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Bristol-Myers Squibb Co (NYSE:BMY)
Q4 2019 Earnings Call
Feb 6, 2020, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day and welcome to the Bristol-Myers Squibb 2019 Fourth Quarter Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. John Elicker, Senior Vice President, Public Affairs and Investor Relations. Please go ahead, sir.

John Elicker -- Senior Vice President, Public Affairs and Investor Relations

Good morning, Anna and thanks, everybody for joining us today as we talk about our quarter and importantly the outlook for 2020 and beyond. I'll take care of the legal requirements, before I turn it over to Giovanni, both Giovanni and David Elkins, our CFO will have prepared remarks and then joining us for Q&A as well our Samit Hirawat, our Chief Medical Officer and Head of Development; Chris Boerner, Chief Commercialization Officer and Nadim Ahmed, our President of the Hematology business.

During the call, we'll make statements about the company's future plans, and prospects that constitute forward-looking statements. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the company's SEC filings. These forward-looking statements represent our estimates as of today and should not be relied upon as representing our estimates as of any future date. We specifically disclaim any obligation to update forward-looking statements even our estimates change.

We will also focus our comments on our non-GAAP financial measures, which are adjusted to exclude certain specified items. Reconciliations of these non-GAAP financial measures to the most comparable GAAP measures are available at our website. And just to remind everybody, in case you have, haven't seen them, there are slides to go along with today's call.

And with that, I'll turn it over to Giovanni.

Giovanni Caforio -- Chairman of the Board and Chief Executive Officer

Thank you, John, and good morning, everyone. Welcome to our fourth quarter and full year 2019 earnings call. I am pleased to be here today to discuss the earnings results of our new company for the first time.

On Slide 4, let me, let me start by reminding you who the new Bristol-Myers Squibb is today. Our mission hasn't changed. We are focused on discovering, developing and delivering innovative medicines that help patients living with serious diseases. We aspire to be the leading biopharma company in the industry. Our strategic foundation remains centered on combining the scale and resources of a pharma company with the agility and speed of a biotech. I am proud of the strength and talent of our people who are focused on transforming patients' lives through science.

Moving to Slide 5. I am more encouraged about our company's potential today than I was a year ago. The strength of our performance in '19 has positioned us very well for the future. As I look at '19 we've delivered strong in line performance across our businesses and geographies, and we've made important progress on our late-stage pipeline. I am pleased with how integration is going so far, with good progress across our business units and functions as we remain on track to deliver $2.5 billion in synergies. Of course, we have more work to do to integrate our processes, systems and platforms, including IT pricing and accounting. Based on what I've seen to date, I'm confident about the successful integration of our company.

Turning to our financial outlook, I feel really good about the financial strength of the company. Our guidance reflects the earnings power and significant EPS growth outlook that we have as a company. We continue to see potential for significant cash flows to support debt reduction and continued investment in innovation. Finally, as I look forward, we have an unprecedented number of new drug launches in the near-term horizon. These are all either first-in-class and or best-in-class medicines. And I am very encouraged by how prepared our teams are to maximize this launch opportunities. Now, let's move to the fourth quarter.

Turning to Slide 6. I'll give you my perspective, before David provides more color on product performance. We've delivered strong growth across multiple key brands, many with double-digit growth. With respect to the IO franchise, I'm pleased with the excellent work of our teams in this area. Opdivo grew on a full year basis. And though, we are seeing some pressure in the US, as expected, we saw growth internationally and continue to view 2020 as a year of transition for the brand.

Looking forward, we have the potential for new launches, supporting an expected return to growth in 2021. This includes first-line lung cancer which studies 227 and 9LA. Our first line renal cancer opportunity with 9ER and moving into earlier stage disease with a number of adjuvant opportunities. Regarding lung cancer, let me talk briefly about study 227. While we're disappointed by the position taken by the CHMP. We continue to view the combination of Opdivo and Yervoy as a differentiated regimen, with the potential for long-term survival and one that should be available to patients globally.

Going forward, we continue to focus on the review of study 227 in the US, where it was granted priority with a PDUFA date in May as well as the filing on of 9LA in the US and globally. In summary, I am very encouraged by the strength of commercial execution across the enterprise in oncology, hematology, cardiovascular and immunoscience. This is a clear demonstration of our leading commercial capabilities, which will be important to deliver on the exciting potential near-term launch opportunities ahead.

Now let's turn to Slide 7. In December, we attended our first medical meeting as a combined company at the American Society of Hematology, just a few weeks after we closed the Celgene transaction. Importantly, we saw very good data at ASH for our hematology pipeline including pivotal data for three products which are potentially approaching launch and encouraging data from the early pipeline. I believe that this reinforces the opportunity we have to broaden the hematology portfolio and sustain a leadership position in multiple myeloma.

Let's turn to Slide 8, I feel good about the earnings power and growth outlook for the company moving forward. I am encouraged by the financial strength of the company this year, we see significant non-GAAP EPS growth from this year into next year and we project continued non-GAAP EPS growth into 2022. So, this will be moderated by the impact of generics on Revlimid. David will provide more details on this guidance but I am pleased with the strength of our in-line business, our launch opportunities, our financial flexibility and the breadth of our pipeline.

And with respect to our launch opportunities we expect important potential milestones over just the next few months. In March, the US approval of a ozanimod in multiple sclerosis. In April, the expansion of Reblozyl in MDS. In May, the US approval of Opdivo plus Yervoy in first-line lung cancer. Additionally, we continue to advance our regulatory filings for liso-cel, ide-cel and CC-486. Taken together, the company is in a strong position. And this is reflected in the performance of our business and the outlook, we are providing today.

