Bristol-Myers Squibb Reports Fourth Quarter and Full Year 2015 Financial Results

• Bristol-Myers Squibb

Bristol-Myers Squibb Company has reported results for the fourth quarter and full year of 2015, which were highlighted by strong sales for Opdivo, Eliquis and Orencia and continued advances in the company’s Immuno-Oncology portfolio.

“We have had an unprecedented year in Immuno-Oncology, delivered strong overall business performance and made strategic investments that position the company well for growth,” said Giovanni Caforio, M.D., chief executive officer, Bristol-Myers Squibb. “We are looking forward to 2016 as an exciting year to continue our leadership in Immuno-Oncology, drive performance of our in-line products and continue to advance our diversified R&D portfolio.”

** In excess of +/- 100%

FOURTH QUARTER FINANCIAL RESULTS

• Bristol-Myers Squibb posted fourth quarter 2015 revenues of $4.3 billion, an increase of 1% compared to the same period a year ago. Global revenues increased 6% adjusted for foreign exchange impact.
• U.S. revenues increased 9% to $2.3 billion in the quarter compared to the same period a year ago. International revenues decreased 7%. When adjusted for foreign exchange impact, international revenues increased 3%.
• Gross margin as a percentage of revenues was 77.8% in the quarter compared to 77.3% in the same period a year ago.
• Marketing, selling and administrative expenses, which includes advertising and product promotion expenses, increased 10% to $1.5 billion in the quarter.
• Research and development expenses increased 61% to $1.9 billion in the quarter due to higher charges resulting from business development transactions and an in-process research and development (IPRD) impairment.
• The effective tax benefit rate was 59.7% in the quarter, compared to 145.0% in the fourth quarter last year. Income taxes in both periods include net tax benefits attributed to specified items and the R&D credit for the full year.
• The company reported a net loss attributable to Bristol-Myers Squibb of $138 million, or $0.08 per share, in the quarter compared to net earnings of $13 million, or $0.01 per share, a year ago. Results in the current quarter include charges resulting from the Five Prime Therapeutics, Inc. and Cardioxyl Pharmaceuticals, Inc. business development transactions ($0.24 per share after tax) and non-cash charges resulting from an IPRD impairment for BMS-986020, an investigational oral lysophosphatidic acid 1 receptor antagonist, in fibrosis and the transfer of the Erbitux business in North America to Eli Lilly and Company ($0.14 per share after tax).
• The company reported non-GAAP net earnings attributable to Bristol-Myers Squibb of $647 million, or $0.38 per share, in the fourth quarter, compared to $771 million, or $0.46 per share, for the same period in 2014. An overview of specified items is discussed under the “Use of Non-GAAP Financial Information” section.
• Cash, cash equivalents and marketable securities were $8.9 billion, with a net cash position of $2.2 billion, as of December 31, 2015.

FOURTH QUARTER PRODUCT AND PIPELINE UPDATE

Global revenues for the fourth quarter of 2015, compared to fourth quarter 2014, were driven by Opdivo, which grew by $470 million; Eliquis, which grew by $321 million; Daklinza and Sunvepra, which grew by $251 million, Orencia, which grew 22%; and Sprycel, which grew 8%.

