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Msg  3266 of 4347  at  6/26/2020 2:56:04 PM  by


Bristol-Myers Squibb Company (BMY) CEO Giovanni Caforio on Special Call (Transcript)....


Bristol-Myers Squibb Company (BMY) CEO Giovanni Caforio on Special Call (Transcript)

About: Bristol-Myers Squibb Company (BMY), BMYMP

Earning Call Audio

Bristol-Myers Squibb Company (NYSE:BMY) Special Call June 26, 2020 11:30 AM ET

Company Participants

Tim Power - Vice President, Investor Relations

Giovanni Caforio - Chairman & Chief Executive Officer

Samit Hirawat - Chief Medical Officer, Global Drug Development

Chris Boerner - Chief Commercialization Officer

David Elkins - Chief Financial Officer

Conference Call Participants

Andrew Baum - Citi

Seamus Fernandez - Guggenheim

Steve Scala - Cowen

Matt Phipps - William Blair

Tim Anderson - Wolfe Research

Olivia Brayer - Bank of America

Carter Gould - Barclays

Prakhar Agrawal - UBS

Terence Flynn - Goldman Sachs


Ladies and gentlemen, thank you for standing by and welcome to today’s program entitled Bristol-Myers Squibb Three-Part Investor Series: Immunology and Cardiovascular. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder, today's program may be recorded.

Now, I'd like to introduce your host for today's program, Tim Power, Vice President of Investor Relations. Please go ahead, sir.

Tim Power

Thanks Jonathan, and good morning, everyone. Thanks for joining us again today. This morning, we'll have the concluding session from our Three-Part Investor Series focused on Immunology and Cardiovascular. And once again, we'll have a presentation followed by a Q&A session. So, if you are not participating in the webcast, you can go ahead and download the materials at

Joining me this morning for the presentation are Giovanni Caforio, Chairman and Chief Executive Officer; Samit Hirawat, Chief Medical Officer, Global Drug Development; Chris Boerner, Chief Commercialization Officer; and David Elkins, Chief Financial Officer. Also, as in the prior session, we’ll have others here for Q&A in particular, Nadim Ahmed, President Hematology and Rupert Vessey, Executive Vice President, Research and Early Development, as well as some of the other members of our Research and Clinical teams.

Before we get started, I'll read our forward-looking statements. During this call, we will make statements about the company's future plans and prospects that constitute forward looking statements.

Actual results may differ materially from those indicated by those forward-looking as a result of various important factors, including those discussed in the company's SEC filings. These forward looking statements represent our estimates as of today and should not be relied upon as representing our estimates as of any future date.

We specifically disclaim any obligation to update forward-looking statements, even if our estimates change. We may also discuss certain non-GAAP financial measures, which are adjusted to exclude certain specified items. Reconciliations of those non-GAAP financial measures to the most comparable GAAP measures are available on

So, let's go to slide three, please. And over to you, Giovanni.

Giovanni Caforio

Thank you, Tim, and thank you all for joining the third and final part of our investor series.

Slide four is a reminder of the breadth and depth of our portfolio and how we are driving innovation across therapeutic areas. In the first two sessions, we had the opportunity to highlight immuno-oncology and hematology, starting with the strength of our in-line brands, focusing on ongoing launches, and describing the multiple opportunities that exist through the lifecycle management programs of our late-stage assets, as well as the early part of our pipeline.

During our last session today, I'm really excited to share with you the opportunities we have to broaden our immunology franchise, including our broad clinical development programs for our TYK2 inhibitor and our S1P agonist, Zeposia. Additionally, we will provide more color on our newly highlighted Phase 3 ready anti-IL-13 molecule, cendakimab. Finally, we will discuss the potential to continue our leadership in CV with our Phase 2 Factor XIIa inhibitor.

Now, let me turn it over to Samit. Samit?

Samit Hirawat

Thank you, Giovanni. Good morning, good afternoon, and good evening, everyone, and welcome to Day Three. Today, I'm excited to have the opportunity to share my thoughts on our expanding immunology and cardiology portfolio.

Let's go to slide six. We spent a lot of time over the previous two days talking about immuno-oncology and the hematology portfolio, and today, I'm going to talk more about immunology and cardiovascular pipeline.

On slide seven, let me start with the immunology portfolio. Here, you can see the breadth of our programs in immunology, with several ongoing registration studies and proof of concept studies.

Now let's start with TYK2 Inhibitor. On Monday, you heard Rupert talk about our scientists exploring TYK2 as the target, using human genetics and foundational data sets. And then, using really good medicinal chemistry, they were able to construct a molecule that selectively binds to the target.

Building on that, I'm going to tell you more later on, about how we're developing our TYK2 inhibitor in the clinic for a broad set of autoimmune diseases. You've seen recent data read-outs as well as co-data as well. Now, I'm going to tell you a little bit more about the opportunities we have in IBD.

And then we have a new medicine, as Giovanni mentioned, in Cendakimab, which we haven't talked about before, so I want to share with you our plans and why we believe it could have a differentiated profile in patients with Eosinophilic Esophagitis.

With all of that in mind, what this slide is showing you, is that over the next three years or so, we're going to have top line readouts for the lead indications for two new medicines; the TYK2 inhibitor BMS-165 and Cendakimab, as well as several proof of concept read-outs for the TYK2 inhibitor, which will help inform the Phase 3 path, the important diseases, including ulcerative colitis, Crohn’s disease, psoriatic arthritis and lupus.

Slide eight please. So let's talk a little bit more about TYK2. So I'm really excited about the potential for our TYK2 inhibitor. It has the potential to be differentiated. And we think it could be a really important opportunity, because of the unique chemistry developed by our internal teams.

Let me point to a couple of things that are really important about TYK2. Firstly, it is important to highlight, that our TYK2 inhibitors selectively binds to the pseudokinase domain. Secondly, inhibiting TYK2 through this domain leads to a very specific inhibition of three cytokine pathways, IL-12, IL-23 and type I Interferon.

On the other hand, the JAK inhibitors bind to the activator domain and have inhibitory effects on the multitude of downstream cytokines. And as you can see in the table on the right, the IC50 BMS-165 is a nanomolar concentration where it does not have an impact on the pathways such as the Eco pathway impacted by the JAK inhibitors.

Turning to slide nine, in addition to the in-vitro data on the previous slide that I just showed, we have conducted additional experiments to investigate the differentiation of BMS-165 versus the JAK inhibitors. As you can see on this slide, the concentration needed for BMS-165 for TYK2 pseudokinase domain inhibition is in nanomolar ranges, whereas the concentrations required for JAK inhibition cannot be achieved in the clinical studies. On the flipside, the JAK inhibitors are not known to hit the pseudokinase domain, even at high concentrations. And so these data begin to point towards the differentiation of our BMS-165 TYK2 inhibitor from the JAK inhibitors.

Turning to slide, 10, the preclinical data, then supported by the clinical data. In the clinical setting, the TYK2 inhibitor does exactly what you'd expect it to do. You can see on the left side of the slide, that by inhibiting TYK2 and then through downstream effects on IL-12 and IL-23, we see efficacy in both biologic naive and expose patients with psoriasis, which is very similar to what you get with biologics and truly better than what you get with the existing, small molecules.