Turning to Slide 9 to realize our potential, we will continue to deliver on the in-line business, drive integration and synergy capture, maximize the value of our launch opportunities and advance our pipeline. Beyond this, I continue to be encouraged by our financial strength and flexibility, and now this enables us to continue to invest in innovation to deliver important medicines for patients. All of this is what gives me confidence in our near and long-term opportunities as a company.

I'm looking forward to our Investor Day, which will be held on April 2nd in New York City. When my team and I will be able to talk in greater detail about the many opportunities ahead of us. Speaking of my team. I am very pleased to be joined today by David Elkins and Nadim Ahmed, welcome to both. At this point, I will hand it over to David, our new CFO to walk you through the financials. David?

David Elkins -- Executive Vice President and Chief Financial Officer

Thank you, Giovanni and good morning, everyone. Having benefited from working in this industry for over 20 years, I could not be more excited about the growth potential and earnings power of bringing these two companies together. I've been very impressed by the employees of the combined company. I'm encouraged by the breadth of opportunities we have ahead and our ability to deliver important new medicines to patients.

Now, let's turn our focus to the performance in 2019, to start the business continued to deliver strong performance in the fourth quarter with 6% revenue growth on a pro forma basis. This performance serves as a strong foundation for the future outlook of the company, which we will cover in a moment. Giovanni give you some brand insights, and let me provide you with additional color on the underlying performance of the business.

Beginning with Opdivo on Slide 11, we had continued strong commercial excellence in the quarter, were our teams continue to operate very well and increasingly competitive markets. Let me provide you with a perspective on how we see the business at the moment. From a US demand perspective, we are seeing sequential low single-digit decline driven by the headwinds we described in the past. Note that demand trends are more studies and reported sales, which were incrementally impacted by buying patterns, both in the government channel and from wholesalers.

Now, with respect to some key indications, we expect steady performance in our melanoma business driven by our leadership in both metastatic and adjuvant setting. In non-small cell lung cancer, the size of the eligible pool of second line patients is leveling off at roughly one-third and first-line RCC space. We continue to perform well were Opdivo, Yervoy remains the standard of care in intermediate and poor risk patients and we've seen stabilization in this indication as well.

Internationally, we've seen very strong commercial execution in all our key markets, resulting an encouraging growth in the brand. We expect further growth as we continue to secure reimbursement in first-line RCC. With respect to first-line lung. We look forward to the opportunity to launch 9LA in the same setting and making Opdivo available for patients in these markets. So, stepping back, we continue to see 2020 as a transition year for Opdivo with demand pressures in the US and growth in our international business. More importantly, as we move into 2021, we believe we have a strong foundation for growth fueled by potential new indications, including first-line lung.

Now, let's turn to Eliquis on Slide 12. In the fourth quarter, we saw continued strong sales growth of 19% globally due to increased demand in both afib and VTE. In the US, we saw 18% sales growth in the fourth quarter versus prior year. Despite increased discounts for the Medicare coverage gap.

Eliquis continues to increase its share at the expense of warfarin and an expanding NOAC class. As the class is expanded, we've seen Eliquis taking share at the expense of other NOACs. Shown on this slide is the difference between new brand share and total brand share in the US for both warfarin and Eliquis. This highlights the continued growth opportunity for the class and the brand. We are also very pleased with the growth of Eliquis internationally, where we have a leading share in a growing number of markets, resulting in 21% sales growth in Q4 versus the same quarter last year. We continue to view this brand, which remains the number one NOAC globally as one positioned for significant future growth and continued opportunity for patients.

We also see strong growth in our multiple myeloma franchise. As you will see on Slide 13, Revlimid continue to grow in the fourth quarter driven by triplet regimens and increased treatment duration, increasing 10% year-over-year on a pro forma basis. Pomalyst saw significant growth of 23% in Q4 versus last year on a pro forma basis, driven by increased demand and duration of therapy. We expect growth to continue across both brands through to increase adoption of the triplet regimens and increased duration of treatment.

I'll now turn to Slide 14 and review our fourth quarter P&L. This was an unusual quarter for the company as a result of the close of the Celgene acquisition on November 20. Included in our reported P&L or the approximately six weeks of results from the legacy Celgene business post the transaction close, as it relates to the non-GAAP P&L. We now include the impact of stock-based compensation in our operating expense, which was previously specified for Celgene when it was a stand-alone company. With respect to OI&E since the close of the transaction, we have incorporated both the interest expense on legacy Celgene debt and have begun recognizing interest expense on acquisition financing that had previously been specified since its issuance last May. Also, our Q4 tax rate was primarily impacted by several one-time favorable items including the resolution of uncertain tax provision and provision adjustments for filings in the US and other markets.

Looking to 2020 from a financial perspective on Slide 15, we provided guidance reflecting the strength and momentum in the business. Our new launch products and indications and the realization of synergies. First, it's important to note that our guidance on non-GAAP earnings per share reflects the expected 40% accretion to the BMS stand-alone P&L and includes significantly higher operating margins than in the past. Given the unique circumstances as a new company this year's guidance includes more detail than we typically provide. So, let me provide some color on the key line items. Revenue represents growth on a pro forma basis driven by opportunities we see in our prioritized portfolio, more than offsetting declines in our established brands. We expect a continued decline in established brand portfolio due to strategic course choices and competitive dynamics.

