Bristol-Myers Squibb Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
July 27, 2023

There are 23 speakers on the call.

Operator

Good morning, everyone. Welcome to the Bristol Myers Squibb Second Quarter 2023 Earnings Conference Call. All participants will be in a listen only mode. 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.

Operator

Mr. Power, please go ahead.

Speaker 1

Thank you. Good morning, everyone, and thanks for joining us this morning for our Q2 2023 earnings call. Joining me this morning with prepared remarks are Giovanni Forio, our Board Chair and Chief Executive Officer and David Elkins, our Chief Financial Officer. Also participating in today's call are Chris Berner, Our Chief Operating Officer Adam Linkowski, our Chief Commercialization Officer and Sumit Herawat, 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.

Speaker 1

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 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.

Speaker 1

We'll also focus our comments on our non GAAP financial measures, which are adjusted to exclude certain specified items. Reconciliations of certain non GAAP financial measures The most comparable GAAP measures are available at bms.com. With that, I'll hand it over to Giovanni.

Speaker 2

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.

Speaker 2

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, POMALIST, 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.

Speaker 2

In fact, Our new product portfolio is already annualizing at $3,500,000,000 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 $4,000,000,000 accelerated share repurchase in the 3rd quarter. Let me now provide some details on today's update. Our revised guidance reflects a $1,000,000,000 decrease for Revlimid, and we are now guiding to approximately $5,500,000,000 in 2023.

Speaker 2

Combined with a roughly $300,000,000 impact for Polycyst, These changes account for our revised guidance on revenue and EPS ranges. As you know, we are navigating generic entry for Revlimid, though this is not the driver of our revision in outlook. Concurrent with entry of the most recent wave of generic volumes, we saw some softness in Revlimid sales beginning at the end of the Q1. As we looked into its drivers, we recognize there had been an unusual increase starting at the same time. In Q2, the number of patients on free drug continued to increase and reached a level significantly higher than normal.

Speaker 2

The impact on Revlimid and Pomonist revenues also accelerated in Q2. This issue is the main driver of our revised guidance. The situation is complex And to explain it, I'll turn to Slide 5 to remind everyone of some of the ways we meet our commitment to support Eligible patients who can't afford their medicines. For commercially insured patients, we provide the Copay support to eligible patients. Under U.

Speaker 2

S. Law, however, we cannot provide copay support to government insured patients such as Medicare patients. There are 3rd party independent charitable foundations that provide financial assistance to patients to help with out of pocket costs, including Medicare patients. These charitable foundations Our financial performance are supported financially in a variety of ways. This includes contributions from donors, including BMS, consistent with HHS guidance.

Speaker 2

Additionally, we donate BMS products to the independent BMS Patient Assistance Foundation, which provides free medicine to all qualified patients who are not financially supported elsewhere. Importantly, to comply with government guidance, once patients enter this program, the BMS Patient Assistance Foundation provides free product through the end of the calendar year. Earlier this year's funds at independent third party charitable foundations, the ones that provide financial assistance to eligible multiple myeloma patients closed for a period of time. This was because the collective funding from donors was not sufficient to meet the need for co pay assistance for the patients taking the variety of medicines that the multiple myeloma funds support. We believe the funds closing for a period of time was the primary driver for an increase in patients requesting free product from the independent BMS Patient Assistance Foundation.

Speaker 2

During the Q2, the level of free product utilization continued to increase and ultimately reached a level that was significantly higher than normal. These dynamics were building while we were also navigating the most recent wave of generic volumes for Revlimid. Today, we are able to provide you with an update on our company guidance for the year that incorporates the impact from both Revlimid and POMALYST. I want to underscore that we do not expect these dynamics to continue into next year. This is based on 2 key factors.

Speaker 2

First, the BMS Patient Assistance Foundation has seen applications for free product returning to normal levels. 2nd, changes in Medicare Part D coverage taking effect in 2024 will help improve Patient affordability. This should directly impact the number of patients needing to access the free drug program. So to sum up what this means financially, we estimate the impact of the increase in patients receiving free product to be approximately $330,000,000 for Revlimid and Pomalyst in Q2, with about 80% of that being Revlimid. Because the BMS Patient Assistance Foundation provides free drug for the calendar year, The impact for REVLIMID and POMALYST will be more significant for the full year, approximately $1,000,000,000 $300,000,000 respectively.

Speaker 2

Since revenues for Revlimid are lower than expected this year, we now expect a lower step down of approximately $1,500,000,000 in 20.24 $2,000,000,000 in 2025. Now turning back to the products that will be key to our future. Let me turn to Slide 6 and our new products. Here you can see that we continue to deliver very strong growth and remain on track to roughly double revenue for this portfolio this year. David will provide more details in a few minutes.

Speaker 2

And we see good momentum and growth opportunities across the portfolio, including Progress with accelerating access for Satiktu, building demand and conversion to commercial dispense for Kamsayos in the U. S. And achieving approval in Europe, continuing to build capacity for our cell therapy assets as well as growing REBLISIL in its current indications in advance of an exciting future launch with Commans. On Slide 7, I would like to remind you of the targets we've provided for our new product portfolio. The process of renewing our portfolio and growing the business for the long term centers first on our 9 recently launched products.

