Executive Chairman of the Board, Bristol-Myers Squibb Co
Bristol-Myers and Celgene CEOs talk acquisition deal
Bristol-Myers Squibb chairman and CEO Dr. Giovanni Caforio and Celegene Chairman and CEO Mark Alles sit down with CNBC's Jim Cramer to discuss their recently announced acquisition deal.
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About Giovanni Caforio
Giovanni Caforio, Executive Chairman of the Board at Bristol Myers Squibb, has discussed the company's pipeline and business strategy in recent appearances. In November 2021, Caforio stated that the company was launching nine new medicines, describing the pace as "unprecedented" for the company)Skip. He projected the new drugs would generate $10 billion to $13 billion in sales by 2025, with the potential to exceed $25 billion by 2029. Caforio noted that the company's pipeline had doubled and that it was pursuing both internal R&D and external business development, including small bolt-on acquisitions, to replace products losing exclusivity. He also expressed concern about a "secondary health crisis" from delayed cancer treatments during the COVID-19 pandemic, stating that managing the flow of patients back into healthcare systems was "absolutely critical." In January 2019, Caforio discussed the acquisition of Celgene, describing it as creating a company focused on science and innovation in oncology, autoimmune diseases, and cardiovascular disease. He stated that the deal would allow the combined company to launch six medicines in the following 24 months and accelerate 50 more medicines to patients. Caforio emphasized a responsible approach to drug pricing, saying the company was committed to making medicines affordable and accessible, while also expressing concern that government price-setting could harm innovation. He noted that the industry had been "very responsible" with pricing, with inflation-adjusted increases of less than 1% over the prior two years.
Transcript (16 segments)
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Giovanni Caforio0:10
Right time we are creating an extraordinary company with a focus on science and innovation. Three areas: oncology, autoimmune diseases, cardiovascular disease. These are areas we know well. We diversify our pipeline. We can launch six medicines in the next 24 months, and we've got 50 more medicines that we can accelerate to patients.
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Interviewer0:32
This is the deal that creates value for shareholders from day one. I completely agree, and I thought it was ridiculous that your stock was down. I know because you don't have a stock component, but Mark, a lot of people feel that all you have is Revlimid. Could there be anything more wrong about the description of your company? Probably not. As Giovanni talks about, there are six medicines set to launch. Five of them come from Celgene's late-stage pipeline. In fact, just before the end of the year, a lot of people feel that you did this—I'm going to use the term because I see it in the analysts' reports—they're going to be wrong. You did it out of desperation because Opdivo is not beating Merck. You needed to do something. This is something, but it's all you did was double down on oncology. To me, I think that you took advantage of the fact that the stock was at 90, now at 58. But tell me why you had to do this given the fact that our team has got so many things in the pipeline in many many tests, although people are starting to doubt it.
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Giovanni Caforio1:39
Well, I couldn't be more proud of what we're doing with Opdivo. In fact, we have 17 indications in the US alone. We've transformed lung cancer, kidney cancer, melanoma. We had a great 2018. We have leading shares in all approved indications. So, and again, in areas we know well, where we can add value from day one.
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Interviewer2:10
No, Mark. FDA approval of three late-stage drugs could help with a contingent value plus. Amid a lot of people feel that was your previous—it was Bob Hugin—and maybe paid too much. Liso-cel and then you've got bb2121, which is with Bluebird. These all seem like long shots, but perhaps they could come in and get the nine bucks.
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Giovanni Caforio2:34
I think the first thing, Jim, is that these are real assets. They're not long shots. In fact, bb2121 is the most advanced drug in myeloma in the CAR-T space with our partner Bluebird Bio. We've advanced it to first-in-class, best-in-class. Liso-cel was our Juno acquisition again last year. Liso-cel has its pivotal Phase 2 data in lymphoma done, and at ASH last year, just in... of last year, we've fixed all of the application-related deficiencies, and we look forward to submitting it later this quarter.
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Interviewer3:18
Now I have to tell you, because we got to go over this, I know that Nadeem Ahmed, who's on your call all the time, President of Hematology and Oncology, he did say we learned a lesson in humility when you do an acquisition. He did say you wouldn't have submitted the application. It was done by their CRO. Those people haven't hurt. Has it hurt what perception those brought you, because you did make that miss?
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Giovanni Caforio3:35
Never. I think that we need to step back from blame. I don't think that matters at all. I think what happens in regulatory dossiers often is we take a view that the clinical data and the data from Ahmed are profoundly good in relapsing multiple sclerosis, and then the application had some missing pieces. To... medicines potentially to launch. We can't wait to start working on this. We're gonna do a really great job with those launches.
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Interviewer4:16
A lot of people tell me, Giovanni, that your science is fabulous, that you did a deep dive, that you kicked the tires on all the drugs that are supposed to take the place if Revlimid goes off patent earlier. But one of the things that Bob Hugin taught me was he put money in many different companies. Have you analyzed all the farm team companies? Is there something there that we don't know about?
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Giovanni Caforio4:39
Well, you know, we've done a lot of due diligence, of course. The companies have been talking for a long time. In the last few months, we've been deep at work together. There are a lot of exciting science platforms. We've done business development at Bristol-Myers Squibb all our life as part of our... people just say, well, look, forget that it's all about Revlimid.
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Interviewer5:12
Yeah, I think, Jim, it is mostly about Revlimid in that it is our biggest selling product, of course. The Street has looked at the IP situation on Revlimid, looked out and said, can we continue this run? 2018 was a record year for the company. The fourth quarter will be a record year for the company and the quarter. But it's a Revlimid story until we diversify away from it. Otezla is part of that story, but by itself it's less than two billion dollars a year, whereas Revlimid next year will be above 10 billion. So on a relative basis, I understand why the focus has been on Revlimid.
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Giovanni Caforio5:44
Okay, Bob Hugin, he's a friend from Summit. You guys are in Summit, New Jersey. Menendez in the campaign against Bob. You didn't keep saying that the... responsible to price devalue. The other thing I would say is that in the last two years, if you look at the industry across the board, we're talking about inflation-adjusted pricing that's less than 1% for the entire industry. So it gets a lot of headline and a lot of headline risk, but the reality is drug pricing is attenuating and is coming down year-on-year on a net basis.
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Interviewer6:32
Okay, I want to talk about some things that are deeper. Giovanni, I got to tell you, I'm hearing kidney cancer, I'm hearing indications that we shouldn't just say Opdivo is gonna beat them. I'm hearing that over and over again. It's gonna be a huge year for that drug 2019.
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Giovanni Caforio6:50
It's gonna be a great year 2019 for Opdivo. As I said, the product is going to grow. The medicine is gonna grow. We've... bring immuno-oncology to earlier stages when we can actually have an impact that is very significant on patients. So this is a journey in immuno-oncology, and we are just at the beginning, and we're doing really well.
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Interviewer7:23
But one especially because I know politics do play a role these days. Are you able to raise price with immunity? In other words, a lot of companies, drug companies, put prices through in 2019, but a lot of drug companies they fail. They fail at some drugs. Someone has to pay for that. Are you comfortable with price increases? Do you think that this political environment is going to be too tough?
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Giovanni Caforio7:43
We are going to continue to be, as we've always been, very responsible with drug pricing. We're delivering really innovative medicines that make a really big difference for patients. That's what... a science leader here. It's really important, and that's gonna be our floor.
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Interviewer8:11
I'm something that you took advantage of an unbelievably good price in the combinations. Gonna be sensational. I love this deal.