Bristol-Myers Squibb Company (BMY) — Q1 2019 Earnings Call Transcript

Thank you, Sandy, and good morning, everybody, and thanks for joining the call to discuss our first quarter earnings. With me this morning is Giovanni Caforio, our Chairman and Chief Executive Officer; Charlie Bancroft, our Chief Financial Officer; Chris Boerner, our Chief Commercial Officer; and Tom Lynch, our Chief Scientific Officer. Giovanni and Charlie will have prepared remarks and Chris and Tom are available for Q&A. First, the Safe Harbor language. During the call, we'll 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 forward-looking statements as a result of various important factors including those discussed in our 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. Today, we'll also focus our comments on our non-GAAP financial metrics, which are adjusted to exclude certain specified items. Reconciliations of these non-GAAP financial measures to the most comparable GAAP measures are available at our website. Giovanni?

Thank you, John, and good morning, everyone. I'm pleased to speak with you today about our strong performance in the first quarter and the progress we have made on our pending acquisition of Celgene. I am very proud of our team's focus and execution in the quarter to drive our business forward. Let me start with some highlights from the quarter and a brief discussion of our key growth franchises Opdivo and Eliquis. Our results this quarter were driven by strong commercial execution across the portfolio. Opdivo delivered a solid quarter and continues to perform well. As we look into the future, we recognize we are working in a very competitive space. However, we continue to see Opdivo as a growth franchise given the breadth and depth of our clinical program. Given the rapid update of new indications in immuno-oncology, the growth of Opdivo going forward will be driven by new indications over time. Specifically, I think about our growth opportunities in three areas. First is the opportunity in adjuvant where we have a robust program beginning to read out in 2020. We've already seen the potential in adjuvant melanoma where treatment rates have gone from 20% to nearly 80%. The second area of opportunity is in the metastatic setting across a range of tumors, including upcoming readouts in renal and gastric cancers. And importantly, the third area is the near-term readouts in non-small cell lung cancer beginning this summer and into next year with 9LA.

Thanks, Giovanni. Good morning, everyone. As Giovanni said, this is another strong quarter for the company highlighted by continued growth across our portfolio of prioritized brands. Let's start with Opdivo. During the quarter, we saw good growth, up 19% compared to last year. Let me take a few minutes to discuss what we're seeing in the business today and the dynamics in play going forward. Firstly, with respect to lung cancer. With our commercial team continuing to execute well, Opdivo remains the leading immuno-oncology agent in second-line lung in the U.S. Within this segment, as we've been describing, the size of the immuno-oncology-eligible population is declining and continues to erode in line with our expectations.

Thanks, Charlie. And Sandy, I think we're ready to go to questions.

Thank you for your question. Charlie, regarding the integration you mentioned, there is a significant amount of work ahead. We are seeing a progression of cost synergies from a facility perspective. I would also like to discuss the investments and launches of Luspatercept and Ozanimod from the Celgene side. It would be helpful if you could clarify the level of investments required to offset these synergies. Additionally, I want to dive into your comments about first-line lung treatment, particularly about any changes in reimbursement access. It seems there is less rollout than anticipated due to these hurdles. Could you provide more insight on this and its implications for second-line Opdivo adoption? Thank you.

Yes. So, Geoff, maybe I can start just on your comments regarding synergy and value protection. As I mentioned in my comments, we're very focused on making sure that we ring-fence and protect the value drivers of both companies, BMS and Celgene, and we're very focused on the upcoming potential launches of both brands. And we've done I think a really good job of focusing on where we can drive value and not distract the organization from those launches. But from an investment standpoint, I don't think you would see much different than what Celgene would have done on a stand-alone basis.

So this is Chris, and Geoff, I'll try to take the second part of your question regarding the first-line dynamics and the implications on second-line. So as expected, we continue to see the launch of immuno-oncology agents in the first-line setting continuing to have an impact on the size of the I-O eligible pool in the second-line. In the U.S., as we expected, that's been a bit of a quicker decline in the second-line than what you will have seen outside of the U.S. So, for example, in the U.S. the use of I-O therapies in first-line is about 57%. Today we see that having an impact on the size of the eligible pool and second-line continuing pretty much in line with what our expectations have been. About one-third of patients in second-line today are chemo-experienced patients and thus would be eligible for I-O therapy. And again that's in line with the U.S. expectations. Outside of the U.S. because of the timing of first-line approvals for I-O agents and importantly how quickly those I-O agents then get access in reimbursement and thus drive utilization, that's going to be a bit slower and we've seen that translate into continued fairly large pool of second-line patients who are eligible for I-O therapy outside of the U.S.