Opdivo

• In January, the company announced that a randomized Phase 3 study evaluating Opdivo versus investigator’s choice in patients with recurrent or metastatic platinum-refractory squamous cell carcinoma of the head and neck (CheckMate -141) was stopped early because an assessment conducted by the independent Data Monitoring Committee concluded that the study met its primary endpoint, demonstrating superior overall survival (OS) in patients receiving Opdivo compared to the control arm. The company looks forward to sharing these data with health authorities soon.
• In January, the company announced the U.S. Food and Drug Administration (FDA) has approved Opdivo in combination with Yervoy for the treatment of patients with BRAF v600 wild-type (WT) and BRAF v600 mutation-positive unresectable or metastatic melanoma. This approval expands the original indication for the Opdivo + Yervoy Regimen for the treatment of patients with BRAF v600 WT unresectable or metastatic melanoma to include patients, regardless of BRAF mutational status, based on data from the Phase 3 CheckMate -067 trial which evaluated progression-free survival (PFS) and OS as co-primary endpoints. This indication is approved under accelerated approval based on PFS. Continued approval for this indication may be contingent upon verification and description of clinical benefit in confirmatory trials.
• In December, the company and its partner, Ono Pharmaceutical Co. Ltd., announced that Ono received manufacturing and marketing approval for Opdivo in Japan for the treatment of patients with unresectable, advanced or recurrent non-small cell lung cancer.
• In December, the company and its partner, Seattle Genetics, Inc., announced the companies have initiated a Phase 1/2 clinical trial of ADCETRIS^® (brentuximab vedotin) in combination with Opdivo for patients with CD30-expressing relapsed or refractory B-cell and T-cell non-Hodgkin lymphomas, including diffuse large B-cell lymphoma, peripheral T-cell lymphoma and cutaneous T-cell lymphoma. This is the second of two trials being conducted under a previously announced clinical trial collaboration agreement between the company and Seattle Genetics, Inc.
• In November, the company announced the FDA approved Opdivo injection, for intravenous use, for the treatment of patients with advanced renal cell carcinoma (RCC) who have received prior anti-angiogenic therapy. Opdivo is the first and only PD-1 inhibitor to deliver significant OS in patients with advanced RCC who have received prior anti-angiogenic therapy.The approval, which was granted Breakthrough Therapy Designation by the FDA, was based on data from CheckMate -025, an open-label, randomized Phase 3 study evaluating Opdivo versus everolimus in patients with advanced RCC who have received prior anti-angiogenic therapy.
• In November, the company announced the FDA approved Opdivo injection, for intravenous use, as a single-agent for the treatment of patients with BRAF v600 WT unresectable or metastatic melanoma. The approval is based on data from the Phase 3 trial, CheckMate -066, which evaluated OS as the primary endpoint in treatment-naïve patients with BRAF WT unresectable or metastatic melanoma compared to chemotherapy (dacarbazine). Separately, the company announced the FDA issued a Complete Response Letter for its supplemental Biologics License Application (sBLA) for Opdivo as a single agent for the treatment of previously untreated patients, specifically those with BRAF v600 mutation positive unresectable or metastatic melanoma. The company submitted data for Opdivo in BRAF v600 mutation-positive metastatic melanoma, which was the subject of the FDA’s Complete Response Letter.
• In November, the company announced that the European Medicines Agency (EMA) validated a type II variation application which seeks to extend the current indication for Opdivo to include the treatment of adult patients with advanced RCC after prior therapy. Validation of the application confirms the submission is complete and begins the EMA’s centralized review process. The type II variation submitted is based on data from CheckMate -025, a Phase 3 study that evaluated, as the primary endpoint, the OS of Opdivo versus everolimus, a current standard of care, in advanced or metastatic clear-cell RCC after prior anti-angiogenic treatment.
• In November, the company announced results from multiple clinical trials at the Society for Melanoma Research 2015 International Congress in San Francisco, California.
• CheckMate -066 – In the study evaluating Opdivo as a single agent versus dacarbazine in patients with previously untreated, BRAF WT unresectable or metastatic melanoma, Opdivo continued to demonstrate superior OS versus dacarbazine with 57.7% of patients alive at two years compared to 26.7% of patients treated with dacarbazine. The safety profile of Opdivo was consistent with prior studies.
• Study 004 – In the study evaluating Opdivo in combination with Yervoy in patients with unresectable or metastatic melanoma on which the proof of concept for Opdivo + Yervoy regimen approval was based, data from the longest follow-up of the regimen from various Phase 1 cohorts showed a three-year OS rate of 68% across Phase 1 dosing cohorts. The frequency of treatment-related adverse events (AE) in the study were similar between cohorts and was consistent with the Phase 2 and 3 trials for the combination therapy.

Yervoy

• In October, the company announced the FDA approved Yervoy 10 mg/kg for the adjuvant treatment of patients with cutaneous melanoma with pathologic involvement of regional lymph nodes of more than 1 mm who have undergone complete resection including total lymphadenectomy. The approval is based on clinical data from a pivotal Phase 3 trial, CA184-029 (EORTC 18071), initiated in 2008 by the European Organization for Research and Treatment of Cancer evaluating the 10 mg/kg dose in the adjuvant setting.

Empliciti

• In November, the company and its partner, AbbVie, Inc., announced the FDA approved Empliciti for the treatment of multiple myeloma as combination therapy with Revlimid^® and dexamethasone in patients who have received one to three prior therapies. The approval of this first and only immunostimulatory antibody for multiple myeloma is based on data from the randomized, open-label, Phase 3, ELOQUENT-2 study, which demonstrated the combination of Empliciti with Revlimid and dexamethasone delivered a 30% reduction in the risk of disease progression or death compared to dexamethasone alone.
• In December, the company announced extended follow-up data and a pre-specified interim OS analysis of Empliciti in combination with Revlimid and dexamethasone in patients with relapsed or refractory multiple myeloma from ELOQUENT-2. The follow-up data demonstrated a 44% relative improvement in PFS at three years, which was consistent with the pivotal two-year analysis. The Empliciti combination delayed the need for subsequent myeloma therapy by a median of one year compared to dexamethasone alone. Data were presented at the 57^th American Society of Hematology Annual Meeting and Exposition in Orlando, Florida.

