Bristol-Myers Squibb's Management Discusses Q1 2013 Results - Earnings Call Transcript

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Bristol-Myers Squibb Company (BMY)

Q1 2013 Earnings Conference Call

April 25, 2013 10:30 ET

Executives

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

Charlie Bancroft - Chief Financial Officer

Elliott Sigal - Chief Scientific Officer

Francis Cuss - Incoming Chief Scientific Officer

Giovanni Caforio - President, U.S. Business

Beatrice Cazala - Executive Vice President, Commercial Operations

Analysts

Jami Rubin - Goldman Sachs

Tim Anderson - Sanford Bernstein

Seamus Fernandez - Leerink

Chris Schott – JPMorgan

Gregg Gilbert - Bank of America

Mark Schoenebaum - ISI Group

David Risinger - Morgan Stanley

Marc Goodman - UBS

Alex Arfaei - BMO Capital Markets

Presentation

Operator

Good day and welcome to today’s First Quarter Earnings 2013 Release Conference Call. This call is being recorded. At this time, I would like to turn the call over to Mr. John Elicker, Senior Vice President, Investor Relations and Public Affairs. Please go ahead, Mr. Elicker.

John Elicker

Thank you, Kayla, and good morning everybody. Thanks for joining us to review our first quarter results. Unfortunately, Lamberto Andreotti, our CEO is not able to join us this morning. He is attending to an urgent family health matter. With me this morning are Charlie Bancroft, our Chief Financial Officer. Charlie will have prepared remarks. And then joining him for Q&A are Elliott Sigal, our Chief Scientific Officer; Francis Cuss, our Incoming Chief Scientific Officer; Giovanni Caforio, President of the U.S. Business, and Beatrice Cazala, Executive Vice President, Commercial Operations.

So, before we get started, let me just take care of some of the legal requirements. During the call, we will make statements about the company’s future plans and prospects that constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act. 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 subsequent date.

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

Charlie Bancroft

Thank you, John and good morning everyone. We have just completed a good start to an important year, one in which our focus is on commercial execution as well as the continued delivery of our diverse and sustainable pipeline. Before going into a deeper dive on our financial performance, I would like to highlight three important areas: ELIQUIS, diabetes, and R&D.

We are off to a very good start with ELIQUIS. ELIQUIS’ differentiated clinical profile is being recognized and valued by physicians, payors, and patients. In the U.S., we are on track with our expectation. Trends are consistent with where we thought they would be. And access is actually a little ahead of expectations. We expect to see continued progress in the second quarter with commercial Medicare Part D and hospital plan. We are expecting impact of this will start to be reflected in the prescription trends over the course of this year.

Outside the U.S., we are in the early stages but we have made progress on the access front in Europe with a positive recommendation from the UK and a positive guidance from Germany. In other markets, the process is ongoing with multiple negotiations taking place.

With our partner, Pfizer, we are very focused on executing the global launch of ELIQUIS with its AFIB indication. We continue to believe that ELIQUIS will be the leading new agent over time.

With respect to our diabetes portfolio, we continue to make good progress in this area as well. In the U.S. we are fully aligned with AstraZeneca having finalized our sales and marketing teams.

The combined organization is now focused solely on serving the needs of diabetes patients. We completed the international commercial integration of Amylin on April 1st in nearly 90 markets, a complex process that impacted all aspects of our business. This is a significant accomplishment for the BMS-AZ alliance. With the integration work nearly done, we can now redouble our efforts in diabetes to ensure we are focused and able to capitalize on the opportunities we have including plans to file FORXIGA for regulatory review in U.S. in the middle of the year.

With respect to R&D 2013 is another important year for the presentation of key clinical data that will lay the foundation for our company’s future growth. We have planned to present new PD-1 data at ASCO. PD-1 has received fast track status from the FDA for lung, renal cell and melanoma. The top-line results for SAVOR our CV outcomes trial for Onglyza should be available in June.

In Hep C you may have seen the important data on our triple regimen presented at EASL this week and we expect to initiate Phase III in a fixed dose combination by the end of the year. As mentioned in our press release this morning we have received breakthrough status from the FDA for this program.

Also by the end of the year we plan to apply our all dual oral regimen for regulatory review in Japan.

Now let me discuss our first quarter financial performance. We deliver net sales of 3.8 billion down 27% compared to the first quarter of last year due to the loss of exclusivity of PLAVIX and AVAPRO. We will continue to see the impact of these exclusivity losses on our financial results for one more quarter. Excluding PLAVIX and AVAPRO global sales grew 10% led by YERVOY, ORENCIA, our diabetes portfolio, Baraclude and SPRYCEL.

