Bristol-Myers Squibb Company BMY
Q1 2013 Earnings Call Transcript
Transcript Call Date 04/25/2013

Operator: Good day, and welcome to today's First Quarter Earnings 2013 Earnings Release Conference Call. This call is being recorded.

At this time, I'd like to turn the call over to Mr. John Elicker, Senior Vice President, Investor Relations and Public Affairs. Please go ahead Mr. Elicker.

John Elicker - SVP, Public Affairs and IR: Thank you, Kayla, and good morning everybody. Thanks for joining us to review our first quarter results. Unfortunately Lamberto Andreotti, our CEO is not able to join us this morning. He is attending to an urgent family health matter. With me this morning are Charlie Bancroft, our Chief Financial Officer. Charlie will have prepared remarks. And then joining him for Q&A are; Elliott Sigal, our Chief Scientific Officer; Francis Cuss our incoming Chief Scientific Officer, Giovanni Caforio, President of U.S. business and Beatrice Cazala, Executive Vice President Commercial Operations.

So, before we get started, let me just take care of some of the legal requirements. During the call, we'll make statements about the Company's future plans and prospects that constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act. Actual results may differ materially from those indicated by these forward-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 subsequent date. We specifically disclaim any obligation to update forward-looking statements, even if our estimates change.

We will also discuss non-GAAP financial measures adjusted to exclude certain specified items. Reconciliations to these non-GAAP financial measures to the most comparable GAAP measures are available on our website. Charlie?

Charles Bancroft - EVP and CFO: Thank you John and good morning everyone. We have just completed a good start to an important year one in which our focus is on commercial execution as well as the continued delivery of our diverse and sustainable pipeline.

Before going into a deeper dive on our financial performance I would like to highlight three important areas. ELIQUIS, diabetes and R&D. We were off to a very good start with ELIQUIS. ELIQUIS' differentiated clinical profile is being recognized and valued by physicians, payors and patients.

In the U.S. we are on track with our expectations, trends are consistent with where we thought they would be and access is actually a little ahead of expectations. We expect to see continued progress in the second quarter with commercial Medicare Part D and hospital plan. We expect the impact of this will start to be reflected in the prescription trends over the course of this year.

Outside the U.S. we are in the early stages, but we have made progress on the access front in Europe with a positive recommendation from the U.K. and a positive guidance from Germany. In other markets, the process is ongoing with multiple negotiations taking place. With our partner Pfizer, we are very focused on executing the global launch of ELIQUIS with its a-fib indication. We continue to believe that ELIQUIS will be the leading new agent over time.

With respect to our diabetes portfolio, we continue to make good progress in this area as well. In the U.S., we are fully aligned with AstraZeneca, having finalized our sales and marketing team. The combined organization is now focused solely on serving the needs of diabetes patients. We completed the international commercial integration of Amylin on April 1 in nearly 90 markets, a complex process that impacted all aspects of our business. This is a significant accomplishment for the BMS AZ alliance.

With the integration work nearly done, we can now redouble our efforts in diabetes to ensure we are focused and able to capitalize on the opportunities we have, including plans to file FORXIGA for regulatory review in the U.S. in the middle of the year.

With respect to R&D, 2013 is another important year for the presentation of key clinical data that will lay the foundation for our Company's future growth. We plan to present new PD-1 data at ASCO. PD-1 has received Fast Track status from the FDA for lung, renal cell, and melanoma. The topline results for SAVOR, our CV outcomes trial for ONGLYZA should be available in June. And in hep C, you may have seen the important data on our triple regimen presented at EASL this week, and we expect to initiate Phase III in a fixed dose combination by the end of the year.

As mentioned in our press release this morning, we have received Breakthrough status from the FDA for this program. Also, by the end of the year we plan to file our all dual oral regimen for regulatory review in Japan.

Now, let me discuss our first quarter financial performance. We delivered net sales of $3.8 billion, down 27% compared to the first quarter of last year due to the loss of exclusivity of Plavix and Avapro. We will continue to see the impact of these exclusivity losses on our financial results for one more quarter.

Excluding PLAVIX and AVAPRO, global sales grew 10%, led by YERVOY, ORENCIA, our diabetes portfolio, BARACLUDE and SPRYCEL. I'll touch on some key products highlights.

YERVOY global sales increased 49% to $229 million. This includes the positive impact from a $25 million one-time reversal of deferred revenues in the U.S. You will recall that we established this sales deferral in the third quarter of 2011. Excluding this adjustment for YERVOY, U.S. sales increased 15% versus last year. We are seeing good growth across all segments, including community hospitals and practices, as physicians increasingly understand the potential for long-term survival. We expect continued growth in both the U.S. and Europe, where we now have reimbursement in essentially all market.

