the question around the cabasimab very quickly. In terms of the presentation of the data, we anticipate presenting the first Of the 2 studies at AD later this I think it's in the Q2, it's I think April. And then the second one, you have to find an appropriate conference in the second half of the year so that we can share the data more broadly, so that Mercedes can share with the community. Second about the filing, we are working very diligently and it is a priority for us. So we do anticipate filing quite rapidly. And of course, as soon as we have the PDUFA date, we will be broadly communicating that and sharing that information with you and others. Sorry about the FDA panel, we obviously can't comment on that. We don't know that. We have to continue to have the dialogue with regulatory And so looking forward to that conversation with the health authorities. And last one is on the secondary endpoints. As we've said, we've met the And the secondary endpoints, we are very comfortable with the data that we've seen showing the superiority not only against placebo, But also against Altezla, and we've looked at it from a PASI-seventy five perspective, SCBA-one perspective, So we are very comfortable with the data that we've seen thus far from both primary and secondary endpoints. Thanks, Seamus. Can we go to the last one, please? Our next question comes from Andrew Baum with Citi. Thank you. Two questions on the Factor XI inhibitor, please. First, I'm interested in how quickly you can initiate a Phase 3 program. I'm assuming given the high probability that you and I both put on the probability of The planning for a Phase 3 program has already begun given how lengthy many of these programs are going to be. I just want to confirm if Okay. I'm assuming you've also identified sites as well given both the company's previous experience. And then second, You've previously spoken to ESAs for acute coronary syndrome, some of the areas that you want to go on the arterial side. Do you see any subpopulation of atrial fibrillation where you could go head to head versus adequate? Or should we disregard the atrial fibrillation First, I don't think we should disregard AtriaFibrillation from any trial further. Those are the discussions that we still need And of course, the conversations will need to be had both with our collaborator, Janssen, as well as with the regulatory authorities that the appropriate competitor Would be in the right population. So more to come on that as we gather the data and the conversations gear up. In terms of starting again the Phase 3 study, 1, We need to see the data first from the first trial of total knee replacement. Both of the companies, of course, want to proceed as quickly as possible and we certainly honor the excitement that is around there. And of course, these are a priority module that we need to move forward. So we will be able to initiate Phase 3 trials quite rapidly. You very correctly said both companies have the expertise In conducting these trials and with the prior experiences that we have, we will be able to initiate very quickly, but certainly looking forward to see the first data. I cannot share timelines yet because we have to obviously collaborate with Janssen to be able to define those, but as soon as those are available, those will be shared in due course as Thank you, Sanath, and thanks, everyone. Let me just make a couple of comments. First of all, let me say I I'm excited that 2020 was a really important year for us. It was a great year, the first year for us. As a combined company, our performance was strong during the challenging year from so many different points of view, and we've established a really strong foundation for our new company. There is solid momentum in our business going into 2021, and that's Our outlook for 2021 and the guidance we provided today, we feel really good about the company that we're building, The way in which we are executing and delivering on the value drivers of the acquisition of Celgene, we see both Significant opportunities for sustained long term growth ahead and the acceleration of the renewal of our portfolio, And we look forward to continuing to update all of you as we make progress by continuing to remain focused on I know the team will be available to answer any additional questions, and I'd like to Thank you for participating in our call today. Thank you. And that does conclude today's conference. We thank you for your participation. You may now disconnect.