First, we expect Baraclude to continue to decline based on the maturity of that drug and generic competition. We expect by days it will be impacted in 2020 by generics in Europe. And we expect the rest of the established brands portfolio to decreased by about one-third compared to the 2019 pro forma results. This is driven by the full year impact of the Otezla divestiture, as well as further generic erosion of the HIV portfolio.

OI&E includes incremental interest expense offset by royalties. From an interest perspective in our non-GAAP P&L, interest expense will be driven by approximately $45 billion of debt at a weighted average interest rate of 3.4%. Note that royalties from the AstraZeneca are stepping up in 2020 and we also expect higher royalties on our PD-1 patents, altogether we expect royalties to roughly offset interest expense in the year.

Our separate line items for R&D and SG&A each include the impact of stock-based compensation, as well as deal synergies. We expect to realize about one-third of the total $2.5 billion synergies this year. With respect to stock-based compensation BMS includes the impact of Celgene's employee stock-based comp in our operating expense, which negatively impacts our non-GAAP P&L. The full year amount of the stock-based compensation for Celgene in 2019 was roughly $800 million on a non-GAAP basis, which was incremental to the BMS stand-alone stock-based compensation. We expect levels of stock-based compensation to remain elevated in 2020 and begin to taper down over time as the Celgene and BMS legacy plans converge.

We also want to remind you, on Slide 16, the evolution of our share count. Basic share count as of the end of 2019 was impacted by the $715 million of new issuances as a result of the Celgene conversion and by the impact of the ASR. Going forward, our 2020 basic share count will be impacted by three factors. The number of stock options exercised, the finalization of the ASR program and additional share repurchases, which provides us flexibility to manage the potential future dilution. Remember, there will continue to be a dilutive impact for the stock options, that remain in the money. That said, no additional options will be granted under the legacy Celgene plan, so over time this impact will lessen as the compensation plans from the legacy companies converge. As you can see, we've guided our weighted average share count for the year to be approximately 2.3 billion shares for the year.

Now, on Slide 17 as we look beyond 2020, we see a robust growth in 2021, driven by the current portfolio as well as new expected launch opportunities and the impact of continued synergies, all of which is reflected in the EPS guidance. We expect continued growth into 2022 while acknowledging, this will be at a moderated growth rate do the generic competition for Revlimid. It's important to mention that we do not anticipate continually updating our long-term guidance throughout the year.

Now, let's turn to capital allocation on Slide 18. As we said in the past, we continue to expect significant cash flow from the newly combined businesses and we will continue to employ a balanced approach to capital allocation. Business development is a key enabler of our strategy and therefore remains a top capital priority. We also remain committed to the dividend, as evidenced by our 10-plus year track record of annual increases and our recent increase of almost 10% in December. At the same time, we remain fully committed to deleveraging and achieving our 1.5 times gross debt to EBITDA ratio by the close of 2023.

As you are aware, we have approximately $10 billion in bonds maturing over the next three years, providing an opportunity to reduce total debt. Finally, related to share repurchases, we repurchased 105 million shares in 2019, 99 million in Q4 under the $7 billion ASR, mostly due to the percent retired upfront. The remaining roughly 20% of the ASR is expected to be completed by the end of Q2 this year.

As we announced today, we've increased our share repurchase authorization by $5 billion to $6 billion. This provides us with the flexibility to execute disciplined share repurchases to manage the dilution from stock-based compensation and stabilizing the share count, into the next year. Other typically, we don't provide quarterly guidance, I'd like to remind you of the seasonality of the legacy Celgene portfolio, specifically Revlimid revenue is historically a bit lighter in the first quarter then the full-year average run rate.

Before we move to the question-and-answer session, I just wanted to reiterate that we feel really good about the growth outlook and financial flexibility of the business, and have reflected in our guidance. The company is in a strong position to embark on its next chapter and delivering important medicines for patients. I'll now turn the call back over to John and Giovanni for the question and answer.

John Elicker -- Senior Vice President, Public Affairs and Investor Relations

Thanks, David. And I think we're ready to go to the Q&A session.

Questions and Answers:

Operator

Thank you. [Operator Instructions] We take our first question from Chris Schott from J.P. Morgan. Please go ahead.

Chris Schott -- J.P. Morgan -- Analyst

Great, thanks so much for the questions. Maybe just two here on Opdivo. First, I know Giovanni you touched on a little bit in the prepared remarks, but can you elaborate on the first-line lung strategy in Europe post the last week's 227 update. And then we think about first-line lung in the US is Opdivo, Yervoy and the 227 data the primary focus or do you feel that 9LA regimen of chemo Opdivo, Yervoy will be the bigger focus. I'm trying to figure out how you're balancing those I guess two data sets. And then my second question was another one, just as we think about 2020 for Opdivo, when you look at where the Street shaken out here or so things about a 5% erosion for Opdivo this year versus 2019. Do you feel like consensus properly captures the balance of the second-line lung erosion relative to the growth you're seeing in some of these other indications? Thanks so much.

Giovanni Caforio -- Chairman of the Board and Chief Executive Officer

Yes. Thank you, Chris. So first of all, let me just say, as I mentioned in my remarks. Our focus in Europe for first-line lung cancer obviously has shifted to 9LA, which we believe has you know, and we've said before is an important study. Let me just ask Chris Boerner to give you a perspective on our overall strategy for first-line lung cancer in the US as we think about the two trials, and then Chris can provide some perspective on Opdivo performance and the various components of that in 2020 as well.