More importantly, we're also seeing a side effect profile, that looks different than what you see with JAK inhibitors in the Phase 2 study. There is no evidence of dyslipidemia, liver abnormalities, lymphopenia, thrombotic events and these are usually observed with the JAK inhibitors that we know of.

Next slide, please. So how do we prove the profile in late-stage studies? Well, in the near term, we're going to start to see the pivotal trial data from the Phase 3 studies in psoriasis readout starting later this year. To remind you of some of the features of the trials, there are two Phase 3 trials generally required for new indications like this.

Both of them are evaluating BMS-165 versus placebo at the 16-week time point and beyond with the crossover that occurs. But importantly, you'll notice that in both trials, there is a comparison versus Apremilast, which is the standard of care. This means that we'll be able to see not only how our TYK2 inhibitor performs against the placebo, but also against that standard-of-care oral medicine used to treat patients today.

Now turning on slide 12, what's really exciting about our TYK2 inhibitor is not that it's just differentiated and could potentially be best-in-class oral medicine for psoriasis. So that we know that we can impact diseases mediated through IL-12, IL-23 and type 1 interferon, such as psoriatic arthritis, SLE, ulcerative colitis, Crohn's disease and etcetera.

We have built a life cycle management program and are generating Phase 2 data to help establish proof of concept for these diseases that could open up opportunities well beyond psoriasis. And so to tie it all together, TYK2 inhibition has the potential to be really broad-based medicine in auto-immune diseases, starting this year of course, with psoriasis data, but with many more opportunities to follow beyond that.

So changing gears on slide 13. Let me take a minute to talk about another medicine we have in development in immunology and that is the Zeposia ozanimod and focus on why it has the potential to play an important role in Inflammatory Bowel Disease or IBD? Zeposia is a selective S1P receptor agonist that reduces the reach of autoreactive lymphocytes to the gut.

So as you know, we've already announced that Zeposia has met its primary endpoint in ulcerative colitis. Let me tell you that I'm really encouraged by the data we've seen that are highly statistically significant and clinically meaningful. And we are also seeing really positive results across our secondary endpoints including endoscopic improvements.

And of course, it's also important to remember that the favorable safety profile is already well understood and reflected in the MS label. So on the right-hand side of the slide; some of those features are highlighted and include no black box warning, no first dose cardiac monitoring, no broad-based ocular testing, no genetic testing.

Now with respect to ulcerative colitis, we look forward to presenting the results at an upcoming medical meeting and discussing the results with health authorities, but of course, it doesn't end with ulcerative colitis because as you can see on slide 14, we have an ongoing Phase 3 program in Crohn's disease.

We believe that Zeposia has the potential to play an important role in the treatment of Crohn's disease, where there is still a high unmet medical need. On the left side, the Phase 2 STEPSTONE study demonstrated encouraging endoscopic responses in both biologic-naive and experienced patients.

Considering similar trials in this patient population, the results of endoscopic response of 23%, as you can see here, are greater than what we would expect for patients treated with placebo, which is about 11% to 14%. The mean deduction of Crohn's disease activity index of about 130 points is also greater than what we would expect for placebo of approximately 50 points. The ongoing Phase 3 YELLOWSTONE study is being conducted in patients with moderate to severe active Crohn's disease with dual primary endpoints, similar to what we had in the ulcerative colitis trial, first, looking at remissions after 12 weeks induction period and then after 52 weeks of maintenance. The studies are currently enrolling with data expected in due course.

Now turning to slide 15. Now before I talk about cendakimab, let me first talk about eosinophillic esophagitis and the significant unmet medical need in this space. So esophagitis like this affects many patients around the world, and is particularly challenging disease as it has the potential to significantly impair patients' quality of life. Current treatments would include diet, proton pump inhibitors and steroids. However, there are complications, and risks associated with those options and the disease is not well-managed.

So for some patients, it can truly be life-altering disease, because as the disease progresses, it can lead to not only inflammation, but also changes in the tissue of their esophagus that can lead to things like inability to eat and the resulting weight loss and emaciation. And many patients will eventually require surgical intervention. We believe that cendakimab has the potential to be an important treatment option for these patients and let me to you why on slide 16.

Here, you can see an illustration for the mechanism of action for cendakimab. This is a drug that targets IL-13 and selectively binds to the IL-13 ligand. Importantly, it inhibits binding of the ligand to both IL-13 alpha-1 and alpha-2 subunits. This is important because the alpha-2 subunit is associated with fibrosis and remodeling of the tissue. And because of this, cendakimab has the potential to reduce the inflammation associated with eosinophillic esophagitis, and additionally has the potential to reduce fibrosis and the tissue damage associated with this disease.

So turning to slide 17, from a clinical perspective, what do we know so far? So, in the Phase 2 study, cendakimab at both doses that were tested was associated with a significant reduction in mean esophageal eosinophil count, which was a primary endpoint. A significant endoscopic improvement was seen at both doses of cendakimab as measured by EoE EREF score. At the 360-milligram dose, cendakimab demonstrated meaningful trends in clinical improvement using the dysphasia symptom diary as well. Now this was not powered analysis, so this is a secondary endpoint.

Turning to slide 18. Furthermore, generally well-tolerated safety profile with cendakimab was demonstrated using the 16 -- during the 16-week period, as well as carried forward to the 52-week open-label extension with the most common adverse events being headache, arthralgia, upper respiratory tract infection and nasopharyngitis. What this means is we already have a proof-of-concept from this Phase 2 study, which demonstrates activity in the disease, and now this gives us the confidence to start a registration program for cendakimab and eosinophilic esophagitis.

So to summarize on this part, we believe cendakimab could potentially be a differentiated medicine for patients with eosinophilic esophagitis who are in significant need of new treatment options. We've established proof-of-concept in the Phase 2 study, and we believe that cendakimab has the potential to play a role beyond this indication in a range of autoimmune diseases, which we will continue to evaluate over time.

So moving to Cardiovascular Disease Pipeline on slide 20. As you know, BMS has a legacy of developing transformational cardiovascular medicines, including Plavix and Eliquis. Today, I'm going to talk about our new opportunity with Factor XIa inhibitor and why we believe this could be another transformational medicine for the treatment of thrombotic diseases.

Starting on slide 21. Here is why we believe it is important to develop a medicine life Factor XIa inhibitor. Firstly, with Factor Xa inhibitor, we've achieved significantly better efficacy and significant reduction in bleeding and have made great advances in that area. At the same time, we know there is more we can do to improve the current rate of bleeding because of which many patients are either not treated at this time or are under dose.

In addition, we know that Factor Xa inhibitors have shown benefits when combined with antiplatelet therapy, but these are not used because there is significant bleeding risks associated when combining Factor Xa inhibition with antiplatelet agents. So if we can develop a medicine that has the same efficacy, but improved bleeding than the Factor Xa inhibitor, we can help substantially more patients with cardiovascular disease.

