Bristol-Myers Squibb Company (NYSE:BMY) 4th Annual Wolfe Research Healthcare Conference November 16, 2022 3:20 PM ET
Company Participants
Chris Boerner – EVP and Chief Commercialization Officer
Conference Call Participants
Tim Anderson – Wolfe Research
Tim Anderson
Okay. Great. Well, thanks for joining us. I’m Tim Anderson, I’m the large cap biopharma analyst at Wolfe. And we’re pleased to have with us Bristol-Myers Squibb for a fireside chat here. Chris Boerner, who’s EVP and Chief Commercial — Chief Commercialization Officer at the Company, joined Bristol in 2015, has held leadership positions in both the U.S. and ex-U.S. markets. And prior to Bristol, he was in various commercial roles at CGen and Genentech and other places as well.
So Chris, thanks for joining us.
Chris Boerner
My pleasure. Thanks for the invitation.
Question-and-Answer Session
Q – Tim Anderson
I thought we’d start with maybe just some kind of 2023 outlook type of questions. So maybe you can just frame out what you see as pushes and pulls as we close out 2022.
Chris Boerner
Well, I think our objective for 2023 is to grow this business. And I think the way we look at it, there are a number of reasons to be optimistic about that. I would characterize them in sort of a few buckets. First, as I think you know, we have just completed this year the launch of nine new medicines. Those medicines are really important, because they transition Bristol-Myers Squibb to a newer portfolio, and it’s going to be very important that we grow those businesses really across the board next year. And I would — I suspect we’ll have a chance to go through some specifics, but I think important, are going to be continuing to drive growth on Camzyos. That’s an important new medicine in obstructive hypertrophic cardiomyopathy.
We’ve had very good success with Opdualag, which is an important new medicine in first-line metastatic melanoma. Obviously, we have the opportunity to increase capacity with our cell therapy assets. Those are going to be important next year as well as growing products like Reblozyl and Zeposia. I didn’t mention Sotyktu. I don’t think that’s going to be a huge opportunity for us next year, but that has considerable long-term potential, and it’s going to be important we continue to drive volume there.
So maximizing those new launches are going to be particularly important. We’ve got a very big base business with products like Eliquis and Opdivo. Those products continue to have considerable growth opportunities in the U.S. as well as in many respects, ex-U.S. So that’s going to be important. And then beyond that, of course, we’ve got some new launches that will be important potentially next year, both in terms of line extensions. We’ll be launching repotrectinib, which will be an important medicine, we believe, for a niche population in first-line lung cancer. So that’s going to be important as well.
So I think on the put side, that’s how I would bucket it. In terms of potential headwinds, I think, obviously, from a Bristol standpoint, we’ve got Revlimid coming off patent, and we would expect to continue to see an impact of that next year. We’ve seen some early entry of generics for Eliquis outside of the U.S. It’s been somewhat minimal in its impact. But clearly, that’s something we’re going to keep an eye on. And then from more of a macro standpoint, we’re looking at various potential impacts. Notably, among those would be FX. So we’ll be continuing to stay focused on that. Add it all up, though, we still have the strong objective and a good story for growth next year.
Tim Anderson
So a lot of that’s top line discussion. How about further down in the P&L when you’re looking at things like gross margins or spending trends, taking into account things like inflation or the need to invest in the pipeline.
Chris Boerner
Well, obviously, one thing that we have been very good at over the years is expense management, and we’re going to continue to be very disciplined in how we do that. We’re — from a commercialization standpoint, we’re a highly efficient operation, but we’re going to continue to look for opportunities to leverage additional opportunities to find efficiencies within the P&L, and I think that’s going to be true across the board.
The one thing that we want to be very diligent on, though, is we’re going to continue to be focused on new innovation, whether that innovation is sourced internally or obviously, we’ve got the financial flexibility and horsepower to be able to bring innovation in from outside. And so business development is going to continue to be an important opportunity for us.
Tim Anderson
And on business development, are you guys willing to kind of put an upper limit in terms of the types of deals you’re looking at?
Chris Boerner
Size wise?
Tim Anderson
Yes, size wise.
Chris Boerner
Well, what we said is, and I think this is true, is that we continue to be agnostic with respect to size. The way we think about business development is on really three dimensions.
First, it’s got to make sense strategically for the Company. Is this scenario that we know that we think we can add value in? Obviously, it’s got to be scientifically relevant. So we obviously had programs across multiple therapeutic areas, but we are looking for opportunities that can substantially change patient outcomes, where we have expertise in the science.