Chris Schott -- J.P. Morgan -- Analyst

Yeah, Chris. Thanks for the question. I mean I think we continue to see 227 and 9LA as being bought off in the US, very much in conjunction with one another. If you go back, what we hear consistently from physicians who have seen the 227 data is that number one, they're impressed with the potential for long-term survival with dual I-O therapy. They note the depth and durability of complete remissions, all coming with a very manageable safety profile and so, they see that as an important opportunity for patients who either don't need or don't want to chemotherapy. And incidentally, I would say that the be NCCN listing to A listing that we got back in December is a recognition, both of the unmet need that continues to exist in first-line lung cancer as well as the potential that exist for dual I-O therapy. What 9LA then brings to the table is, answering the question for those patients who do need chemotherapy, does concomitant chemotherapy two cycles in this case along with dual I-O therapy provide a benefit, and we're very happy to see a second study that demonstrates overall survival. So, as physicians in the US, think about these studies, they very much think about them in combination with one another and that's an important part of how we are going to think about our long-term strategy in first-line lung cancer.

As it relates to 2020 and how we think about the business, let me say, just a couple of things, first of all the business for Opdivo in the US, continues to perform in line with our expectations. In second-line lung cancer eligibility is still on the order of 30% to 35%. We expect that's going to flatten out around 30% this year. Our shares are holding stable in the 35% to 40% range. The business continues to be stable in metastatic melanoma. We continue to have a leadership position and adjuvant melanoma and again in first-line renal our business of stable in our approved indications.

As we think about this year, as David mentioned, the business is going to continue to still be under pressure. As a reminder that pressure really comes from three tumors, it's second-line lung cancer, where we've talked about the dynamics there and it's small cell and head and neck and in those two tumors, it's a very similar dynamic to lung cancer where you've seen competitive approvals in the first-line impacting eligibility in the second line, but I would say, importantly, our assumption for this year is that our stair our shares in the second-line setting across those tumors remained stable, it's just stable within a smaller pool of patients.

Giovanni Caforio -- Chairman of the Board and Chief Executive Officer

And again, as we said earlier in the remarks, Chris, but we're not commenting exactly on guidance for the growth of this year. We remain confident with growth growing into 2021 and that's our focus, particularly as it relates to preparation for launches and commercial execution.

John Elicker -- Senior Vice President, Public Affairs and Investor Relations

We go to the next question please, Anna.

Operator

We take our next question from Seamus Fernandez from Guggenheim. Please go ahead.

Seamus Fernandez -- Guggenheim -- Analyst

Well, thanks very much. Actually, I'd love to ask you guys about the Celgene portfolio a little bit, rather than focusing on the Bristol portfolio. One of the products that we learned about at ASH was the -- all of the day's opportunity. I was just hoping you might be able to help put that in context, for us to help us understand what may be an under-appreciated opportunity in the Bristol story and particularly something that falls outside of the CVR maybe this is a bit of a surprise upside. And then also would you update us on the CELMoD development opportunity. Maybe just put in context, where you see the CELMoD portfolio delivering the most upside as we talk to position, some of the feedback that we get is that this is a pretty straight forward opportunity for physicians to treat patients that have progressed on both Revlimid and Pomalyst. So, just love to get your thoughts on both of those opportunities. Thanks.

Giovanni Caforio -- Chairman of the Board and Chief Executive Officer

Thank you, Seamus. Let me ask Samit to start and give you a perspective, both on CC-486 and CELMoD and Nadim will make some comments from a commercial perspective.

Samit Hirawat -- Executive Vice President, Chief Medical Officer, Global Drug Development

Thank you. Thank you, Seamus for the question, I think you already teed up the overall portfolio from a, what comes from the Celgene side of things. In terms of hematology, where certainly beyond the ones that we've already talked about from Abraxane [Phonetic] and Inrebic. CC-486 certainly adds on to that. CC-486 study in patients with acute myeloid leukemia certainly a very important data set that we presented at ASH, looking at patients with AML, who have received induction with or without consolidation chemotherapy and then achieve a complete response with or without complete recovery of the bone marrow. And what we saw with, there is of course the overall survival improvement as well as an improvement in the relapse-free survival, and this is an oral agent so convenience of delivery for these patients becomes very, very important. And this is the first and only treatment that has shown a survival benefit in the maintenance setting. So, we remain excited about that and we are looking forward toward discussions with the health authority in the and the filings going forward. Of course, here we also continue to think about the overall lifecycle management plan with our portfolio and the combinations that could be available in the future.

As it comes to the CELMoD and then I will pass it on to Nadim to comment more on. I think CELMoDs are certainly a very, very exciting addition to the overall portfolio. And in the armamentarium that we look forward to developing in multiple myeloma. We see this as absolute necessary opportunity and one of the data set that we presented in ASCO 2019 were for CC-220 where we saw that patients who had received prior treatment with IMiD proteasome inhibitors, daratumumab, they still went on to have a response rate of 31% and these are durable responses that we saw in this late-line setting. So, we have additional plans for not only CCT-220 but CC-480 which is another CELMoD looking at multiple myeloma setting and there are multitude of opportunities with our overall portfolio of cell therapies as well as the T-cell engagers where we will continue to think about how to do the treatments for further improvement in the outcome of these patients where cure still does not exist. So, we will be sharing those plans in the coming months and as we look forward. But let me pass it onto Nadim to talk a little bit more from the commercial perspective.

