Bristol Myers Squibb 10-Q 2023-09-30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to _______

Commission File Number 001-01136

BRISTOL-MYERS SQUIBB COMPANY

(Exact name of registrant as specified in its charter)

Route 206 & Province Line Road, Princeton, New Jersey 08543

(Address of principal executive offices) (Zip Code)

(609) 252-4621

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

APPLICABLE ONLY TO CORPORATE ISSUERS:

At October 20, 2023, there were 2,034,757,742 shares outstanding of the Registrant’s $0.10 par value common stock.

BRISTOL-MYERS SQUIBB COMPANY

INDEX TO FORM 10-Q

September 30, 2023

| Risk Factors | | | 55 | | | | | | | | | | Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | | | 55 | | | | | | | | | | Item 5. | Other Information | | | 55 | | | | | | | | | | Item 6. | Exhibits | | | 56 | | | | | | | | | | | Summary of Abbreviated Terms | | | 57 | | | | Signatures | | | 58 | | |

• Indicates brand names of products which are trademarks not owned by BMS. Specific trademark ownership information is included in the Exhibit Index at the end of this Quarterly Report on Form 10-Q.

PART I—FINANCIAL INFORMATION

BRISTOL-MYERS SQUIBB COMPANY

CONSOLIDATED STATEMENTS OF EARNINGS

Dollars in millions, except per share data

(UNAUDITED)

(a) Excludes amortization of acquired intangible assets.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Dollars in millions

(UNAUDITED)

The accompanying notes are an integral part of these consolidated financial statements.

BRISTOL-MYERS SQUIBB COMPANY

CONSOLIDATED BALANCE SHEETS

Dollars in millions

(UNAUDITED)

The accompanying notes are an integral part of these consolidated financial statements.

**BRISTOL-MYERS SQUI

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Management’s discussion and analysis of results of operations and financial condition is provided as a supplement to and should be read in conjunction with the consolidated financial statements and related footnotes included elsewhere in this Quarterly Report on Form 10-Q to enhance the understanding of our results of operations, financial condition and cash flows.

EXECUTIVE SUMMARY

Our principal strategy is to combine the resources, scale and capability of a large pharmaceutical company with the speed, agility and focus on innovation typically found in the biotech industry. Our priorities are to continue to renew and diversify our portfolio through launching new medicines, advancing our early, mid and late-stage pipeline, and executing disciplined business development. Our focus is on discovering, developing and delivering transformational medicines for patients facing serious diseases in the following core therapeutic areas: (i) oncology with a priority in certain tumor types; (ii) hematology with opportunities to broaden our franchise and sustain a leadership position in multiple myeloma; (iii) immunology with priorities in psoriasis, lupus, RA, inflammatory bowel diseases and fibrotic lung diseases; (iv) cardiovascular disease; and (v) neuroscience with a focus on neurodegenerative disease. We are working on accelerating our drug development and delivery of our innovative medicines to patients, enhancing our commercial operating model, as well as enhancing flexibility and reliability of our manufacturing network. We are committed to the strategic allocation of resources and investing in areas that maximize value and drive sustainable growth. We remain committed to maintaining a strong investment grade credit rating and returning capital to shareholders. For further information on our strategy, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Executive Summary—Strategy" in our 2022 Form 10-K. Refer to the Summary of Abbreviated Terms at the end of this Quarterly Report on Form 10-Q for terms used throughout the document.

In 2023, we received approvals for initial and additional indications for the following marketed products in major markets (the U.S., EU and Japan), which further expanded our geographical reach in immunology, hematology and oncology including: (i) U.S. and EC approval of Opdivo expanding upon the existing adjuvant treatment for melanoma patients; (ii) FDA approval of Reblozyl in the first-line setting for the treatment of anemia in MDS and EC approval for an additional indication for anemia associated with non-transfusion-dependent beta thalassemia; (iii) approvals in Japan and by the EC of Opdivo in combination with chemotherapy for the neoadjuvant treatment of patients with resectable NSCLC; (iv) approval of Camzyos for the treatment of symptomatic obstructive HCM by the EC; (v) approval of Breyanzi for the second-line treatment of diffuse large B-cell lymphoma by the EC; and (vi) approval for Sotyktu for moderate-to-severe plaque psoriasis by the EC. We continue expanding our commercial CAR-T manufacturing network through the FDA approval of our Devens, MA facility in June 2023. In October 2023, we entered into a definitive merger agreement to acquire Mirati, a commercial stage targeted oncology company with a pipeline of commercial, clinical and pre-clinical stage oncology medicines and assets, including Krazati,* a best-in-class inhibitor of KRASG12C mutation, which was approved by the FDA as a second-line treatment for patients with NSCLC, and MRTX1719, a potential first-in-class MTA-cooperative PRMT5 inhibitor in Phase 1 development, among others*.*

Revenues decreased by 4% for the nine months ended September 30, 2023 primarily due to lower Revlimid sales driven by the previously disclosed generic erosion and increase in patients receiving free drug product for Revlimid, and to a lesser extent, Pomalyst, from the Bristol Myers Squibb Patient Assistance Foundation, a separate and independent 501(c)(3) entity to which BMS donates product, and foreign exchange impacts of 1% partially offset by higher sales in our New Product Portfolio and In-Line Products (primarily Opdivo). The $0.99 increase in GAAP EPS was primarily driven by the impact of certain specified items, including lower losses on equity investments and amortization of intangible assets, litigation and other settlement income and a deferred income tax benefit related to a non-U.S. tax ruling. After adjusting for specified items, non-GAAP EPS decreased $0.08 primarily as a result of lower revenues, partially offset by lower Acquired IPRD charges, net interest expense, effective income tax rate and weighted average shares outstanding.