And then finally, it’s got to make sense financially. So on the surface, I would say, there’s sort of no limit in terms of size. That said, I think when you look at the available opportunities that fit those three criteria, would tend to push you more towards medium and lower-sized deals.
Tim Anderson
Just going back to the P&L. So as Revlimid disappears, which has started to in 2022, does that lend some upward pressure on the tax rate? I’m guessing that was — and its price set up in a tax advantage territory, so that loss of revenues leads to a negative mix shift.
Chris Boerner
I think we’re fairly comfortable with the tax rate that we’ve got budgeted for next year. I think, obviously, Revlimid has a lot of implications across the P&L. You’ve already referenced one of those, which is that we continue to be very focused on gross margin, because, obviously, that’s a high-margin product for us. So, we’re going to continue to be focused really across the board and how we manage our expenses.
Tim Anderson
So Bristol has the lowest PE multiple of all the big pharmas that I cover, which are 10 names in total. And I’m wondering what you think — where you sit, where you think investors are under appreciating that keeps that multiple low?
Chris Boerner
Yes. I think there would be a few things that I would highlight. First, I think we have just completed a wave of transitioning this portfolio with nine new launches. And I think one of the things that investors want to see is the execution against those launches and that those are going to deliver the opportunity that we believe are inherent there. So that’s why I say when you talk about the catalyst for next year, it’s so important that we continue to execute effectively against those launches.
And we think there’s some really important opportunities there. We think Camzyos has the opportunity to be a very big and important product in its initial indication and there are life cycle opportunities there. Even though Sotyktu is going to continue to be in the early phases of launch, that product has considerable potential. And I’ll say that, that product has had a very good early uptake. We’ll be able to provide more details on that in the Q4 call. But embedded within those new products, we think, are really important medicines that have big commercial opportunities, and we’ve got to continue to deliver on those. So that’s one.
Second thing is, I think that the investment community wants to continue to see the progression of the pipeline. I think in that regard, again, we’re starting to tell a particularly good story there. We just announced that we have COMMANDS data, which is an important line extension for Reblozyl, that hit on the interim and showed clinically meaningful improvements in efficacy. So that’s going to be an important opportunity. It roughly doubles the size of the opportunity that we have with Reblozyl given its current indication.
We’ve got additional life cycle opportunities for our cell therapy assets. We’re going to see data in from the pipeline on our BCMA T cell engineered antibody at ASH. And then important, we just now have data in-house, and I’m pleased to say Phase II data for LPA1. And that’s important. That’s our LPA1 antagonist. That data is important because you may recall, Tim, that we had a previous LPA1 antibody that had very good activity in idiopathic pulmonary fibrosis, but it had liver toxicity. We went back to the bench, redesigned the asset. And what we have now is continued good activity in IPF, but we’ve been able to manage that safety profile.
So that’s important data. We just got that in-house, and we’re obviously looking forward to presenting that data at an upcoming medical conference, and we’ll be initiating Phase III on that program. So we think that’s an important opportunity. And of course, earlier in the pipeline, we’ve got additional assets. But I think what investors are looking to see is execution against the launches, continued progression of that late-stage pipeline to show additional growth opportunity, particularly as you get into the latter part of the decade. And then obviously, given the space we’re in, we got to continue to bring in new innovation earlier in the pipe.
Tim Anderson
Yes. Okay. A couple more that are kind of P&L related inflation price caps that come into effect through the IRA. Does that have any impact at all for you guys in 2023? A lot of companies have already self-limited and net pricing hasn’t been high at all for…
Chris Boerner
Yes. Our exposure to that is relatively limited in so far as if you look at our net price increases over time, they’ve been neutral to negative. So our exposure there is relatively minimal. What I would say the biggest impact of IRA that we see for the industry is when price setting kicks in, in the 2026 time line.
Tim Anderson
Yes. Okay. And then outside the U.S., we saw post ’08 austerity measures being taken by various European countries, forced down prices. Any possibility that, that happens as we tether on the edge of a recession here globally?
Chris Boerner
Well, I think at the general macro environment in terms of pricing outside of the U.S. has continued to be challenging. And I think that you’re going to continue to see governments try to make up for not only the austerity measures as a result of just the hit to the economy generally, but remember, these are governments that have also had big hits to their health care budgets. So I think we’re going to continue to see pressure outside of the U.S.