Nadim Ahmed -- Executive Vice President and President, Hematology

Thanks, Samit. And then thank you for the question, Seamus. So, if you think about front-line or newly diagnosed AML across EU5 and the US, about 33,000 patients and about two-thirds of those patients are eligible for intensive chemotherapy and that's the patient group that we studied and the unmet need even in newly diagnosed AML is very high. So, with the elderly patients, you have a five-year survival of only about 15% and 80% of these patients will relapse within 18 months. So, to have a treatment that adds 10 months overall survival and doubles the relapse-free survival is going to be really important. So, we're very excited about the opportunity in AML and I'd also remind you that this gives us another opportunity to once again established the maintenance treatment paradigm in another disease after we did the same in multiple myeloma. So, we're very excited about the opportunity. So, that's CC-486.

In terms of 220 and Samit covered it very well as well as 480. We are hearing the exact same thing from clinicians who have been using the drug on study. So, certainly we're seeing the CELMoDs work after our IMiDs, our in-line portfolio. But I think the additional opportunity as Samit alluded to some of the lifecycle management opportunities where we then have the chance to move these treatments up earlier in the treatment sequence to displace the IMiD. So, we're very excited about that opportunity also.

John Elicker -- Senior Vice President, Public Affairs and Investor Relations

Thanks, Seamus for the questions. Can we go to the next question please, Anna.

Operator

Thank you. The next question comes from Geoff Meacham from Bank of America. Please go ahead.

Geoff Meacham -- Bank of America -- Analyst

Just have a couple. For David or Giovanni for 2021 guidance, I know you guys don't want to give details, but generally issue, should we assume the earnings growth will be mostly from the return to growth for IO and maybe new launches or is it more from the operational synergy side of things. And then for Nadim, what is a crowded field for BCMA-targeted therapy is just curious about the status of moving bb2121 up to second-line myeloma. And when you BCM modalities in your pipeline. How do you all reconcile by specifics with CAR-Ts and others? Thank you.

Giovanni Caforio -- Chairman of the Board and Chief Executive Officer

Yeah. Thank you, Jeff. Let me start. Obviously when you look at 2121 as we've, as we've said we have an opportunity to return to growth for Opdivo. We have a number of really exciting launch opportunities and I've mentioned several of those. And so, there is real momentum in the business, which is driven by the portfolio and how new launches come into play. That's the reason why I feel really good about the fact that the guidance we provided for '21 is driven by dynamics in the portfolio that are very encouraging for us. Of course, we will be disciplined with respect to continuing to execute on the synergies and as you know, we've updated that we feel comfortable with the $2.5 billion, about a third will come this year and we expect about a third to come next year. But I think the growth of next year, we're really excited about the portfolio opportunity is playing out. Let me just ask Samit and Nadim to ask you to answer your second question.

Samit Hirawat -- Executive Vice President, Chief Medical Officer, Global Drug Development

Thank you, Giovanni. Thanks, Jeff, for the question on the BCMA portfolio. So, from a BCMA CAR T perspective from ide-cel perspective, we've already shared some of the data last year at ASH, looking at I'd said in the fourth line plus patient population where we saw a CR rate of 31% overall and we certainly excited toward continuing to expand that portfolio and toward filing of that data set itself. There are three additional studies that are currently ongoing. As you can see, on contrast.gov, CARMA 2 [Phonetic] is the study. I think that sort of answers your question that we are beginning to look at the second line setting, so we are looking at are using ide-cel in the second line patient population. CARMA 3 is a randomized Phase 3 study looking at ide-cel versus a triplet therapy for patients, the third-line plus setting. And then CARMA 4 was just initiated at the end of last year. Looking at the first-line patient population in a Phase 1, 2 study. So, we're really excited toward looking into the outcomes of these studies and the data generation.

When we talk about the overall portfolio from a BCMA perspective, I think all the emerging data tells us that BCMA is absolutely an important target that we need to be able to target, attack from various modalities, whether it'd be through the cell therapies that we talked about or the T-cell engager that we have now shared the data from the Phase 1 study, 269 and certainly looking forward to now looking at how to bring that forward as more data matures and accelerate that development plan. And then of course, we will look into our pipeline, how to combine these with, as we previously discussed with cell CELMoDs etc. But let me pass it onto Nadim to give me, give you a little bit more on that.

Nadim Ahmed -- Executive Vice President and President, Hematology

Sure. Thanks. Thanks, Samit. And so, one thing I will remind everyone is that once we had a good idea that BCMA was going to be a very important target for multiple myeloma, we strategically and proactively embarked on a multi-modality approach to treating this disease. And our thinking there was that you have very different patient segments that can benefit from CAR-T versus a T-cell engage and even ADC, which we have early on in the clinic. So, as you think about the various patient segments, patient profiles and patient preferences, you can envisage where a patient has the opportunity to receive CAR-T with the once, one and done treatment that allows them time very long treatment free interval. So, there is an opportunity to do that. Physicians may choose to refer the younger and fitter patients for CAR-T, for example. You may have somebody who prefers to be treated closer to home for whom a T-cell engager will be an ideal treatment and then both treatments work differently. For a T-cell engaging you need to continue the treatment to stay on top of the disease. And with the CAR-T therapy, it's a once and done treatment. So, we think there is definitely room for both and even potentially three modalities to coexist one within the same line of therapy but across also across multiple lines of therapy in exactly the same way we approached Revlimid and Pomalyst in the multiple myeloma market. So, we feel very confident that we're actually delivering on our strategy, and there is the opportunity for multiple patient segments to benefit from all these types of modalities.

