Bristol-Myers Squibb reports 11% increase in first-quarter 2010 revenue

Bristol-Myers Squibb Company (NYSE: BMY) today reported strong sales and earnings growth for the first quarter of 2010.

“Saxagliptin Assessment of Vascular Outcomes Recorded in Patients with Diabetes Mellitus”

"Double-digit growth for both sales and earnings per share marks a very positive start to the year for our company," said Lamberto Andreotti, CEO-designate, Bristol-Myers Squibb. "While we remain clearly committed to productivity, we are also focused on giving maximum priority to driving sales growth."

"The challenges of an increasingly complex business environment, now including U.S. health care reform, can be addressed successfully through a sustainable pipeline. I am excited about the portfolio of products we have in development and look forward to key clinical data for many of them being presented in the next few months," Andreotti added.

Phase III results for ipilimumab in metastatic melanoma and SPRYCEL^® for the first-line treatment of chronic myeloid leukemia have been accepted for presentation by the American Society of Clinical Oncology. Results of a Phase III study of dapagliflozin for the treatment of Type 2 diabetes are planned for presentation at the American Diabetes Association scientific sessions. New data for belatacept will be presented at the American Transplant Congress.

FIRST QUARTER FINANCIAL RESULTS

• Bristol-Myers Squibb posted first quarter 2010 net sales of $4.8 billion, an increase of 11%, or 8% excluding foreign exchange impact, compared to the same period in 2009. Health care reform had a 1% negative effect on net sales in the first quarter.
• U.S. net sales increased 11% to $3.1 billion in the first quarter of 2010 compared to the same period in 2009. International net sales increased 11%, or 3% excluding foreign exchange impact, to $1.7 billion.
• Gross margin as a percentage of net sales was 72.8% in the first quarter 2010 compared to 73.0% in 2009.
• Marketing, selling and administrative expenses remained flat, or decreased 3% excluding foreign exchange impact, to $900 million in the first quarter of 2010 compared to the same period in 2009.
• Advertising and product promotion spending decreased by 15%, or 17% excluding foreign exchange impact, to $212 million in the first quarter of 2010, compared to the same period in 2009.
• Research and development expenses remained flat, or decreased by 1% excluding foreign exchange impact, to $910 million in the first quarter of 2010 compared to the same period in 2009.
• The effective tax rate on earnings from continuing operations before income taxes was 24.2% in the first quarter of 2010, compared to 23.0% in the same period in 2009.
• The Company reported first quarter GAAP net earnings from continuing operations of $743 million or $0.43 per share, compared to $649 million or $0.33 per share for the same period in 2009.
• The Company reported first quarter non-GAAP net earnings from continuing operations of $967 million or $0.56 per share, compared to $829 million or $0.42 per share for the same period in 2009. An overview of specified items is discussed under the "Use of Non-GAAP Financial Information" section.
• The impact of U.S. health care reform decreased first quarter EPS from continuing operations by approximately $0.03 on both a GAAP and non-GAAP basis. Further details are discussed under the "Health Care Reform Impact" section.

FIRST QUARTER PRODUCT AND PIPELINE UPDATE

• Bristol-Myers Squibb's global sales growth in the first quarter was led by an increase of 16% for PLAVIX. The Company's virology franchise, including BARACLUDE^® (42%) for hepatitis B, and REYATAZ^® (16%) and SUSTIVA^® (15%) for HIV demonstrated consistent growth. First quarter sales of ORENCIA^® and SPRYCEL grew 36% and 49% respectively compared to the same period in 2009.
• In March, the Company and sanofi-aventis announced revisions to the U.S. prescribing information for PLAVIX, which include a boxed warning. The boxed warning concerns the diminished effectiveness of PLAVIX in patients who have a genetic variation leading to reduced formation of the active metabolite. The percentage of poor metabolizers is estimated to be approximately 3% of the population, based on published studies.
• In March, the Company and sanofi-aventis announced that the European Commission approved the dual antiplatelet combination tablet DUOPLAVIN^®/DUOCOVER^® (clopidogrel 75 mg and acetylsalicylic acid 100 mg or 75 mg) for the prevention of atherothrombotic events in adult patients already taking both clopidogrel and acetylsalicylic acid.
• In February, the belatacept Marketing Authorization Application (MAA) for the treatment of prophylaxis of organ rejection in kidney transplant patients was validated by the European Medicines Agency.
• In March, the U.S. Food and Drug Administration's Cardiovascular and Renal Drugs Advisory Committee voted 13 to 5 to recommend approval of belatacept, a selective co-stimulation blocker, for the prophylaxis of acute rejection in de novo kidney transplant patients. The Prescription Drug User Fee Act (PDUFA) date—the date by which a decision from the U.S. Food and Drug Administration (FDA) is expected—for belatacept is May 1, 2010.
• In March, the Company and AstraZeneca announced that the FDA has accepted for review a New Drug Application (NDA) for an investigational fixed dose combination of ONGLYZA™ and metformin HCL extended-release tablets as a once-daily treatment for Type 2 diabetes mellitus in adults. The PDUFA date for the combination therapy is October 29, 2010.
• In March, the Company and AstraZeneca announced the commencement of the "Saxagliptin Assessment of Vascular Outcomes Recorded in Patients with Diabetes Mellitus" trial (SAVOR-TIMI 53), a multicenter, randomized, double-blind, placebo-controlled Phase IV study to evaluate treatment with ONGLYZA in adult Type 2 diabetes patients with cardiovascular risk factors. The five-year study will follow approximately 12,000 patients with Type 2 diabetes who have either a history of previous cardiovascular events or multiple risk factors for vascular disease, and includes patients with renal impairment.
• In March, the apixaban MAA for the prevention of venous thromboembolic (VTE) events in adult patients who have undergone elective hip or knee replacement was validated by the European Medicines Agency.
• In January, the European Commission approved ORENCIA in combination with methotrexate for the treatment of moderate to severe active polyarticular juvenile idiopathic arthritis in pediatric patients six years of age and older who have had an insufficient response to other disease-modifying anti-rheumatic drugs, including at least one TNF inhibitor.
• In April, week 12 data from a Phase IIa study of BMS-790052, an NS5A inhibitor under investigation for the treatment of Hepatitis C virus (HCV), were presented at the European Association for the Study of the Liver (EASL). The data showed that once-daily dosing of the NS5A inhibitor plus peginterferon-alpha-2a and ribavirin produces high rates of extended rapid virologic response in treatment-naive HCV-genotype 1 subjects, compared to peginterferon-alpha-2a and ribavirin alone. The rate of adverse events was comparable across BMS-790052 dosing arms and placebo.