Sandy, can we go to the next question, please?

Thank you very much. I have a couple of questions about Opdivo. First, I'd like to discuss the RCC market and get some insights on how you see the competitive landscape developing, particularly in relation to Opdivo and Yervoy versus the PD-1/TKI combinations. Additionally, regarding the RCC question on 9ER, have the timelines been pushed out? Are there any interim results we should be aware of that might suggest an earlier stoppage? Lastly, Giovanni, could you revisit some of your earlier comments on growth? Currently, is adjuvant therapy the biggest opportunity compared to the remaining metastatic readouts? Among those adjuvants, which ones are you the most focused on or excited about? Thank you.

Chris, why don't you start?

Let me begin, Chris. We are experiencing a very strong business in first-line renal cell in the U.S. While it is still early, the initial feedback from outside the U.S. has been very positive. In the U.S., we increased the market share of Opdivo and Yervoy in the first quarter to just over 40%, primarily due to growth in the PD-L1 negative segment. Although it's still early days outside the U.S., feedback from early launch markets such as Germany and France has been encouraging. We have gained access in the U.K., Australia, and Canada, and we anticipate entry into other significant European markets later this year. Notably, we have observed rapid adoption in Japan, where our share exceeds 30%. Regarding competition, we have been preparing for the launch of I-O/TKI since last year. As we have mentioned before, we believe the I-O/TKI combination will play a significant role, as there is growing interest in this combination in the first-line setting, which is why we are conducting our 9ER study. This will likely exert some pressure on Opdivo and Yervoy. Nevertheless, we also believe, based on what we are hearing from customers, that Opdivo and Yervoy will remain a standard of care in first-line renal cell treatment due to the depth and durability of responses, as well as the quality of life and safety profile we have observed with Opdivo plus low-dose Yervoy. Additionally, as more data about Keytruda and Inlyta is released, we need to carefully analyze it because we are dealing with very different patient populations, making direct comparisons difficult. About one-third of patients in the Keytruda and Inlyta study were favorable, while the extended follow-up from CheckMate-214 shows that Opdivo plus Yervoy has approximately twice the percentage of complete responses compared to Keytruda plus Inlyta, and these responses are highly durable. Approximately 88% of patients achieving a complete response in CheckMate-214 continue to benefit, while we do not yet know how durable the results for Keytruda plus Inlyta will be. From a commercial perspective, we are focused on highlighting the value and long-term benefits of Opdivo and Yervoy, putting the data in context, and I have full confidence in our team's ability to compete effectively in this area.

Thank you, Chris. To address your two questions, one regarding 9ER and the other on adjuvant. With 9ER, this is our randomized trial comparing cabo plus nivo to sunitinib, and we anticipate data will be available in early 2020. The slight delay in timelines is partly due to the importance of accruing patients in Asia, including some from Japan. We have increased the target enrollment for this study from about 500 to approximately 700, which enhances our ability to explore overall survival as a possible secondary endpoint, although progression-free survival remains the primary focus. We look forward to the data early in 2020. You've raised a critical point regarding adjuvant therapy, and we recognize the significant potential for immuno-oncology in this area. In cancer treatment, while many drugs advance outcomes in metastatic disease, transformative successes occur when we can prevent recurrence. This has been evident with therapies like Herceptin and adjuvant chemotherapy, as well as in the melanoma space with Opdivo. We have nine adjuvant trials slated to report over the next three years across six major tumor types, including melanoma, bladder, esophageal, renal, hepatoma, and a neoadjuvant study in lung cancer. While I’m cautious about singling out specific trials, I will note a couple. In melanoma, we've observed that Opdivo combined with Yervoy improves results compared to Opdivo alone, and I am particularly interested to see if this translates into benefits in the adjuvant setting. The melanoma trial, expected to report in 2020, will be significant. In renal cell carcinoma, Opdivo combined with Yervoy has had a considerable impact, yet there is currently no established adjuvant therapy for this condition, highlighting a critical unmet medical need. I'm looking forward to those results. Lastly, I want to mention muscle-invasive bladder cancer, which is another crucial area of unmet need where I believe immuno-oncology could provide an important benefit.