I will touch on some key product highlights. YERVOY global sales increased 49% to 229 million. This includes the positive impact from a 25 million, one time reversal of deferred revenues in the U.S. You will recall that we establish this sales deferral in the third quarter of 2011. Excluding this adjustment for YERVOY U.S. sales increased 15% versus last year. We are seeing good growth across all segments including community hospitals and practices as physicians increasingly understand the potential for long term survival. We expect continued growth in both the U.S. and Europe where we now have reimbursement in essentially all markets.

ORENCIA global sales increased 26% to 320 million. ORENCIA continues to perform well globally with growing demand in the U.S. and Europe as we expand access, reimbursement and promotion for the SubQ formulation.

U.S. sales increased 25% compared to last year driven by strong demand for SubQ which recorded sales of $70 million in the quarter. Several months into the SubQ launch in Europe we are seeing strong uptake in Germany and the rest of Northern Europe and we continue to secure access and reimbursement in other parts of Europe.

ORENCIA also continues to perform well in Japan, up 31% versus last year and we’re waiting for regulatory decision on SubQ. In diabetes global sales for the ONGLYZA franchise increased 25% to 202 million. Although ONGLYZA’s new prescription trends in the U.S. flattened somewhat this past quarter we saw strong volume growth for the ONGLYZA franchise versus the prior year. U.S. sales for our exenatide franchise were 136 million.

BYDUREON sales volume and market share continued to grow during the quarter fueled primarily by primary care physicians as we broaden BYDUREON’s prescriber base. For BYETTA we are focused on opportunities to combine the short acting insulin.

We launched FORXIGA in Germany, the UK and Denmark during the quarter and as I mentioned we hope to file for U.S. regulatory approval by mid-year.

SPRYCEL global sales increased 24% to 287 million. In a very competitive market SPRYCEL continues to gain market share particularly in the first-line setting. Also included in our total sales figure is a positive $36 million impact from prior year Medicaid accrual adjustment.

Now let me highlight a few items from the rest of our P&L. I will focus my remarks on our non-GAAP results, as John mentioned reconciliations to our GAAP results are available on our press release and our website. Gross margin was 74.5% during the quarter down 70 basis points compared to the same period last year. This decrease is primarily due to the change in terms for ABILIFY and product mix particularly the Exenatide franchise.

R&D expense was 930 million which is up 9% compared to last year, the increasing spend was largely due to the Amylin acquisition and increased portfolio spend including PD-1 and Hep C. Our non-GAAP tax rate was 11% during the quarter, this is lower than our full year guidance largely due to booking the entire 2012 R&D tax credit in the quarter.

Moving to guidance, we are confirming our full year 2013 GAAP and non-GAAP EPS guidance range. In addition, our line item guidance remains unchanged. Our guidance assumes current exchange rates. As you know, foreign currencies have weakened against the dollar since we originally gave 2013 guidance in January, particularly the yen. While we saw no net impact from exchange in the first quarter compared to last year at current rates, we would expect to see some pressure through the remainder of the year. So, taken together, this is an important time for Bristol-Myers Squibb. We are in full transition to portfolio of the future, a transition that is moving forward on two parallel tracks executing our near-term commercial opportunities, and at the same time, developing a pipeline to deliver long-term sustainable growth.

Before we turn it over to your questions, I want to take a moment to offer my personal congratulations to Elliot in wishing well in his retirement. I have had the privilege of working with Elliot for a long time and truly value his many contributions to our company. I would also like to congratulate Francis on his appointment to Chief Scientific Officer. Francis and I have also worked together for quite some time. Francis is a respected leader with broad experience in both research and development. I look forward to continued collaboration with Francis to help our company delivering innovative and diversified line of medicines.

At this time, we would be happy to answer your questions.

John Elicker

Thanks. Kayla, I think we are ready to go to questions. And I will just remind everybody. In addition to Charlie, we have Elliot and Francis on the R&D side as well as Giovanni and Beatrice here to answer any commercial questions that we might have. Kayla?

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) And we will take our first question from Jami Rubin with Goldman Sachs.

Jami Rubin - Goldman Sachs

This is for Elliot and Francis. Can you comment on your PD-1 program in the context of Fast Track status versus Breakthrough designation, there seems to be some confusion in the marketplace? And then to that end, you did receive Breakthrough status for your Triple DAA Hep C therapy, which is interesting, because I know that Gilead didn’t receive breakthrough status. So, what do you think this all means? And then secondarily we did see some early data on Roche’s PD-L1, just interested in your take and how you see that comparing to your PD-1? Thanks.