ORENCIA global sales increased 26% to $320 million. ORENCIA continues to perform well globally, with growing demand in the U.S. and Europe as we expand access, reimbursement and promotion for the SubQ formulation. U.S. sales increased 25% compared to last year, driven by strong demand for SubQ, which recorded sales of $70 million in the quarter. Several months into the SubQ launch in Europe, we are seeing strong uptake in Germany and the rest of Northern Europe, and we continue to secure access and reimbursement in other parts of Europe. ORENCIA also continues to perform well in Japan, up 31% versus last year, and we are waiting for regulatory decision on SubQ.

In diabetes, global sales for the ONGLYZA franchise increased 25% to $202 million. Although ONGLYZA's new prescription trends in the U.S. flattened somewhat this past quarter, we saw strong volume growth with the ONGLYZA franchise versus the prior year.

U.S. sales for our exenatide franchise were $136 million. BYDUREON sales volume and market share continue to grow during the quarter, fueled primarily by primary care physicians as we broadened BYDUREON prescriber base.

For BYETTA, we are focused on opportunities to combine the short acting insulin. We launched FORXIGA in Germany, the U.K. and Denmark during the quarter, and as I mentioned, we hope to file for U.S. regulatory approval by mid-year.

SPRYCEL global sales increased 24% to $287 million in a very competitive market SPRYCEL continues to gain market share particularly in the first line setting. Also included in our total sales figure is a positive $36 million impact from year Medicaid accrual adjustments.

Now let me highlight a few items from the rest of our P&L. I will focus my remarks on our non-GAAP results, as John mentioned reconciliations to our GAAP results are available on our press release and on our website.

Gross margin was 74.5% during the quarter down 70 basis points compared to the same period last year. This decrease is primarily due to the change in terms for ABILIFY and product mix, particularly the exenatide franchise.

R&D expense was $930 million which is up 9% compared to last year. The increase in spend was largely due to the Amylin acquisitions and increased portfolio spend including PD-1 and hep C. Our non-GAAP tax rate was 11% during the quarter. This is lower than our full year guidance largely due to booking the entire 2012 R&D tax credit in the quarter.

Moving to guidance; we are confirming our full year 2013 GAAP and non-GAAP EPS guidance range. In addition, our line item guidance remains unchanged. Our guidance assumes current exchange rates. As you know, foreign currencies had weakened against the dollar since we originally gave 2013 guidance in January, particularly the yen. While we saw no net impact from exchange in the first quarter compared to last year, at current rates, we would expect to see some pressure through the remainder of the year.

So, taken together, this is an important time for Bristol-Myers Squibb. We are in full transition to the portfolio of the future, a transition that is moving forward on two parallel tracks, executing our near-term commercial opportunities and at the same time developing a pipeline to deliver long-term sustainable growth.

Before we turn it over to your questions, I want to take a moment to offer my personal congratulations to Elliott and wish him well in his retirement. I have had the privilege of working with Elliot for a long time and truly value his many contributions to our Company. I'd also like to congratulate Francis on his appointment to Chief Scientific Officer. Francis and I have also worked together for quite some time. Francis is a respected leader with broad experience in both research and development. I look forward to a continued collaboration with Francis to help our Company deliver an innovative and diverse pipeline of medicines.

At this time we'd be happy to answer your questions.

John Elicker - SVP, Public Affairs and IR: Thanks. Kayla, I think we're ready to go to questions and I'll just remind everybody in addition to Charlie, we have Elliot and Francis on the R&D side as well as Giovanni and Beatrice here to answer any commercial questions that you might have. Kayla

Transcript Call Date 04/25/2013

Operator: Jami Rubin, Goldman Sachs.

Jami Rubin - Goldman Sachs: This is for Elliot and Francis, can you comment on your PD-1 program in the context of Fast Track status versus Breakthrough designation. There seems to be some confusion in the marketplace. And then, to that end, you did receive Breakthrough status for your DDDA hep C therapy which is interesting because I know that Gilead didn't receive Breakthrough status. So, what do you think this all means? Then secondarily, we did see some early data on Roche's PD-L1. Just interested in your take in how you see that comparing to your PD-1? Thanks.