That said, I think we’re in a pretty good position for a couple of reasons. One, this isn’t new. We know how to manage it. Number two, the way I look at pricing generally is pricing is a bigger issue if you don’t have valuable drugs. And I think so this is all sort of relatively speaking, I think we’re in a pretty good spot, because we’ve got drugs that have meaningful impact on patients. They’re meaningfully — and they’re important to health care systems. And I think we’ve got a good history of being able to articulate that value to payers outside of the U.S.
Tim Anderson
But at this point, no countries are bringing up austerity or hinting austerity measures where they take explicit price cuts like they did post ’08. They didn’t say it post COVID. There are a lot of companies that thought we would see at post-COVID?
Chris Boerner
No. We haven’t seen anything significant that I would — that I would highlight. We’ve seen continued clawbacks that impact the industry, those kinds of things continue to increase over time, but nothing that’s tied directly to a potential recession.
Tim Anderson
Okay. I wanted to talk about China for a little bit. And I feel — and I think I’ve asked this before on a conference call. Is Bristol undersized in China? Because I don’t know what it was, maybe it was 10 years ago, you guys actually sold off certain brands, and you exited certain emerging markets, not China per se. But you kind of shrunk your global footprint, because it was right at the time given the narrower focus, but post Celgene, post pipeline progression, I now almost wonder if maybe you’re underexposed to China and if that’s something that needs to be addressed and you see need to basically step up your footprint in China?
Chris Boerner
Yes. So let me address the question on China and then also position in the broader global market. So China, for us, is as you know, a relatively small business today. If you look at where we are, we still have like a lot of companies, some older products. So for example, Baraclude is still a meaningful product in China. But it’s a market that we intend to grow with our innovative portfolio. And in fact, you’re seeing an initial foray into that with Opdivo. Opdivo has multiple indications in China. We’re particularly in a good position in gastric cancer, both first line and later line and we’ve got additional opportunities to grow that business.
We were just approved with Reblozyl for beta-thalassemia in China. So our intent is to continue to grow that business. And in fact, if you look between now and 2025, we’ve got roughly 30 new indications that we can put into that market. Many of those are first or best-in-class opportunities for us in China. So our intent is, with our innovative portfolio, to continue to grow that business. What I would say is you look at China within the broader footprint, because as you know, we did at an earlier time skinny down that ex U.S. footprint, I think we have an opportunity to expand that footprint globally. And I think the portfolio is right to do that.
And the good news is that we’ve got the capabilities in place to do so, and I’ll highlight two in particular. One, we have the right presence. So we have a BMS presence in all of the large markets. And in the smaller markets, we have a mix of BMS presence and third-party distributors. And we’ve gotten pretty good at being able to titrate when to move from a distributor to putting a formal BMS presence in. So that’s one.
And the second thing is we built the capability to ensure that our pipeline is relevant for all of these global markets. So for example, the gastric indication in China was approved about 4.5 months after the FDA approved gastric for Opdivo. With ducravacitinib, just recently, we were approved in the U.S. in September and three weeks later, we were approved in Japan. And so we’ve gotten very good at ensuring all of our new programs are able to pivot into these markets globally. So I do think you’re right, it’s an opportunity as the portfolio expands for us to continue to relook at our global footprint.
Tim Anderson
Okay. I thought we could shift to individual brands. So the Company gave peak sales nonrisk adjusted out to 2029 for quite a few products. Unusual for companies to give explicit guidance that far out. I think it’s great. It draws a line in the sand. That guidance isn’t that old, so not that much has changed. But as we are here closing out 2022, is it possible to point to brands that might be tracking ahead and possible to point to brands that might be maybe still need to prove themselves in the marketplace?
Chris Boerner
Look, I think that we — as I look at, for example, the launches that we’ve got, I think that we feel very comfortable about the guidance, for example, that we’ve given with Sotyktu. Sotyktu has had very strong launch. We’ll be able to talk specifically about patient numbers in Q4, but that’s an opportunity for us, not just in psoriasis, moderate to severe psoriasis, which is a big opportunity. But we also have line extensions for that in SLE, IBD, psoriatic arthritis. And I think we feel good about the long-term potential for that product.
Similarly, Camzyos is going to be a very important drug for us. The feedback that we’ve gotten on that profile has been nothing short of extraordinary, both from physicians and from patients. The biggest opportunity in the short term is obstructive HCM. We also have the follow-on programs in non-obstructive disease. So that’s going to be an important opportunity. We feel great about that opportunity.
