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Amgen Inc. (AMGN) Wells Fargo Securities Healthcare Conference (Transcript)

Amgen Inc. (AMGN)

Wells Fargo Securities Healthcare Conference

Company Participants

Arvind Sood - VP of IR

Peter Griffith - EVP and CFO

Conference Call Participants

Mohit Bansal - Wells Fargo

Presentation

Mohit Bansal

Thank you very much for joining us today. My name is Mohit Bansal. I'm one of the biopharma analysts here at Wells Fargo. And I have Peter Griffith, the CFO of the company; and Arvind Sood, the greatest of all times. So thank you both for joining us today.

I'll turn it over to Peter for opening remarks here.

Peter Griffith

Mohit, thank you very much. And actually, this is Murdo Gordon masquerading. But good morning, and we're so glad to be here. Thanks for inviting us. As we always do at Amgen, let's start with patients and our mission to serve patients through discovering, developing, manufacturing and distributing first-in-class and best-in-class medicines to patients with grievous and serious illness all over the world.

We're creating value for patients, staff and shareholders, and are well positioned on any number of fronts that deliver long-term growth. We're driving a successful integration beginning off an early fourth quarter close with Horizon Therapeutics based on that exceptional strategic fit. We're driving the best innovation through our pipeline, and we're driving results as we did in the second quarter with record revenue and a record non-GAAP earnings per share.

We remain well positioned for continued volume-driven growth with 11% year-over-year volume growth in the second quarter. Underneath that was 16% year-over-year volume growth outside the United States, and underneath that was 46% volume growth in our JPAC region. Based on our strong second quarter and outlook for all of 2023, we raised our financial guidance for the year, just as we did after the first quarter. We're excited to be moving forward on Horizon. We expect to close early in the fourth quarter, and it is a great strategic fit for us. Why is it a great strategic fit?

First, their products are innovative, first-in-class biologics, that make a big difference in the patients who receive them. That's the exactly the focus of our R&D strategy. Second, these products treat autoimmune disorders, which have been a core focus for us for decades.

And third, these products are in early stage of their life cycle with lots of ways for us to add value. Where do we expect to add value? Across life cycle management, including in global development, manufacturing, process development, new formulations, delivery devices and so on. We expect to add value in international markets where they haven't yet built out their capabilities. Ours are in place, fully prepared to go on these new products, particularly on TEPEZZA and ongoing research and development, Sjogren's and other potentially attractive markets, including those identified in our review of the genetics behind their targets using our deCODE team.

So where are they going to add value to Amgen, Horizon's industry-leading rare disease capabilities will be an immediate benefit to TAVNEOS and other rare disease opportunities in our pipeline. Finally, as we have consistently said, we expect this deal to be accretive to our financials and additive to our long-term outlook. We will talk more about driving results in the business in a minute. But before that, let's cover our innovation in our pipeline, where momentum is building, multiple Phase III trials position us well for long-term growth.

Our oncology pipeline includes any number of late-stage opportunities, announced positive potentially registrational results from tarlatamab in small cell lung cancer, where we see annual incidents of 65,000 to 70,000 patients across major markets. It's the first BiTE molecule to demonstrate unequivocal activity in common solid tumor.

We're excited to share these data later in the year and are rapidly moving tarlatamab into earlier lines of treatment to maximize the opportunity for patients. Later this fall, we'll be sharing exciting initial data from Xaluritamig, our STEAP1 bispecific being studied in prostate cancer and AMG 193, our MTA-cooperative PRMT5 inhibitor, where we've seen responses across multiple solid tumor types. We announced positive top line Phase III results from LUMAKRAS in combination with Vectibix in metastatic colorectal cancer.

And then moving to inflammation and general medicine in the pipeline, we continue to explore the potential of TEZSPIRE in multiple additional indications and then rocatinlimab in atopic dermatitis and continues to enroll Phase III very well as does Olpasiran, our Lp(a) molecule, also in Phase III. Maridebart cafraglutide, also known as [mari], known hereafter is mari, AMG 133 and AMG 786, two of our obesity assets in our evolving obesity platform, both -- those are in Phase II and Phase I trials, respectively. Mari is enrolling very well. The goal of that study is to generate data that will provide broad optionality to design a Phase III program.

Turning to commercial performance. Our priority products within each therapeutic area performed well in the second quarter. Our innovative hematology/oncology portfolio grew 10% year-over-year with continued growth opportunities in BLINCYTO, KYPROLIS and Vectibix. We saw strong sequential growth across our innovative brands, including Otezla, ENBREL, TEZSPIRE and TAVNEOS.

We're making additional investments into Otezla this year from a position of strength in the general medicine portfolio, Repatha grew 30% year-over-year with 35% volume growth in the second quarter. We also see continued upside opportunity for Repatha. And also, we're making additional investments into Repatha this year also from a position of strength there.

The bone franchise continues to deliver growth. Prolia growing 11% year-over-year and surpassing $1 billion in quarterly product sales for the first time ever. And EVENITY, also in the bone portfolio growing 47% year-over-year. Our biosimilars portfolio continues to generate meaningful sales and continues to create meaningful returns for our shareholders.

As we have consistently said, we see long-term growth driven by launches of new products and into new markets. We're excited about our recent initiation of a pivotal study evaluating ABP 206 with OPDIVO, one of six planned new biosimilars.

So finally, we continue to execute on multiple capital allocation opportunities. In the second quarter, we invested over $1 billion in internal innovation, about $300 million in capital expenditures, including into any number of artificial intelligence use cases, and we increased the dividend by 10% year-over-year.

So Mohit, we're creating value for patients, staff and shareholders, well positioned on any number of fronts to deliver long-term growth, driving the successful integration with Horizon Therapeutics based on the strategic fit driving the best innovation through our pipeline, driving results as we did in the second quarter with record revenue, record non-GAAP earnings per share.

And with that, I'll turn it over to you to drive some Q&A.

Question-and-Answer Session

Q - Mohit Bansal

Thank you very much. Thank you for this great introduction. And if you guys have any questions, feel free to let me know, raise your hand, and it's your event. But I have a lot of questions as well. So maybe let's just start with the first question, like you pointed out, do you have a lot going on and a lot of this pipeline is longer term, right? I mean if you look at the OX40, Lp(a), obesity franchise, which could be a big -- which could be on -- in itself like a single asset could be a big growth driver for Amgen.

Organically, though, people think that next 18 to 24 months without Horizon are going to be a little bit challenging in terms of -- this is the argument from some investors. I mean how do you counter that argument? How -- when you look at your base business, which are the points which could provide growth even without Horizon that, that people may be missing here?

Peter Griffith

Excellent. Mohit, thank you very much. So we'd point to the double-digit volume growth in Repatha. By way of example, we see continued upside opportunity there. It was up 35% in volume year-over-year. We look at EVENITY, up 53% year-over-year. TEZSPIRE up 37% quarter-over-quarter sequentially. And the hematology/oncology portfolio, up 12% year-to-date.

So we think that's very strong. So we see continued near-term and long-term opportunity in those products. We continue to invest in Repatha in the primary care physician presence. We think that's reflected in that strong volume growth and will continue to be....

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