Thanks, Chris. Sandy, can we go to the next question please?

Thank you, and congratulations on securing shareholder support for the merger. I have a couple of questions. First, regarding the I-O franchise, specifically CheckMate-227 Part II, could you share your current thoughts on it? You seem to have expressed some caution about this trial, which may be confusing for investors considering the data you have from your trials and those of your competitors. Should we adjust our expectations for this trial due to factors like increased crossover or any other variables? Next, concerning the merger, Celgene has outlined its expectations for its top five assets by product, while you have provided estimates for a total of six products, including your TYK2. Could you discuss whether you concur with Celgene's projections for their major assets as detailed? Lastly, could you provide the latest estimated sales figures for Opdivo by indication? Thank you.

Thank you, Alex. This is Giovanni. So let me just answer the first two questions and then I'll ask Chris to give you an update on Opdivo sales by indication. So with respect to -227 readouts, as we mentioned in our remarks, we expect Ia and II in the summer. There is really no update there and no news there from our perspective. Obviously, as you said, very important data readouts and we look forward to seeing that data. With respect to the Celgene, five launches as we've communicated extensively in the last few months, we provided an estimate of what we believe the peak sales for the six launches are in aggregate. Obviously, as you know, we've included risk-adjusted assumptions in our financials, but we wanted to provide that incremental disclosure as we were really discussing the value of the pipeline. As it relates to future guidance, we may provide for the combined company or individual assets we'll talk about that after we close the transaction.

Let me just hit on the allocation of business. In the U.S. lung is about 25%; melanoma is about 30%; renal is just over 20%; and all other indications are about 20% as well. The only comment I'd make outside of the U.S. is lung is about 45% and that just reflects the dynamics of lung being a bigger percentage in second-line just given the timing of indications.

Thanks, Alex. Sandy can we go to the next question please?

Thank you. A couple of questions. First one is kind of a higher level. So your stock has been in free fall for the last few weeks at least. In your opinion and based on your conversations with investors and analysts, why do you think this is happening? What are the biggest areas of concern that you hear about that you think are misplaced? That's the first question. Second question is Part 1 of -227 has a monotherapy Opdivo arm tucked within it. That tends to get overlooked. It's fairly large several hundred patients. I think it's around 400. It's not registrational, but it seems like there could still be a chance for the product to redeem itself in front-line lung as monotherapy following the spectacular failure of -026 back in August. So I'm guessing you'd say the odds are fairly high that we see good competitive results from this often-forgotten arm and recognizing it's not registrational. Can you comment?

Yes, Tim. Let me address your first question and I'll ask Tom to give you his perspective on the second one. So with respect to interaction with shareholders, obviously as you can imagine, we are continuing to interact with all of our shareholders. We are strong believers in the value of the company that we are creating and the opportunity to deliver significant value for shareholders in the long term. So our focus right now is really on making sure that the integration is successful and that we deliver the full value of the combination. I think that's where we can make a big difference as a team and that's where our focus is right now. And as we've discussed in remarks, I think we're making great progress already.

Thank you for your question on lung cancer. I want to highlight the full scope of our work in this area. We have several approaches to non-small cell lung cancer, and this summer we will be releasing the results of -227 Part 1, which includes overall survival data for a group of patients based on PD-L1 status. This data is significant for a couple of reasons. While it will provide insight into the monotherapy arm, it will also enhance our understanding of the overall data from TMB and the interactions among biomarkers, which are essential for grasping the response in immuno-oncology. This remains a critical question. Additionally, we anticipate seeing the results of Part 2 this summer, which involves our chemotherapy combination, and I would also like to mention the 9LA study, which we expect to report results in 2020. This study involves two cycles of upfront chemotherapy followed by Opdivo/Yervoy, which we believe has the potential to create a durable response in that context. We are looking forward to these important readouts in lung cancer and are eager to learn how the monotherapy performs in this setting.

The only other thing I would comment is that the use of monotherapy right now in the first-line setting tends to be dominated in the greater than 50% PD-L1 expression. That's almost entirely catered to monotherapy and the vast majority of the business outside of that setting has begun to evolve to a chemo combo.

