Release Date: July 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Growth portfolio revenues increased 18% year over year, or 21% excluding the impact of foreign exchange.
- US regulatory approvals for Breyanzi, Krazati, and Augtyro, demonstrating the strength of the pipeline.
- Achieved European approval in first-line bladder cancer and presented data in first-line liver cancer.
- Operational excellence initiatives are on track to achieve $1.5 billion in cost savings.
- Raised full-year EPS guidance due to strong Q2 performance and confidence in the remainder of the year.
Negative Points
- Sotyktu's performance in the immunology business has been slower than expected due to competitive environment and access issues.
- Inventory and gross-to-net favorability across several growth brands may impact sales in the second half of the year.
- Continued challenges in the immunology market, particularly with Sotyktu, despite improved commercial access.
- Potential price erosion in the immunology portfolio due to competitive pressures and broader access.
- Concerns about the long-term implications of the Inflation Reduction Act (IRA) on innovation and pricing.
Q & A Highlights
Q: Can you talk about the immunology portfolio and how to think about pricing going forward? Is there a good run rate to think about price for immunology, or will there be continued price erosion over time?
A: We acknowledge that Sotyktu's performance has been slower than we'd like, but we're focused on improving that. We've made significant progress in improving our access position, doubling our unrestricted access to approximately 65%. We expect further access improvements in January, which will help us move patients quickly onto commercial products. We anticipate modest incremental gross-to-net pressure on revenue growth, offset by increased volume.
Q: Can you provide directional color on IRA price negotiations for Eliquis?
A: We have received the government's final MFP price for Eliquis and anticipate CMS will publish it on or before September 1. We are confident in our ability to navigate the impact of IRA on Eliquis. However, we firmly oppose government price-setting under IRA, as it is not good public policy and could impact innovation long-term.
Q: Could you describe the $150 million stocking benefits across products in Q2?
A: The inventory stocking primarily occurred in the I-O franchise across Opdivo and Yervoy, as well as in our immunology franchise with products like Orencia and Zeposia.
Q: What are the key launch preparations for KarXT to capitalize on your competitive head start?
A: We are sourcing an experienced field sales and medical organization, reinforcing the profile with state Medicaid directors and Medicare payers, and ensuring physicians and patients have a positive first experience. Given the patient population is over 80% Medicaid and Medicare, our access team has been working to build access for this product.
Q: How do you see the CELMoD portfolio positioned in the crowded multiple myeloma landscape?
A: CELMoDs like Iberdomide and Mezigdomide are being developed across multiple Phase 3 trials. These therapies will play a role for patients not eligible for cell therapies and those needing manageable toxicities. We are focused on generating more data to provide physicians with a robust treatment arsenal.
Q: How do you think about the impact of Part-D redesign on Eliquis and other products?
A: We will see favorability with Eliquis due to the elimination of the coverage gap, partially offset by Revlimid and Pomalyst having responsibility in the catastrophic phase. Overall, we expect the Part-D redesign to be largely neutral across our portfolio.
Q: Can you provide early commentary on 2025 operating margins?
A: We remain committed to maintaining operating margins above 37%. We feel confident about our operational efficiency programs, which provide flexibility in maintaining these margins.
Q: How do you view the competitive landscape for Sotyktu and Opdualag given new data from competitors?
A: Sotyktu has set a high bar for new orals in the PSO space. We expect further access improvements and are preparing for competition. For Opdualag, we are ahead with approvals in melanoma and are progressing with Phase 3 programs in non-small cell lung cancer.
Q: What are the expectations for potential REMS modification for Camzyos?
A: Thousands of patients have been treated with Camzyos, showing a manageable profile and transformational outcomes. We continue conversations with the FDA and look forward to the readout of the non-obstructive hypertrophic cardiomyopathy study in Q2 next year.
Q: Can you shed light on the PRMT5 readout later this year and the data size?
A: We will present data on PRMT5 responses across multiple tumor types at a medical conference. For CD19 NEX-T, we will present data for patients with systemic lupus erythematosus, systemic sclerosis, myositis, and multiple sclerosis.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