So as I look at, as you say, the guidance that we provided isn’t that old. I think that we still feel pretty good about the peak potential for all of these assets. And obviously, next year is going to be an important year, because we’re still in the early stages for a lot of these launches and next year really is an opportunity to us to set the trajectory commercially.
Tim Anderson
Let’s talk — before we talk about innovative growth brands, let’s talk about a dying brand, which is Revlimid. So erosion, you guys have given guidance of about $2 billion a year up until 2026, and then it fully falls off the cliff and goes away. And you gave that guidance. And then I think one quarter in, you changed it a little bit. Eroded a little bit faster. How is that looking now? How confident are you that it’s still going to be plus or minus $2 billion?
Chris Boerner
Well, I think we feel good that the step down next year will be roughly $2.5 billion. I think the challenge with Revlimid is that we see what the volumes that we provide to generics, what we don’t see is the volume that are with specialty pharmacies. So how they manage that is something that’s opaque to us. What we have seen is an erosion that has been a little less than what we had anticipated when we had one generic in the market. Since September, we now have roughly half a dozen generics that are in the market.
And so what we said is that we’ll probably be on the upper end with respect to Revlimint sales for this year. I think the $2.5 billion step-down that we expect for 2023 is still — we still feel pretty good about. But look, Revlimid is still an important product for patients. So while, as you say, it may be a dying brand from a commercial standpoint, it’s an important medicine. And I think the way specialty pharmacies are trying to manage that as to ensure they’re not switching patients from Revlimid to generics and then back again. And so that’s created a little bit of the uncertainty in terms of what that forecast looks like. But where we sit today, we feel good about where we are next year.
Tim Anderson
And that’s a process that you can control with confidence with all these sellers. So it’s not that you have sellers that might sneak a little bit more into the marketplace?
Chris Boerner
So we control the volumes that go out to generics. And so that’s not a concern. How they manage that volume through their channel is something that we have no control over. But what’s important is that we have an interest clearly in making sure that patients don’t end up going off therapy. That’s bad for patients. But ultimately — so what we can see is what we — the volumes that we provide.
Tim Anderson
Yes. Okay. So turning to Sotyktu, you have just kind of alluded to this, and the Company has talked about this before. Access being a slow grind or I don’t know if that’s not your language, that’s my language. But not really fully gaining access in ’23, really hitting 2024 and beyond. So can you just — and maybe you won’t give this until Q4, but put numbers around that in terms of ballpark lives covered in 2023. And then also as part of that, with sort of access restrictions you’re anticipating, there aren’t a lot of generic prescription psoriasis products out there. So I can’t see things like a first policy. It would be odd to me to force someone to take a injectable biologic first and fail that and then go to a pill. So any access restrictions about that?
Chris Boerner
Well, so I think the way I would characterize the access environment for Sotyktu is, first of all, there’s no surprises here. This is a space that’s heavily managed and one where rebate walls are important. So we knew coming into this launch, we’re going to have to knock those down. We felt very good about our ability to do so, because we have a great drug and an experienced team.
As far as 2023, because of the timing of this launch and because of the timing of negotiations, we missed the window for 2023 access. I’ll come back to ’23 in a second. The goal with this launch is to build volume as quickly as possible, so that when we get into negotiation cycles with PBMs in the late summer of next year, we’re in a position for zero or one step edits, ideally zero step edits in 2024.
Now we have a very strong incentive to try to move that forward into 2023. It’s not the base case, but clearly, the faster we can drive volume this year, the better off will be for getting either zero or one step at it in 2023. And clearly, that’s our focus. How we’re going to do that? You’ve got to build volume, because one of two things have to be true. You either have to be able to show a trajectory for the product such that a PBM wants to be able to provide a rebate to that or you have to have sufficient volume of rebates that they’re not getting, because you’re taking those patients.
And so I think the way we look at it is we’ve got a plan. Near term, get access to patients where they have access, drive volume so that would position ourselves by 2024, and I ideally move that forward to ’23. The good news is that we’re seeing very good uptake.
We’re seeing uptake really across the board, so you’re not seeing it just an academic institutions where we knew physicians were familiar with the product. About 80% of the use is in the community setting. And this is really important. We’re actually seeing use across both first-line naive, first-line switch as well as second line plus patients.