Turning to slide 22. Let me share with you a little bit more. Let me share with you how Factor XIa inhibitor is different mechanistically and why we believe that it could result in lower bleeding risk than the current options today. On this slide, you can see the two distinct pathways in the coagulation cascade. The intrinsic pathway in gray on the left of slide and extrinsic pathway, on the right. The two pathways then converge to form the common pathway in green.

In simple terms, if you can think of the extrinsic pathway as being activated by external trauma, for instance, when you get a paper cut. Whereas the intrinsic pathway is activated by trauma inside the vascular system and can be activated by platelets-exposed endothelium, chemicals, collagen, et cetera. And as you can see, Factor Xa sits in the common pathway, which ultimately can be targeted to inhibit both pathways.

Our hypothesis is that by inhibiting just the intrinsic pathway through Factor XIa targeting, you can potentially reduce clotting while still allowing your body to heal from external injuries. Furthermore, Factor XI can be activated by thrombin via a positive feedback loop which amplifies thrombin generation and leads to a stable clot, which has an impact on the bleeding time. Now taken together, we believe that Factor XIa inhibitor has the potential to have a differentiated profile with a reduced risk of bleeding.

Turning to slide 23. Beyond the mechanistic arguments, we have evidence to support the hypothesis based on genetic and epidemiologic studies and preclinical data. On the left, you can see that people who have a deficiency of Factor XI are at approximately 40% to 50% reduced risk of cardiovascular events than the general population, and they experience less spontaneous bleeding.

On the right-hand side, you can see preclinical work we've done that shows that when you take Factor XI inhibitors versus Factor Xa inhibitor, it seems to present a similar level of efficacy with respect to thrombus rate reduction, but with less impact on bleeding, as demonstrated by bleeding time with the Factor XIa inhibitor.

Given where it sits in the coagulation cascade and based on the generics and epidemiological studies and the preclinical data, we believe Factor XIa is a very important target to build further on to improve outcomes for patients with cardiovascular disease.

Turning to slide 24, let's think about what the opportunity would be if we truly have the profile we want with efficacy similar or better than Factor Xa inhibitor, but with a favorable bleeding profile.

First, there may be an opportunity to improve the current anticoagulation paradigm for Factor Xa inhibitors used today. Secondly, there may be an important opportunity to expand the use of anticoagulants to disease states where they aren't really used today by being able to safely combine with anti-platelet therapy and deliver, number one, improved efficacy; and number two, without a significant increase in bleeding.

With that in mind, we have two ongoing trials today to understand if either or both of those options of increased efficacy and decreased bleeding may be available to us. In secondary stroke prevention, where the current standard of care is anti-platelet therapy, we are looking at Factor XIa inhibition on top of the dual anti-platelet therapy. And in total knee replacement, we are looking at Factor XIa inhibition as a monotherapy.

We're looking forward to seeing the data starting in 2021, which will inform how we move forward into Phase 3. Depending on what the data shows, there is a potential for Factor XIa inhibitor to play a role across a range of serious thrombotic diseases, both arterial and peripheral vascular.

So, in closing on slide 25, we are very excited about our emerging immunology pipeline with Phase 3 psoriasis data from our TYK2 inhibitor reading out at the end of this year and early next year that has the potential to be the best oral therapy.

We are encouraged about the profile of our TYK2 inhibitor and potential broad applicability across various immunologic diseases. Zeposia offers a best-in-class label with no first dose monitoring requirement or ocular testing in MS, which Chris will talk about further, and has also demonstrated a highly statistically significant result in ulcerative colitis.

We look forward to finishing recruitment in Crohn's disease program and seeing the promise of this medicine for a larger population of IBD patients. Cendakimab is a new asset that is potentially differentiated for eosinophilic esophagitis with a Phase 3 program starting later this year or early 2021. And lastly, we have an important opportunity to renew our cardiovascular portfolio and build on our leading anticoagulation agent, Eliquis.

Let me now turn it over to Chris to share his perspective. Thank you.

Chris Boerner

Thanks Samit. Good day everyone. I'm going to continue where Samit left off and discuss the opportunities we have commercially in immunology and the cardiovascular space. Let's go to slide 27.

Before kicking off, let me say that both of these franchises provide important opportunities for growth based on the continued strong in-line business with Orencia and Eliquis and our newly launched position in relapsing/remitting MS with Zeposia. These businesses establish us well to grow with Zeposia lifecycle opportunities in IBD; TYK2, initially launching in psoriasis, but with a number of additional LCM opportunities; a new Phase 3 Cendakimab for eosinophilic esophagitis; and Factor XIa, all of which I'll cover on subsequent slides.

Let's go to slide 28. Let me start with immunology. Immunology is an important business area for us today based on the $3 billion business globally we built with ORENCIA across three indications; the largest being rheumatoid arthritis. The success of this business has hinged on our ability to do a few things really well: follow the science in terms of identifying patients most likely to benefit from ORENCIA and then effectively engage in those sections; building on our clinical data with real-world evidence; and establishing a strong position from a market access standpoint.

All of these become increasingly important as we expand this franchise. You can see the opportunities for this expansion on the right-hand of this slide, in the near-term with ZEPOSIA in UC, based on the data we announced recently and which Samit just highlighted; and TYK2 in psoriasis. And then in the slightly longer term, continued opportunities for both products in IBD as well as with TYK2 in lupus and psoriatic arthritis. And as noted here, the new opportunity we have with cendakimab in Eosinophilic Esophagitis.

Let's move to slide 29. Clearly, an important component of this immunology story is ZEPOSIA, with its initial launch in MS. MS, as I suspect, many of you know is an important chronic disease with over 1 million relapsing and remitting MS patients diagnosed globally. From a business perspective, I would highlight four points about this market.

First, while there's been a lot of commercial activity in this space, there is still significant need for oral agents with improved safety and efficacy. Second, this is a highly concentrated market with roughly 3,000 healthcare providers in the U.S. making up the majority of the business.

Third, these physicians rely on their own and broader real-world experience to drive treatment choices. There are no guidelines that effectively drive the adoption of new products. And finally and importantly, because this is a chronic disease with many younger patients, patients play an important role in treatment choice.

Together, these four factors speak to the opportunity we have with ZEPOSIA and the importance of some of the factors, I mentioned previously that have driven our success thus far in immunology, notably, the ability to effectively engage patients, market access and more generally strong commercial execution.

Since approval, we’ve gotten great feedback from customers regarding how ZEPOSIA’s profile fits into this market. Notably, we believe we have efficacy at least as good as existing oral agents, based on traditional endpoints, we're the only S1P to prospectively show improvement on increasingly important novel brain endpoints of efficacy. And we have a best-in-class safety profile, specifically around no need for first dose cardiac monitoring, no requirement for broad-based ocular testing and no need for genetic testing.

While it's still very early days, the launch is going well. We have a very experienced team, and these field resources are supplemented by very strong patient support and market access capabilities. One final point on ZEPOSIA, while we have launched in the U.S., outside of the U.S., we anticipate launching in July in Germany, and look forward to future health authority reviews.