Elliott Sigal

Thank you, Jami. This is Elliot, I will start and Francis will chime in. I agree that people are trying to figure out the exact implications of the new designation of Breakthrough therapy. It’s a new tool that we all welcome for the FDA. Its implications are going to evolve, and it’s added to a host of other existing tools. My impression is that it is an opportunity for early programs to receive regular interaction with the FDA and to gain input on the development of the registrational program. So, to that end, we certainly welcome the breakthrough designation on our triple regimen in hepatitis C. This is a Phase 2 program. I can only speculate that the FDA was attracted to this, because it is a non-new phase regimen. It has no ribavirin potentially and has no ritonavir, but again the implications are not clear.

The FDA oncology division has historically identified programs and used all the tools, including Fast Track and other tools to their advantage to advance programs that can benefit patients in the areas of unmet need. Fast Track is what we took advantage of in three tumor types. And over the last year or so, we have had in my opinion very high quality frequent interactions, great input, and have moved from a standing start as I call it from a Phase 1 into 6 registrational trials, including five randomized Phase 3 programs. So, I am very pleased with where we are. I acknowledge that the field is competitive and we were attracted to this field back in 2004 and have been developing the science that is leading the way, but it is a competitive field. Our program is broad, comprehensive in multiple tumor types and has multiple opportunities for acceleration and early approvals. Francis would you like to add to that?

Francis Cuss

I’m certainly very excited moving to the HCV program for the recent data that is presented at EASL. As you’re well aware this is a non-interferon non-riba, non-ritonavir triple, and we showed very impressive efficacy data and well tolerated regimen, and I think we have had numerous and very good interactions with the FDA and I think it reflects the potential importance they see in this regimen within its profile. We also have the advantage here of being able to move quickly. We have accelerated the Phase III into the fourth quarter this year and I’m confident we will have a fixed dose combination to take into Phase III which will be presumably a simple one tablet twice a day regimen for 12 weeks.

Just moving to PD-1, PDL-1 as you know we published in New England Journal last year, our experience both with PD-1 and PDL-1 we have the advantage of being the only company that’s been able to look at both of these regimens and based on the data we saw both efficacy and safety we are moving forward with PD-1 with an opportunity to accelerate that forward.

I think it's important to note that we also talked about biomarkers in those publications and we will be looking at biomarkers but we have left ourselves open with the option of a program that doesn’t necessarily rely on a biomarker the data that would support it.

Operator

We will take our next question from Tim Anderson with Sanford Bernstein.

Tim Anderson - Sanford Bernstein

Again on PD-1, my understanding is that you can get both Fast Track and Breakthrough and my question is did you ask for Breakthrough designation and is that request still pending or have you been denied? I don’t think it really means that much but it is a little bit unusual that Merck got that designation because your compound is the one that’s been in press lot.

Then a question on dosing in Phase III if I understand the dosing right it’s 3 mg/kg. I think in Phase II you went all the way to 10 mg/kg. Is there a dose limiting toxicity with the drug and if so what is it or maybe asked differently, are there any dose dependent side effects with the product? And then just your comment about L1 versus 1, are you saying that you saw worse safety with your PDL-1?

Elliott Sigal

I will deal with different classifications that you talked about and Francis will address the fact that we’re selecting a dose. With regard to the dose side-effects the choice of PD-1 versus PDL-1 and the different ligands. It is true that these different designations of including Fast Track and Breakthrough are not mutually exclusive and I think however the way I’m viewing this I’m very pleased with the interactions we have had when our program was at an earlier stage and now has a well-designed broad set of possibilities for indications early approval acceleration. These designations don’t convey any guarantee for downstream action like early approval or priority review et cetera but our program is designed to take advantage of the full array of opportunities here.

Francis Cuss

Just on the dose of Nivolumab, we obviously tested comprehensively different doses and as always we make an analysis of the best therapeutic index. So our analysis taken together with the dosing regimen came out that three was the optimal dose. As far as PD-LI versus PD-1 is concerned, you can certainly read the data we have presented last year in the New England Journal. I will tell you as an overview we have seen similar toxicities for both PD-1 and PD-L1 of similar degree. So, our analysis was we were somewhat ahead on PD-1. There was a suggestion perhaps of greater efficacy, but of course, it’s very early studies and we were able to accelerate PD-1 forward. Thank you.