Elliott Sigal, M.D., Ph.D. - EVP, CSO and President, R&D: Thank you Jami, this is Elliot. I will start and Francis will chime in. I agree that people are trying to figure out the exact implications of the new designation of Breakthrough therapy. It's a new tool that we all welcome for the FDA. Its implications are going to evolve, and it's added to a host of other existing tools. My impression is that it is an opportunity for early programs to receive regular interaction with the FDA and to gain input on the development of the registrational program. So, to that end, we certainly welcome the Breakthrough designation on our triple regimen in hepatitis C. This is a Phase II program. I can only speculate that the FDA was attracted to this because it is a non-nuc-based regimen. It has no Ribavirin potentially and has no Ritonavir. But again, the implications are not clear .The FDA oncology division has historically identified programs and use all the tools including Fast Track and other tools to their advantage to advance programs that can benefit patients in the areas of unmet need. Fast Track is what we took advantage of in three tumor types and over the last year or so we've had in my opinion, very high quality frequent interactions great input and have moved from standing start, as I call it from a Phase I and II, six registrational trials, including five randomized Phase III programs. So, I'm very pleased with where we are. I acknowledge that the field is competitive and we were attracted to this field back in 2004 and have been developing the science that is leading the way. But it is a competitive field. Our program is broad, comprehensive in multiple tumor types and has multiple opportunities for acceleration and early approvals. Francis would you like to add to that.

Francis Cuss - SVP, Research R&D: Certainly, well I am certainly very excited talking – moving to the HCV program for the recent data that was presented at EASL. As you're well aware, this is non-Interferon, (non-Ribavirin), non-Ritonavir triple, and we showed very impressive efficacy data in the well-tolerated regimen and I think we've had numerous very good interactions with the FDA and I think it reflects the potential importance they see in this regimen in its profile. We also have advance here being able to move quickly, we've accelerated to the Phase III into the fourth quarter of this year and I'm confident we will have a fixed dose combination to take into Phase III, which will be presumed to be a simple one tablet twice a day regimen for 12 weeks. Just moving to PD-1, PD-L1; as you know, we published in the New England Journal last year our experience both with PD-1 and PD-L1. We have the advantage of being the only (company) been able to look at both of these regimens, and based on the data we saw of both efficacy and safety, we are moving forward with PD-1 with an opportunity to accelerate that forward. I think it's important to note that we also talked about biomarkers in those publications and we will be looking at biomarkers, but we've left ourselves open with the option of a program that doesn't necessarily rely on a biomarker, the data that would support it.

Operator: Tim Anderson, Sanford Bernstein.

Tim Anderson - Sanford Bernstein: Again on PD-1. My understanding is that you can get both Fast Track and Breakthrough and my question is did you ask for Breakthrough designation and is that request still pending or have you been denied? I don't think it really means that much, but it is a little bit unusual that Merck got that designation because your compound is the one that's in the press a lot. And then a question on dosing; in Phase III if I understand the dosing right its 3 mg per kg. I think in the Phase II you went all the way up to 10 mg per kg. Is there a dose limit in toxicity with the drug, and if so, what is it? Or maybe I asked differently, are there any dose dependent side effects with the product? Then just on your comment about L1 versus 1, are you saying that you saw worse safety with your PD-L1?

John Elicker - SVP, Public Affairs and IR: Okay Tim, this is Elliott and Francis will follow. I'll deal with the different classifications that you talked about and Francis will address the fact that we're selecting a dose, then with regard to the dose side effects, the choice of PD-1 versus PD-L1 and the different ligands. It is true that these different designations of including Fast Track and Breakthrough are not mutually exclusive, and I think however the way I am viewing this, I am very pleased with the interactions we've had when our program was at an earlier stage, and now has a well-designed broad set of possibilities for indications, early approval acceleration. These designations don't convey any guarantee for downstream action, like early approval priority review, et cetera. But our program is designed to take advantage of the full array of opportunities here.

Francis Cuss - SVP, Research R&D: Just on the dose of Nivolumab, we obviously tested comprehensively different doses and as always, we make an analysis of the best therapeutic index. So, our analysis of this taken together with the dosing regimen came out that (3) was the optimum does. As far as PD-L1 versus PD-1 is concerned, you can certainly read the data we presented last year in New England Journal. I will tell you as an overview, we've seen similar toxicity for both PD-1 and PD-L1 of similar degree. So our analysis was we were somewhat ahead on PD-1 there was a suggestion perhaps of greater efficacy, but of course it's very early studies and we were able to accelerate PD-1 forward.

Operator: Seamus Fernandez, Leerink Swann.