Let's move to slide 30. While we're obviously very excited about ZEPOSIA in MS, we think there's an important opportunity with this agent to transform IBD, both in the pre and post-biologic space. IBD is a large opportunity, as you can see on the right-hand side of this slide, with significant unmet needs. While biologics and JAKs play an important role today, based on improved efficacy over older agents, they carry with them considerable logistical and safety baggage that has limited their impact for patients.

We think the data in UC for Zeposia that Samit highlighted provide an important opportunity to be a best-in-class S1P and I'll talk more about that on the next slide. And we have the potential to expand into Crohn's disease both with Zeposia based on the Phase 3 studies enrolling now, as well as with TYK2.

Let's move to slide 31. To better understand why we're so excited by -- Zeposia and UC, I think it's important to tangibly understand the unmet need here. While UC has a heterogeneous patient population, the majority are relatively young, active and female. And the life of these patients with moderate to severe UC is pretty miserable. Most are subjected to multiple; in some cases 12-or-more bowel movements a day. Flare-ups are frequent and painful and have a significant impact on day-to-day functioning.

Finally, patients are subjected to a life of cycling between multiple therapies with the end result for many being surgical bowel resection. Add it all up the socio-psychological impact of this disease is quite significant. Unfortunately, while there have been a number of products approved in this space, existing agents still leave considerable room for improvement across multiple dimensions.

Patients across the spectrum of disease are subjected to prolonged steroid use with the associated comorbidities. While biologics provide important efficacy over older agents, these products, along with newer JAK inhibitors, carry significant side effect baggage, including increased risk of severe infections, downstream malignancies and fertility concerns, among others.

These side effects create very real apprehension among patients who are faced with the chronic use of these medications. Thus, there's a real need for novel mechanisms that can deliver strong efficacy, but that are both convenient and do not carry the safety baggage, I just referenced. What we like about the data for Zeposia, we've seen in UC are we're seeing clinically meaningful efficacy competitive with existing biologic therapies and that efficacy has been consistent across both clinical and endoscopic endpoints.

We've seen both in MS and in the UC data a relatively clean safety profile that avoids the issues that have led to black box warnings for other agents in the space. We've got a convenience once-daily oral dose. And in a disease where patients can be expected to cycle through different modalities, either because of waning efficacy or in the case of biologics, immunogenicity, Zeposia will be a first-in-class S1P in IBD. As Samit noted, we look forward to presenting these data at a future medical conference and making this product available for patients.

Let's now move to slide 32. As noted here, Zeposia in UC is the first in a series of opportunities we have to build a differentiated GI profile in immunology. As Samit mentioned, we are enrolling the Phase 3 Zeposia program in Crohn's disease. I would note here that, the unmet need in Crohn's is very similar to that I've just described in UC.

The newest addition to our immunology franchise, cendakimab, gives us an opportunity in eosinophilic esophagitis another area of significant unmet need and a product with broader immunologic applications. And of course, TYK2, which has proof-of-concept studies underway in both UC and Crohn's and could complement our presence with Zeposia in these diseases. So we think these three assets will differentiate us within the GI space and meaningfully add to our presence in immunology.

Let's move to slide 33. I just noticed – noted the opportunity we have with TYK2 in GI. A nearer-term opportunity for us is moderate to severe psoriasis. As discussed with UC, this is a very large disease with significant need for products with better efficacy in a safe and convenient formulation. While biologics have provided an important step forward in treating patients with psoriasis. The logistical challenges associated with these products and importantly the safety profile has constrained their use. In fact, fewer than 30% of patients ever get systemic therapies. Most patients unfortunately are still relegated to less effective topicals.

Based on the Phase 2 data presented in 2018, there's considerable enthusiasm among psoriasis treaters for TYK2. The PASI-75 response rates we saw in that study clearly demonstrated promising efficacy with respect to skin clearance against an active comparator of apremilast.

The efficacy was roughly in line with that theme with CNS, but with a superior safety profile in oral formulation. As a result, we see TYK2 offering a first and best-in-class product that has the potential to create a new standard of care in the pre-biologic treatment space, and we very much look forward to the Phase 3 readout.

For now, we continue to engage with the dermatology community from a medical standpoint. As we get closer to the Phase 3 read-out, we'll continue to build-out commercial infrastructure. And, of course, we continue to support the enrolment of our expansion opportunities.

Let's move to slide 34 now. We're going to switch gears and talk about our CV portfolio and specifically Factor XIa.

Slide 35, please. As you all know, BMS has a long and very successful history in the CV space, going back to Plavix, and of course today with Eliquis. And if you look at both of those products, and in particular, Eliquis, we've clearly demonstrated the ability to build a very big and thriving business in this space. And it's helpful to recall that we've made Eliquis the number one OAC globally, in spite of being third to market.

And as our performance globally illustrates, we have continued opportunities to grow this business, solidifying our leadership in the OAC class and expanding into undertreated and undiagnosed segments. It is on this infrastructure that we plan to launch Factor XIa.

What we like about Factor XIa is, as Samit said, it's a validated antithrombotic target that has the potential to address two continued unmet needs in the cardiovascular space, specifically, the risk of secondary events, notably stroke. And the need for improved efficacy with lower toxicity, notably lead grades.

Obviously, it's still early days. We need to see the Phase 2 data read-out, but I think it's hopefully clear that we have the commercial experience and infrastructure to capitalize on the opportunities we have with Factor XIa.

Slide 36, please. Let me close by noting a few things. First, we have a strong business today business today in both immunology and CV. Zeposia in MS is the first of a number of life cycle and new product opportunities we have to significantly improve the lives of patients with a range of immunologic disorders.

Diseases like moderate-to-severe psoriasis and IBD are areas of significant unmet need. And we like the profiles we see emerging with these programs. And look forward to seeing the readouts of ongoing studies.

Finally, we have real opportunities to further improve the outcome for patients with thrombotic diseases. And here too, we look forward to seeing the outcome of our Phase 2 studies with Factor XIa.

With that, let me please turn it over to David.

David Elkins

Thank you, Chris, and hello, everyone. I want to take a few moments to share with you how we view the financial strength of the company today and moving forward.

As you will see on slide 38, we've covered a lot over the past week. As you've heard, we have multiple value drivers with our current strong brands, late-stage pipeline and life cycle management programs and exciting potential next wave of medicines. I won't repeat the details of those elements now, but I do want to point out that it doesn't end there. We additionally have an opportunity to capture significant synergies and employ considerable financial flexibility as a company.

On slide 39, you will recognize the slide which Giovanni shared with you on Monday. First, when you take the recent and near-term expected new launches together, those listed here on the right, we believe we have significant commercial potential with approximately $20 billion in non-risk adjusted revenue in the second half of the decade.

Not only that, but we also have at least six promising new medicines currently in or close to full development, each individually with the opportunity to become an important medicine with significant commercial potential. Also by the end of decade, we fully expect that our diverse early-stage pipeline will be maturing and bearing fruit.

Finally and importantly, business development remains a key component of our strategy. And our financial strength enables us to continue and complement our internal pipeline with external opportunities. And I'll touch base on this in a moment. But first, I'd like to spend some time on now, where we are with our integration and synergy realization.