John Elicker

Great, thank you Tim. Can we go to the next question please, Kayla?

Operator

We will take our next question from Seamus Fernandez with Leerink.

Seamus Fernandez - Leerink

Thanks. So, I guess, maybe just I have a temporary break from PD-1, but I will get back to it. The ELIQUIS launch, can we talk a little bit about how you guys are thinking about the potential for an acceleration we have seen a really material acceleration in Xarelto scripts, roughly about 12 months into the launch. So, just wondering if again given your statements earlier, if we can anticipate a similar type acceleration?

And then separately on PD-1 just a couple of questions there, can you talk a little bit about the – what could be a potential issue if any with utilizing a modified IgG1. So, again, the immunoglobulin that’s attached to Roche’s PD-L1 versus the choice of an IgG4, there are suggestions that perhaps that, that maybe an important difference although I think there may be some limitations there?

And then lastly have you seen any responses in colorectal cancer with either your PD-1 or PD-L1, it looks like there may be some responses in colorectal cancer with Roche’s drug, and I didn’t know if you saw certain ways or potential ways that open up that very large tumor type with immunotherapy? Thank you.

Charlie Bancroft

Thanks Jami. This is Charlie. Let me talk a little bit a brief overview on ELIQUIS and then I will pass it over to Giovanni. He can talk more specifically about the U.S. Feedback has been universally positive on ELIQUIS’ clinical profile. And although we are still at the early stages of our launch, we continue to believe ELIQUIS will be the leading new agent in this market over time. We also have some near-term lifecycle plans for ELIQUIS. We plan to file for potential VTE prevention indication with the FDA this summer. And in addition, we expect to present the data from the AMPLIFY study at ISTH and we will potentially file for VTE treatment indication by the end of the year, obviously pending the results of that study? Giovanni?

Giovanni Caforio

Yes, good morning Seamus. This is Giovanni. Just to follow-up on what Charlie said. As you know, we have been working with Pfizer and promoting ELIQUIS in the U.S. since the beginning of February. And so far although it’s early clearly the launch has been going very well and very much in line with our expectations. We have positive feedback from our customers on the differentiated profile of ELIQUIS. And let me give you a couple of comments about early indicators. When we started our focus on the launch we focused on access, we focused on hospital formulary listing and stocking. That’s important as you know, because over 50% of initiations are in the hospital. And also we started promoting with cardiologists and with a group of early adopter PCPs.

From an access perspective, as Charlie mentioned in the introductory remarks, we are doing as well and maybe a bit better than we have planned. Right now, we have coverage in approximately 90% of commercial lives and in approximately 60% of Medicare lives. Importantly, we have covered status with all five top Medicare Part D plans. And with three of those five, we have actually achieved preferred status. So, that is going in line with our plans and obviously we are continuing to work on that. From a hospital perspective, we are continuing to make progress. We had a very large number of P&T committee reviews in April. There are many more planned for the month of May. That is going well and will continue to improve over time.

In terms of our promotion to physicians, the efficacy and safety profile of ELIQUIS is really resonating very well. The talk, I may even recall, messages are really around efficacy and safety and the three end points which is different from other agents which are being prescribed primarily because of convenience on the contrary so we see that all of the leading indicators are in line with our expectations. They are very positive and that clearly reinforces belief that Eliquis will become overtime the leading agent in the indication and that clearly would result in growth over the course of the year and into next year.

Elliott Sigal

With regard to your question of applicability of the PD-1 pathway and other tumors early one we began exploring the possibility and the likelihood that this could be very broad based and we feel that’s going to turn out to be true. We have a program where we are exploring other tumor types and we will be presenting that data down the line. Right now as you know the focus is on kidney, lung and melanoma with about six or seven registrational trials and a broad-based program. The second question dealt with the isotype of the anti-body and our research scientist in California, they originally came from Medarex. They have done perhaps the most work on the relevance of the isotype in selecting these immune modulators with positive and negative features sometimes chosen and they are very confident that we have chosen an optimal isotype for PD-1; I will let Francis add his comments to that work that’s being ongoing under him

Francis Cuss

So couple of things to mention, as you know our monoclonal antibody comes from the XenoMouse model developed by (inaudible) and his colleagues at Medarex. So we have a fully human anti-body, it's IgG4, anti-body and the mutation in the hinge region to make a consensus for ICG-1.

