David V. Elkins
Executive Vice President, Chief Financial Officer at Bristol-Myers Squibb
Thank you, Chris, and good morning, everyone. I'm pleased to share our quarterly financial performance. As a reminder, unless otherwise stated, all comparisons are made from the same period in 2023 and sales growth rates will be discussed on an underlying basis which excludes the impact of foreign exchange. All references to our P&L are on a non-GAAP basis.
Let's start on slide 10 with some highlights from our third quarter sales. We demonstrated solid commercial performance in the third quarter with higher sales driven primarily by our growth brands. The growth portfolio delivered another quarter of double-digit growth, up 20% with continued progress across key brands including Reblozyl, Breyanzi, Camzyos and Opdualag. Our legacy portfolio also performed well with U.S. Growth led by Eliquis, partially offset by lower sales of Sprycel. As a reminder, the LOE for Sprycel in the U.S. recently occurred on September 1st and the LOE for Pomalyst in Europe happened back in August.
Our continued focus on commercial execution enabled us to deliver nearly half of our sales in the third quarter from the growth portfolio, and with the recent U.S. Approval and launch of Cobenfy, our sales mix will continue to diversify and provide a stronger foundation for growth. Importantly, we will continue to optimize the strong cash flow generated from the legacy portfolio to invest in growth opportunities.
Before going into key brand performance, it's important to note that third quarter sales were impacted by the reversal of an approximate $150 million inventory build from the second quarter. This tempered growth across several brands, primarily Opdivo, as well as Opdualag, Camzyos and some immunology products.
Let's start with our oncology business on slide 11. Global sales of Opdivo were higher in the third quarter, reflecting solid demand growth outside the U.S. Looking ahead, we continue to expect global full year sales growth to be in the mid single digit range. We remain focused on the anticipated approval and launch of the subcutaneous formulation of Nivolumab, which as Chris mentioned, is expected to receive FDA approval by year end. With this anticipated approval, we will have the potential to extend the durability of our immuno-oncology portfolio into the next decade.
Moving to Opdualag, we delivered strong double-digit growth in the third quarter, driven primarily by demand. Three years post launch, Opdualag has become a standard of care in first line melanoma in the U.S. with 30% market share. Outside the U.S., third quarter sales benefited from the strong uptake in newly launched markets such as the U.K., Brazil and Australia.
Moving to our cardiovascular portfolio on slide 12, Eliquis is the leading anticoagulant worldwide and delivered double-digit sales growth in the third quarter. U.S. sales benefited from the higher demand and market share gains. Sequentially as we've seen historically, U.S. sales included an unfavorable gross to net impact related to the Medicare coverage gap. Outside U.S. sequential sales of Eliquis reflected higher demand across key markets and favorable inventory compared to the prior quarter.
Turning to Camzyos, third quarter sales more than doubled driven by strong U.S. demand for new patient starts and an increasing number of patients on commercial drug. During the third quarter we saw steady patient adoption with nearly 20% growth in patients on commercial drug, more than doubling the number from a year ago. Outside the U.S., sequential sales growth reflected higher demand in newly launched markets in Europe.
Now let's turn to hematology on slide 13. Sales of Reblozyl grew 81% in the third quarter with strong double-digit growth both in the U.S. and international markets. The U.S. sales were driven by continued demand and first line setting. Outside the U.S., recent first line reimbursement in Europe and Japan contributed to the strong performance in the quarter.
In cell therapy, sales of Breyanzi more than doubled versus prior year, driven by demand in new indications and improved manufacturing capacity and reliability. In the U.S., sales grew more 40% on a sequential basis, driven primarily by pent-up demand in two of our newly approved indications -- follicular lymphoma and mantle cell lymphoma. We expect more modest sequential growth from third quarter to fourth quarter as demand normalizes. Also in cell therapy, despite a competitive market, ABECMA performed well in the third quarter with solid demand growth in both the U.S. and international markets.