Speaker 2

The combination of our scientific innovation and commercial execution gives us great confidence in the growth trajectory of these set of products. We continue to expect to deliver $10,000,000,000 to $13,000,000,000 of revenue from this portfolio in 2025, and the opportunity remains significant with $25,000,000,000 plus of potential revenue in 2,030 on a non risk adjusted basis. Importantly, We are continuing to further derisk these products with opportunities such as COMMANDS for REBROSO, CLL and follicular and mantle cell lymphomas for Briansy and many more, which brings me to our scorecard, outlining our strong pipeline execution on Slide 8. As I mentioned, we are making progress de risking our new products as well as accelerating our pipeline more broadly, and we achieved some important clinical milestones this quarter. During the Q2, we presented exciting data for our LPA1 agonist in idiopathic pulmonary fibrosis.

Speaker 2

The Phase 2 data for this drug showed more than a 60% reduction in the rate of decline in lung function without any of the GI tolerability issues associated with existing drugs. With the proof of concept also achieved in progressive pulmonary fibrosis, we look forward to presenting more data for this asset and we are rapidly moving to Phase 3 trials. ASCO and EHA were important meetings for us this year. In addition to presenting the REBLOCIL COMMANDS data, strong data was presented for Opdivo in first line classical Hodgkin lymphoma and for our GPRC5D cell therapy program in multiple myeloma, and we are excited to move this into registrational trials. These underpin the growth potential of our IO franchise and the incredibly exciting opportunities we see ahead for our leading cell therapy platform, including into new areas such as immunologic diseases.

Speaker 2

We have also announced a positive outcome from our CheckMate 901 trial of Opdivo and chemotherapy in cisplatin eligible first line metastatic bladder cancer. Not only is this a very positive development for these patients, It speaks to the breadth of opportunity in our pipeline beyond what's shown on this slide. We have a rich and broad pipeline that we continue to advance rapidly. We are looking forward to sharing more about the opportunities we see coming from our scientific research at our R and D Day in September. Now I'd like to spend a minute to take stock of where we are on our portfolio renewal journey.

Speaker 2

Turning to Slide 9, with 60% of the Revlimid erosion behind us At the end of 2023, we are well on track to meet our commitment of growing revenue Low to mid single digit CAGR from 2020 to 2025. When, as we have told you, our recent LOEs will represent at most 10% of our revenue. The profitability of our business with operating margin of at least 40% provides us with the financial flexibility needed to continue to invest in our future. Turning now to Slide 10. I want to reiterate that our focus and our confidence in the renewal of our portfolio are as strong as ever.

Speaker 2

This rests on our in line and new product portfolios and our pipeline as the key drivers of our performance beyond 2025 and we are pleased with where we are. There are 4 important levers which will enable us to renew our portfolio in the second half of the decade as Eliquis and Opdivo lose exclusivity. The continued growth of the 9 medicines in our new product portfolio from $10,000,000,000 $13,000,000,000 in 2025 to realization of their full potential of at least $25,000,000,000 of non risk adjusted revenue by the end of the decade, The potential launch of 6 registrational stage assets with meaningful contributions before the end of the decade, Continued progress with our early stage pipeline and potential external innovation through business development. We are executing well on all four fronts. I'm excited and confident about what the future holds for Bristol Myers Squibb.

Speaker 2

Before I turn the call over to David, I want to thank our teams globally for the commitment to our patience and focus on our business. David will now walk you through our product performance and financial results in more detail. David?

Speaker 3

Thank you, Giovanni, and thank you all for joining our Q2 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 Q2 were $11,200,000,000 driven by 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.

Speaker 3

The portfolio generated $862,000,000 in sales in the quarter, already annualizing approximately $3,500,000,000 New products grew significantly in the quarter and year to date with 79% 91% growth respectively versus last year. This strong performance was driven by several of our key products across the portfolio, including OptilAgrebrizel and our cell therapies Brianca and Abekma as well as Chemsias and Zippozia. 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 U. S, 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.

Speaker 3

Sequentially, we estimate these buying patterns to be about $50,000,000 to $100,000,000 Importantly, year to date revenues were up 9% versus last year, with continued growth expected this year. Outside the U. S, 2nd quarter revenues increased 10%, driven by demand for recently launched indications and expanded access. Moving to the strong launch of Optilag, Sales in the quarter grew significantly over prior year with revenues of $154,000,000 This also represents 31% growth versus prior quarter. Rain, extremely pleased with the launch of Opthalag in first line melanoma with market share approaching 25% and continuing to be primarily sourced from PD-one monotherapy.

Speaker 3

Positive experiences are driving repeat and expanded use across patients. This momentum gives us confidence in the ability for optolite to become the new standard care in first line melanoma. Transitioning to our cardiovascular portfolio on Slide 15, beginning with Eliquis, we continue to be pleased with our leading OAC, which generated of approximately $3,200,000,000 globally, largely driven by the U. S. Where sales grew 7% year over year driven primarily by demand.

Speaker 3

Sequentially, as is typical in the Q2, we start to experience unfavorable gross to net adjustments as patients enter into the donut hole. As a reminder, these dynamics are more acute in the 3rd and 4th quarters with the second half revenues being lower than the first half as we see each year. Outside U. S, sales continue to be impacted primarily by generic entries in Canada and the U. K.

Speaker 3

As well as government pricing measures we mentioned in the past. Turning to Kamsaios, which generates sales of $46,000,000 in the quarter, we are pleased with our continued progress. We are Seeing healthy increases in patients being treated week over week with approximately 3,800 patients in our hub, of which approximately 2,500 patients drug at the end of the quarter. We continue to make great progress with centers of excellence and broadening our prescriber base into the community setting. Patients have highlighted significant improvement in symptoms, which has resulted in strong adherence and minimal drop off.

