10-QPeriod: Q2 FY2015

BRISTOL MYERS SQUIBB CO Quarterly Report for Q2 Ended Jun 30, 2015

Filed July 23, 2015For Securities:BMYCELG-RIBMYMP

Summary

Bristol-Myers Squibb Company (BMY) reported its financial results for the quarter and six months ended June 30, 2015. The company experienced a net loss of $130 million for the quarter, a significant decrease from the prior year's net earnings of $333 million, largely driven by increased research and development expenses. For the six-month period, net earnings attributable to BMS were $1.06 billion, down from $1.27 billion in the same period last year. Total revenues showed growth, up 7% for both the quarter and the six-month period, primarily fueled by strong performance in key products like Eliquis, Opdivo, and the Hepatitis C Franchise, partially offset by the impact of foreign currency fluctuations and the expiration of Abilify U.S. commercialization rights. The company's R&D spending saw a substantial increase due to the acquisition of Flexus Biosciences for $800 million upfront, aimed at bolstering its immuno-oncology pipeline. Management highlighted the strategic importance of Opdivo, which received significant regulatory approvals in Europe and strong results from Phase III trials, positioning it as a key growth driver. Despite the quarterly loss, the company maintained a strong liquidity position, with cash, cash equivalents, and marketable securities totaling over $10 billion. The company anticipates lower earnings in the remaining quarters of 2015 due to ongoing product transitions and increased investment in new launches.

Financial Statements
Beta
Revenue$4.16B
Cost of Revenue$1.01B
Gross Profit$3.15B
R&D Expenses$1.86B
SG&A Expenses$1.14B
Operating Expenses$4.11B
Interest Expense$49.00M
Net Income-$130.00M
EPS (Basic)$-0.08
EPS (Diluted)$-0.08
Shares Outstanding (Basic)1.67B
Shares Outstanding (Diluted)1.67B

Key Highlights

  • 1Net loss of $130 million for the three months ended June 30, 2015, compared to net earnings of $333 million in the prior year's quarter.
  • 2Total revenues increased by 7% to $4.16 billion for the quarter and 7% to $8.20 billion for the six months, driven by strong sales of Eliquis, Opdivo, and Hepatitis C Franchise products.
  • 3Research and Development expenses increased significantly, notably due to an $800 million upfront payment for the acquisition of Flexus Biosciences, aimed at strengthening the oncology pipeline.
  • 4Opdivo (nivolumab) received important regulatory approvals in the EU for melanoma and demonstrated positive results in Phase III trials for both melanoma and non-small cell lung cancer (NSCLC).
  • 5The company's liquidity remains strong, with $10.1 billion in cash, cash equivalents, and marketable securities as of June 30, 2015.
  • 6Abilify U.S. commercialization rights expired on April 20, 2015, leading to a significant decrease in related revenues.
  • 7The company is actively managing its capital structure, including debt redemptions and issuances, and expects capital expenditures to increase significantly for manufacturing capabilities.

Frequently Asked Questions

The primary driver for the net loss of $130 million in the second quarter of 2015 was a significant increase in Research and Development expenses, largely due to an $800 million upfront payment for the acquisition of Flexus Biosciences, Inc. This acquisition is part of the company's strategy to enhance its oncology pipeline.

Opdivo has shown significant promise, receiving European Commission approval for melanoma and demonstrating strong Phase III trial results for both melanoma and non-small cell lung cancer (NSCLC). Eliquis continues to perform very well, with revenues increasing substantially in both the U.S. and international markets due to higher demand. These products are key growth drivers for the company.

The expiration of Bristol-Myers Squibb's U.S. commercialization rights to Abilify on April 20, 2015, led to a significant decrease in related revenues, particularly impacting the reported figures for the second quarter and the six-month period. The company no longer records Abilify revenues in the U.S. following this expiration.

Management anticipates that revenues and earnings are expected to be lower in the remaining quarters of 2015 compared to the first half. This outlook is due to the expiration of Abilify U.S. commercialization rights, a projected decrease in Hepatitis C Franchise sales, and increased operating expenses to support product launches, the continued growth of Eliquis, and accelerated Opdivo development programs.