Seamus Fernandez - Leerink Swann: So I guess, maybe just have a temporary break from PD-1 but I will get back to it. ELIQUIS launch can we talk a little bit about how you guys were thinking about the potential for and acceleration we have seen a really material acceleration in Xarelto scripts. Roughly about 12 month into the launch so just wondering if again given your statements earlier if we can anticipate an similar type acceleration and then separately on PD-1 just a couple of questions there. Can you talk a little bit about the, what could be potential issue if any with utilizing an modified IgG1. So again the immunoglobulin that’s attached to Roche's PD-L1 versus the choice of an IgG4 there are suggestions that perhaps, that that maybe an important difference. Although I think there may be some limitations there. And then lastly have you seen any responses in colorectal cancer with either your PD-1 or PD-L1 it looks like there may be some responses in colorectal cancer with Roche's drug and I didn’t know if you saw certain ways or potential ways to open up that very large tumor type with immunotherapy? Thank you.

Charles Bancroft - EVP and CFO: Let me talk a little bit of overview on ELIQUIS and then I'll pass it over to Giovanni, he can talk amore specifically about the U.S. Feedback has been universally positive on ELIQUIS' clinical profile. And although we are still at the early stages of our launch, we continue to believe ELIQUIS will be the leading new agent in this market over time. We also have some near-term lifecycle plans for ELIQUIS. We plan to file for a potential VTE prevention indication with the FDA this summer, and in addition, we expect to present the data from the AMPLIFY study at ISTH, and we'll eventually file for a VTE treatment indication by the end of the year, obviously, pending the results of the study. Giovanni?

Giovanni Caforio, M.D. - President, U.S. Pharmaceuticals: Just to follow-up on what Charlie said. As you know, we've been working with Pfizer and promoting ELIQUIS in the U.S. since the beginning of February, and so far, although it's early clearly, the launch has been going very well and very much in line with our expectations. We have positive feedback from our customers on the differentiated profile of ELIQUIS. Let me give you a couple of comments about early indicators. When we started our focus on the launch, we focused on access, we focused on hospital formulary listing and stocking, that's important as you know, because over 50% of initiations are in the hospital, and also we started promoting with cardiologists and with a group of early adopter PCPs. From an access perspective, as Charlie mentioned in the introductory remarks, we are doing as well and maybe a bit better than we had planned. Right now we have coverage in approximately 90% of commercial lives and in approximately 60% of Medicare lives. Importantly, we have covered status with all five top Medicare Part D plans, and with three of those five, we've actually achieved preferred status. So that is going in line with our plans, and obviously we're continuing to work on that. From a hospital perspective, we are continuing to make progress. We had a very large number of P&T committee reviews in April; there are many more planned for the month of May. That is going well and will continue to improve over time. In terms of our promotion to physicians, the efficacy and safety profile of ELIQUIS is really resonating very well. The top unaided recalled messages are really around efficacy and safety and the three endpoints, which is different from other agents which are being prescribed primarily because of convenience on the contrary. So, we see that all of the leading indicators are in line with our expectations. They are very positive, and that clearly reinforces our belief that ELIQUIS will become over time the leading agent in the indication, and that clearly would result in growth over the course of the year and into next year.

John Elicker - SVP, Public Affairs and IR: This is Elliott. With regard to your question of applicability of the PD-1 pathway in other tumors, early on we began exploring the possibility and the likelihood that this could be very broad based, and we feel that's going to turn out to be true. We have a program where we’re exploring other tumor types and we will be presenting that data down the line. Right now, as you know, the focus is on kidney, lung and melanoma with about six or seven registrational trials and a broad-based program. Your second question dealt with the isotype of the antibody and our research scientists in California, they originally came from Medarex, have done perhaps the most work on the relevance of the isotype in selecting these immune modulators with positive and negative features sometimes chosen and they are very confident that we have chosen an optimal isotype for PD-1. I'll let Francis add his comments to that work that’s been ongoing under him.

Francis Cuss - SVP, Research R&D: So a couple of things to mention. As you know, our monoclonal antibody comes from the XenoMouse model developed by Nils Lonberg and his colleagues formerly at Medarex. So we have a fully human anti-body. It's an IgG4 anti-body and the mutation in the hinge region to make a consensus for IgG1. There has been some suggestions by others that there may be some ADC, but there's absolutely none in our in-vitro and we've not seen anything in the clinic. I think it's important to also always to look at the immunogenicity of these antibodies, and ours being a fully human antibody, we see very low immunogenicity in nearly 1,000 patients we've treated now. I think, as you mentioned, the Genentech antibody, that of course is CDR grafted antibody, and I think it's again important to – it has a different target on immune cells, and so one should look carefully at the immunogenicity and one measure of that, of course, is what your dose is and we have, as we just mentioned in the previous question, a low dose which reflects the low immunogenicity.