Speaker 3

We are delighted to have Update the label for KEMZYOS based upon the VALOR study, which reinforces the strong data seen in EXPLORER study and further strengthens the clinical profile of KEMZYOS. Outside of the U. S, we're excited to have received European approval last month and look forward to making this 1st in class medicine available to more patients once we secure reimbursement. Now turning to our hematology portfolio on Slide 16, I won't go into details on Revlimid and PAMLA since Giovanni already discussed them earlier. I'll turn to REBLISEL.

Speaker 3

We had a strong quarter with revenues of $234,000,000 growing 35% versus prior year, primarily driven by demand. In the U. S, revenues grew 24%, primarily due to continued total prescription share growth driven by longer duration of treatment. Internationally, Revlissel roughly doubled as we continue to secure reimbursement in additional countries. We have a strong foundation in place and look forward to the upcoming PDUFA date for REBRISIL in first line ESA naive MDS patients on the COMMANDS data, which will further accelerate growth of the band upon anticipated approval at the end of next month.

Speaker 3

Moving on to our transformative cell therapy products At Beckman and Briyonzi, we continue to make progress at expanding capacity, which has enabled robust sales of $232,000,000 growing 81% versus prior year driven by strong demand. Bechtma booked sales of $132,000,000 globally, growing 48% versus last year, primarily due to demand and an increase in manufacturing capacity. We expect Q3 revenues to be lower than Q2 revenues due in part to planned manufacturing maintenance in June with growth expected in the Q4. Having said that, we continue to be pleased with the reproducibility of our efficacy and safety data in the real world and the reliability of our manufacturing processes, which will reinforce at ASCO. We also look forward to the upcoming PDUFA date in December for Beqmet in early alliance based on the Karma 3 trial.

Speaker 3

Turning to Briansy, which generates sales of $100,000,000 globally, more than doubling versus prior year and 41% sequentially, primarily driven by demand in 2nd line and third line large B cell lymphoma and increased manufacturing capacity. We are pleased with our success in increasing supply. While factor constraints will result in 3rd and 4th quarter revenues being largely similar to 2nd quarter, we are further building out our capacity for growth next year. Outside the U. S, we are excited about the EU approval of Briansy in second line large B cell lymphoma and look forward to bringing this treatment to earlier line patients in Europe.

Speaker 3

Now let's turn to our immunology portfolio on Slide 17. Global sales as opposing a quarter were $100,000,000 growing 52% compared to prior year and 28% sequentially. In the U. S, growth was primarily driven by demand in multiple sclerosis and expanding contribution from ulcerative colitis. Outside the U.

Speaker 3

S, sales increased year over year primarily due to demand in multiple sclerosis and securing reimbursement in additional countries. And lastly, turning to Sotikto. We are extremely pleased with the launch and progress we've made to date. Since launch, We have greater than 23,000 script equivalents across Bridge and commercial drug, nearly doubling volume in Q2 versus Q1. Sutiqtu's share of the oral market is now approaching 40%, continuing to source more business from systemic naive patients as well as our Tesla and biologic experience patients.

Speaker 3

I'm also very pleased to report that we've made progress accelerating access. Most notably, half of CVS plans with 0 step edits effective mid July. CVS indication based plans account for approximately 30,000,000 people or roughly 15% of the commercial covered lies and we look forward to securing broader formulary access in 2024. Outside the U. S, we continue to be pleased with the strong launch performance of Japan and are working with various countries across Europe to secure reimbursement.

Speaker 3

Now moving to our Q2 P and L on Slide 18. I will focus my remarks on a few non GAAP key line items having just covered the $11,200,000,000 of sales in the quarter. In the quarter, gross margin of approximately 75% was primarily impacted by product mix. Operating expenses of $4,200,000,000 Excluding acquired in process R and D increased approximately 2% versus last year largely driven by an increase in spend to support our new product portfolio. Acquired in process R and D in the quarter was $158,000,000 which was partially offset by $20,000,000 of licensing income.

Speaker 3

Overall, 2nd quarter earnings per share was $1.75 Turning to the balance sheet and capital allocation on Slide 19. Cash flow generation on our balance sheet remains strong. Cash flow from operations in the quarter was approximately $1,900,000,000 with over $8,700,000,000 in cash and market securities on hand as of June 30. Cash flow from operations in the quarter was primarily impacted by a $3,000,000,000 tax payments in the quarter, which is dynamic as we've seen in previous years. Our priorities for capital allocation remain unchanged.

Speaker 3

Our business development continuing to be a top priority and a focus on balance sheet strength as well as returning capital to shareholders. In the quarter, we repaid approximately $240,000,000 of debt and $1,900,000,000 year to date with an additional $2,000,000,000 maturing this year. Additionally, as Giovanni mentioned, We intend to execute a $4,000,000,000 ASR in the Q3 of this year with approximately $2,000,000,000 remaining in our share repurchase authorization after the ASR. Turning to our updated 2023 non GAAP guidance on Slide 20. Our updated guidance reflects the decline of Revlimid and to a lesser extent, palmless revenues, Giovanni mentioned earlier.