Thanks, Tim. Sandy, can we go to the next question please?

Great. Thanks for the question. So just a couple here. Tom, you mentioned that the -9ER study, the primary endpoint is progression-free survival, but the study has been pushed out to 2020 because of recruiting in some Asian markets. I'm just trying to kind of triangulate that and understand that better. It would seem like PFS would likely have the study finished sooner or at least at/or around the same time. So I'm just trying to get an understanding of did you guys alter the statistical analysis plan at all to ensure that you have overall survival as kind of part of the stopping rule? I'm just trying to get a better understanding of why this study would get pushed out if PFS is the primary endpoint as most of us understood it and then the second question can you just maybe update us on your thoughts on what we might learn about the competitive landscape and how Bristol is positioned at ASCO this year. Obviously, we have the approval of Merck's label heading into ASCO. I'm just trying to get a better sense of the areas of focus that you're going to be bringing in your discussions with physicians from the data that you present there? Thanks.

Seamus, thank you. So let me just reiterate on -9ER and there's been no change to the statistical plan. And it's not a dramatic push-out of the readout data. It's just a slight push out of the day. One, we increased the sample size to give us more optionality around a key secondary endpoint, which is overall survival in this setting and we think that that's going to be important. And then second is, it's important for our study to have global impact and global reach and we felt it was important to accrue sufficient number of patients in Japan to be able to address the needs of the Japanese market as well. So there's been no change in the statistical plan and we do believe that we will be well positioned to answer the important question to help us determine the role of Opdivo and Cabo in that setting. Now regarding ASCO this year, as we've said a couple of times on this call, a number of our important readouts are actually happening this summer and it won't really be available in time for ASCO such as Part 1 and Part 2. Now we hope that many of those will be available including potentially even an update of our head and neck data at ESMO this year. I think we are very proud of some of the data we presented at ASCO, GU this year, which showed that Opdivo/Yervoy had activity in patients with hormone refractory prostate cancer, particularly in a group of patients that had high TMB. Again, I think this is a good example of the productivity of our translational medicine group the fact that we're able to look at a group of patients with TMB defined by a different cutoff actually than the TMB that was used for lung cancer and find a really important group of patients who benefited from Opdivo/Yervoy in that setting and that was at ASCO GU. Also at AACR, we reported data this year on some of the long-term benefit that we're seeing in patients with previously treated lung cancer. If you're a PD-L1 positive, a 19% four-year survival in second-line lung cancer, which is truly remarkable in that setting. So there'll be a lot of important data readouts and I think ESMO will be a good place to see some of the larger study again depending upon the timing of data.

Thanks, Seamus. Sandy, can we go to the next question please?

Hi, thank you for taking my question. Regarding Opdivo, it appears that this is the second consecutive quarter with a slight decline in U.S. sales, which may not be surprising given the dynamics in second-line lung treatment. With Keytruda's approval in first-line RCC occurring ahead of schedule, do you anticipate that the minor decrease in U.S. sales will persist, or is there potential for growth in the latter half of the year? Additionally, you mentioned that you currently hold a 40% market share in first-line RCC. Is that figure based on the label-recommended patient population of intermediate poor risk, or does it encompass all first-line patients?

Thanks for the question. So let me just address Opdivo growth. First, if you just put the Opdivo story for the quarter in context it was a very good quarter. We saw strength really across all of our tumors outside of lung cancer. In fact, we estimate that sales in all tumors outside of non-small cell lung cancer grew quarter-over-quarter and that's really a function of the base business continuing to be strong. We still have leading shares in all of our promoted tumors. And as I mentioned, we're seeing growth as expected in first-line renal cell as well as adjuvant melanoma. So overall, you continue to see very good strength across the majority of our businesses. The headwinds that we saw in the first quarter really were very much focused on lung cancer. As expected, we continue to see pressure in the second-line setting due to the decrease in the eligible pool of patients I referenced previously. That's very much in line with the expectations, but does impact quarter-over-quarter growth. The second thing that we saw this quarter was we saw a decrease in Opdivo monotherapy non-promoted sales in the first-line setting. That had been running about 4% to 5% in the latter half of 2018. We saw that come down in the first quarter to about 1% and I would expect, it's going to stay in that range for the remainder of the year. And as we flash forward to the remainder of the year, I think that first and foremost we continue to see Opdivo growing globally year-over-year, but I think the dynamics that you saw in the first quarter are likely going to continue as we move forward through the remainder of the year. Just addressing the question in renal cell the 40% share, the vast majority of that is in the intermediate and poor population. That is consistent with our label. We do see about 5% share in the favorable risk population, but that's relatively small in the grand scheme of things.