Now moving to immunology on slide 14, sales of Sotyktu nearly doubled when compared to the impact of the $30 million clinical trial purchase in the third quarter of last year. Outside the U.S., sales grew year-over-year benefiting from the launch in a number of international markets. Looking to the fourth quarter, we expect a step up in gross to net discounts resulting from increased rebating associated with our approved access position. This would result in fourth quarter sales being similar to this quarter. As we said previously, we expect that over time, demand growth will offset these pressures.
Now turning to the P&L on Slide 15. In addition to solid commercial execution, our third quarter performance demonstrated our focus on financial discipline and steady progress against our $1.5 billion cost savings program. As a reminder, we initiated this program to offset incremental opex from the recent deals. Savings from across the organization include reductions in direct clinical trial expense, site rationalization, elimination of roles and a reduction in headcount. As we said previously, we expect the majority of the savings to come through this year. As we realize these savings, we are strategically reinvesting in high potential opportunities to fuel long-term growth and innovation in key areas.
Moving to gross margin, we saw a decline in the quarter of about 130 basis points driven primarily by product mix. Operating expenses excluding in process R&D were impacted by higher deal related spend, partially offset by savings from our efficiency initiatives. Our effective tax rate in the quarter changed from 11.6% in the prior year to 18.5%, impacted by one-time adjustment in 2023 resulting from newly issued IRS guidance. Overall, third quarter earnings per share were $1.80.
Now moving to the balance sheet and capital allocation highlights, we ended the quarter with approximately $8.4 billion in cash, cash equivalents and marketable debt securities on hand. During the third quarter, both our growth and legacy portfolios delivered solid revenue growth, contributing to robust operating cash flow of approximately $5.6 billion. In terms of capital allocation, we remain focused on strengthening our balance sheet. We are executing our plan to pay down approximately $10 billion of debt, and relative to our position at the end of the first quarter, we have reduced it by $5.9 billion. This includes roughly $3 billion of commercial paper and $2.9 billion of long-term debt.
As we previously have said, we remain committed to our dividend. Our strong cash flow profile enables us to address these priorities, while also strengthening our outlook. Turning to 2024 non-GAAP guidance, as is our practice, we provide revenue guidance on a reported basis as well as on an underlying basis, which assumes currency remains consistent with prior year. We now expect full year 2024 revenue to increase approximately 5% as reported, and approximately 6% at constant currency, primarily due to higher than anticipated sales of Revlimid. We are pleased with the performance of both growth and legacy portfolios, and in legacy we have updated our full year sales estimate of Revlimid to approximately $5.5 billion. As a reminder for modeling purposes, in addition to Revlimid, other legacy brands should soften into fourth quarter due to competition from generics for Sprycel and Abraxane in the U.S. and Pomalyst in Europe.
Turning to gross margin, we now expect a slightly tighter range to reflect the impact of our U.S. sales mix. Excluding acquired in process R&D, we now expect total operating expenses for the year to increase approximately 4% to 5%. This increase reflects higher fourth quarter spending to support our product portfolio and pipeline, and is in line with fourth quarter increases seen in previous years. These costs are partially offset by savings from our productivity initiatives. We remain confident in our ability to achieve our full year operating margin target of at least 37%.
For OI&E, we have increased our estimate from approximately $50 million of expense to approximately $125 million of income due to better-than-expected royalty and interest income. As a reminder, our tax rate was impacted by the nondeductible charge for acquired in process R&D, primarily from the Karuna acquisition in the first quarter. Excluding the acquired in process R&D, we continue to expect estimated underlying non-GAAP tax rate for the full year to be approximately 18%. Taking these updates into effect, we are raising our non-GAAP EPS guidance to a range of $0.75 to $0.95.
In closing, our third quarter results were marked by significantly higher sales across key growth brands, brands robust cash flow generation and continued financial discipline. As we reestablish our presence in Neuroscience with the U.S. launch of Cobenfy, we are excited about the long-term opportunity of this brand and its potential to serve more patients. We're looking forward to additional near-term catalysts as our pipeline continues to advance, our solid performance year-to-date supports our raised full year guidance, and our increased confidence in our ability to drive long-term sustainable growth. And with that, I'll now turn the call back over to Chuck for Q&A.