Speaker 3

We now expect 2023 revenues to decline in the low single digit range on a reported and ex FX basis and gross margin is expected to be approximately 76%. Excluding the impact of acquired in process R and D, we continue to expect low single digit decline in operating expenses, which reflects efficiency initiatives in MS and A as we continue to invest in our new product portfolio. For the Q3, we expect total operating expenses to be largely similar to the 2nd quarter at approximately $4,200,000,000 Our tax rate is now expected to be 17.5%, reflecting changes in product mix and our earnings per share is now expected to be in the range of $7.35 to $7.65 Lastly, turning to Slide 21, despite Revlimid dynamics this year, the future of our company was driven by our in line and new product portfolio. Importantly, the robust growth of this business remains unchanged. We continue to expect the new product portfolio to roughly double versus prior year.

Speaker 3

We are continuing to diversify our business and have become less concentrated as a result. As you can see and as Giovanni mentioned earlier, in 2025, Greater than 90% of our business is expected to come from our in line and new product portfolios. We continue to expect low to mid single digit CAGR from 2020 to 2025 and reaffirm our midterm outlook. Before we move to Q and A, I want to reiterate and recognize the strong execution of our teams to accelerate momentum of the future of our company, our new product portfolio. We remain laser focused on bringing these transformational medicines I'll now turn the call back over to Tim and Giovanni for Q and A.

Speaker 4

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

Operator

Ladies and gentlemen, we will go to the question and answer session. In 2. Our first question today comes from Chris Shibutani from Goldman Sachs. Please go ahead with your question.

Speaker 5

Thank you very much. Good morning. When we think about the new product portfolio, particularly Slide 7, where you outlined your objectives for 2025 into 2,000 and 30, Hemzios sits at the top of that list in terms of being able to factor and to contribute. The initial journey, I think, it's It's pretty clear that outlining some of the challenges developing a new market, there's the REMS, etcetera. 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 $4,000,000,000 range, Many factors go into this.

Speaker 5

Can you highlight sort of the most important and the potential timing there?

Speaker 6

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 In the prepared remarks, we remain on track to roughly double the revenue of that portfolio.

Speaker 6

We are very much on track toward the $10,000,000,000 to $13,000,000,000 in 2025. And as Adam will highlight, I think we've made some very good progress really across that portfolio, not just Kamsayo's, but certainly Adam can provide additional details on Kamsayo. So Adam? Yes. Chris, thanks for

Speaker 7

the question. Let me say about ChembHios, we are very pleased with the performance of ChembHios, which is on track with our launch expectations. We are seeing, as you heard from David, week over week in patients treated with Kamsiose and we expect to see continued Steady and consistent growth for this important brand. Remember that the launch trajectory of Kymbios 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.

Speaker 7

So as patients continue to accumulate, we Expect these patients to be on drug now for many years, multiple refills in 2023 beyond. And most importantly, patient feedback as well as physician feedback continues to be extremely positive. And we are also excited about the VALOR approval, which happened in which further strengthens and solidifies the profile of Kamsiose and we will continue to increase adoption. We are also happy about the approval in Europe as well. So we are just getting started there.

Speaker 7

So taken together, we are very confident this will lead to continued and Same growth in 2023 and beyond. Thanks, Adam.

Speaker 4

Great. Thanks very much, Adam. James, can we go to the next one, please?

Operator

Our next question comes from Evan Sigerman 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.

Operator

Thank you.

Speaker 8

Thanks, Evan. This is Giovanni. So, first of all, the decision to execute the $4,000,000,000 ASR, And as you know, we had a $6,000,000,000 authorization outstanding. It's 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.

Speaker 8

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 $4,000,000,000 in Q3.

Speaker 4

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

Operator

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

Speaker 7

Thanks guys

Speaker 6

for the questions. Just had a couple. So Giovanni, you went over the Revlimid dynamic in 2Q. Maybe just talk about the risks of recurrence of this co pay assistance looking to 2024 for Revlimid Or for Pamela's. And then real quick on Sotek 2, you guys with obviously CVS and maybe some other payers removing step edit.

Speaker 6

How should we think about kind of demand and share looking to the second half of this year and going into 'twenty four? Thank you.

Speaker 8

Sure. Thank you, Jeff. Let me take the first question and then we'll move to Sutiq II. 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.

Speaker 8

First of all, we are seeing that Free drug applications to the BMS Patient Assistance Foundations have been returning to normal levels. And second, remember there are significant changes to the PASD design next To the pool of patients that qualifies for LIS. 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 PalmaList and lesser degree sorry, for Remnimid and a lesser extent PalmaList. Adam? Thanks for

Speaker 7

the question, Jeff. So we are very pleased with the CetiQ II launch. Our CetiQ II oral market share is nearing 40% of The oral new brand market, we are making great progress towards our goal, which we have stated becoming the standard of care for oral products. We now have over 23,000 prescriptions since launch, and that means we've doubled the volume of TRx equivalents from The Q2 versus the Q1. And as you mentioned, we are very, very pleased that we are able to Sure.

Speaker 7

And pull forward an access win as CVS moves to Dixit into a preferred position in the middle of the month. So That brings roughly 30,000,000 lives or 15% of the total commercial lives covered in the United States. So being able to pull that forward, We are expecting it takes around 2 to 3 months to move patients from bridge to commercial drug. So we would expect a ramp Thorson to take to commercial product in the back end of the year. We are also in continued negotiations with payers right now to work to secure improved commercial access in January.

Speaker 7

And for all those reasons, I feel very good, not only about our launch performance, about our execution and continued growth in the second half of the year as well as into 2024.