There has been some suggestion but immunogenicity there is absolutely none in our feature and we have not seen anything in the clinic. I think it's important to also always to look at the (inaudible) of these anti-bodies and us being a fully human anti-body we see very low opportunity nearly in 1000 patients we have treated now. I think as you mentioned Genentech anti-bodies that’s of course the CDR grafted anti-body and I think it's again important to tell a different target on immune-cells and so one should look carefully at the immunogenicity and one measure of data course is what your dose is and we have as we just mentioned the previous question a low dose which reflects that the low immunogenicity sort of itself there.

Operator

We will take our next question from Chris Schott with JPMorgan.

Chris Schott – JPMorgan

Just a couple of questions just to shift gears a bit to diabetes. For ONGLYZA it looks like we have seen a little bit of share loss, I guess how are you thinking about that and addressing that share dynamic? Second question on Bydureon. We’re seeing some gradual uptick but given additional resources you put on the product there, are you where you want to be at this point with that launch or relaunch profile and then maybe finally just for me look at the mid-stage pipeline beyond PD-1 would love just to hear in terms of what you’re kind of most excited about with the rest of the portfolio maybe Elliott suppose I guess one of the, the last earnings we had you on so any comments there will be appreciated. Thanks.

Giovanni Caforio

This is Giovanni let me comment on the diabetes portfolio performance in the U.S. So first going back to the comments made by Charlie at the beginning of the coal, over the last two quarters in the U.S. we have fundamentally transformed our commercial organization, we have integrated the (inaudible) Bristol Myers Squibb teens. We have realigned restructure an increased the sales of our size of our sales organizations and that transition has been completed at the end of the first quarter and we acknowledge that during this period of transition in a very competitive market we have seen some disruption to our commercial effort.

Now on Q2 and beyond that transition is behind us, our teams are fully staffed. We have the right level of resourcing and our teams are back in the market promoting the full portfolio products. With respect to ONGLYZA you will remember that ONGLYZA grew very rapidly increase its market share and had very strong performance in 2012. In the first quarter of 2013, we have seen flattening of our TRX share and some loss of our MBRX share, which is really related to the factors I described before, but also to the fact that the DPP-4 market growth slowed down considerably and clearly the competitive pressure in this segment increased. We have seen a flattening of our share in March and April. And I think that is a positive indicator and we are really focused on returning to growth during the remainder of 2013.

With respect to BYDUREON, when we started promoting BYDUREON, we had set three objectives for us as we started promoting this franchise. The first one was to improve access for BYDUREON. The second one was to broaden the prescriber base, particularly in primary care. And the third one clearly was to accelerate the development of the dual chamber pen and bring that to market. So, we have made progress in all of those areas. Access for BYDUREON has improved in both commercial and the Medicare space. We have actually grown significantly the prescriber base, particularly in primary care and we are on track to launch the dual chamber pen, which is an important driver of incremental growth at the beginning of 2014.

As a result of that, we have seen growth for BYDUREON in terms of TRX as we grew 18% in Q1 versus the last quarter of 2012. We also increased two share points in the market. And as a leading indicator, our MBRX growth has been stronger than that. So, we clearly believe BYDUREON can grow more and faster. And as I said at the beginning, we have the right teams and resources in place to continue to drive that growth. I should also say thinking about the exenatide franchise that we believe there continues to be good opportunities for BYETTA. And as of the beginning of Q2, we have actually increased the resourcing behind promoting BYETTA in combination with short-acting insulin.

Elliott Sigal

Chris, this is Elliott. As I have said before, I have been privileged to leave this R&D organization through a very important transformation. And my last act has been focused on a very efficient transition. So that the great momentum that you are sensing continues and I believe in Francis Cuss, we have the leader to affect that important transition. And we have a team that supports him that is responsible for how far we have come. So, I am very excited about the timing here, because not only the leadership, but the timing have mainly been coincides with the great deal of momentum and catalyst, not only in the late-stage, but moving from discovery into the mid stage. And Francis has been the leader in charge of that and should comment on some of the exciting things that we both see.

Francis Cuss

Thanks Elliot. So, we have talked just a moment ago about our excitements around nivolumab, but I think it’s important to realize that we have a immuno-oncology platform and I find it incredibly exciting that we actually have seven immuno-oncology assets now between early and full development. We have got more than the 1000 back in discovery. And we have put together an integrated hypothesis driven kind of combination strategy. You will see the first fruits of that at ASCO when we present some preliminary data on the elotuzumab, nivolumab combination, but as the number of other combination trials ongoing in early clinical research. And we have a translational – global translational immuno-oncology network, where we are partnering with academics around the world to help to develop models and develop clinical data to help us bring forward what we believe will be the flowering of IO, which is in combination therapy, which will allow us to continue providing transformative clinical benefit to patients. Thanks.

