David Elkins
Chief Financial Officer at Bristol-Myers Squibb
Thank you, Giovanni, and thanks again for joining our third quarter earnings call.
Let's turn to Slide 10 to discuss our top line performance. Unless otherwise stated, I will discuss sales performance growth rates on an underlying basis, which excludes the impacts of foreign exchange. Revenues in the third quarter were approximately $11.2 billion, consistent with prior year. Our diversified in-line and new product portfolio grew strongly, up 13%, offsetting the impact of our recent LOEs.
Now let me touch on our performance of our new product portfolio on Slide 11. Global revenues were over $550 million, up 66% versus prior year, driven by continued demand. Growth over prior quarter was also strong, up 16%. We continue to be very pleased with the performance of our new product portfolio and its future potential. With three new launch brands this year and over $2 billion of annualized revenue so far, our portfolio has been largely derisked, increasing our confidence in the potential to generate greater than $25 billion of nonrisk-adjusted revenues in 2029.
Turning to Slide 12 to discuss our performance of our solid tumor portfolio, Opdivo sales continue to grow globally, up 13%, driven by demand for our newly launched and core indications. In the U.S., sales were strong. We continue to grow double digits, up 17% versus prior year, driven by demand of our newer metastatic and adjuvant indications, partially offset by declining second-line eligibility as well as some use from Opdualag in first-line melanoma. Internationally, revenues grew 8%, primarily due to growth from new indications, particularly first-line lung and GI cancers. Looking forward, we continue to expect growth of Opdivo from our new and expanding indications in both early and late-stage cancers.
Now let's move to Opdualag. We cannot be more pleased with the launch of Opdualag. The launch is off to a great start, being the first LAG-3 inhibitor to launch in fixed-dose combination with our PD-1 inhibitor, Opdivo. Sales in the quarter were $84 million, growing 45% sequentially, and sales of Opdualag are already annualizing to approximately $350 million. At this point in the launch, our share in first-line melanoma is in the mid-to-high-teens. And as expected, we are seeing use of Opdualag coming from PD-1 monotherapy and Opdivo + Yervoy combinations.
Moving on to our expanded cardiovascular portfolio on Slide 13. Our leading OAC, Eliquis, had another strong quarter, up 16% year-over-year. In the U.S., sales increased 31% versus prior year, driven primarily by demand and favorable gross to net adjustments. As expected, sequential performance was driven by the typical dynamics we experienced each year from higher gross to net payments as patients enter the donut hole.
Internationally, Eliquis has become a leading OAC across numerous countries. Given the success of the product, pricing pressures, as expected, impede growth. Pricing measures in addition to at-risk generic entry in the U.K. and Netherlands affected growth in the quarter.
Now turning to Camzyos, a first-in-class medicine to treat underlying disease of obstructive hypertrophic cardiomyopathy. We continue to be pleased with the progress we are making to bring this life-changing medicine to patients. To date, we have over 2,000 REMS-certified healthcare professionals, which is a good indicator for intent to treat. And we've received extremely positive feedback from physicians and patients. We are also making progress at large HCM centers to ensure they are operationalized to make Camzyos available to patients.
As of the end of Q3, there are over 1,100 patients enrolled in our hub and growing each week. As expected, new patients are generally initiating treatment as part of their regularly scheduled echocardiograms. Based on the time to transition patients to commercially dispense medicine, we expect acceleration of revenue beginning in Q4 and as we move into 2023. Chris can provide more details on the launch during Q&A, but we are pleased with the progress we have made.
Turning to Slide 14 to discuss hematology's performance, starting with Revlimid. Sales in the quarter were approximately $2.4 billion. Sales were primarily impacted by generic entry, particularly in international markets. In the U.S., we saw slower than anticipated entry by second wave generics in September. We expect to see generic erosion progressively increasing in the coming weeks. And at this point, we expect Revlimid sales to be at the upper end of our $9 billion to $9.5 billion range for the year.
Pomalyst global revenues grew 8% versus prior year, primarily driven by demand for triple-based regimens in earlier lines, extending the duration of treatment for patients.
Moving to Reblozyl, which had another strong quarter. Sales were $190 million in the quarter, up 22% versus prior year. In the U.S., revenue growth was impacted by a onetime change in distribution model in the prior year. Excluding the impact from last year, sales would have been approximately 25% versus prior year. This is being driven by continued progress in increasing patient adherence and extending treatment duration. Outside of the U.S., Reblozyl continues to grow driven by demand in both MDS and beta thalassemia-associated anemia. To date, we are now reimbursed in nine countries, and we'll continue to secure reimbursement in additional countries in the future.