Our non-GAAP financial measures, including non-GAAP earnings and related EPS information, are adjusted to exclude specified items that represent certain costs, expenses, gains and losses and other items impacting the comparability of financial results. For further information and reconciliations relating to our non-GAAP financial measures refer to "—Non-GAAP Financial Measures."

Economic and Market Factors

Governmental Actions

Our products continue to be subject to increasing pressures across the portfolio from pharmaceutical market access and pricing controls and discounting, changes to tax and importation laws and other restrictions in the U.S., the EU and other regions around the world that result in lower prices, lower reimbursement rates and smaller populations for whom payers will reimburse, which can negatively impact our results of operations (including intangible asset impairment charges), operating cash flow, liquidity and financial flexibility. For example, some of the provisions of the IRA signed into law in August 2022, were as follows: (i) the government requires pharmaceutical manufacturers like BMS, under the threat of significant penalties, to sell certain innovative Medicare Part D and Part B medicines at government-set discounted prices, (ii) manufacturers are to pay an inflation-based rebate for Medicare Part B and Part D medicines, and (iii) Medicare Part D redesign. In addition, there were changes made to U.S. tax laws, including (i) a 15% minimum tax that generally applies to U.S. corporations, and a (ii) a non-deductible 1% excise tax provision on net stock repurchases, to be applied to repurchases beginning in 2023. Implementation of this legislation is expected to be carried out through upcoming actions by regulatory authorities, the outcome of which is uncertain. We continue to evaluate the impact of the IRA on our results of operations and it is possible that these changes may result in a material impact on our business and results of operations. See "Item 1. Financial Statements—Note 18. Legal Proceedings and Contingencies—Other Litigation" for further information. Furthermore, countries are expected to make changes to their tax laws

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For a discussion of our market risk, refer to "Item 7A. Quantitative and Qualitative Disclosures about Market Risk" in our 2022 Form 10-K.

Management carried out an evaluation, under the supervision and with the participation of its chief executive officer and chief financial officer, of the effectiveness of the design and operation of its disclosure controls and procedures, as defined in Exchange Act Rules 13a-15(e) and 15d-15(e), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our principal executive officer and principal financial officer concluded that as of September 30, 2023, such disclosure controls and procedures are effective.

There were no changes in the Company's internal control over financial reporting during the quarter ended September 30, 2023, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

Information pertaining to legal proceedings can be found in "Item 1. Financial Statements—Note 18. Legal Proceedings and Contingencies," to the interim consolidated financial statements, and is incorporated by reference herein.

Item 1A. RISK FACTORS

There have been no material changes from the risk factors disclosed in the Company's 2022 Form 10-K.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table summarizes the surrenders of our equity securities during the three months ended September 30, 2023:

(a)Includes shares repurchased as part of publicly announced programs and shares of common stock surrendered to the Company to satisfy tax withholding obligations in connection with the vesting of awards under our long-term incentive program.

(b)In May 2010, the Board of Directors authorized the repurchase of up to $3.0 billion of our common stock. Following this authorization, the Board subsequently approved additional authorizations, including most recently, in February 2020, January 2021 and December 2021, in the amounts of $5.0 billion, $2.0 billion and $15.0 billion, respectively, to the share repurchase authorization. The remaining share repurchase capacity under the program was approximately $2.0 billion as of September 30, 2023. Refer to "Item 8. Financial Statements and Supplementary Data—Note 17. Equity" in our 2022 Form 10-K for information on the share repurchase program.

(c)On August 9, 2023, as part of our existing share repurchase program, BMS executed accelerated share repurchase (“ASR”) agreements to repurchase an aggregate $4.0 billion of common stock. Approximately 56 million shares of common stock (85% of the $4.0 billion aggregate purchase price calculated on the basis of a price of $60.62 per share, the closing share price of the Company's common stock on August 9, 2023) were received by BMS and included in treasury stock. The total number of shares to be repurchased under the ASR agreements, and the average price paid per share, will be determined at the settlement of the ASR agreements and will be based on volume-weighted average prices of BMS's common stock during the terms of the ASR transactions less a discount and subject to adjustments pursuant to the terms and conditions of the ASR agreements. The ASR transactions are scheduled to terminate in the fourth quarter of 2023, but each may conclude earlier than its scheduled termination date at the election of the applicable bank.

Rule 10b5-1 Trading Arrangement

During the period covered by this Quarterly Report on Form 10-Q, no director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K. During the third quarter of 2023, the Company entered into the ASR agreements which are intended to be Rule 10b5-1 trading arrangements. For more information about the ASR transactions, see "Item 2. Unregistered Sales of Equity Securities and Use of Proceeds."

Exhibits (listed by number corresponding to the Exhibit Table of Item 601 in Regulation S-K).

• Indicates, in this Quarterly Report on Form 10-Q, brand names of products, which are registered trademarks not solely owned by the Company or its subsidiaries. Abilify is a trademark of Otsuka Pharmaceutical Co., Ltd.; Gleevec is a trademark of Novartis AG; Keytruda is a trademark of Merck Sharp & Dohme Corp; Krazati is a trademark Mirati, Therapeutics, Inc.; Onglyza is a trademark of AstraZeneca AB; Otezla is a trademark of Amgen Inc.; and Plavix is a trademark of Sanofi; Tecentriq is a trademark of Genentech, Inc. Brand names of products that are in all italicized letters, without an asterisk, are registered trademarks of BMS and/or one of its subsidiaries.

SUMMARY OF ABBREVIATED TERMS

Bristol-Myers Squibb Company and its consolidated subsidiaries may be referred to as Bristol Myers Squibb, BMS, the Company, we, our or us in this Quarterly Report on Form 10-Q, unless the context otherwise indicates. Throughout this Quarterly Report on Form 10-Q we have used terms which are defined below:

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.