Daklinza

• In November, the company announced results from the Phase 3 ALLY-3+ trial investigating a regimen of Daklinza in combination with sofosbuvir and ribavirin in genotype 3 hepatitis C patients with advanced fibrosis or cirrhosis, for treatment durations of 12 and 16 weeks. The results show that 100% of patients in the advanced fibrosis cohort achieved sustained virologic response (SVR12) in both the 12- and 16-week arms of the study. SVR12 rates were 83% and 89% in patients with cirrhosis in the 12- and 16-week arms, respectively. The combination regimen had no discontinuations due to adverse events and relapse occurred in four patients (two in the 16-week and two in the 12-week arm). There was one death (12-week arm; not treatment-related) and no virologic breakthroughs. Results were presented at The Liver Meeting 2015, the annual meeting of The American Association for the Study of Liver Diseases in San Francisco, California.

Eliquis

• In December, the company and its partner, Pfizer, Inc., announced results from a post-hoc subanalysis of the Phase 3 AMPLIFY trial. Results demonstrated that Eliquis was comparable to conventional therapy (subcutaneous enoxaparin overlapped and followed by oral warfarin dose-adjusted to an international normalized ratio of 2.0 to 3.0) in recurrent venous thromboembolism (VTE) and VTE-related death. There was significantly less major bleeding during the first 7, 21 and 90 days after starting treatment. The data were published in Thrombosis and Haemostasis.

ADCETRIS^® is a trademark of Seattle Genetics, Inc.
Revlimid^® is a trademark of Celgene Corporation.

BUSINESS DEVELOPMENT UPDATE

• In December, the company announced it has entered into agreements with ViiV Healthcare, a global HIV company, to divest its pipeline of investigational HIV medicines including an attachment inhibitor (BMS-663068), currently being investigated in Phase 3 as a therapeutic option for heavily treatment-experienced patients, and a maturation inhibitor (BMS-955176) currently being investigated in Phase 2b development for treatment-naïve and treatment-experienced patients. These transactions are consistent with the evolution of the company’s strategic focus, including the decision announced in June to discontinue its discovery efforts in virology.
• In December, the company announced a new research collaboration with the Department of Chemistry at Princeton University that includes the establishment of the Center for Molecular Synthesis (BMS-CMS). The agreement creates opportunities for scientists at Princeton University and the company to collaborate on top-flight synthetic chemistry research, leveraging the two sites’ close proximity to foster a robust exchange of scientific ideas. Research projects will investigate areas of mutual interest and benefit, using the expertise developed in the laboratories of the Princeton faculty to conduct frontier science within the pharmaceutical industry. Over the next five years, the Center will also fund a select group of research fellows each year.
• In November, the company announced a definitive agreement to acquire all of the issued and outstanding capital stock of Cardioxyl Pharmaceuticals, Inc., a private biotechnology company focused on the discovery and development of novel therapeutic agents for the treatment of cardiovascular disease. The company completed the acquisition in December. The acquisition gives the company full rights to Cardioxyl’s lead asset CXL-1427, a novel nitroxyl (HNO) donor (prodrug) in Phase 2 clinical development as an intravenous treatment for acute decompensated heart failure.
• In November, the company completed a previously announced agreement with Five Prime Therapeutics, Inc. for an exclusive worldwide license and collaboration agreement for the development and commercialization of Five Prime’s colony stimulating factor 1 receptor (CSF1R) antibody program, including FPA008, which is in Phase 1 development for immunology and oncology indications.
• The company announced several collaborations as part of the Immuno-Oncology Rare Population Malignancy (I-O RPM) program in the U.S.:
• In December, the company announced an agreement with the David Geffen School of Medicine at UCLA to conduct a range of early phase clinical studies. The company will fund positions within UCLA’s fellowship program in the UCLA Division of Hematology/Oncology.
• In December, the company announced an agreement with The Ohio State University Comprehensive Cancer Center – Arthur G. James Cancer Hospital and Richard J. Solove Research Institute to conduct a range of early phase clinical studies. The company will fund training positions within the Hematology and Medical Oncology fellowship programs of the Ohio State University College of Medicine, Department of Internal Medicine.
• In November, the company announced an agreement with The Sidney Kimmel Comprehensive Cancer Center at Johns Hopkins to conduct a range of early phase clinical studies. The company will also fund positions within The Johns Hopkins University School of Medicine fellowship program.

2016 FINANCIAL GUIDANCE

Bristol-Myers Squibb is setting its 2016 GAAP and non-GAAP EPS guidance range at $2.30 - $2.40. Both GAAP and non-GAAP guidance assume current exchange rates. Key 2016 non-GAAP guidance assumptions include:

• Worldwide revenues increasing in the mid-single digit range.
• Full-year gross margin as a percentage of revenues to be approximately 75% - 76%.
• Marketing, sales and administrative expenses decreasing in the mid-single digit range.
• Research and development expenses increasing in the high-single digit range.
• An effective tax rate between 21% and 22%.

The financial guidance for 2016 excludes the impact of any potential future strategic acquisitions and divestitures, and any specified items that have not yet been identified and quantified. The non-GAAP 2016 guidance also excludes other specified items as discussed under “Use of Non-GAAP Financial Information.” Details reconciling adjusted non-GAAP amounts with the amounts reflecting specified items are provided in supplemental materials available on the company’s website.