Operator: Chris Schott, JPMorgan.

Chris Schott - J.P. Morgan: Just a couple of questions. Just to shift gears a bit to diabetes. For ONGLYZA it looks like we've seen a little bit of share loss I guess how are you thinking about that and addressing that share dynamic? Second question on BYDUREON, we are seeing some gradual uptick, but given additional resources you put on the product there, are you where you want to be at this point with that launch or relaunch profile? Then maybe finally just when we look at the mid-stage pipeline beyond PD-1, I would love just to hear in terms of what you are most excited about with the rest of the portfolio. Maybe Elliott, this is I guess, one of the last earnings calls we'll have you on, so any comments there would be appreciated?

Giovanni Caforio, M.D. - President, U.S. Pharmaceuticals: This is Giovanni. Let me comment on the diabetes portfolio performance in the U.S. So, first, going back to the comments made by Charlie at the beginning of the call, over the last two quarters in the U.S., we've fundamentally transformed our commercial organization. We've integrated the AZ and Bristol-Myers Squibb teams. We have realigned, restructured and increased the sales of our sales – the size of our sales organizations and that transition has been completed at the end of the first quarter. We acknowledge that during this period of transition in a very competitive market we've seen some disruption to our commercial effort. Now, on Q2 and beyond, that transition is behind us. Our teams are fully staffed. We have the right level of resourcing and our teams are back in the market promoting the full portfolio of products. With respect to ONGLYZA, you will remember that ONGLYZA grew very rapidly, increase its market share and had very strong performance in 2012. In the first quarter of 2013, we've seen flattening of our TRx share and some loss of our NBRx share, which is really related to the factors I described before, but also to the fact that the DPP-4 market growth slowed down considerably and clearly the competitive pressure in this segment increased. We've seen a flattening of our share in March and April, and I think that is a positive indicator and we are really focused on returning to growth during the remainder of 2013. With respect to BYDUREON, when we started promoting BYDUREON, we had set three objectives for us as we started promoting this franchise. The first one was to improve access for BYDUREON. The second one was to broaden the prescriber base particularly in primary care, and the third one clearly was to accelerate and the development of the Dual Chamber Pen and bring that to market. So, we've made progress in all of those areas, access for BYDUREON has improved in both the commercial and the Medicare space. We have actually grown significantly the prescriber base particularly in primary care, and we are on track to launch the Dual Chamber Pen which is an important driver of incremental growth at the beginning of 2014. As a result of that, we have seen growth for BYDUREON. In terms of TRxs we grew 18% in Q1 versus the last quarter of 2012. We also increased two share points in the market and as a leading indicator, our NBRx growth has been stronger than that. So, we clearly believe BYDUREON can grow more and faster, and as I said at the beginning, we have the right teams and resources in place to continue to drive that growth. I should also say thinking about the exenatide franchise that we believe there continues to be good opportunities for BYETTA and as of the beginning of Q2, we have actually increased the resourcing behind promoting BYETTA in combination with short-acting insulin.

Elliott Sigal, M.D., Ph.D. - EVP, CSO and President, R&D: As I have said before. I have been privileged to lead this R&D organization through a very important transformation and my last act has been focused on a very efficient transition. So that great momentum that you are sensing continues. And I believe in Francis Cuss we have a leader to affect that important transition and we have a team that supports him that is responsible for how far we've come. So I am very excited about the timing here because not only the leadership, but the timing of me leaving, coincides with a great deal of momentum and catalyst, not only in the late stage but moving from discovery into the mid-stage. And Francis has been a leader in-charge of that and should comment on some of the exciting things that we both see.

Francis Cuss - SVP, Research R&D: So we talked just a moment ago about our excitement around Nivolumab but I think it's important to realize that we have immune-oncology platform and I find it incredibly exciting that we actually have seven immune-oncology assets now between early and full development. We've got more than a dozen back in discovery and we've put together an integrated hypothesis driven kind of combination strategy, you'll see the first fruits of that at ASCO when we present some preliminary data around the ipilimumab-nivolumab combination. But there is a number of other combination trials ongoing in early clinical research and we have a global translational immuno-oncology network where we are partnering with academics around the world to help us develop models and develop clinical data to help us bring forward what we believe will be the flowering of I/O, which is in combination therapy which will allow us to continue providing transformative clinical benefit to patients.