Speaker 4

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

Operator

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

Speaker 9

Great. Thanks so much for taking the question. Maybe 2 for me. I was just wondering if Sumit san, if you can talk about your confidence in If there's any update on the Opdivo Hodgkin's lymphoma indication in the frontline setting for NCCN guidance guideline updates. Thank you.

Speaker 8

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

Speaker 10

Thank you, Terrence. Thank you for the question. For Revlozil, of course, we cannot comment specifically on the label and discussions with the regulatory agencies, but I just want to remind again on how the study was conducted with the intent to treat principles applied to the study where all common 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 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 off of transfusion. And in all subsets, you see that consistently across the board that patients who benefit, benefit as well as they offer transfusions for a long duration.

Speaker 10

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, you want to add something? Sure.

Speaker 7

Thanks, Amit. So we are excited about what we are seeing for EBITDA for the quarter. The growth is coming both from the U. S. And internationally as it relates to The commands approval, remember this is certainly an important launch for us.

Speaker 7

The PDUFA is in 4 weeks and our U. S. Team is launch ready. And so what we are hearing from physicians post ASCO, post EHA, physicians tell us they want to use REVLOVIL regardless of our status because of the Durability and the opportunity for transfusion dependence. So, together, I think we are well positioned to be really the new standard of PR in the first Fine.

Speaker 7

Thanks. So as it relates to the second question, which is Opdivo in CHL, We also were very pleased with the data presented at ASCO, where Opdivo demonstrated superiority versus ADCETRIS in a head to head Similarly, we have 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 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 adoption over the coming weeks to months as well.

Speaker 4

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

Operator

Our next question comes from Chris Schott from JPMorgan. Please go ahead with your question.

Speaker 11

Great. Thanks so much. Just 2 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 PAMALIST or is that really the only change in the overall top line numbers? And then my second question was just on Brianca and Abekma.

Speaker 11

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 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.

Speaker 8

Thank you, Chris. David and Adam? Yes.

Speaker 12

Thanks, Chris. The only change to our guidance was related to the And Palmetto and Palmetto's dynamic that we have discussed before. Yeah.

Speaker 7

So I will take the second part of your question. We are seeing across our cell therapy franchise. This year, we made very good progress on increasing capacity for both Beqma and Brianca. And so when you look at our approach to the market, number 1, our focus is rapidly expanding our One friend, both in the U. S.

Speaker 7

And internationally based on our increase in supply. When you look at the approach we are taking overall for CAR T manufacturing, there are really 2 components to cell therapy as drug product and vector. So for drug product, We have increased capacity with successfully executed ramps at both our existing sites for Briantyne and BECMA and additional ramps planned for each product in the back end of 2023. We are building new state of the art facilities, as we talked about in Devon, Massachusetts online this year as well as Leiden in the Netherlands, which will come onboard in 2025 to further Increase and accelerate capacity. The second area is really around vector and we continue to both internalize and externalize vector and our fastest path to increase Capacity of our current vector is to partner with existing third party manufacturers.

Speaker 7

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 are accelerating our transition to next

Operator

Gen

Speaker 7

vector technologies as well. So thinking together, we are making very good progress in increasing our capacity for both That's my end. Chris, the only thing

Speaker 6

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 the past and we'll talk again about at the R and D Day in September, we've obviously got a very exciting portfolio of cell therapy assets, Notably GPRC5D as well as NextE CD19

Speaker 4

and so these investments are going

Speaker 6

to be critical for those as well.

Speaker 4

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

Operator

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

Speaker 13

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 And then separately on the IRA, just hoping that you could give us a little bit of your sense of the pushes and pulls.

Speaker 13

We've had some conversations recently where experts, expert legal consultants would suggest that there's Potential for a preliminary injunction to be issued because of the pressure points around the 5th Amendment. 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.

Speaker 8

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 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.

Speaker 8

In fact, I mentioned earlier, that obviously the fact that next year, patients will no longer contribute to the catastrophic phase and that there is an expansion of the definition for LIS eligibility. These are Good examples of things that go very much in the right directions. And of course, they impact Parts of our business, including Eliquis, as an example. Sumit?

Speaker 10

Thank you. Thank you, Giovanni, and thanks for the questions, Seamus. For LPA1, if you think about IPF and Yes. Both are conditions which have a very high unmet medical need. To date, there are only 2 drugs approved for IPF and only one approved for And both of them have their own safety liability, which does not allow patients to continue on treatment for a very long duration.

Speaker 10

We have now shown in 3 different studies, the first one with the 1st generation LPA1 and other two studies that recently completed. We've shown the efficacy of the oral drug, our LPA1 inhibitor in improving the outcomes of 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 FVC, 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 data sets are giving us confidence that we will be launching 2 Phase 3 trials starting later this year or very early next year for IPF and to be able to bring this medicine to patients in the short term.

Speaker 10

Adam, do you want to add?

Speaker 7

Yes, Sumit. Thanks. From a commercial standpoint, we are very encouraged by the LPA1 asset. As Amit alluded to, there is a very high unmet need in IAPF and PPS and the prognosis for these diseases Are not too dissimilar to some metastatic cancer diagnosis. And so we generated, as Sanjay mentioned, very encouraging efficacy and safety data.

Speaker 7

There was no GI talk seen with the current treatments, no liver toxicity that we saw in the early studies and this gives us confidence, As Sami 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 diagnosed tools are going to really help accelerate the diagnosis rates with rates, which Pretty low today. They range around 30% to 40%. We think when we bring our LPA1 to market, we will be able to accelerate that significantly and make a significant impact in patients with these serious diseases.