John Elicker -- Senior Vice President, Public Affairs and Investor Relations

Great, thanks. Anna, can we go to the next question please.

Operator

Next question comes from Tim Anderson from Wolfe Research. Please go ahead.

Tim Anderson -- Wolfe Research -- Analyst

Thank you. A couple of questions. Originally, you guys at the time of the deal gave 2022 and 2025 guidance on revenues and net income, that has not been updated since the Otezla divestiture. And I'm wondering, are you going to update that at some point or can you update that today. I guess is it will have changed.

And then second question is, at least for us, a black box, has been how to model Revlimid erosion at the time of the deal, you made a very clear that your internal forecasts were much more conservative and cautious on the rate of erosion of Revlimid from 2022 onwards, which was a big product. I'm wondering now a year on, as you see analyst models, do you think the analyst community is appropriately modeling that erosion. Thank you.

Giovanni Caforio -- Chairman of the Board and Chief Executive Officer

Thank you, Tim. Let me just start on both questions, and then David, can add more comments. So, first of all, with respect to guidance, I think as we said from the beginning we were not going to go back and update the S-4 from last year. As you know there have been a number of things that have happened since last year, the divestiture of Otezla as you mentioned, the divestiture of our Otezla consumer medicines business and on the other side, continued really strong performance with our in-line business and significant progress with the pipeline, which obviously is a key driver of our performance in the next few years. So overall, as I mentioned, also my remarks I feel better today about where we are. Then I felt a year ago when we first announced the deal, and in the strength of our in-line business and the progress made with our pipeline make me feel really good about the future and the key drivers that were behind sort of the confidence we had last year and we have today in the business.

Today, we provided guidance on 2020 and '21, I made some comments about our perspective on '22 and we feel pretty good about where we are. So now, with respect to with respect to Revlimid also there, there have been good developments. First of all, I would say the in-line performance of the brand continues to be strong, and the teams are doing a great job of continuing to support an important franchise. I think that's important. We had two IPR decisions which were favorable to Bristol-Myers Squibb. We did reach a settlement with Alvogen, which was aligned with our expectations. And I would say that, overall, we continue to see the loss of exclusivity for Revlimid as a slope that is driven by sort of all of the same assumptions that we've discussed in the past. There has been a good development. And so, nothing has really changed there.

John Elicker -- Senior Vice President, Public Affairs and Investor Relations

Tim, thanks for the questions. Anna, can we go to the next one please.

Operator

The next question comes from Terence Flynn from Goldman Sachs. Please go ahead.

Terence Flynn -- Goldman Sachs -- Analyst

Hi, good morning. Thanks for taking the questions. I was wondering, first on Opdivo, if you can give us your latest thoughts on the opportunity and adjuvant bladder following the Roche data. Just wondering if there are any notable trial design differences. You could point to, for your study versus their trial. And then on bb2121 and JCAR in the commercial ramp on the forward. Anything you guys have learned from the competitive CAR-T launches that you can leverage and would you expect to have stronger launches as a result? Thank you.

Samit Hirawat -- Executive Vice President, Chief Medical Officer, Global Drug Development

Sure. Thank you for the question, Terence. And as it relates to the adjuvant setting. First of all, let me start by saying that immuno-oncology products are going to play a major role in the adjuvant setting, because the earlier we can utilize these treatments. It will provide an opportunity to not only shift the level of recurrence, but provide a potential for cure for these patients. And overall as we move earlier and earlier from the metastatic setting to the earlier setting, the overall plan that we have in place, we are, we feel very confident about it and non-small cell lung cancer melanoma RCC gastric and of course, in bladder cancer as well there, it's no point trying to do cross trial comparisons at this point, I think we are pretty close to where we will be starting to see the data emerging, I think just to keep in mind that, the overall patient population that we've enrolled seems very similar. And without getting into the specifics, one major differences placebo used in our trial versus observation in the other trial and the treatment duration is different, but I think we should wait for the data for it readout rather than getting into the specifics at this time. But I think Chris can give you more color on the commercial side.

Chris Boerner -- Executive Vice President, Chief Commercialization Officer

Yeah. So, let me just say something on a macro level with respect to the adjuvant programs and then I'll talk specifically about bladder. Just a reminder there as you think about the adjuvant setting, you need to think not only about the patients who are treated today, but also the potential for patients to be treated. So, what we saw when we launched IO in the adjuvant melanoma space was that you saw treatment rates increase significantly and in a number of the tumors in which we are pursuing our early stage program, you see treatment rates in the low-to-single digits ultimately up to potentially around 40% for some tumors, but still there is plenty of opportunity for us to not only treat patients who are being treated today but with improved therapies improve the treatment rates overall. With respect to bladder cancer specifically, this is a very large patient population. It's highly fragmented and we have importantly multiple opportunities in the muscle invasive space about 50% of those patients are getting surgery today. We have CheckMate-78, which is in the peri-adjuvant setting. We are looking at the entire population with CheckMate-274 and we also have a non-muscle invasive bladder program as well. So, it's an important opportunity for us. We are still very confident in the opportunity for IO in the adjuvant setting and we very much look forward to seeing the data.