Operator: Gregg Gilbert, Bank of America Merrill Lynch.

Gregg Gilbert - Bank of America-Merrill Lynch: First for Elliott. And Francis, I'm not sure if you answered whether you asked for Breakthrough status or not. My real question though is on SGLT2. Given your knowledge of your program and having seen an ad come as well as a label approved for another drug in the classes, is it fair to say that there can be some meaningful differentiation among the players in this class? And then for Charlie, I was curious if you are considering any deals that are larger than the typical string of pearls kind of deals you've done in the past and what would a larger deal have to bring to the table to be seriously considered? Thanks.

Elliott Sigal, M.D., Ph.D. - EVP, CSO and President, R&D: Yes, Gregg, this is Elliott. I'll just repeat what we are saying is that we have Breakthrough therapy in HCV. We do not have Breakthrough therapy on PD-1. We utilized a different mechanism that provides, we think, the same kind of advantage to get to the advanced stage we are at. With regard to FORXIGA, we believe that it's good for the SGLT2 field to not have not only our first in class molecule approved in Europe and things progressing well there, but the U.S. FDA division recognizing the mechanism by the approval of a competitor. We will be submitting midyear our submission with even stronger data on the benefit side, and I believe all the questions of safety addressed and I do believe these will be important members of the armamentarium and that we see differentiation.

Charles Bancroft - EVP and CFO: Let me just quickly talk on business development. We've always said that it's an important component of balanced approach to capital allocation and it had to pass three hurdles. And that to pass strategically, does it make sense for Bristol-Myers Squibb, does the signs hold up and does it make financial sense for us? We said all along, we're agnostic around deal size, but if you look back retrospectively around our String of Pearls, you can see the type of deals that we've done.

Operator: Mark Schoenebaum, ISI Group.

Mark Schoenebaum - ISI Group: Hey, Elliot, maybe I can ask you something. This has been brought up before, but I'd really love to get just your update and complete thoughts on this, and I know all the dialog at ASCO as well. But why shouldn't it be our base case expectation as investors that the use of your anti-PD-1 antibody is likely, although certainly not assured, but likely to be restricted to patients with PD-L1 expression, given the fact I think there have been zero RECIST responses at least in those patients? Thank you very much.

Francis Cuss - SVP, Research R&D: It's Francis. Let me take that one, Mark. So, it's just not true actually that we haven't seen responses in patients without PD-L1. There may be several reasons for this; one may be we just don't understand the mechanism well enough. It's true and you can look back at our data last year that there was a higher response rate in the PD-L1 patients, but it wasn't exclusively so, and it's continued to be the case here. One of the particular issues, I think, with melanoma is that sampling of the tumors, and I'd be very heterogeneous. So, you always run the risk of having a tumor which is apparently negative, but others tumors are positive. So we are taking the view that we are doing a very comprehensive Phase III, where we'll be looking at patients with and without PD-L1. We'll collect the data. We'll be able to make a submission either based on a biomarker or not on a biomarker. But, of course, our principle is we want to make this medicine, important medicine available to as many patients as possible.

Operator: Steve Scala, Cowen.

Steve Scala - Cowen & Company: Is SAVOR already complete and is the data in-house? I think you said that you'll have the data in June, but will we get the data in June? And is the full data still expected at ESC? This is a bit confusing, because I think clinicaltrials.gov says the trial ends in July. And in the past I don’t recall your prepared remarks highlighting SAVOR to the extent that you did today. So I find this whole thing very interesting. One other question on ELIQUIS, was there any pipeline fill in the sales numbers? Thank you.

John Elicker - SVP, Public Affairs and IR: Real quick. In terms of whether or not what the disclosure on SAVOR will be, I don’t think it's really we are ready to comment on that. We'll have to work through that once we see the data with AstraZeneca. Elliot, do you have anything else on this.

Elliott Sigal, M.D., Ph.D. - EVP, CSO and President, R&D: Steve always asked me this and this is the last time I can answer. No, I haven’t seen the data, and we expect to be looking at it sometime in the summer. I am not exactly sure when the events will be completed. Maybe there was confusion because we can't say exactly what meeting we’ll be able to present at, but we certainly want to present towards the end of the year, and the meeting that you mentioned would be the likely target.

Francis Cuss - SVP, Research R&D: And on ELIQUIS, Steve, the best way again to look at performance is to look at the development of TRxs in the U.S. Obviously, with the launch of any product in the U.S., there is a distribution to the channel and that was the case with ELIQUIS as well at the beginning.