Speaker 4

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

Operator

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

Speaker 9

Great. Thank you. 2 for me. I guess first, Just hoping to get a little bit more color on some of the trends you're seeing with EYLEA. I mean, basically, your confidence on reacceleration in the back half of the year given the sequential decline in U.

Speaker 9

S. And flat ex U. S. And then just quickly on Opdula lag, you talk about potentially becoming standard of care in melanoma. Can you talk a little bit about maybe just a little bit more color on kind of what's a reasonable kind of market share assumption or how What really would that be in terms of market share or some further color on that front?

Speaker 9

Thank you.

Speaker 8

Sure. Adam?

Speaker 7

Thank you, Carter. To start, let me just say, we are very pleased with what we are seeing across our cell therapy Franchise. Now for Abekma, as David mentioned, year on year, we grew approximately 50%. There are a few factors that impacted 2nd quarter for Beqma. The quarter on quarter decline was driven mainly by pricing dynamics in Germany.

Speaker 7

2nd, there was a planned impact due to manufacturing maintenance that happened in June. In anticipation of our Karma 3 Approval, which we expect in the back end of the year, we would also anticipate a significant increase in volume in the Q4. And thirdly, we anticipated increase in the use of other BCMA agents in the U. S. And we know this is a competitive market.

Speaker 7

But it's a market that we know extremely well and we are very confident in our ability to compete in multiple myeloma with this important product, Beqma. I think most importantly, we continue to see and hear from physicians about favorable perceptions 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 investment outlook in the second half of twenty twenty three and beyond. The The second question was around Opdulag. And so for Opdulag, as you heard from David, Opdulag It's rapidly becoming the standard of care in the U.

Speaker 7

S. We are 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-one monotherapy and from Opdivo Yervoy combinations, but About 2 thirds of that share is being sourced from PD-one monotherapy, roughly fifty-fifty from Opdivo and KEYTRUDA. As we talked about last quarter, NCCN updated their guidelines and changed Opiolex from category 2A to category 1 in the BF mutant patient population and they removed the effect inhibitors as a preferred treatment in the first line setting. So as a result, We are seeing a really nice inflection in the BRAF mutant patient population for both OpioLog and for Opdivo Yervoy.

Speaker 7

That's where

Speaker 10

we are continuing to

Speaker 7

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 Opdivo, Yervoy and Opdivo monotherapy, our share is now greater than 65%. So I am very proud of our continued leadership in metastatic melanoma.

Speaker 10

And just to add to what Adam has just talked about, Abdulai, 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 Leucarcinoma in the first and the second line in 2024. So there is a large program behind the melanoma metastatic disease. Thanks Amit. Let's go to the next question please, Jamie.

Operator

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

Speaker 14

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 2025, so you guys have talked about a positive being less out of pocket spending, but there's a negative to contemplate too, which is manufacturers having Take up the 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 or is that going to be a net drag to earnings? It seems to me like it could be. So that's the first question.

Speaker 14

And then the 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?

Speaker 15

Thank you.

Speaker 6

Chris? Yes, maybe I'll start and then I'll turn it over to Adam to talk about the Opdivo piece. Tim, with respect to IRA, I think this is in some ways very consistent with way we've been describing IRAs 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.

Speaker 6

And 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

Speaker 7

the question. As it relates to Opdivo, really internationally, What we are seeing is continued strong growth in our international market. In fact, when you look at year over year 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 are just starting to unlock some of our new indications. We are very pleased to see our approval of CheckMate 816 in Europe.

Speaker 7

And when I think about the kind of the decline of price in Europe, that anytime 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.

Speaker 8

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 'twenty six. So the dynamics that Chris described don't meaningfully impact to our P and L and our outlook in 'twenty four to 'twenty five.

Speaker 4

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

Operator

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

Speaker 16

Hi. It's Emily Hutchinson from Lizzie on behalf of Andrew. A question please on Opdivo. Can you talk to the 2% sales growth in the U. S.

Speaker 16

And give a bit more context there? You mentioned customer buying pattern. Can you elaborate on these dynamics? And are there any other factors you would flag competition, top line comps or anything like that? Thanks very much.

Speaker 7

Yes, Emily, thanks for the question. So we are pleased with what we saw with Opdivo through the first half of the year and we anticipate continued growth through the back end of the year. In fact, Opdivo grew 11% overall year to date. And so similar to what we see internationally, We are also seeing our growth coming from same core tumors, first line lung. Our share is now approximately 15%.

Speaker 7

On gastric indication first line, where our share is approximately 50% and across our early adjuvant indications. As you noted, sequentially in the Q2, the demand growth in U. S. From our core business was offset by impact from unfavorable customer buying patterns. And so we expect to 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 U.

Speaker 7

S. That we are indicated in with the exception of first line lung. We are making good progress. We also have a number of significant readouts in the short term. So we have got some nice catalysts including our stage 2 melanoma indication, which is has a PDUFA date of October of this year.

Speaker 7

And you also read our press release In first line, cyst eligible bladder, checkpoint, and that's really exciting because there's been 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 INOMPIVA's ability to grow in 2023.

Speaker 4

Thanks, Adam. Next question please, Jamie.

Operator

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

Speaker 15

Thank you very much. I'd like to ask a question about Revlimid. 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 the free drug program is Why then is the expected decline on an annual basis expected to be less than before?