John Elicker

Thanks Chris. Can we go to next one Kayla?

Operator

We will take our next question from Gregg Gilbert with Bank of America.

Gregg Gilbert - Bank of America

Thanks. First for Elliott and Francis, I am not sure if you answered whether you asked for breakthrough status or not. My real question though on SGLT2, given your knowledge of GEO program and having seen in Adcom as well as the label approve for another drug in the class. Is it fair to say that there can be some meaningful differentiation among the players in this class and then for Charlie I was curious if you’re considering any deals that are larger than the typical string of pearls kind of deals you have done in the past and what would a larger deal have to bring to the table to be seriously considered. Thanks.

Elliott Sigal

I will just repeat what we’re saying is that we have breakthrough therapy and HCV, we do not have breakthrough therapy on PD-1 we utilize it to different mechanism that provides, we think the same kind of advantage to get the advance stage we’re at with regard to (inaudible) we believe that it is good for the SGLT2 field to not have not only our first in class molecule approved in Europe and things progressing well there but the U.S. FDA division recognizing the mechanism by the approval of a competitors. We will be submitting mid-year, our submission would be even stronger data on the benefits side and I believe all the questions are safety addressed and I do believe these will be important members of (inaudible) and that we see differentiation.

Francis Cuss

Let me just quickly talk on business development, we have always said that it's an important component of our balance approach to capital allocation and it has to pass three hurdles. That’s to pass strategically, does it make Bristol-Myers Squibb, it defines hold up and does it make financial sense for us and we said we’re agnostic around the deal size but if you look back retrospectively around our string of pearls you can see the type of deals that we have done.

Operator

We will take our next question from Mark Schoenebaum with ISI Group.

Mark Schoenebaum - ISI Group

Maybe I can ask you something, this has been brought up before but I really love to get just your update and complete thoughts on this and I know we have dialogue I will ask as well but why shouldn’t it be our basis expectation as in investors that the use of your anti-PD-1 anti-body is likely, although certainly not assured but likely to be restricted to patients with PDL-1 expression given the fact that I think there have been zero recessed responses at least in those patients. Thank you very much.

Francis Cuss

Let me take that one Mark, so it's just not true actually that we haven't seen responses in patients without PDL-1 there may be several reasons to this one maybe we just don’t understand the mechanism well enough. It's true and you can look back at our data last year that was higher response rate at the PDL-1 patients but it wasn’t exclusively so and it's continued to be the case here. One of the particular issues I think with the number is the sampling of the tumors that would be heterogeneous, so you always run the risk of having a key which is apparently negative but other tumors are positive. So, we’re taking the view that we’re doing a very comprehensive Phase III where we will be looking at patients with or without PDL-1, we will collect the data. We will be able to make a submission either based on a biomarker or not on a biomarker but of course our principle is we want to make this medicine, all the medicine available to as many patients as possible.

Operator

We will take our next question from Steve Scala with Cowen.

Steve Scala - Cowen

Is Sabre already complete and is the data in-house. I think you said that you will have the data in June but will we get the data in June and is it a full data still expected at ESC. This is a bit confusing because I think clinicaltrials.gov says that the trial ends in July and in the past I don’t recall your prepared remarks highlighting sabre to the extent that you did today. So I find this whole thing very interesting. One another question on Eliquis was there any pipeline still in the sales number. Thank you.

John Elicke

This is John real quick in terms of whether or not what the disclosure on sabre will be I don’t think it's really we’re ready to comment on that. We will have to work through that once we see the data with AstraZeneca. Elliot, you want to anything else on this?

Elliott Sigal

Well, Steve always asked me this since the last time I can answer. No, I haven’t seen the data. And we expect to be looking at it sometime in the summer. I am not exactly sure when the events will be completed. Maybe there was confusion, because we can’t say exactly what meeting we will present, be able to present at, but we certainly want to present towards the end of the year. And the meeting that you mentioned would be the likely part.

Francis Cuss

And on ELIQUIS, Steve, the best again to look at performance is to look at the development of TRX is in the U.S. obviously with the launch of any product in the U.S., there is a distribution to the channel and that was the case with ELIQUIS as well at the beginning.

Elliott Sigal

Yeah. And Steve, it was approximately $11 million in the U.S. although in Japan we were expecting in the broader sort of GP arena to have a little bit more.

John Elicke

Thanks Steve. Can we go to the next question please?

