Bristol's Q3 2025 Earnings Call: Contradictions Emerge on Cabenfi Development, DTC Eliquis Offers, and Growth Projections

Date of Call: None provided

Financials Results

• Revenue: $12.2B in Q3; growth portfolio +17% YOY (growth brands drove strength)
• EPS: $1.63 diluted EPS; includes net charges of ~$0.20 per share for acquired IPR&D and licensing; full‑year EPS guidance narrowed to $6.40–$6.60
• Gross Margin: Approximately 73%, primarily due to product mix (versus full‑year guidance ~72%)

Guidance:

• Full‑year revenue guidance raised to $47.5B–$48.0B (midpoint +$750M).
• Full‑year non‑GAAP EPS narrowed to $6.40–$6.60; midpoint unchanged.
• Gross margin guidance ~72%; operating expense guidance ~$16.5B.
• Other income/expense (OIE) now expected ~ $500M; full‑year tax rate ~18%.
• Legacy portfolio expected to decline ~15–17%; Revlimid sales expected ~ $3B.

Business Commentary:

* Strong Growth Portfolio Performance: - Bristol Myers Squibb's growth portfolio delivered another strong quarter with sales increasing 17% year over year, strengthening the foundation for long-term growth. - The growth was driven by multiple products including the IO portfolio, Reblozyl, Camzyos, and Breyanzi.

• New Indications and Development Milestones:
• Bristol Myers Squibb achieved significant milestones with the potential first-in-class bispecific ADC Isobren receiving breakthrough therapy designation and the FDA granting fast track designation to its anti-tau antibody for Alzheimer's disease.

• These milestones highlight the potential of the pipeline to sustain growth in the future.

• Business Development and Strategic Acquisitions:

• The company's recent acquisition of Orbital Therapeutics is expected to bolster its cell therapy franchise with a potential off-the-shelf best-in-class asset.

• This acquisition is aligned with Bristol Myers Squibb's strategy to strengthen its expertise in autoimmune diseases and expand its pipeline.

• Financial Discipline and Cost Management:

• The company generated significant cash flow from operations and maintained strong financial discipline through its Strategic Productivity Initiative, decreasing operating expenses by approximately $1 billion year to date.
• This was aimed at aligning the cost structure with the projected shape of the business while maintaining financial flexibility for future growth opportunities.

Sentiment Analysis:

Overall Tone: Positive

• Management: "Q3 was another strong quarter...we are again raising our top line guidance and maintaining the midpoint of our bottom line guidance." CFO: "total company sales were approximately $12.2 billion." CFO: "we are increasing our full year revenue guidance by $750 million at the midpoint." These statements, plus multiple product callouts and planned readouts, support a positive tone.

Q&A:

• Question from Chris Schott (JP Morgan): Can you provide updates on actions after the clinical site reviews and how confident you are in ADEPT 2 relative to ADEPT 1 and ADEPT 4 given study design differences?
  Response: ADEPT 2 readout expected by year‑end; management remains blinded but confident in the Cabenfi program based on external data, internal lead‑in/extension data and will apply learnings to maximize execution.

• Question from Geoff Meacham (Citi): How would you characterize reimbursement speed and prescriber depth for Cabenfi in the U.S., and what are Christian's early priorities?
  Response: Commercial access is strong (virtually 100% Medicare/Medicaid); weekly TRXs >2,400 and steady growth expected; Christian prioritizes science‑led portfolio prioritization, execution, AI integration and talent building.

• Question from Evan Segerman (BMO Capital Markets): How do recent PD‑1/VEGF bispecific data inform your view of the BioNTech partnership and pomitomig program?
  Response: Partnership with BioNTech is strong; pomitomig's data (and competitor data) increase conviction — broad, fast‑moving development program across multiple indications aiming to be first/second to market.

• Question from David Elkins (Piper Sandler): What are the key barriers to Cabenfi adoption (tolerability, dosing, prescriber inertia) and how will you drive acceptance?
  Response: Primary barrier is prescriber switching inertia; addressing via peer‑to‑peer education, real‑world evidence and a phase‑4 switch study to build confidence; tracking ahead of recent D2 launches.

• Question from Assad Haider (Goldman Sachs): Any updated thoughts on strategic productivity timing versus R&D pushes (e.g., BNT327) and early pipeline priorities?
  Response: On track for ~$1B savings in 2025 and clear line of sight to $2B by 2027 while balancing targeted investments in R&D and BD; Christian highlighted milvexian, ArmiParent (IPF) and protein‑degradation and cell therapy platforms as key priorities.