Moving to slide 40. As you heard Giovanni say, we're extremely pleased with how our integration activities have been going. First and most foundational is our cultural integration, which we found that working remotely through COVID-19 environment has actually accelerated our cultural cohesiveness, as it provided a common goal and geographic agnostic way of working for all employees.

This made it easier for the company to unify under common vision – mission and set values. We're pleased to see that overall, our employee engagement levels are trending positively.

From a talent and organization perspective, we quickly identified our first levels of leadership who then built strong teams. We're pleased to say that now nearly 90% of the new combined organization has in place in their roles.

Since talent is so critical to our success as a company, our change management plans were executed to minimize disruption and increase engagement. And as you heard from Rupert and others mentioned, we now have even greater access to talent through our stronger presence in key biopharma hubs.

And finally, as it relates to integration processes, project, sites and systems, we made tremendous progress on all fronts. Our global site selection process was completed and announced early on, and site consolidation efforts continue as planned.

Also, our procurement integration continues, building on our existing capabilities and enabling approximately $1 billion of external sourcing synergies. Taken together, these and other important integration activities are enabling $2.5 billion of synergies by the end of 2022, with approximately a third of these on track to be realized this year.

Moving to slide 41. I'll now switch to capital allocation, where we have a very disciplined approach. As we've said, we are committed to reducing the debt, targeting less than 1.5 times gross debt-to-EBITDA by the end of 2023. BMS also remains committed to a dividend, as demonstrated by the company's over 10-year history of annual dividend increases. And again, business development remains a top priority for us as we believe in-sourcing innovation, both internally and externally, which leads me to my next slide, 42.

The company has significant financial flexibility to invest in future innovation. Q1 demonstrates a significant cash generation of this business, with approximately $4 billion in operating cash flow and an ending balance of approximately $19 billion in cash and marketable securities.

Over the next three years, our business will generate a significant amount of cash of approximately $45 billion and expected free cash flow. We have several planned outlays, including approximately $10 billion in upcoming debt maturities and approximately $12 billion in dividends, modeling our current dividend rate. And we continue to plan to pay the approximately $7 billion to CVR holders upon realization of the three specified regulatory milestones.

Even considering these important payments to debt and equity holders, our strong cash generation will continue to strengthen our already solid balance sheet position. This provides us a significant flexibility to consider business development opportunities as we see them. I'll explain more about the lens through which we view these and assess these opportunities on slide 43.

As I said, we're committed to accessing innovation to compliment our internal pipeline. We see sourcing innovation externally as critical to our strategy with the use of disciplined approach for assessing those opportunities.

First and fundamentally, the deal must make strategic sense, the science must be sound, and of course, the economics must bring future value. Both BMS and Celgene had a long history of partnerships within the biotech industry with academia and of course, with our pharma peers. And we remain a partner of choice, offering creative and flexible approaches that meets the needs of our partners and creates mutual value.

We've created a leading business development organization -- a strategic alliance organization through the combination of BMS and Celgene, which has been consolidated under Elizabeth Mily's leadership with close scientific partnership with Rupert and some scientists. This positions as well we continue our leadership in I/O and hematology and expand our immunology business, complementing our already exciting pipeline there and build out our portfolio in cardiovascular, where we have a legacy of identifying growing best-in-class medicines.

Finally, in neurology, we have a sound set of partnerships that provides a unique approach to early research and development in this space. We are continuously reviewing all opportunities to assess their fit and we'll continue to be very active in this space.

For all the reasons I discussed, now moving to slide 44, I feel really good about the financial strength of the company. We have multiple value drivers in the near-term, and we're well positioned for the future. We have strong commercial capabilities that support the execution of our in-line brands. We've made significant progress on eight expected near-term launches, we have a robust lifecycle management program, which gives me confidence in the pipeline, and we continue to advance and derisk the early pipeline.

And as I talked about earlier, our integration and synergy capture are delivering as planned. These drivers, along with strong cash flow generation, a consistent approach to capital allocation, provide the company with significant financial flexibility as we continue to bring forward innovative medicines to patients.

Thank you. And I'll now turn it over to Giovanni to close out today's session.

Giovanni Caforio

Thank you, David and thanks to the entire management team for highlighting our deep pipeline across our key therapeutic areas. Let's turn to slide 46. We covered a lot of ground this week. And while we could not cover everything, I hope we have provided you with meaningful insights into the company's early and late-stage stage pipeline across immuno-oncology, hematology, immunology and cardiovascular, and how within our own pipeline, we have very important opportunities to renew our portfolio, the wave of innovation complemented by strategic business development.

Moving to slide 47, as I have mentioned several times, I'm even more excited about the promise of our portfolio than I was a year ago. I believe we are well-positioned for the near and the long-term. We have a strong set of inline brands that generate a significant amount of cash flow. We have meaningful near-term growth opportunities, driven by new launches and life cycle management programs. And we have a robust early-stage pipeline, fueled both organically and through external innovation. We hope you found these events helpful and also recognize the significant potential of the combined portfolio.

With that, let's turn it over to the Q&A session. As in prior sessions, we have our leaders on the line ready to address your questions. Tim, would you please open the Q&A?

Tim Power

Thanks, Giovanni. Jonathan, can you open with our first question, please?

Question-and-Answer Session


Certainly. Our first question comes from the line of Andrew Baum from Citi. Your question, please.

Andrew Baum

Thank you. Some questions on the Factor XIa. Could you talk to your confidence in the clinical success of this program? It seems to be significantly -- it seems to be very high to me, given the Mendelian randomization data, the costing cascade data you have, as well as the combined experience you and your partner have in the sale, in terms of how we should think about risk adjusting it going forward?

Second, the dose ranging that you are doing in your Phase 2 is extensive. There's a ten-fold dose window there. I just wonder were there any of the cohorts have been stopped due to the emergence of treatment-related adverse events? And how high can you go here?

And then finally, just with one eye on the anticipated loss of exclusivity for Eliquis, could you talk to potential timing of introduction for both the first venous and then the first Opdivo indication for the drug? Many thanks.

Samit Hirawat

Okay. I'll start off. And then certainly, Chris, if you want to chime in, sort of, feel free. Starting with the -- what our thought process is in terms of the overall clinical success probability, as I said earlier, mechanistically, it makes sense. And as you said, from a coagulation pathway perspective, from genetic epidemiology perspective, we see that as a great opportunity. And as I said, even today, with the available agents, they are being under-dosed or not dosed because of the associated risks due to bleeding.

For Factor XIa, we do believe, because of the specificity of the pathway that is targeted, that is very, very important that we maintain the anti-coagulatory effect, but not really impact the bleeding side of things. And that's what the data are suggesting to us.

In the ongoing studies, we also know that Factor XIa combination with anti-platelet, as I mentioned, is very risky. So that is why that secondary stroke prevention study becomes very, very important in terms of establishing the ability to deliver the combination in those patients. So we believe, from our perspective, the probability of success because of the specificity of targeting the pathway is very high.

With that said now, the second question you asked is, we are doing a multitude of dose ranging, because we needed to select the right doses. And from my knowledge perspective, there was no stoppage of any cohorts due to safety reasons. So we are good with that.