BUSINESS DEVELOPMENT UPDATE

On March 3, Bristol-Myers Squibb and Allergan, Inc. announced a global agreement for the development and commercialization of AGN-209323, a Phase II-ready, orally administered small molecule in clinical development for neuropathic pain.

HEALTH CARE REFORM IMPACT

The impact of U.S. health care reform decreased first quarter EPS from continuing operations by $0.03 on both a GAAP and non-GAAP basis. Higher rebates to Medicaid and Medicaid managed care organizations had a negative impact of $0.02 per share. There was also a one-time $0.01 per share charge due to the elimination of the tax deductibility of a portion of Company's retiree health care costs.

The Company expects additional negative financial impact in 2010 as other parts of the new health care law are implemented, including discounts to certain critical access hospitals, cancer hospitals and other covered entities as required by the expansion of the 340B Drug Pricing Program. In addition, beginning in 2011, the Company will provide a 50% discount on its brand-name drugs to patients who fall within the Medicare Part D coverage gap, also referred to as the "Donut Hole," and the Company will pay a non-deductible annual fee to the federal government based on an allocation of its market share of branded prior year sales to certain government programs including Medicare, Medicaid, Department of Veterans Affairs, Department of Defense and TriCare.

A positive impact on net sales from the expected increase in the number of people with health care coverage could potentially occur in the future, but not until 2014 at the earliest.

2010 FINANCIAL GUIDANCE

In January, the Company announced 2010 GAAP EPS guidance range of $1.94 to $2.04 and 2010 non-GAAP EPS guidance range of $2.15 to $2.25 that explicitly excluded the impact of U.S. health care reform. The Company now estimates the negative impact of health care reform on both a GAAP EPS and non-GAAP EPS basis to be approximately $0.12 and is updating its 2010 non-GAAP EPS guidance range by $0.05 to $2.10 to $2.20 as the impact of health care reform is expected to be partially offset by the strength of the underlying business and mitigating actions taken by the Company. The Company is also updating its 2010 GAAP EPS guidance range to $1.84 to $1.94 to reflect higher manufacturing rationalization costs and a licensing transaction, in addition to health care reform impact.

Key 2010 guidance assumptions include: mid-single-digit revenue growth; full-year gross margin being consistent with last year; advertising and promotion expense decrease in the high-single-digit range; marketing sales and administrative expenses remaining flat; research and development expense growth in the mid- to high-single-digit range; and an effective tax rate of between 23% and 24%. The financial guidance for 2010 excludes the impact of any potential future strategic transactions and specified items that have not yet been identified and quantified.

Use of Non-GAAP Financial Information

This press release contains non-GAAP financial measures, including non-GAAP earnings from continuing operations and related earnings per share information, adjusted to exclude certain costs, expenses, gains and losses and other specified items. Among the items in GAAP measures but excluded for purposes of determining adjusted earnings and other adjusted measures are: charges related to implementation of the Productivity Transformation Initiative; gains or losses from the purchase or sale of businesses and product lines; discontinued operations; restructuring and other exit costs; accelerated depreciation charges; asset impairments; charges and recoveries relating to significant legal proceedings; upfront and milestone payments for in-licensing of products that have not achieved regulatory approval, which are immediately expensed; in-process research and development charges prior to 2009; impairments to investments; special initiative funding to the Bristol-Myers Squibb Foundation; and significant tax events. This information is intended to enhance an investor's overall understanding of the company's past financial performance and prospects for the future. For example, non-GAAP earnings and earnings per share information is an indication of the company's baseline performance before items that are considered by the company not to be reflective of the company's ongoing results. These items are also not included in the company's operating segment results. In addition, this information is among the primary indicators the company uses as a basis for evaluating company performance, allocating resources, setting incentive compensation targets, and planning and forecasting of future periods. This information is not intended to be considered in isolation or as a substitute for net earnings or diluted earnings per share prepared in accordance with GAAP.