• Question from Terrence Luke McCartney (Morgan Stanley): Any updates on CMMI pilots and regarding iberdomide—confidence FDA will act on MRD endpoint?
  Response: CMMI pilot details are preliminary and being monitored; iberdomide showed a positive MRD result and the company will discuss data with FDA and other regulators to evaluate potential conditional approval pathways.

• Question from Akash Tiwari (Jefferies): If there are no site irregularities and dropouts are expected, why isn't ADEPT 2 data locked yet and why open ex‑US sites; what was learned from open‑label relapse prevention designs?
  Response: Company reiterates ADEPT 2 readout expected by year‑end and will provide results when available; ADEPT1 uses a different relapse‑prevention randomization design versus ADEPT2/4 which are similar to each other.

• Question from Steven Scala (TD Cowen): Have IRA negotiations concluded for affected drugs (e.g., pomitomig/pomalyst) and outcome versus expectations?
  Response: IRA negotiations are concluding (price expected public by Nov 30); management expects no material impact to the company outlook and notes pomitomig will lose U.S. exclusivity by Jan 2027.

Contradiction Point 1

Cabenfi's ADEPT Program and Confidence in Results

It involves the confidence expressed by the company regarding the ADEPT program and its impact on Cabenfi's development, which is crucial to investor perceptions and strategic planning.

What updates have been made on the clinical site reviews from 2Q earnings? Also, how confident are you in ADEPT 1/4 vs. ADEPT 2? - Chris Schott (JP Morgan)

2025Q3: The Cabenfi development program's confidence remains strong. External data supports our expectations, and we're ensuring studies succeed with high probability. - Chris Boerner(CEO)

With recent cost cuts, how is Bristol approaching R&D investment and pipeline risk? Has the strategic direction changed? - Mohit Bansal (Wells Fargo)

2025Q1: Given the data that we have seen so far in the studies, we are confident in the robustness of the data, the confidence that we have in the utility of the data to continue to have the potential to demonstrate benefits in new indications. - Samit Hirawat(CMO)

Contradiction Point 2

Direct-to-Consumer (DTC) Offering with Pfizer

It involves differing statements about the discount and potential expansion of the DTC offering with Pfizer, which could impact patient access and company strategy.

Are there concerns about reduced deals with the administration? What are the implications of Eliquis and DTC offerings? - Louisa Hector (Berenberg)

2025Q3: Eliquis will be available via Direct to Patient at a discounted rate. - Chris Boerner(CEO)

Can you provide details on the direct-to-consumer offering with Pfizer and whether it could be used with other products? - Courtney Breen (Sanford C. Bernstein & Co.)

2025Q2: Pfizer's Eliquis will be discounted over 50%. - Christopher S. Boerner(CEO)

Contradiction Point 3

Cabenfi Development and Confidence

It involves differing levels of confidence expressed regarding the development and commercialization of Cabenfi, which could impact investor perceptions and strategic planning.

Update on actions taken after 2Q clinical site reviews? How confident are you in ADEPT 1 and 4 versus ADEPT 2? - Chris Schott (JP Morgan)

2025Q3: The Cabenfi development program's confidence remains strong. - Chris Boerner(CEO)

How do you balance entrenched physician prescribing habits with the current poor standard of care and significant unmet need when planning Cobenfy's growth for 2025? - Christopher Schott (JPMorgan)

2024Q4: With respect to the cost programs, keep in mind that our focus is on investing for growth, both in current products and promising areas of science. This timing of the announcement reflects the need to capitalize on opportunities now. - Christopher Boerner(CEO)

Contradiction Point 4

Eliquis Growth and Reimbursement

It involves differing expectations for Eliquis' growth and reimbursement, which are critical for financial forecasting and investor confidence.

Are deal delays with the administration a concern? What impact do Eliquis and DTC offerings have? - Louisa Hector (Berenberg)

2025Q3: Eliquis will be available via Direct to Patient at a discounted rate. We'll launch TICTU DTC at a greater than 80% discount, supporting patient access. - Chris Boerner(CEO)

Can you quantify the tailwinds from the Medicare Part D redesign for Eliquis? What is the growth opportunity for this brand going forward? - Mohit Bansal (Wells Fargo)

2024Q4: We expect Eliquis to face tempered growth due to the Medicare Part D redesign in Q1, with the elimination of the coverage gap. However, we anticipate sales will rise in the second half of the year due to the elimination of the coverage gap, aligning with the historical dynamics of Eliquis. - David Elkins(CFO)