The third question about timing of registration, et cetera. At the current time, what we can talk about is readout of the ongoing Phase 2 program. And as I said, we will start to see the data in the second half of 2021. The two studies are enrolling. But as you can imagine, some of the impact of COVID-19 is going to be realized because we do need the emergency room for stroke patients as they come into the hospital for informed consent and tying all up together with neurologists and etiologists and the all physicians. There will be a little bit of an impact, but the team is well – has planned really well in terms of continuing the trajectory towards enrollment in that trial. So we do think that we will get – start to see the data in 2021 in the second half. Tim or Chris? Thank you.

Chris Boerner

The only thing I would add is just that we still have -- we have obviously a strong sense of urgency around this program. Cardiovascular disease is still the number one killer of Americans. There's still opportunities, as I mentioned in the main presentation to address really two big issues that continue to plague this area, which are how do you avoid secondary events like stroke and how can you continue to improve the therapeutic window. And as Samit mentioned, we're excited about this program. We look forward to the proof of concept in 2021 and we'll obviously move with a sense of urgency.

Tim Power

Okay. Thanks, Chris. Jonathon, can we go to the next one please.


Certainly. Our next question comes from the line of Seamus Fernandez from Guggenheim. Your question please?

Seamus Fernandez

Great. Thanks for the question. And just to echo some of the comments previously, this has been actually super helpful. So really appreciate the additional follow-up. A couple of questions, on the Factor XI, I understand the genetic approach, the challenge is there. But we've also seen some areas where Phase II data then subsequently ended up with some surprises. We've got P2Y12 resistance as an issue.

So just interested, can you walk us through the clopidogrel -- the choice of clopidogrel as the background agent here? I assume that it's just because this is primary standard of care. But I'm just -- can you remind us what the underlying clinical trial was that makes this the choice of therapy?

And then as we think about the risk, can you just compare and contrast the differences of Factor XIa versus TRA, so the Thrombin Receptor Antagonist, which generated a lot of enthusiasm initially around Phase 2 data for sharing clot quite a while back and then ended up in an unfortunate -- almost an unfortunate end result with a higher rates of bleeding? Those are my two questions. Thanks so much.

Samit Hirawat

Thank you. Thank you for asking the questions on clopidogrel. Let me start off, just building on from the previous answer and then certainly come to yours. So apart from what I already mentioned in terms of the generics, etcetera there's also the data that are available from the use of antisense and the impact weighed specifically on an inhibiting Factor XIa and the better outcomes from a cardiovascular perspective.

On your question around why we chose clopidogrel as a background therapy in terms of anti-platelets. If you think about the secondary stroke prevention that is sort of the dual anti-platelet therapy is emerging to be the standard of care. So that is the ASA and the clopidogrel. And that's why it is our randomized trial of clopidogrel plus ASA versus these two agents plus the Factor XI. So that's why we believe that it is appropriately set up. More than 2,000 patients will be enrolled and we'll start to see the data at the end of next year or right after.

Now in terms of the comparison versus the TRAs, I don't have any direct comparisons that we can make. We just have to wait for the readout of the data itself to be able to really make sense in terms of the efficacy with this particular agent, and then we can compare and contrast versus the thrombin-directed agents.

But you remember, when I showed the overall cascade, where the two drugs would be targeting and hitting. So once again, the importance of hitting up in the pathway on the intrinsic-side versus hitting on the common pathway much lower, and then what that could mean in terms of also bleeding times become very, very important.

So those are the factors I would keep in mind. But overall, I think the data will speak for itself. And that's why the Phase 2 trials are very important, which are both very large trials to be able to then guide us towards the Phase 3 program.

Tim Power

Great. Thanks Samit. Jonathan, can we go to the next one?


Certainly. Our next question comes from the line of Steve Scala from Cowen. Your question please.

Steve Scala

Thank you. Two questions. Admittedly, to a small degree, but Bristol's TYK2 is in the JAK family and does impact JAK1, 2 and 3. So Samit, how confident are you that you can avoid the cardiovascular class warning of the JAKs?

And secondly, perhaps for Giovanni, Bristol management should be applauded for focusing on cardiology given almost all of your peers have abandoned the area. But the question is, why isn't the focus even greater? When you look at Bristol sales, five, 10, 20 and 30 years ago, your largest drugs were either in cardiology, diabetes or rheumatology. So, why increase the focus on oncology now when all your peers are doing the same thing when you have proven expertise elsewhere? Thank you.

Samit Hirawat


Giovanni Caforio


Samit Hirawat

I’ll start. Thank you, Giovanni. So thank you. I think, Steve, I don't know where the hitting the JAK1, 2, 3 might be coming from. Because if you look at slide 9, when you are able to go back, the concentrations required for BMS-165 with TYK2 inhibitor to be able to hit JAK1, 2 or 3 are so high from a preclinical in vitro perspective that are not achievable from a clinical perspective. The specificity of the pseudokinase domain is such that it only hits the IL-12, IL-23 and interferon, cytokine pathways. And that also then gets reflected in the overall safety profile.

So we are quite confident from that perspective. But whether we will be able to convey and convince the health authorities that we are differentiated or not will be a matter of discussion. And that's why the Phase 3 profile will become very important. And having that data along with the preclinical data, as well as the mechanistic data that we have generated of comparing and contrasting these molecules preclinically, and having that overall package to have the discussion will become important.

Today, we cannot obviously talk about whether we will have a label of this sort or not. But certainly, we are working very hard to have the differentiation come out through the clinical trial, as well as through the discussions itself. Giovanni?

Giovanni Caforio

Yeah. Thank you. Thank you, Samit. And Steve, let me just say, I agree with you that we have significant expertise in cardiovascular disease. And as we've just mentioned, the success of Eliquis is remarkable. It speaks to our medical and commercial strength in that area. We have a really good partnership to take Factor XIa program further and forward as fast as we can.

And while we haven't really covered our early pipeline in CV, we have a number of really interesting programs that address different parts of the heart failure opportunity and population. Cardiovascular is also an existing area of focus for our business development activities. And so we are constantly looking for opportunities to continue to broaden this franchise, because we agree with you, we're in a really strong leadership position.

Tim Power

Thanks, Giovanni. Can we go to the next one, please.


Certainly. Our next question comes from the line of Matt Phipps from William Blair. Your question, please.

Matt Phipps

Thanks for taking my questions and hosting another great day. Two on cardiology, one following up on the Factor XI inhibitors, just wondering if you can comment on antisense knockdown versus small molecule approach here, I guess pros and cons of each, and your efficient opinions on it? And then on Eliquis, a lot of questions going around currently on the ongoing District Court decision, and any Hatch-Waxman today, so just wondering if you guys can provide an opinion on those?

Giovanni Caforio

Yes, Samit or Rupert, why don't you start with the first question, and I'll address the second one.

Samit Hirawat

Yes. Thank you for your question. I mean, I think that, there are obvious differences between small molecule approaches and antisense approaches in terms of convenience of dosing long history with small molecule optimization compare with antisense. So I think where you can make, a highly selective and specific small molecule that's usually the preferred way to go. Thanks.