Operator

We will take our next question from David Risinger with Morgan Stanley.

David Risinger - Morgan Stanley

Thanks very much. So, I have a couple of questions. And first, I wanted to offer my congratulations to Francis, I haven’t had a chance to do that yet, so congrats on your new role, Francis and best of luck to you, Elliott.

Elliott Sigal

Thank you.

David Risinger - Morgan Stanley

With respect to the DPP-4s and GLP-1s, can you comment on the upcoming cancer workshop and how you see that and what you think of the FDA’s scrutiny of potential association with cancer risk? And then second with respect to DAPA and I guess this is more of a commercial question, but the way that AstraZeneca characterized the ramp in Germany was that the infection risk associated with DAPA isn’t limiting uptake at all, does that DAPA had ramped in the first 10 weeks in Germany at a rate that was very similar to Januvia’s launch. And so I guess my simple question is do you think that the investment community is overly concerned about infection risk limiting the commercial uptake of (indiscernible)? Thank you.

Beatrice Cazala

Well, let me answer first about FORXIGA in Germany and actually in Europe, where we are very pleased about what – which are currently seeing. We are off to a very good start in the markets, where we have launched. If we look at Germany specifically, the feedback we get from the physician and from the patient are extremely encouraging. So, what you have from us present in call we concur with. When we talk about the placebo side effects, what we hear from our physician and the patient is that they are manageable. So, we haven’t seen any issues with the uptake linked to the side effect profile. On the contrary, what we are hearing and again it’s very early and I think totally is that the patient and the physician are satisfied with the profile both in term of the A1c reduction, but also with the additional benefit of weight loss and blood pressure. And actually, the weight loss we hear is that it happened. It’s a fast onset. So, within the first month, the patients are coming back and making comments to their physician. So, very strong first customer experience, which we understand is the base for the relatively happy uptake. Now, again, it’s early days, we also note that dermatologists are particularly happy with the mode of action, which is differentiated and a fairly new alternative in addition in monotherapy as well as in combination where we see the source of business as a non-insulin dependent mechanism.

Francis Cuss

Thank you very much, David and thank you for your best wishes. Let me say a word about this whole area. So, the pancreatitis are causing pancreatic carcinoma. And as you well know ever since the GLP-1s and DPP-4 inhibitors came out, there have been reports to the FDA the patients who developed pancreatitis while treating with these patients, of course these patients are at risk anyway of pancreatitis. And of course all the agents that are both GLP-1 and DPP-4 has actually carried the warnings about pancreatitis, which of course, a reflection of these reports. Now, I think it’s always important to say these reports are regarded as hypothesis generating, because the way they are collected and they are not hypothesis confirming and I must say we have no evidence from either our non-clinical or our clinical sources as to cause a relationship between the treatment with these medicines and pancreatitis and of course it's done exhaustive and oncology using the standard techniques and we see nothing either with (inaudible). In particular there is no increase of pancreatitis observed in randomized clinical trial and a number of observation studies in healthcare day’s basis have also demonstrated no effect. So taken together based on all of this we have partnered (inaudible) of course are very confident of the positive risk benefit profile of the drug and I think we’re interested to hear what the science when it reviews because we know that other sponsors of these medicines have the same results that we have that we can find no cause or link.

So we’re looking forward to that scientific discussion just to comment on pancreatic carcinoma, it's very similar that we find no link either in our animal studies and of course we have done carcinogenicity studies in rodents for two years we see nothing there or in the clinical studies. And I will comment a recent paper which of course stirred up some discussion on this from (inaudible) colleague. We find this actually quite difficult to interrupt and though significant limitations around their both their link with the animal studies and of course the way their views there patient group. So, we are going to be presenting some data I believe at this FDA meeting and say we look forward to seeing the science review. Thanks very much.

Operator

We will take our next question from Marc Goodman with UBS.

Marc Goodman - UBS

Couple of question first Elliott yesterday mentioned that there was some extra cost in their business due to the (inaudible) and I was curious whether that was looking like it was going to be more a hit this year then you thought it was going to be when you started the year. Second on ORENCIA can you talk about whether that product has been impacted at all on the new launch of the (inaudible) if there was any stocking or whatever? I know you mentioned something in your prepared remarks but I missed at 36 million I didn’t hear exactly what that was and then third you talked about the DPP-4 class we have all seen it slow down, I was curious if you had a hypothesis towards why is it just law of big numbers. Thanks.