Nadim Ahmed -- Executive Vice President and President, Hematology

Great, thanks. Thanks, Chris. I'll pick up on CAR-T So, I think a couple of things I would mention as you alluded to. So clearly, there have been some headwinds in the marketplace and I think about things like reimbursement access environment complexity of manufacturing also the safety profile of current agents has led to most of the administration being conducted in the inpatient setting. So, we're addressing all of those near-term headwinds. So, a couple of things I would say. So, if I use just liso-cel as an example, the dates we showed at ASH of the pivotal data, we are seeing a safety profile where we seeing significant reduction in the incidence and severity of CRS neurotoxicity, which we think bodes well to be able to, to give this treatment in the outpatient setting, which will allow us to expand our prescriber base. So, we're excited about that.

The other thing that's important to point out from a differentiation of BMS is that, we do have very deep relationships with hematologists and that includes multiple myeloma that includes lymphoma. So, our footprint out in the community will really help us to drive those referrals into the treatment sites where CAR-Ts will be given as well as expand out into the community with assets like liso-cel. So, from where we are looking, we think we're addressing the near-term headwinds. In terms of the access environment ongoing work continues in terms of addressing the DRG issue. Great news last year that the National Coverage Determination wasn't implemented. So, that could have impacted side of care. So that's not an issue for us now. From a manufacturing capacity capability between Samit and Seattle. We feel very good about capacity at launch. And we also have longer-term plans to expand our footprint to make sure we continue to have great capacity.

But the other final thing I would add is, we've seen transformational data in very late stage setting. But I think the true potential of these therapies, is moving them up earlier in the treatment sequence from a long-term potential perspective and you heard from Samit that we have a very aggressive lifecycle management plan for both of these assets that would allow us to unlock that long-term potential for these transformational therapies.

John Elicker -- Senior Vice President, Public Affairs and Investor Relations

Thanks Terence can we go to the next question please, Anna.

Operator

Your next question comes from Matt Phipps from William Blair. Please go ahead.

Matthew Phipps -- William Blair -- Analyst

Thanks for taking question. I was wondering if you could quantify the impact of buying patterns for Opdivo in the US for the quarter or do you just assume it's the difference between the 6% decline in quarter-over-quarter prices versus, I know you mentioned a low single-digit decline in demand?

Chris Boerner -- Executive Vice President, Chief Commercialization Officer

Yeah, so, let me address that, Matt. So, as David mentioned in his prepared remarks, we saw Opdivo decline on the quarter versus same time last year about 2%. And let me just characterize that, that was entirely driven by the US, which was down about 10%, but virtually all of that decline year-over-year as a result of the dynamics. We've been talking about quite a bit, which are the dynamics in second-line lung cancer.

As you look on a sequential basis, the US was down roughly 6%, about half of that was a result of the inventory work down with the VA. The remaining portion of that was mainly the second line eligibility issue in lung cancer, we saw a little bit of an impact in eligibility in small cell lung cancer and head and neck. But importantly, if you normalize for the VA inventory movements. What you see in both Q3 and Q4 from a demand standpoint was Opdivo was down. As David mentioned in low-single digits around 2% to 3%. And importantly, as we see both 2020 and 2021, the impacts that you saw in the quarter, will have no material impact on what we see for the year as a whole in 2020 and for the growth opportunities for Opdivo as we go into, we go into '21.

Operator

The next question comes from Steve Scala from Cowen. Please go ahead.

Steve Scala -- Cowen and Company -- Analyst

Thank you. I have two questions, both for clarification. First Giovanni to clarify on what you said about growth in 2022. Did you say you see growth into 2022 or through 2022 although moderating? And if into, is there any scenario where earnings would be down in 2022. So that's the first question.

The second one is on the other income expense guidance for 2020. It appears way better than one would expect, given the financing costs. Now, you mentioned the step up in royalties on Keytruda and the AstraZeneca diabetes products in 2020. But I thought that the Keytruda royalty was flat at 6.5% through 24 and the AstraZeneca royalties are either flat or step down in 2020. So, are you saying that the royalty rates are the same, but the products will grow or something different? And I don't think there's a lot of optimism about the AstraZeneca diabetes portfolio. So, I'm wondering again, is it the royalty rates are changing or the products, royalties are changing? So please clarify. Thank you.

Giovanni Caforio -- Chairman of the Board and Chief Executive Officer

Thank you, Steve. Let me answer the first question. So, when I spoke about 2022. I'm speaking about growth in 2022 moderated by in terms of the growth rate, by the potential beginning of the entrance of generics for Revlimid in 2022. So, I see at this point, our business growing in 2022 as a year with the moderation of the growth rate versus '21 driven by the dynamic I just discussed. David?

David Elkins -- Executive Vice President and Chief Financial Officer

Yeah, Keytruda from a volume perspective continues to grow and AstraZeneca, the rate continues to increase. So, that is being offset by the higher interest expense as I talked about in my prepared remarks with the $45 billion of debt and average interest rate of 3.4%.

John Elicker -- Senior Vice President, Public Affairs and Investor Relations

Can we go to the, I think we have time maybe for two more questions, Anna?

Operator

Thank you. The next question comes from David Risinger from Morgan Stanley. Please go ahead.

David Risinger -- Morgan Stanley -- Analyst

Thanks very much and congrats on the disclosures. So, starting go back on this Giovanni, but just a quick question, I think that last year you had said you expected versus sort of growth, EPS through 2025. In your prepared remarks, you mentioned, continuing growth into 2022. Could you just provide any comments beyond 2022, please? And then second, with respect to CAR-T hospitals are obviously losing significant amount of money on patients who are not in clinical trials, which were paid for by manufacturers. Could you just talk about prospects for changes to Medicare reimbursement and potential changes in DRG codes in the future? Thanks so much.