Giovanni Caforio

Thank you, Matt. Just to answer your question on IP. So let me just step back and remind you where we are. So first of all, nothing has really changed with respect to our confidence in the strength of IP for Eliquis. We've made that comment before. We continue to feel confident in the strength of our IP situation.

As you will remember, we've settled with 22 generic companies. And the patent trial, which is against the three remaining companies, took place during the fall. And from our perspective, we believe the trial went well. And we're trying – and we're waiting for the ruling from the court.

And so as you know, there have been some questions with respect to the timing, and I just want to remind all of you that the timing of the ruling is really up to the judge. And the court is actually not required to make a ruling before the expiry of the Hatch-Waxman Stay. So it's not uncommon for that to come after.

From our perspective, as I said, we continue to feel really confident about the IP. We're not concerned about an at-risk launch because of our confidence in the IP of Eliquis. We're not going to make any comments about the documents that were unsealed. We believe they speak for themselves. But again, as I started, I'll conclude by saying, nothing has really changed. We're confident in the strength of the IP for Eliquis.

Tim Power

Thanks, Giovanni. Jonathan, can we go to the next question, please.


Certainly. Our next question comes from the line of Tim Anderson from Wolfe Research. Your question, please.

Tim Anderson

Thank you. A couple of questions. You say that TYK2 could be best-in-class. Your own Slide 10 shows efficacy is not quite at the level of newer psoriasis biologic drugs like IL-23. So what are you seeing that would make TYK2 best-in-class? I appreciate that oral availability makes it compelling and probably better than the only other oral out there. But when I think of best-in-class, that usually is a reference to better clinical profile, such as better efficacy or safety or both. So, if I look at something like IL-23s, it seems to me that TYK2 is not going to quite stack up to those.

And then second question on Zeposia in ulcerative colitis, you've only toplined the data. You do mention that the product is competitive with existing biologics. Within that category biologics, not all products are the same; some are stronger, some are weaker. When you say it's competitive in efficacy, does this include the newer best-in-class biologics like -- inhibitor?

Chris Boerne

So, maybe I'll -- maybe I will take that. And let me start with the discussion around TYK2 and where we sit on that program. So, I think as you know, TYK2, the way psoriasis is treated today, you've got a range of topicals all the way to biologics, which are mainly infused products.

And as we think about the opportunity that we have, Derms typically shy away from many of those biologics for a few reasons. While the efficacy tends to be a bit higher than certainly what we see with topicals and even existing oral therapies, there are rather significant safety issues associated with many of those, including black box warnings and there are logistical issues associated with the administration of those products.

So, what we feel is that there's going to continue to be a very important role to play for oral agents in the psoriasis space, where oral agents that can demonstrate efficacy that is on par with biologics, but be much easier to manage from a logistical standpoint for the dermatology community and much more convenient for patients that that space is going a continue to be a very important space and we think TYK2 has the potential to be best-in-class within that category.

And so, we still are very confident based on what we're seeing from the Phase 2 data that was presented in 2018. We very much look forward to the data coming out of the Phase 3 program, but we think there's a real opportunity for this product.

With respect to UC, what I would say is that, while I'm not going to comment on specific newer agents in large part, because we need to see a number of those agents play out in Phase 3. What I would say is what we like about the UC profile that we've seen thus far with Zeposia is that it's an orally administered product that has efficacy that is on par with existing biologic therapies, but with a much better safety profile.

And specifically, we are not seeing the sort of issues associated with serious infections, thrombosis, malignancy that you would typically see with oral JAKs and in fact, have led to black box warnings for those products.

We're also not seeing some of the other cardiovascular issues that have been associated with products in this space. So, by and large, based on what we've seen thus far, we think there's a real opportunity for this agent to play a meaningful role in UC.

And I think if you elevate up beyond UC, there's still significant unmet need in IBD as we talked about here. And I think it's very similar really across both Crohn's disease and UC. So, we're really excited about the opportunity that this agent can play, really in the broader IBD space.

Tim Power

Thanks Chris. Jonathan, can we go to the first question please?


Certainly. Our next question comes from the line of Geoff Meacham from Bank of America. Your question please.

Olivia Brayer

Hi guys. It's Olivia Brayer on for Geoff. Thanks for taking my question. When you think about ozanimod as an oral agent in UC, what's the strategy for commercial positioning in terms of treatment lines? Is that more of a third-line plus play or is there an opportunity there to move into earlier treatment lines as well?

And then for your CV portfolio, you touched on IP for Eliquis earlier. But when you think about your strategy over the long-term in CV, obviously, you have an opportunity with your Factor XIa asset, but is there a capacity -- or do you all have the capacity to grow out the pipeline more in terms of later-stage opportunities? Thanks so much.

Chris Boerner

Sure. Maybe I'll start. So with respect to line of therapy in UC, we think there's an opportunity for this agent to play both in the pre-biologic space as well as in the post-biologic space. And I would say, again, consistent with what I said previously, I think that's largely true really across both UC and Crohn's disease.

Pre-biologics, there's a need for safe, convenient options with, as I said, comparable efficacy to biologic. That's especially true in Crohn's disease, which really does lack a well-established first-line treatment. And then post-biologic, there's a need for safe options with different MOAs, given the fact that these patients are going to be on therapy for their entire lives. And so you're going to see a cycling through of different modalities. So that's going to be important.

And in particular, with biologics, as you may know, you get immunogenicity in many cases. And so, there's certainly a need for new MOAs to complement in the post-biologic space. And so, we think there's a real opportunity for Zeposia to play a role earlier in the treatment algorithm, as well as potentially later.

Giovanni Caforio

Yes. And Olivia, let me just -- thank you, Chris. Let me just reiterate, as I said earlier, obviously, we're very focused on the performance of Eliquis. The Factor XIa program is advancing. We have interesting assets in the early pipeline in CV, like the Relaxin program and the FPR2 program that we're continuing to advance.

And as I said earlier, from a business development perspective, BD is part of our strategy -- sorry, cardiovascular is part of our strategy. In BD, we evidently have the capabilities, the experience and the existing infrastructure to continue to broaden our cardiovascular presence if warranted.

Tim Power

Thanks, Giovanni. Can we go to the next one, please Jonathan.


Certainly. Our next question comes from the line of Carter Gould from Barclays. Your question please.

Carter Gould

Good afternoon. And thanks again to the BMS team for putting these sessions on and taking the questions. I guess, first off, on the epidemiology, you released on Monday, you guys sort of framed the EoE opportunity, the prevalent pool EoE opportunity in the U.S. sort of two times what your peers had kind of pegged that at. Can you provide any color on that front, as well as sort of address what you think sort of the addressable population for biologics is?

And then, I guess, more broadly, thinking about sort of the EoE opportunity that's increasingly becoming sort of a crowded segment between you guys, Dupixent, IL-5, S1Ps, cyclic ade. So when you think about sort of how that market might evolve and the potential segmentation, can you maybe share your view? And maybe in addressing that, the role of allergists versus gastroenterologists in the space longer-term? Thank you.