Speaker 15

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 U. S. GI market this morning.

Speaker 15

What are you are you seeing this? And if yes, to what do you attribute it? Thank you.

Speaker 8

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.

Speaker 8

So as you know, The most recent increase in generic volumes had entered in March, and we have seeing that drive significant variability in the past. At the same time, we saw an Increasing 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 as Q2 progressed, a number of patients on free drug It continued to increase eventually reaching significantly higher levels that we had seen historically. And also the impact on Revlimid and Polysty revenue accelerated during the course of Q2. So, we have been looking at these trends.

Speaker 8

And one of the things that is important to consider here Is that once the BMS Patient Assistance Foundation provides free drug to a Patient consistent with HHS guidance, we provide the debt free drug for the totality of V. 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 inputs, 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 a question, The generic dynamics that we've discussed for a while, which really account for month to month and quarter to quarter variability Are not a factor in what we are we've disclosed today, but obviously they were at play as we were looking at the development of Revlimid revenue during the Q2. 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.

Speaker 8

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 in 2024 and approximately $2,000,000,000 in 2025. So that's the number of dynamics at play here. And second question for Adam.

Speaker 10

Yes. The second question that

Speaker 7

I asked Steve was around what we are seeing in the GI marketplace. And so Overall, we are seeing for Zepozia is really strong growth, 28% quarter over quarter growth as well as probably 50% growth versus same time last year. When we look at the GI market, we continue to see acceleration of demand for Zolgia In UC, what we're hearing from thought leaders is that they continue to emphasize the benefit of using Zophosia in the first line setting. In fact, You look at our business shift now, about 60% of our business for Zuposia is in the first line use and we are continuing to make good progress on the access We are now 40% of lives have either 0 or 1 step edit and we are working to continue to improve that in 2024. So for those reasons, We're pleased with our growth in the GI market with Zuposia.

Speaker 7

We're also seeing strong performance in MS with our when our share is at an all time high.

Operator

And so

Speaker 7

we expect continued growth for Aussie in the back end of this year and certainly into 'twenty four as well.

Speaker 4

Thanks, Adam. Let's try and squeeze a couple more in here. If you don't mind, we can go to the next one, please, Jamie.

Operator

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

Speaker 17

Hi. Thanks for taking my questions. First, are you still confident in the roughly $4,000,000,000 in new product guidance for this year for the new product 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 Abdualag data in non small cell next year, but I did notice on Slide 7, the first line non small cell Rub Doolag as a key milestone has officially been added as some of the long term opportunity.

Speaker 17

So just confirming you haven't seen that data in house yet to make that

Speaker 6

Maybe I'll start, Matt, and then I'll turn it over to Adam before going to Summit. 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 $10,000,000,000 to $13,000,000,000 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 KAMZYOS, we had the access wins that Adam alluded to on SOTYX-two.

Speaker 6

Optulag is clearly going to continue to be important. And while we've discussed the dynamics on APECMA with respect to manufacturing, keep in mind that we have a number of catalysts coming with Avecma, but more importantly, we've seen a really nice continued growth with Brianca as well. But Adam, anything

Speaker 8

you would add? I guess just to put a

Speaker 7

finer point, what we said was right through the first half of the year, we are annualizing at $3,500,000,000 But as Chris alluded to, we have a number of catalysts 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 And as Chris mentioned, with Revelsville in the first line, we're looking forward to the PDUFA for commands. As David mentioned, we're also pleased with our to pull forward a large PBM this year for Sotyc2 and those patients will ship to commercial product from Bridge over the next 2 to 3 months. And also as Chris mentioned, Canzyos, we expect a continued steady flow of patients coming into our hub and then moving out to commercial product Remember, that takes around 8 weeks to 10 weeks for a patient to move from our hub into commercial product. And Finally, we are continuing to increase supply for Abekma in advance of our Karma 3 launch as well as ramping supply for in the back end of the year.

Speaker 7

And for those reasons, we remain committed to roughly doubling our sales of new products this year.

Speaker 10

Thanks, Adam, and thanks Matt for the question on OTULAG 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 meaning proceeding to Phase 3 will be based on looking at the overall data set from both overall On-site, 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.

Speaker 4

Thanks. We're really a little short on time, so we'll squeeze a few more. And if you could just keep it to one question, so we can get to as many people as possible, that would be great. Go to the next one, please, Jamie.

Operator

Our next question comes from Trung Huynh from Credit Suisse. Please go ahead with your question.

Speaker 18

Hi, guys. If it's one, I guess on Eliquis, total sales declined 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 U. S. And faster EU erosion?

Speaker 18

How should we think about the price demand for the rest of the year and then into the future. Cheers.

Speaker 7

Great. Thanks, Shum. As you heard from David, Eliquis had unfavorable gross to net adjustments in the Quarter, we saw an increase in Medicare and PHS patients. As you probably know, there is a lag in getting claims and those claims came in, in the Q2. So really that's an unfavorable adjustment, but we are very pleased with what we are seeing with Eliquis in the U.

Speaker 7

S. Remember, 75% of Eliquis' business remains in the U. S. And we expect continued strong growth. Our share, our NBRx share It's north of 70% and continues to grow.

Speaker 7

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 or international dynamics. We are seeing demand increases that's offset by the impact of price erosion in a number of our European markets.

Speaker 7

David talked about the impact of generic penetration in Canada and the U. K. With loss of exclusivity in both those markets. Overall, we're very pleased with Eliquis' performance and we would expect continued strong growth.