Charles Bancroft - EVP and CFO: Steve, it was approximately $11 million in the U.S. Although in Japan, we were expecting in the broader sort of GP arena to have a little bit more stocking, which we did. So, this would indicate that.

Operator: David Risinger, Morgan Stanley.

David Risinger - Morgan Stanley: So I have a couple questions, and first, I wanted to offer my congratulations to Francis. I haven't had a chance to do that yet, so congrats on your new role, Francis, and best of luck to you, Elliott. With respect to the DPP-4s and GLP-1s, can you comment on the upcoming cancer workshop, and how you see that, and what you think of the FDA's scrutiny of a potential association with the cancer risk? Then second, with respect to dapagliflozin, and I guess this is more of a commercial question, but the way that AstraZeneca characterized the ramp in Germany was that the infection risk associated with dapa isn't limiting uptake at all that dapa had ramped in the first 10 weeks in Germany at a rate that was very similar to Januvia's launch. And so I guess my simple question is, do you think that the investment community is overly concerned about infection risk limiting the commercial uptake of dapagliflozin? Thank you.

Beatrice Cazala - EVP, Commercial Operations: We'll let's move onto first about FORXIGA in Germany, and actually in Europe, where we are very pleased about what we are currently seeing. We are off to a very good start in the markets where we have launched. If we look at Germany, specifically, the feedback we get from the physician and from the patient are extremely encouraging. So, what you have from us, we concur with. When we talk about the placebo side effect, what we hear from our physician and the patient is that they are manageable. So, we haven't' seen any issues with the update, linked to the side effect profile. On the contrary, what we are hearing and again it is very early and anecdotally is that the patient and the physician are satisfied with the profile both in terms of the HbA1c reduction, but also with the additional benefit of weight loss and blood pressure. And actually the weight loss, the comments we hear is that it's happened, it's a fast onset. So, within the first month patient are coming back and making comments to their physician. So, a very strong first customer experience which we understand is the base for the relatively happy update. Now, again its early days. We also know that the diabetologist are particularly happy with the mode of action which is differentiated and new alternative in addition in monotherapy as well as in combination where we see the source of business as a non-insulin dependent mechanism.

Elliott Sigal, M.D., Ph.D. - EVP, CSO and President, R&D: Thank you very much David and thank you for your best wishes. Let me say a word about this whole area. So, this pancreatitis are causing pancreatic carcinoma, and you well know, ever since the GLP-1 and DPP-4 inhibitors came out, there have been reports to the FDA patients to develop pancreatitis. While treated with these patients of course, these patients sort of risk anyway of pancreatitis, and of course all the agents that are both GLP-1 and DPP-4 has actually carried the warning about pancreatitis which of course is a reflection of these reports. I think it's always important to say these reports are regarded as hypothesis generating, because the way they are collected and they are not hypothesis confirming and I must say we have no evidence from either our non-clinical or our clinical sources to support a causal relationship to impact between the treatment with these medicines and pancreatitis, and of course we have done exhaustive toxicology using the standard techniques. We have seen nothing either with ONGLYZA or BYETTA or BYDUREON. In particular, there is no increase of pancreatitis observed in randomized clinical trials, and a number of alternation studies in healthcare databases have also demonstrated no effect. So taken together based on all of this, we together with our partner AZ, of course, are very confident that of the positive risk benefit profile of the drug and I think we are interested to hear what the science when its reviewed, because we know that other sponsors of these medicines have the same result that we have. That we can find no causal link, so we are looking forward to that scientific discussion, just a comment on pancreatic carcinoma, it's very similar there as we find no link either in our annual studies and of course we have done carcinogenicity studies for two years. We see nothing there or in the clinical studies. I will comment a recent paper which of course stirred up some discussion on this from partner and colleagues. We find this actually quite difficult to interpret and there's significant limitations around their – both their link with the animal studies and of course the way they've used their patient group. So we are going to be presenting some data I believe at this FDA meeting and say we look forward to seeing at the Science Review.

Operator: Marc Goodman, UBS.

Marc Goodman - UBS: Lilly yesterday mentioned that there was some extra cost in their business due to the donut hole. I was curious whether that was looking like it was going to be more of a hit this year than you thought it was going to be when you started the year? Second, on ORENCIA, can you talk about whether that product has been impacted at all by the new launch of the (indiscernible) and if there was any stocking or whatever? I know you mentioned something in your prepared remarks, but I missed $36 million, I didn't hear exactly what that was. Then third, you talked about the DPP-4 class. We've all seen it slow down. I was curious if you had a hypothesis towards why is it just the lot of big numbers? Thanks.