Elliott Sigal

Regard to the doughnut hole, I mean the doughnut hole it's a reflection of the portfolio it depends on the products and which ones are taking like Medicare patients. So we haven’t really seen anything different from our original plan. So I can’t comment on beyond that, in regard to the Medicaid reversal of the 36 million that relates to as states continue to provide us with the billing we review that vis a vis our accruals and assumptions that we made when we originally established and so it's just basically a throw up of some of our year accruals.

Giovanni Caforio

Let me make a couple of comments, first on the performance of our ORENCIA, we had very strong performance of ORENCIA in the U.S. Q1 with significant growth of 25% of over prior year that was driven by the successful launch of SubQ which generally did significant growth in 2012. It's early to fully assess the impact of the launch of (inaudible). We have seen some increase in share primarily in the switch market which has had a sort of an impact on all players in the subcutaneous market but the impact on us specifically has been very modest and we’re very pleased that we have become the third most prescribed SubQ agent in the U.S. market. With respect to your comment on the growth or DPP-4 slowing down the main attribute – a number of different factors impacting that. As a reminder, the only comment I would make is part of the accelerated growth that we had still in 2012 was linked to the significant decrease in the TGD market with the entry of generics in that area. So, there has been a transition of prescription from one class to the other. The growth has slowed down, but it continues to be healthy.

John Elicke

Thanks Mark. Kayla, I think we have time for two more questions.

Operator

We will take our next question from Andrew Balm with Citi.

John Elicke

Andrew?

Operator

Andrew Balm, your line is open.

John Elicke

Okay. We can move on Kayla?

Operator

We will take our last question from Alex Arfaei with BMO Capital Markets.

Alex Arfaei - BMO Capital Markets

Good morning. Thank you for taking the questions. Following up on your comments regarding the growth of BYDUREON and the SGLT2s, I was wondering how you see this market evolving specifically, do you see the SGLT2 is being used ahead of the GLP1s on par with DPP-4s. If you could talk about how you plan to position your diabetes products? And a follow-up if I may, my understanding is that you have closed the Amlin side in San Diego and there have been significant headcount reductions regarding the revised agreement for ABILIFY? Are there any major opportunities for cost savings as the ELIQUIS launch ramps up? Thank you.

John Elicke

Yeah, let me just comment on Amlin. So, when we initially purchased Amlin we assumed in the deal terms in our guidance that we gave that there would be certain synergies related to that acquisition. So, the San Diego, the overall cost opportunity was already sort of recollected in the guidance that we have provided.

Beatrice Cazala

So, you were asking the question about how to think about SGLT2 and GLP-1, I think we – what we are looking at the global market and then we then to comment about the U.S. is that depending also on the final labels and the access obtained by those class of products, we may end up having very different (indiscernible). So, that’s what we want. However, from the scientific standpoint, we clearly believe that with the GLP-1 provide a good opportunity for patient that have a need of a product that will combine the benefit of A1c as well as benefit on blood pressure and weight loss. So, clearly in that space of the physician and patient that will agree on an old treatment of the long-term GLP-1. Now, when you look at the benefit of the GLP-1 especially when it can be used on weekly basis and potentially later on a monthly basis that creates a very different set of opportunities. And when we look at behaviors of patient, you will find clearly a space prior to insulin, but you also find the space in the number of patient that do not want treatment every day. So, there are different patient profiles. We are saying that we will be able having the chance of the broad portfolio to combine the optimal benefits of the company and for the patient adding the possibility to play in those two arenas.

Elliott Sigal

Yeah, just to add something on GLP-1s in the U.S. market, we see significant opportunity for continued growth of GLP-1s. They are currently prescribed to less than 10% of diabetes patients in the U.S. and they have been prescribed at the beginning primarily by endocrinologist. In fact, the prescribers’ base at this point is much more narrower than you see with classes like DPP-4s. The class is growing very rapidly we believe that will continue, because with the availability of BYDUREON as a weekly agent, the good efficacy and the very good tolerability profile of BYDUREON, there clearly is room for increased penetration in primary care. That’s exactly what we are focusing on and that is what we are beginning to see happen. So, we see continued potential for growth with GLP-1s.

John Elicke

Great, thanks very much Alex. I think that’s all the time we have. I appreciate everybody’s joining us for the call this morning. And before we close I would like to turn it back to Charlie for any closing comments.

Charlie Bancroft

Thanks John. And thanks everyone for your questions. Again, our first quarter was a good start to an important year, one in which our focus is on commercial execution and delivery of our diversified pipeline. Thank you very much.

Operator

And this concludes today’s conference. Thank you for your participation.



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