And that’s important, because if you think about where Sotyktu needs to be ultimately positioned, it needs to displace Otezla as a first-line agent and to see not only naive patients, but switch patients this early is really encouraging.
Tim Anderson
And that’s switch away from Otezla?
Chris Boerner
That’s right.
Tim Anderson
How about switching away from any of the injectable products?
Chris Boerner
We are seeing some switching away. But again, I think the way physicians are thinking about this is very much using it ahead of injectables.
Tim Anderson
And you talked about a step at it, what would be that one step at it? What would that one step at it?
Chris Boerner
Well, I think — well, ideally, we want zero step at it, it’s ultimately. But I think to the extent that we’re seeing one step at it, it would either be Otezla or it would be one of the injectables. But again, that’s going to be subject to a negotiation on the types of rebates that payors are getting from those other agents.
Tim Anderson
So how does Humira biosimilars factor into this? It seems to me that might be the one maybe you’re forced to step through as it becomes available.
Chris Boerner
Well, so what we have seen thus far is, and this is true really across therapeutic areas and particularly outside of the U.S., is that biosimilars when they become available or typically replacing the branded alternative. So that’s number one. We have not seen much in the way of step-throughs and importantly, within the psoriasis category, TNF inhibitors as a class have generally been declining in use.
So I think that the way we look at it from where we sit today, we don’t see a significant impact on our near-term launch. And we’re going to do everything we can, obviously, to minimize any step throughs. But just given where this class is going, we don’t anticipate where we said today that, that’s going to have a big impact. That said, this is a space you got to pay a lot of attention to. And so we’re going to continue to monitor it.
Tim Anderson
Yes, it just seemed to me that with stepped-up rebates either on the brand or with just biosimilar pricing, even though it’s been losing share, that would be the logical one to make you guys step through. But I mean they’re not launched yet, so that’s probably going to evolve from here.
Your view of competitors in the TYK2 space, there aren’t many. There’s one NIMs private health company. They talk about the virtues of their product being able to take dosing higher, for example, I think that Sotyktu has left efficacy on the table by not taking dosing high enough. Your view of those claims? And just in general, of competitor TYK2?
Chris Boerner
Yes. I mean having worked at a small biotech, I can tell you, it’s always easier to make claims about drugs that are on the market and where you haven’t engaged in regulatory discussions. I would say, look, at this point, from a commercialization standpoint, we are very focused on taking the asset we have and maximizing it and ensuring it becomes the premier first choice oral for moderate to severe psoriasis patients. And the good news is we have a very clean label. We’re not seeing any restrictions in terms of getting patients onto therapy.
And because we have a clean label, we have an ability to tell the efficacy and safety story for this product. You have two Phase III studies that show very clear superiority relative to Otezla, an active comparator and the product we wish to displace. The reaction to the profile for Sotyktu has been stellar. Physicians see the PASI-75 scores as impressive. They like the durability of response. They’re seeing depth of response in the PASI-90 scores. So you add it all up, we’ve got a great profile, and so we’re going to stay focused on that, and we’ll worry about competition later.
Tim Anderson
Shifting to Camzyos There’s a gating factor, of course, which is getting certified through REMS program. And we’ve certainly seen now that has slowed other launches in the past. But you’re seeing, once physicians get through REMS, then heavy prescribing and frequent prescribing, and a lot of receptivity towards the product.
Chris Boerner
What I would say is that the receptivity of the product is very, very good. The first step to being able to use the product is getting REM certified. We’re seeing a nice increase week-over-week in terms of physicians getting REM certified. Once they’re REM certified, the other thing that’s very encouraging with this product is they get one patient on and the speed with which they get multiple patients on is very short.
And we’re starting to see not only the breadth of use, more trialist, but we’re seeing depth of use. So we’re seeing physicians use it more. And then, of course, as we mentioned on the call in Q3, as we get formulary decisions, and this is not the same situation as Sotyktu, this is not a heavily managed group. As we’re able to get those formulary decisions out, patients will be on free drug for a shorter period of time and those patients fall down into commercial dispense much faster.
Tim Anderson
Yes. And then another, I guess, way to gauge success would be to look at how many docs are opting to go through the REMS program, how many there their hands up in there and say, I just to what I have, which is a bunch of old off-label generic products basically. So what’s been the receptivity or the willingness to go through REMS?