Speaker 4

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

Operator

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

Speaker 12

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 months to 18 months. Thank you.

Speaker 12

Yes. Thanks, David. As we talked about before, we saw More volumes come in that were expected in March of this year. The next inflection point will be in March of 'twenty four and then February of the following year. So Those are the 2 ones which are planned step down.

Speaker 12

And I think it's 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 $6,500,000,000 down to $5,500,000,000 with a step down of $1,500,000,000 next year, $2,000,000,000 $25,000,000 which will get you to essentially where consensus was previously. So no change to where we were.

Speaker 4

Let's go to the next one please, Jamie.

Operator

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

Speaker 19

Great. Thanks for taking my question. My question is regarding the inline portfolio. How confident do you feel about The growth trends you or our 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 $300,000,000 down division for, Pomalyst, It seems like 7% growth and considering you have been 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.

Speaker 8

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 $300,000,000 for this year and 20% roughly Of the $330,000,000 that we saw for revenue in the Q1, when looking at the totality of performance for the Inline business, we continue Feel really strongly about the strength of the trends and that's one of the reasons why we feel Very confident reaffirming the guidance for 'twenty five, both for our in line portfolio and for the new products.

Operator

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

Speaker 20

Hi, this is Yi Han on for calling. Thanks for taking our question. So we all know that you will have your R and D day on September 14th. 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.

Speaker 20

And the same delay, it is on your CAR T in lupus. So we recently noted you initiated of Phase 1 trial of your CD19 CAR T in SLE, which has on primary completion date in 2028. So you previously noted you would go fast on this program. So just wondering If there's any guidance on the timing of the data readout? Thank you so much.

Speaker 6

Hi, Leon. It's Chris. I will start and then Samit can very We hit on the CAR T question. Look, we're excited about the opportunity to spend some dedicated time talking about R and D. The focus on The day will be a few things.

Speaker 6

We'll obviously walk through the R and D strategy. We'll give you an update on the pipeline 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

Speaker 4

I think this is going to

Speaker 6

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 14th.

Speaker 10

Yes. Thank you, Chris, and thank you for the question. For the next gen CAR T CD19 therapy, what you're seeing is that we've just started 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 controls.gov.

Speaker 10

But certainly there will be earlier data Readouts and earlier data sharing prior to that date. So we'll keep you informed as we progress with the study conduct.

Speaker 4

Thanks. I think we maybe have time for 1 or 2 more. Let's go to the next one, please, Jamie.

Operator

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

Speaker 10

Thanks for taking the

Speaker 21

questions. As you think about the conversion to commercial pay drug for those patients that you've gained market share with and to take 2. It seems like by our math on the script run rate, you're running around maybe $800,000,000 close to $800,000,000 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?

Speaker 21

Or do you expect continue taking additional market share while converting Q3 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.

Speaker 8

Yes. David, thank you, Dane. David, why don't you start and then Adam can answer the question to Dictate.

Speaker 12

Yes. Thank you, Dane. Yes, it is included in our guidance. As we said, we will anticipate doing about $4,000,000,000 ASR in the Q3. And just remember, the dynamics of those ASR is about 80% of

Speaker 7

Yes, Dane, thanks. As it relates to CertikTokyo, as I mentioned, certainly our objective is to continue to grow market share. 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.

Speaker 7

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, 2 to 3 months. So that ramp will happen in the back end of the year. And as we start unlock other plans starting in January of next year. We will also see that start to take place as well, more patients moving into commercial supply.

Speaker 7

So we feel very good about our continued growth prospects for Certik-two in the back end of this year and certainly into 2024.

Speaker 4

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

Operator

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

Speaker 22

Hey, good morning guys and thank you for the question. Wanted to follow-up on Beqma'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-three and lung, how are you thinking about the bar for success in that Phase 2?

Speaker 22

And what's the strategy and timing for moving into registrational studies? Thanks.

Speaker 7

I will take the first question, Olivia. Thanks for the question. So as it relates to manufacturing and the Capacity shutdown. So we are making very good progress to increase our capacity across Cell therapy franchise, both Abekma and Briyansy. I talked about the 2 components of that.

Speaker 7

But as it relates to the manufacturing shutdown, That really is limited to Beqma, because that shutdown took place in our asphalt site where Beqma is manufactured. And so all of our shutdowns are planned, It is really tied to overall supply plans with Karma 3 being one important aspect of that ramp. And that's important because we now have over 90% manufacturing success rates and multiple ramps since launch. So this routine manufacturing maintenance process Really important for us to continue our strong success rates and build our readiness for increased capacity in advance of the Karma 3 launch. So as David mentioned, No.

Speaker 7

That will have some impact in Q3 and we expect our Bechma sales to accelerate in Q4 and certainly into 2024. And very quickly on

Speaker 10

the question on LAG-three non small cell lung cancer. As you know, Phase 2 studies combining I'll do that with chemotherapy comparing versus Nivo plus chemotherapy, but for the Phase 3 trial, we intend to do the combination comparison versus pembrolizumab plus chemotherapy. So we 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 effect that we need to see in Phase 3. 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 if the data is supported.

Speaker 8

So thank you, everyone. So as I think about the quarter, first of all, I want to say, obviously, we provided an important update 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 The launch portfolio and the strength of our pipeline. With that, I want to thank you for participating.

Speaker 8

Our team as always remains available to answer Any questions you may have and wish everyone a good day.

Operator

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

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