Bristol Myers Squibb — 2020 Form 10-K Summary
Business context and reporting period
For the fiscal year ended December 31, 2020, Bristol Myers Squibb (BMS) reported as a single global biopharmaceutical segment. The filing is an annual report, not a standalone fourth-quarter filing. Results include a full year of Celgene operations, acquired in November 2019, and MyoKardia from its November 17, 2020 acquisition.
Financial performance and position
| Metric | 2020 | 2019 |
|---|---|---|
| Total revenue | $42.518 billion | $26.145 billion |
| GAAP net earnings (loss) attributable to BMS | $(9.015) billion | $3.439 billion |
| GAAP diluted EPS | $(3.99) | $2.01 |
| Non-GAAP diluted EPS | $6.44 | $4.69 |
| Operating cash flow | $14.052 billion | $8.210 billion |
| Cash and cash equivalents | $14.546 billion | $12.346 billion |
| Marketable debt securities | $1.718 billion | $3.814 billion |
| Short-term and long-term debt, balance-sheet carrying amounts | $50.676 billion | $46.733 billion |
| Net debt, as presented by BMS | $34.412 billion | $30.573 billion |
Revenue increased 63%, reflecting principally Celgene products and higher Eliquis demand. Net product sales were $41.321 billion; gross-to-net adjustments were $18.695 billion, or 31% of gross product sales. R&D expense was $11.143 billion, including an $11.438 billion MyoKardia acquired in-process R&D charge. Amortization of acquired intangible assets was $9.688 billion. The GAAP loss therefore contrasts sharply with non-GAAP EPS; the latter excludes specified items and is not a substitute for GAAP results.
Key product revenue included Revlimid $12.106 billion, Eliquis $9.168 billion, Opdivo $6.992 billion and Pomalyst/Imnovid $3.070 billion. Eliquis sales rose 16%; Opdivo declined 3%, including a 9% decline in the U.S. Quarterly revenue was $11.068 billion in Q4 2020, when BMS recorded a net loss attributable to BMS of $10.027 billion and diluted EPS of $(4.45).
Current assets were $30.192 billion and current liabilities $19.080 billion at year-end. Operating cash flow increased year over year, while investing activities used $10.859 billion and financing activities used $1.151 billion. BMS paid $4.075 billion in dividends and repurchased approximately $1.6 billion of shares in 2020. Interest expense was $1.420 billion, up from $656 million.
Material changes versus the prior comparable period
- Revenue growth largely reflects the first full year of Celgene results; BMS attributed $15.7 billion of 2020 revenue to Celgene, so the reported year-over-year comparison is not like-for-like.
- GAAP earnings swung to a loss, primarily due to MyoKardia’s IPR&D charge, acquired-asset amortization, Celgene inventory fair-value adjustments and related tax charges. Non-GAAP EPS rose from $4.69 to $6.44.
- Cash flow from operations rose by $5.842 billion. BMS cited the expanded business, partly offset by higher interest and tax payments and MyoKardia award settlements.
- Debt and interest costs increased following acquisition financing. BMS issued $7 billion of senior notes in November 2020 to fund part of the MyoKardia acquisition.
- Product trends were mixed: Eliquis and several Celgene brands grew; U.S. Opdivo demand weakened, and established brands faced generic competition.
Outlook, commentary, risks and unusual items
- Outlook: The supplied filing text does not provide a clear numerical revenue or EPS forecast. Management said it expects approximately $3.0 billion of annualized pre-tax Celgene synergies through 2022, with about $1.4 billion achieved in 2020. Planned capital expenditures are approximately $1.3 billion in 2021 and $1.2 billion in 2022. BMS reiterated its commitment to reduce debt while investing in products, pipeline and manufacturing.
- Pipeline and launches: BMS reported more than 50 unique compounds in clinical development and 13 major-market approvals in 2020. The MyoKardia acquisition added mavacamten, then expected to be submitted for U.S. approval in Q1 2021. Breyanzi was approved in the U.S. in February 2021, after the reporting year.
- COVID-19: Management said the pandemic had not significantly affected 2020 revenue or disrupted medicine supply, but fewer patient visits and slower trial enrollment remained concerns. Raw-material scarcity and possible future supply or clinical-development delays were identified as risks.
- Exclusivity and competition: BMS estimated Revlimid generic entry in parts of Europe beginning in 2022 and a volume-limited U.S. generic license beginning in March 2022, with unlimited U.S. entry permitted from January 31, 2026 under settlements. Eliquis generic timing depends on pending patent appeals; outcomes described include potential entry in 2026 or 2028, or earlier following an adverse ruling.
- Clinical setbacks and asset charges: The Phase III CheckMate-548 glioblastoma trial did not meet its overall-survival endpoint; BMS withdrew Opdivo’s U.S. third-line SCLC indication after confirmatory studies failed their endpoints. BMS recorded a $575 million impairment for Inrebic rights and a $470 million impairment after discontinuing orva-cel development.
- Acquisition and contingent items: The $11.438 billion MyoKardia IPR&D charge materially affected GAAP results. The Celgene CVR obligation terminated in January 2021 because liso-cel was not FDA-approved by the specified deadline.
- Legal and regulatory exposures: A jury award to Juno and Sloan Kettering involving Kite’s Yescarta was approximately $1.2 billion, plus a stated running royalty, and was under appeal. The filing also describes multiple patent, product-liability, antitrust, pricing and tax matters. BMS estimated its share of environmental remediation costs at $78.8 million.
- Liquidity and obligations: BMS said cash, securities, operating cash generation and, if needed, commercial paper should meet anticipated needs for at least the next few years, including approximately $15.8 billion of debt maturities through 2024. It disclosed $22.0 billion of potential R&D milestone payments, generally contingent on future events, and additional sales-based milestones.
Important facts for investors to verify
- Reconcile GAAP results to non-GAAP EPS, including the $11.438 billion MyoKardia charge and other excluded items; assess which adjustments may recur.
- Evaluate revenue quality and concentration: Celgene’s contribution, performance of major brands, gross-to-net estimates and reliance on a small number of products.
- Track debt reduction, maturities, interest expense, liquidity and the cash demands of dividends, acquisitions and milestone commitments.
- Monitor generic-entry timing and litigation outcomes for Revlimid, Eliquis, Pomalyst and other key products.
- Follow clinical-trial results, regulatory decisions and commercial execution for pipeline assets, including mavacamten and cell therapies; consider COVID-related enrollment and supply risks.
- Review material legal and tax contingencies, including the Yescarta patent appeal and tax-authority examinations, as outcomes and potential losses may remain uncertain.