Chris Boerner
The receptivity has been very good. Now remember, we’ve launched this product in a sort of somewhat select set of institutions, about 500 institutions. Those account for roughly 60% of the overall volume. The majority of the REM certified physicians have come from those accounts. That’s where we’re putting our promotional effort.
But I think, number one, we’ve seen physicians volunteer to go through this process. That’s a very good, as we’ve said, leading indicator because it is a little bit of an involved process for cardiovascular physicians, who aren’t used to having REMS, it’s a big step forward. And so we think that’s an important leading indicator. And we’ve seen great receptivity in those 500 institutions.
What gives me confidence that it’s not an impediment to the use of the product is the fact that even outside of those 500 institutions, we have seen physicians ask us to get REM certified. And obviously, that bodes well for the longer-term opportunity here, because at some point next year, we’re going to be in a position to expand beyond those 500 institutions with our promotional effort.
And so we feel good about physicians’ ability to work their way through the REMS. We spent a lot of time working with our development organization from the commercial standpoint to ensure that, that REMS was not overly burdensome.
Tim Anderson
Okay. Let’s move to immuno-oncology. Just starting off with Opdivo. When I think about Opdivo, like it’s hard for me to crystallize what are the drivers of growth. I mean it’s returned to growth after a period of contraction. Obviously, there’s a leading brand out there, which is KEYTRUDA and you’ve got a long list of indications, but there’s nothing that I can see that necessarily leads to an inflection, and it’s gradually becoming a more competitive space, although I think that any of these late entrant products are almost probably rounding areas, frankly, if they’re going into crowded settings. So just talk to us about the longer-term growth trajectory of Opdivo and how we should view that as playing out over the course of, I don’t know, all the web to LOE which is into 2023?
Chris Boerner
I’d say that’s a long time. We do have a lot of indications. And I think that as I look at the Opdivo business, we promised that it would return to growth this year and it has — that growth has been driven really twofold. And I think it sets the foundation for how we think about future growth, which is you’re seeing incremental growth across a lot of different indications. For example, in lung cancer, that’s an important one. We’re starting to see nice growth in the PD-L1 negative population. We’ve got great data there. It’s incremental, but that’s a big market. And so small movements in share can have implications for growth.
So I think you’re going to see continued growth across multiple existing indications. We obviously, over the last year, have launched multiple new indications within the gastric space. So we have the broadest portfolio actually in gastric of any PD-1. And so that’s going to be a growth opportunity. And that’s a bit more of a substantial growth opportunity for us in 2023.
We’ve got data for Opdivo in the neoadjuvant space. That’s a relatively small opportunity, but again, incremental growth. So as we look longer term, we’ve got additional growth in other metastatic settings as well as adjuvant continues to be an important opportunity for us. So we have 77T as well as that’s a periadjuvant study, and then we’ve got 73L, which is an opportunity that we have in the neoadjuvant space. So I think there are considerable opportunities for us.
Tim Anderson
Opdualag, some cannibalization, obviously, in the melanoma segment. When we — and we just did this earlier. Back of the envelope math, it looks like you make more revenues with Opdualag than using Opdivo and Yervoy separately. So is that — am I doing the math correct?
Chris Boerner
So look, I think commercially…
Tim Anderson
I should say Adam doing the math right? This is my assessment.
Chris Boerner
So look, the way we think about Opdualag is, first and foremost, as we’ve discussed on our calls, the primary target for Opdualag was PD-L1 monotherapy. And the reason that we think that’s important is because we have great data there with our pivotal study. That business is when we launched was about 30% of the overall opportunity, about half split between Opdivo and KEYTRUDA.
And as you know, we’ve seen some cannibalization of Opdivo, Yervoy, but still 50% to 60% is coming from PD-1 monotherapy. And that’s accounted for a big portion of the growth thus far. That’s a continued opportunity for Opdualag, because we’re going to close this year with PD-1 monotherapy being roughly 15% to 20% of first-line metastatic melanoma.
We see no reason that, that should continue given Opdualag. There is an opportunity over time for us to continue to capture share from Opdivo plus Yervoy. I think you’re doing the math correctly. That said, the reason that we didn’t make it a primary focus for us at launch was because the data for Opdivo and Yervoy are so strong in first-line metastatic melanoma.
So obviously, Opdualag will have an opportunity as the data matures to potentially have a promotional play there versus Opdivo-Yervoy, but our focus right now is continuing to capture what we think is the lowest hanging fruit, which is PD-1 monotherapy.