Thanks, Matt. Sandy, can we go to the next question please?

Great. Thanks so much for taking my question. So one just around sort of dynamics around drug pricing reform and a specific question really just to this concept of international reference pricing for Part B. I think when that was first proposed, I don't think investors and maybe analysts wouldn't get too much credit for that actually becoming a reality, but it feels like in our conversation that there's maybe a growing sense that that may actually become a reality. So I'm just wondering if you can share your expectations on some degree of international reference pricing being implemented for Part B and how that might impact Opdivo and Yervoy specifically and just I guess Bristol overall. And then my second question is just on the following-up on the Part 1a and Part 2 comments you had made. I know you can't control the timing of these event-driven trials. But given that the data is coming a little bit later than expected does that in any way sort of raise the bar in terms of what you need to show given the uptake Merck is already seeing with – through the mono-therapy and combination therapies in frontline non-small cell? So just wondering if you have to show even stronger data to displace at that point? Thanks.

Thanks, Vamil. This is Giovanni. Let me just start with the question about pricing. So first of all, let me say as I've said many times, I think that from my perspective we are entering a period in which we have to expect that the discussion about pricing and reimbursement will continue. I personally feel that it will be an evolution over time, and I do believe that the pressure to demonstrate value and the focus of payers on pricing and access will continue in the U.S. And in fact, as you may remember, I really believe that one of the important things for us to be doing is to continue to accelerate strengthening and broadening the pipeline, adding more growth drivers for the company, diversifying the portfolio with a larger number of assets and having a presence at the company that spans across multiple payer segments. I think these are all things that in an increasingly competitive market from a payer perspective, which is what we should be expecting, will position BMS much better as a broader innovation company after the transaction with Celgene is completed. With respect to the IPI international referencing, as you know we don't think that's a really good idea and we are really not supportive of that proposal. Because I think when you look at what is happening in many of the countries where they are included in that reference basket is that patients are not having access to new therapies, when you look at the approval of Opdivo and Yervoy in metastatic melanoma that's a transformational regimen as a standard of care in the U.S. It was approved in Europe in 2016, if I remember correctly. And I think in almost half of the markets included in the basket, it's not being reimbursed yet. I think the same is true for the adjuvant melanoma indication approved last year that are many of the markets that are included in the reference basket where that's not reimbursed yet. And almost half of the oncology products approved in the last few years are not reimbursed in those markets. So we are proponents of policies that enable stakeholders to continue to work together to address the issues of out-of-pocket exposure for patients and affordability and access, but in a way that continues to reinforce and reward innovation. And clearly, that's not what that proposal does. It's difficult for me to handicap the probability that a radical proposal like IPI has in truly moving forward. What I can tell you is that as an industry, we are in discussions with the administration and we are supportive of policies that achieve some of the goals of out-of-pocket exposures for patients, but in a way that rewards innovation.

Let me just quickly comment on the first-line opportunity. Undoubtedly, the timing of Merck entering first-line vis-a-vis data readout from us is an important consideration. It does frame the competitive context into which we would be launching. What I would say though is that, front-line lung cancer is a very large opportunity. There is still room to play, as I mentioned earlier, only about just over half of different line opportunities currently being addressed through I-O therapy. I don't think we think about this in terms of needing to hit a particular hazard ratio. Physicians are still looking for multiple options to treat patients in this space. They're looking for chemo-sparing options, which is obviously relevant potentially to Part 1a. And what I would say is that from a competitive standpoint, we know this space well and we know how to compete and we're looking forward to seeing this data readout.