Giovanni Caforio -- Chairman of the Board and Chief Executive Officer

Sure, David, let me start and then Nadim will comment. So, let me just say, again I feel really good about where we are with our business. We discussed, very clearly in Q3, we would not update the S-4 going forward. And I'm feel pretty good about having provided visibility into the next three years, which clearly demonstrate the earnings power, the growth outlook for the company. But most importantly, I feel really good about the fundamentals of the business, both in terms of the performance of the in-line portfolio and the speed at which the pipeline that will drive the long-term growth of the company is advancing. So, I'm not going to make comments beyond 2022, but I believe I provided my perspective on where we are as a company and the real opportunity we have for the long-term. Nadim?

Nadim Ahmed -- Executive Vice President and President, Hematology

Sure. Thanks for the question. So, I think part of the issue around the access reimbursement environment has, as I said previously, has been driven a lot by the fact that many of these treatments have been given in the inpatient setting. So one, I would say if you have a treatment that has the potential to be utilized in the outpatient setting, then you start entering into the Part B environment which is very different to the inpatient compensated DRG environments. That's one point I would make, especially as it pertains to liso-cel,

I think in the inpatient setting, the challenge has exactly being that the capitated treatment even having said that, those things have started to improve, we sold the NTAP improved to 65% last year through CMS. I think there's been lots of talk and we have been working on a potential DRG for CAR-T specifically, currently sites are having to use the DRG for stem cell transplant, which under reimburses the cost of CAR-T therapy. So, there is work to do, but the two things I would leave you with is outpatient represents a discrete different opportunity, which is an affected by capitated payments, but at the same time I think CMS is working on the opportunity to come up with a specific potentially for CAR-T and I think that will help reimbursement in the inpatient setting also.

John Elicker -- Senior Vice President, Public Affairs and Investor Relations

Thanks, Dave. Can we go to our last question please, Anna?

Operator

We take our next question from Navin Jacob from UBS. Please go ahead.

Agarwal -- UBS -- Analyst

Hi, this is [Technical Issues] Agarwal [Phonetic] on behalf of Navin. So, my first question is on the CheckMate of old trial, there were some interesting data at ASCO GI recently, in first-line that you see for Opdivo Cabo and Opdivo Cabo Yervoy triplet regimen. So, any comment on the data presented and potential for these two regimens in TCE. And second question is on Yervoy, so Yervoy performed better than expectations this quarter. So, the question is the impact from the uptake of Keytruda in regimen is first-line RCC mostly done and should we expect more temporary erosion in US in 2020. Thank you.

Samit Hirawat -- Executive Vice President, Chief Medical Officer, Global Drug Development

Yeah, in the HCC arena, our focus is primarily on the Opdivo Yervoy combination. So, beyond that, we're not looking to any expanded way of looking at it at this time. So, that's all I can share at this time from HCC perspective. But maybe Chris?

Chris Boerner -- Executive Vice President, Chief Commercialization Officer

Yeah. So, Yervoy for the quarter was flat relative to the same time last year and we did show sequential growth of around 9% versus the third quarter of 2019. And that growth was driven really by both the US as well as in ex-US. We saw a bit of an uptick in the use of Opdivo plus Yervoy really across multiple tumors and the remainder of the business where we have Opdivo plus Yervoy in the market today, as well as the use of Yervoy as a monotherapy in a selected number of indications was relatively stable for the quarter. So, what we're really starting to see is the increased use of Opdivo plus Yervoy really spread across multiple tumors and that's happening, both in the US and to a lesser extent outside of the US.

Giovanni Caforio -- Chairman of the Board and Chief Executive Officer

Thank you. Thank you, Chris. And thanks, everyone. So before we close, I would like to thank John Elicker for extraordinary leadership of IR over many, many years. Thank you, John. Now in closing, we've had a very successful 2019. And I'm proud of the focus that our teams have had throughout a very, very busy year. We advanced our pipeline. We delivered strong commercial execution to make a difference in the lives of patients and we are very well positioned as we embark on our next chapter as a new company. Thanks, everyone.

John Elicker -- Senior Vice President, Public Affairs and Investor Relations

Thanks everybody for taking the time. As always, if you have any follow-ups, give us a call.

Operator

[Operator Closing Remarks]

Duration: 57 minutes

Call participants:

John Elicker -- Senior Vice President, Public Affairs and Investor Relations

Giovanni Caforio -- Chairman of the Board and Chief Executive Officer

David Elkins -- Executive Vice President and Chief Financial Officer

Samit Hirawat -- Executive Vice President, Chief Medical Officer, Global Drug Development

Nadim Ahmed -- Executive Vice President and President, Hematology

Chris Boerner -- Executive Vice President, Chief Commercialization Officer

Chris Schott -- J.P. Morgan -- Analyst

Seamus Fernandez -- Guggenheim -- Analyst

Geoff Meacham -- Bank of America -- Analyst

Tim Anderson -- Wolfe Research -- Analyst

Terence Flynn -- Goldman Sachs -- Analyst

Matthew Phipps -- William Blair -- Analyst

Steve Scala -- Cowen and Company -- Analyst

David Risinger -- Morgan Stanley -- Analyst

Agarwal -- UBS -- Analyst

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