Tim Anderson
Your confidence that — and this might be — well, it is more of an R&D question. There’s going to be other tumor types outside of melanoma where this drug will work or LAG-3 will work. So it’s in a large Phase II study right now in lung. Frontline randomized trial will give you a very definitive answer. It’s not registrational, but it’s almost registrational. So your confidence from what you can glean either your own views or within the organization about other settings outside of melanoma?
Chris Boerner
Well, the way we’ve approached the development for Opdualag is first, there’s clearly it’s in melanoma, but clearly, the presence that we have in the metastatic setting gives us reasonable an adjuvant. So that study is ongoing. So we’re excited about that. We’ve got reason to believe in CRC, and that study is enrolling. And so advanced colorectal cancer, we think, is an opportunity.
And then what we’ve looked at is where we believe LAG-3 mechanistically makes sense. And those — the two areas that we’ve articulated are HCC and lung. Obviously, we’re going to have to wait and see what the data look like. So that will be somewhat data dependent as to what the opportunity is there. But certainly happy with the activity that we’ve seen with Opdualag in melanoma. We’ll see how the studies play out.
Tim Anderson
A couple of other brands I want to hit on Zeposia. So launched first in multiple sclerosis and then later in ulcerative colitis. That ulcerative colitis approval came through in May of 2021. So roughly 18 months ago. Yet if you look at the ramp of this drug in the U.S. in terms of sales, it’s really not ramping very much. And it’s not intuitive to me why it’s not ramping as a non-JAK as an oral therapy, with good clinical data, so what’s been the holdup if you agree, there’s been a holdup?
Chris Boerner
Yes. So we continue to be excited about the profile. We think the data look good. We think the opportunity to have an oral in this space is important. Obviously, there’s a lot of focus on JAK inhibitors right now, and we think this provides an opportunity for us with Zeposia. As we’ve said consistently, the biggest challenge that we have in this very heavily managed space, has been access. And we’ve got to do — it’s a similar story in many respects to deucravacitinib. You’ve got to build enough volume in order to tell an access story.
Good news is we made some progress even this year in terms of getting access. We’ve gone through the formulary negotiations for 2023. They haven’t been published yet, but we feel good about where we are in terms of being on track to be in a much better formulary position for next year. And that’s going to be an important opportunity for us to grow this brand.
What I would say in the MS population — in the MS spaces, we feel good about the fact that we’re the leading S1P in MS. The brain volume data is playing very well in that space. The challenge that all of the orals have in MS is that the IV market has become much bigger and that’s squeezing that portion of the market. But we still see incremental opportunities to grow in MS as well.
Tim Anderson
Let me ask on Eliquis. What happens when Xarelto goes off patent in 2024? So you’re the leading brand. The growth has been straight up with Eliquis. There’s an unwavering line. It’s been an amazing product. But there is going to be a change in the marketplace when Xarelto goes LOE. So is that going to kind of dent that straight line for Eliquis and — or at least cause more pricing headwind? I would imagine if nothing else is going to lead to incremental price revenue.
Chris Boerner
So first, I think that there’s a range around all of these LOE timings. And so I think you’ll need to spend time with J&J on what the LOE actually is for Xarelto. When you have a product in a class like this that goes generic, price erosion is something you’re always concerned about. But you step back from that and you have to think about it in sort of two ways. Number one, do you have a product that you have a compelling story as to why it is that this drug should be treated from the product that’s just gone LOE. And I think on Eliquis, we’ve got the best story you could possibly have.
You’ve got a drug that has very strong clinical data. We have the largest real-world data set, I think, within the cardiovascular space, and all of it says that this drug is differentiated from Xarelto, both in terms of efficacy and in terms of bleed rates. That’s a very strong story to tell while this should not be a simple swap of a generic — of Eliquis to a generic.
The second thing is do you have a team that can manage those engagements. And I think what you’ve seen with how we’ve managed the gross to nets on this product is we’ve been very disciplined about how we’ve approached and engaged with payors ensuring that we have broad access, and we’ve always pursued open access for this product, but also been disciplined in terms of how much we’re paying for that open access. That’s given us an ability to know these payors, know them well, get sort of used to being able to present very strong arguments as to why Eliquis should be treated the way it has been.
And so given the history of this product, we feel good about our ability to manage any potential switches. But it’s certainly a risk, and it’s something we have to stay focused on.
Tim Anderson
I think we’re out of time. So thank you very much, Chris, for this discussion today, and thank you for joining us.
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