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

Thank you. It was said a couple of times that the CheckMate -227 readouts are due this summer. Previously the Opdivo plus Yervoy OS data was expected in the second quarter. And that was a push out from prior expectations, which at one point were late 2018. There appears to be obviously ongoing delays. Can you provide a range of possible reasons for the delays, which are now approaching over a year? There could be good reasons, of course, so maybe you can paint both sides. And then secondly, not all KOLs are fans of the KEYNOTE-426 data in the first-line arena. Dr. Lynch, I'm wondering if you can point out some of the lingering uncertainties and questions on the data beyond what Chris already identified. Or in your eyes is KEYNOTE-426 a clear win? Thank you.

Steve, thank you. First on the first point, regarding the lung readouts. Just a couple of things. One is these are event-driven studies, and they're large trials. And the events happen when the events happen and I think it's really important not to read too much into event rates. Because event rates can slow down because things are going really well, or they can slow down just because of the way people were accrued to the different arms. So I don't read anything into the event rates, and I think the event rates are what they are. We'll see the data this summertime in that respect. I think the thing about renal cell carcinoma that I want to say, again, that I think is really important is that what you're looking at when you're comparing or looking at a regimen like Opdivo and Yervoy is looking at a regimen that's provided that we have excellent follow-up on now and we have a sense of what the duration of response and duration of benefit is, and that's something that's still a bit unknown with the TKI combination with Keytruda in that setting. And again, maybe fine, but it's unknown at this point. So you're comparing unknown very strong duration of benefit with one that we'll have to see how that data evolves. But although, as we pointed out, we still also believe that the TKI plus PD-1 could be important. That's obviously why we have studied 9ER.

Thanks, Steve. Sandy, can we go to the next question please?

Good morning and thanks so much for taking my questions. I guess I just wanted to follow up on the comment about Opdivo remaining standard of care in renal. Is your thought that this would remain the dominant treatment option in poor to intermediate? Or do you think that it's more of a shared market between I-O/TKI and I-O/I-O? And then as we think about the evolving second-line market in renal do you think the field will evolve to either I-O/I-O followed by I-O/TKI or vice versa given the lack of second – approving second-line options behind an I-O therapy? Thanks.

Yeah. Both very good questions and I think that to a certain extent the answer is going to be these dynamics are going to have to play out in the marketplace over the coming months. What I would say with respect to Opdivo plus Yervoy continuing to be a standard of care in the front-line setting is I very much think that it will be one of multiple modalities that are an option for first-line patients. I would suspect that the initial use of I-O plus TKI will likely be in the favorable patients, where we are not indicated. But I think you're going to likely see physicians make choices about, which option is best for their patients. That then in turn will impact the second-line dynamics. You're correct in pointing out that you might continue to see the increasing use of combination therapy in the second-line space. We've begun to see an uptake in the use of Opdivo plus Yervoy, for example, in second-line renal cell. It's about 20% now in the second-line setting. And so, I think, you're going to continue to see physicians start to think through if they use Opdivo plus Yervoy in first-line, thinking about a combination with TKI in second-line and potentially vice versa. Those dynamics are going to play out in the coming months and we'll obviously need to stay connected on those as the data continue to evolve.

Thanks Jason. Can we go to the next question please, Sandy?

Hi. Thanks for the question. Could you remind us about your dividend policy after the deal closes? What do you expect the payout ratio to be? Will you maintain the roughly 50% ratio that Bristol had standalone, which might be slightly above that for 2018? Is that the outlook for the next few years? Also, I have a question about the upcoming CheckMate 459 first-line HCC trial. How should we view the size of the HCC market? Is it primarily focused on the ex-U.S. market or the U.S. market? Are we looking at a $1 billion to $2 billion opportunity, or could it be $3 billion to $5 billion? Any insight would be appreciated.

Thank you for your question, Navin. Regarding the dividend, we have confirmed that we will continue to increase it. However, we have not specified a payout ratio, similar to our previous comments regarding Bristol. At one point, our payout ratio exceeded 90%. As our earnings grow, we tend to align more closely with our peers. Looking ahead, our approach will depend on the state of our business and various fundamental factors. As in the past, we will outline our dividend policy once a year for the upcoming year.

Yes. And with respect to HCC, HCC is obviously a particularly attractive market. We see considerable use of Opdivo today in the second-line space with about 53% share. We also have good use in the third-line setting with upwards of 45% share. In terms of the opportunity, I think we're going to have to wait and see how the data pan out. And once we get that data we'll be able to provide a bit more clarity. But it's an attractive opportunity and we've seen I-O be very effective in the space.