Now turning to our cell therapy assets, Abecma and Breyanzi. Abecma generated strong revenues in the quarter of $107 million. This represents growth of 59% versus prior year or 22% sequentially. In the U.S., sales growth was driven by strong demand, offset primarily by timing of patient infusions, which we expect to materialize in Q4. Outside of the U.S., sales increased due to a onetime step-up of slots in select markets, which is expected to be sustained at this level for the foreseeable future. We are very pleased with the manufacturing progress we've made to ensure Abecma gets to more patients while we continue to work on further expanding our capacity as we prepare to move Abecma into earlier lines based upon the positive readout of KarMMa-3.
Finally, on Breyanzi, sales in the quarter were $44 million, up 50% versus prior year. Demand remains strong, and we continue to work hard expanding capacity in the next year to benefit more patients with large B-cell lymphoma. As we communicated in the past, we expect Q4 sales to be largely similar to Q3 sales.
Now turning to our expanded immunology portfolio on Slide 15. Starting with Zeposia. Global sales in the quarter was $69 million, up 83% versus prior year, largely due to the expansion of Zeposia in ulcerative colitis. Sequentially, in the U.S., the sales were impacted by last quarter's favorable gross to net and wholesaler buying patterns of approximately $20 million. We continue to see demand growth of 12% over last quarter. Our strategy remains focused on further expanding volume so we can continue to improve access in 2023, and we made progress on improving the quality of access as well.
Internationally, we are continuing to make strides in securing reimbursement in additional markets to get suppose you to more patients living with MS and ulcerative colitis.
Now turning to our most recent launch, Sotyktu, our first-in-class selective TYK2 inhibitor for patients with moderate to severe plaque psoriasis. We're extremely pleased with the U.S. label based on strong data. While early in the launch, we are very encouraged by the feedback we are getting from physicians. Our focus is to ensure many patients as possible get Sotyktu, establishing this medicine as the oral of choice allowing us to secure broader formulary position in 2024.
Internationally, we are also pleased to have received Japanese approval in September, and we look forward to European approval next year.
Let's now discuss our third quarter P&L on Slide 16. I've already discussed revenues, so I'll now focus on other key non-GAAP items in the quarter. Gross margins decreased primarily due to product mix, partially offset by foreign exchange and related hedging settlements. Excluding acquired in process R&D, operating expenses were broadly in line with prior year, and affected by the timing of spend. Acquired in-process R&D charges in the quarter were $30 million related to an upfront payment to GentiBio. This was offset by $73 million of licensing income benefiting OI&E in the quarter.
The third quarter effective tax rate was 16.9%, driven by earnings mix. And overall, we delivered another quarter of earnings growth with non-GAAP earnings per share growing 3% versus prior year.
Moving to the balance sheet and capital allocation on Slide 17. Cash flow from operations in the quarter were $3.7 billion. The company's balance sheet remains strong with approximately $9 billion in cash and marketable securities on hand as of September 30th, which also accounts for the $3.3 billion we paid for Turning Point Therapeutics. Our capital allocation priorities remain unchanged. Business development continues to be a top priority, and we continue to execute on this strategy with the closing of Turning Point Therapeutics acquisition as a recent example. We remain committed to continued debt reduction. In the quarter, we repaid $2.8 billion of debt. And we remain committed to returning capital to shareholders. We executed a $5 billion ASR earlier this year and have $9.5 billion remaining in our share via authorization, and we will continue to be opportunistic on share repurchases.
Now turning to our 2022 non-GAAP guidance on Slide 18. We are maintaining our full-year outlook. We continue to expect revenues to be approximately $46 billion with our in-line and new product portfolio growing in the low double-digit range. Our recent LOE guidance and Revlimid guidance remain unchanged. However, as mentioned earlier, we expect Revlimid sales to be in the upper end of the $9 billion to $9.5 billion range. We continue to expect gross margin to be approximately 79%, and our operating expenses, excluding acquired in-process R&D remain unchanged, primarily driven by favorability in FX as well as cost discipline, partially offset by the inclusion of expenses from the Turning Point acquisition.
Putting everything I just mentioned together, we are reaffirming our full-year non-GAAP EPS guidance, reflecting the strength of our underlying business and absorbing the approximate $0.06 impact from Turning Point acquisition.
Before we move over to Q&A session, I want to express my gratitude to our employees for the performance in the quarter and their continued commitment to our patients.
I'll now turn the call back over to Giovanni and Tim for a Q&A session.