Chris Boerner

Sure. Thanks for the questions, Carter. Let me maybe try to address that. So, given the number of cuts that one can make in terms of defining eligibility, based on the various studies that are taking place in EoE, what we've decided to do is share an overall prevalence number. So that's why you're seeing potentially a higher number than you may have seen in other IR reports. So we've reported about 700,000 in the U.S. and EU, and that's an overall prevalence number. So that may be a part of some of the confusion around that.

Just a couple of comments on where the epidemiology is going though. We do see this as an area that epi is still very much evolved. The prevalence is likely going to be increasing based on the natural history of this disease. But also, you're seeing increased diagnosis as physicians begin to get a better understanding of how to differentiate this disease from other issues that are taking place in this – with patients who have these sort of symptoms.

You had asked a question about sort of the crowded nature of the space. Let's start with where things sit today. The majority of patients with EOE, as you may know, start with generally PPIs, Procon Pump Inhibitors. Most of those patients will then fail those. In fact, over 50% of patients fail PPIs. You're then sort of trying to deal with these issues based on diet and topicals and then eventually a cocktail of steroids that are used to treat this disease. And so that's where we sit today. In fact, there are no approved therapies in the U.S. for this.

As you know, you are starting to see a number of new modalities entering the space. We anticipate Dupixent maybe the first biologic in the space. But I think that given the size of this population, there's room to play for multiple modalities. This is a disease where really not much is proven to work effectively. And we think based on the data that we've seen with cendakimab, we're going to have an important role to play here.

Samit Hirawat

And just to add, I think just if it may be that there is a difference between how Dupixent works versus how cendakimab does. Now Dupixent is certainly known to affect the IL-4 and IL-13. But the way IL-13 is impacted over there is that, there is the receptor binding to IL-4. And due to dimerization, the alpha-1 unit or subunit is then blocked for IL-13, whereas for cendakimab through the ligand binding, the direct impact is on alpha-1 and alpha-2 subunits.

So, there's a differentiation. And then if you start to look at the clinical data, the types of patients treated in the Phase 2 program of cendakimab are much more severe with outcomes that we are certainly very encouraged by which I showed earlier today. So there are differences and we will continue to evolve in terms of understanding and how we can further differentiate cendakimab from Dupixent.

Tim Power

Thanks Samit. Can we go to the next one please?


Certainly. Our next question comes from the line of Navin Jacob from UBS. Your question please.

Prakhar Agrawal

Hi. This is Prakhar Agrawal on behalf of Navin Jacob. I just had one question. So between TYK2 and Zeposia, you could have two oral agents in GI indications. How are you thinking about the positioning of the two orals across UC and Crohn's? Could one agent have a bigger role than UC and the other one in Crohn's or do you see a space for both in the GI space? Thank you.

Giovanni Caforio

Yes. Let me take that one. It's a really good question. And I think, in part, this is going to play out as a result of a few things. One, the Phase 3 data that emerged because will obviously inform specific patient types that may differentially benefit with one product versus the other. Timing will also play an important role as to where these products get positioned.

That said, IBD is a very large disease -- it's a large disease that is heterogeneous in nature. And as we've continually emphasized, it is the disease that because of its chronic nature, you're going to continue to see multiple modalities and multiple approaches.

And we believe that having multiple modalities that target this space gives us an opportunity to help more patients, obviously, data-dependent. And we think there's absolutely room to play for both of these products. Now exactly where they're positioned and how they're -- how we position them vis-à-vis patients in UC or in Crohn's disease, we'll have to wait and see how the Phase 3 data play out.

Tim Power

Thanks, Chris. I think we got time for one last one. Jonathan, please go to the last question please.


Certainly. Our final question for today comes from the line of Terence Flynn from Goldman Sachs. Your question please

Terence Flynn

Great. Thanks for taking the question. Maybe just a two-part for me, probably for Dave. You mentioned accessing external innovation is key to the long-term growth profile. Does that suggest that you're more focused on earlier stage assets? And then would you likely stay within your current key verticals, or do you guys have interest in looking more broadly?

And then on the immunology side, obviously, with the Otezla divestment, there's a different margin profile now on that segment of the business. But was wondering if you could comment about where that stands right now and then how to think about that margin evolution on the immunology franchise over the medium-term as additional assets come on board? Thank you.

David Elkins

Yeah. Thank you for the question. And, yeah, I mean, as you know, if you look traditionally, both historical companies, Celgene and BMS, a vast majority of the opportunities are in the earlier stage, in Rupert's area. But we are open to later-stage programs as well. And we do see significant opportunities out there. We're constantly evaluating those and actively doing that now. But as I talked about in the presentation, we're really focused on those strategic areas that I mentioned where we have leadership positions and we have a strong commercial capability to execute against them, particularly in the I-O in the hematology space, but also as you've heard on the Q&A, cardiovascular/immunology, we see opportunities there as well to continue to build out those franchises.

And then on the neuro side, we have a lot of partnerships there on the early phase, which we think is a unique approach in order to finding medicines in that important market. So that's on that. We really don't talk to profitability at the brand level on the immunology side. But we're pleased with that franchise how it's progressing, and the growth that that business.

Giovanni, I don't know if there's anything you want to add.

Giovanni Caforio

Thank you, David. Yeah. I mean, I'd just like to just stress what you said, Terence. Our perspective with respect to business development is really to focus on the areas of science we know well. And so the number of therapeutic areas is relatively broad. We've added a focus on neurology, but I think we have a relatively broad set of expertise around multiple therapeutic areas. And we're committed to that.

The second thing that I would say with respect to stage of assets in…

[Technical Difficulty]

Tim Power

Giovanni, we can't hear you at the moment. Maybe we can just give you a second to see if we can hear you.

Giovanni Caforio

Yes. Can you hear me now?

Tim Power

Perfect. Giovanni, maybe you want to restart your answer because we couldn't hear you for quite a while there.

Giovanni Caforio

Yes. I do apologize. These are the challenges of the current situation. So just to go back and repeat what my perspective was for Terence, I'd just like to reiterate what David said, with respect to therapeutic areas in focus, we broadened our focus to include neurology. And we feel we have a broad set of capabilities and skills that we can apply through multiple therapeutic areas.

And we're really agnostic to size. And as a result of that, we're agnostic with respect to whether we look at early deals or mid-stage deals. The reality is the majority of our activities is bound to be in the early space, but it really is driven by the strength of the science, the strategic fit and the financial discipline that David has discussed.

So I do apologize for the short break. I just want to close after the end of the Q&A. And I want to thank all of you again for your time and attention over the past week. I'm extremely pleased with the promise of our expanded portfolio, the progress we've made over the last year. We hope you share our excitement about our significant first-in-class or best-in-class launch opportunities, the strength of our robust late- and early-stage pipeline. And we're very committed to continued focus on executing against a large number of opportunities.

We're committed to patients. And that's what really drives us to pursue innovative new therapies for those patients that are suffering from serious disease and have unmet medical needs. Thanks to all of you for participating in these three events over the course of this week. And I wish all of you a really good weekend. Thank you.

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