Thanks Navin for the questions. Sandy, can we go to the next question please? I think we have time for two more.

Hi. Thanks so much for taking our questions. First, we saw the Celgene settlement with Dr. Reddy's for the Canadian territory, not for the U.S. My question was, do you know if Reddy filed an amorphous form of Revlimid in Canada? That was the first. And the second is, on the TYK2 program, I feel like Street focus will inevitably shift to this next key trial coming up, the lupus trial next year. And I have noticed there's a very specific forced steroid taper being implemented in that trial. Can you give us a little more details on exactly how that taper works on steroid? I'm just trying to understand how to think about the placebo arm in that trial. Thank you.

Yes. So let me speak first about Revlimid. There are different patent regimes in Canada and the U.S., so you can't really read across from one jurisdiction to the other. I don't know offhand, quite frankly, if Dr. Reddy's had filed the amorphous claim or not, so we'll have to get back to you on that.

And, Umer, regarding TYK2, I think you pointed out, this is a compound that we're extremely excited about. As you know, it's a drug which looks like it has activity both through the Type I interferons as well as the IL-12/IL-23 pathways. We were delighted to see the data that we saw in psoriasis and we look forward to seeing those Phase 3 trials continue to mature. We also think this is an agent that could have benefit in inflammatory bowel disease and we're beginning studies in inflammatory bowel disease in that setting. We do have a Phase 2 study in lupus, which is appearing. I think one thing to keep in mind with lupus is how challenging of a disease lupus has been. And I think we saw that this year, with some notable shortcomings in other trials. It's a very difficult disease to treat. It's also a very heterogeneous disease in terms of what defines the disease and what drives the disease. And so the purpose of the steroid taper is to be able to have a more objective look at the potential for the benefit of TYK2 versus the potential for the benefit of the steroid interaction. So it's really trying to reduce the number of variables that are present in an inherently variable disease.

Thanks, Umer. Sandy, can we go to our last question please?

Great. Thanks very much. I have two questions for Tom please. First, could you guys talk a little bit about similarities and differences between Part 2 of 227 and 189 and talk about your placebo expectations? And then second, with respect to adjuvant trial readouts could you just go through a little bit more specifics on the potential for the timing of some of the other trials that you highlighted as most important? Thanks very much.

David, thank you and to start off with Part 2, the main difference is the histology. Part 2 focuses on all-commerce histology, while 189 is driven by nonsquamous cell. We've observed that the performance of the placebo arm in 189 has been notably poor, which may have contributed to a very favorable hazard ratio in that context. I'm not sure how our placebo arm will perform in Part 2, but we are eager to see those results and determine the benefits we can offer to patients. This situation does prompt some caution when using hazard ratios to compare trials. I believe it's important to consider landmark analysis, which focuses on how many treated patients have not progressed after a year or remain alive after three to four years. This outlook aligns more closely with how doctors think; patients typically don't inquire about hazard ratios regarding treatments. So, this is vital to consider as we analyze the data from Part 2 and from 9LA. As for the timing of readouts, I can share some estimates, but we are quite far from the events. It's essential to be cautious about the specific timelines since these are event-driven. For example, I previously mentioned the melanoma trial, which we anticipate will conclude in the second half of 2020. However, keep in mind that this is a 2,000-person trial, so the readout may occur sooner or later. Furthermore, in the adjuvant setting, events typically take longer to materialize. Our Muscle Invasive Bladder Cancer trial is also set for the second half of 2020, while the renal cell trial I mentioned is projected for the second half of 2022. Additionally, our hepatoma trial, which involves a 500-person randomized adjuvant study, is expected to read out in the first half of 2022. This provides a sense of our timeline for these readouts, but I urge caution regarding the size of the trials and the variability in their outcomes.

Thank you. Thank you, Tom. Thanks, everyone. In closing, this is a remarkable time for us at Bristol-Myers Squibb. We've had a strong quarter and importantly we've made progress with respect to the acquisition of Celgene. We've maintained a strong focus on executing our strategy and driving the business forward and I'm really confident in the company we are building and the opportunities that we have ahead. Thanks everyone for participating in the call. Thank you.