Charles Bancroft - EVP and CFO: In regards to the donut hole, I mean, the donut hole costs are really a reflection of the portfolio. It depends upon just the product and which ones are taking by Medicare patient. So we haven't really seeing anything different from our original plan. So I can't comment on beyond that. In regard to the Medicaid reversal of the $36 million, that relates to as states continue to provide us with the billing we review that vis-a-vis our accruals and assumptions that we made when we originally established and so it's just basically a true-up of some of our prior year accruals.

Giovanni Caforio, M.D. - President, U.S. Pharmaceuticals: This is Giovanni. Let me make a couple of comments. First on the performance of ORENCIA, we had very strong performance of ORENCIA in the U.S. in Q1 with significant growth of 25% over prior year. That was driven by the successful launch of SubQ which generated significant growth in 2012. It's early to fully assess the impact of the launch of (indiscernible). We have seen some increase in share primarily in the switch market which has had sort of an impact on all players in the subcutaneous market but the impact on us specifically has been very modest and we're very pleased that we've become the third most prescribed SubQ agent in the U.S. market. With respect to your comment on the growth on DPP-4 slowing down, there may actually be a number of different factors impact that. As a reminder, the only comment I would make is part of the accelerated growth that we had seen in 2012 was linked to the significant decrease in the TZD market with the entry to generics in that area. So, there has been a transition of prescription from one class to the other. The growth has slowed down,, but it continues to be healthy.

Operator: (Alex, BMO Capital Markets).

Alex - BMO Capital Markets: Following up on your comments regarding growth of BYDUREON and the SGLT2. I was wondering how you see this market evolving. Specifically do you see the SGLT2 as being used ahead of the GLP-1 on par with DPP-4. If you could talk about how you plan to position your diabetes products. And a follow-up if I may, my understanding is that you've closed the Amylin site in San Diego and there have been significant headcount reductions regarding the revised agreement for ABILIFY are there any major opportunities for cost savings as the ELIQUIS launch ramps up?

Charles Bancroft - EVP and CFO: Let me comment on Amylin. So when we initially purchased Amylin we assumed in deal terms and in our guidance that we gave that there would be certain synergies related to that acquisition. So the San Diego the overall cost opportunity was already sort of reflected in the guidance that we had provided.

Beatrice Cazala - EVP, Commercial Operations: So you were asking the question about how to think about SGLT2 and GLP-1 I think what we are looking at the global market and then we might want to comment about the U.S. is that depending also on the final labels and the access obtained those class of products. We may end up having very different due date. So that’s what we want however from the scientific standpoint we clearly believe that SGLT1 provide good alternative for patients that have need of a product that will combine, would benefit as well as benefit on blood pressure and weight loss. So clearly in that space of the physician and patient that will agree on an oral treatment for the long term GLP-1 now when you look at the benefit of GLP-1 especially when they can be used on a weekly basis and potentially later on a monthly basis that creates a very different set of opportunities. When we look at behaviors of patient, you'll find clearly a space prior to insulin, but you also find a space in the number of patient that do not want treatment every day. So, there are different patient profile, we are saying that we will be able, having the chance of the board portfolio to combine the optimal benefit for the Company and for the patient having the possibility to play in those two arena.

Giovanni Caforio, M.D. - President, U.S. Pharmaceuticals: Yeah, just to add something on GLP-1s in the U.S. market. We see significant opportunity for continued growth of GLP-1s. They are currently prescribed to less than 10% of diabetes patients in the U.S. and they've been prescribed at the beginning primarily by endocrinologists. In fact, the prescribers base at this point is much more narrow than you see with classes like DPP-4s. The class is growing very rapidly. We believe that will continue, because with the availability of BYDUREON as a weekly agent, the good efficacy and the very good tolerability profile of BYDUREON, there clearly is room for increased penetration in primary care, that's exactly what we are focusing on and that is what we are beginning to see happen. So, we see continued potential for growth with GLP-1s.

John Elicker - SVP, Public Affairs and IR: Thanks very much Alex. I think that's all the time we have. Appreciate everybody's joining us for the call this morning. Before we close, I'd like to turn it back to Charlie for any closing comments.

Charles Bancroft - EVP and CFO: Thanks everyone for your questions. Again, our first quarter was a good start to an important year, one in which our focus is on commercial execution and delivery of our diversified pipeline. Thank you very much.

Operator: This concludes today's conference. Thank you for your participation.