Amgen Inc. (AMGN) Earnings Call Transcript & Summary

Great. Good afternoon, everybody. I'm Terence Flynn, the U.S. biopharma analyst at Goldman Sachs, and we're very pleased to be hosting Amgen today at our virtual conference. Joining us today from the company, we have Peter Griffith, the company's CFO; Dave Reese, Head of Research and Development; and Arvind Sood, Head of Investor Relations. Thanks so much for joining us today. Really appreciate the time. Peter, I'm going to turn it over to you for some opening remarks before we go into Q&A.

Great. Well, thank you, everybody, for joining us. Thank you, Terence. Thank you, Goldman Sachs, for the invitation. We look forward hopefully to seeing everybody at Terranea next year. I won't share with you the weather out here today. You wouldn't want to know it's 70 degrees. But rest assured, you're saving some money on your sunblock and your sunscreen by not being here. Well, we've been busy as we near the first half of the year here at Amgen, particularly on the capital allocation front. So we've announced 3 deals this year, beginning with Five Prime and Rodeo, and most recently, an agreement with Kyowa Kirin to jointly develop and commercialize a unique Ox40 antibody for atopic dermatitis. Although these are great examples of acquiring external innovation, our capital allocation hierarchy, always begins with investing in internal innovation. Such investments led to the successful development and approval of LUMAKRAS, the first KRAS G12C inhibitor. LUMAKRAS has demonstrated improvement in ORR and DoR, and we presented data on overall survival at the recently held ASCO. We also presented data on improvement in OS with bema in gastric cancer and an impressive duration of response with Tarla, also known as our AMG 757, our DLL3 targeting small cell lung cancer. Other pipeline progress includes a submission for tezepelumab for severe asthma and the submission of Otezla for mild to moderate psoriasis, excuse me, indication with the December 19 PDUFA date. With LUMAKRAS, we now have pivoted to executing our commercial plan, through educating physicians on the need for biomarker testing and providing assistance as needed for Medicare and commercially-insured patients as well as uninsured and underinsured patients. As for our overall business, Q1 was impacted by the pandemic, but we began to see a recovery in March, which continued into April, and we expect these trends to continue throughout the year. We expect continued cumulative COVID impacts in the second quarter. And while we expect to see improvements in the rate of recovery, that recovery will be more heavily weighted towards the second half of the year. We will stay focused on volume-driven growth and several of our growth drivers, including Repatha, Prolia and Evenity, Otezla and Aimovig are generating volume growth. Biosimilars are now an important growth driver, but going forward, growth in this business will be driven by the addition of new products and new markets that we can commercialize our biosimilars in. So let me conclude by reiterating that we have significant financial flexibility and firepower, strong balance sheet, strong cash flow generation. And we will continue to look for other opportunities that align with our disciplined business development strategy. We will continue to accelerate balanced innovation, both internal and external, in order to bend the curve of health care, first for patients and also for societies and for economies. And with that, Terence, I'll turn it back to you.

Great. Well, thanks so much, Peter. Appreciate you framing everything. So I think we're going to dive into a few of these topics in more detail now. First quarter results came in below consensus. But as you mentioned, the company reiterated your guidance for the year. Maybe just walk us through what you're seeing in your key end markets now here given the ongoing recovery, so cancer, immunology, bone health, migraine and why you're confident in achieving that guidance that you set out at the start of the year?

Thank you, Terence, for the question. January and February, as we said before, we're clearly impacted by the post-holiday COVID spikes, but we saw improvements across the brands in March continuing through today. We expect continued cumulative COVID impacts in the second quarter, as I mentioned. While we expect to see improvements in the rate of recovery, again, we feel it's going to be weighted more heavily towards the second half of the year. We reaffirmed our revenue guidance range of $25.8 billion to $26.6 billion on our April Q1 call. And we anticipate strong, consistent volume growth from our products including Prolia and Evenity, Prolia, I think, was up overall, 16% in the first quarter as well as improvements from products like ENBREL, Otezla and Aimovig. And those are typically impacted for all of us to recall in the first quarter by benefit plan changes, insurance reverifications and higher co-pay expenses. And certainly, finally, I just would finish by saying we're pleased for patients that we were able to ship LUMAKRAS last week. Based on the approval we received a week ago last Friday. So that's great news for patients. And certainly, we've baked Otezla into -- excuse me, LUMAKRAS into our thoughts for the year.

Okay. Okay. Great. Maybe just one other high-level question. There's been a lot of chatter in D.C. these days on drug pricing as a potential pay for, a lot of potential large bills. So where do you guys stand with what you're hearing from your D.C. folks? And is this the time that the industry should strike somewhat of a grand bargain?

Well, it's a great question. And it's certainly developing, I think, even as we speak and it will develop rapidly as we go along here, it seems like it's -- there's a lot of to and fro. So the industry has delivered remarkable innovation in the vaccines and therapeutics which are bringing an end to COVID-19. We always like to start with that and have helped to get the economy back on track. We're going to continue working with the administration and all the members of Congress to find solutions that increased patient access and affordability. We have serious concerns with the HR3 drug pricing bill that was reintroduced in the house or anything that looks like that. And generally, we cannot support the government price setting policies. So we need more innovation. I mean, that's what the last 14 or 15 months have shown all of us, not less. And I believe the analysis done by the CVO points to the negative impact that, that type of policy would have on drug development, patient access and innovation. So Terence, we're going to remain engaged with all the stakeholders to ensure any future legislation protects innovation from our -- in our industry, improves patient access and reduces patient out-of-pocket costs. So a lot more to come there, but that's a great question, and we all need to be thoughtful and considerate about it.

Okay. Thanks for the perspective. I guess, over to Dave, congrats on the LUMAKRAS approval, obviously, was a big focus of the R&D team over the last several years here. And I think one of the quickest approvals Amgen has ever had from first-in-human dosing to approval here. So maybe just talk a little bit about the post-approval commitments here, what you guys have to do? And then would love your perspective at maybe a high level in terms of the FDA and that relationship with the industry because I think, again, we've seen progress on the cancer front, RTO has been one of those. And then you've also -- we recently saw this week the approval of aducanumab under the accelerated approval process. So just from where you sit, Dave, would love your perspective on that, industry's relationship with FDA. And again, do you think there are some learnings here from COVID that maybe the FDA is taking to heart and starting to put to work here?

Yes. Great. So on LUMAKRAS itself and the approval, of course, we're thrilled. Came, as you noted, some 32, 33 months, something like that after we first entered the clinic. It was the fastest development program in Amgen's history. It clearly hits a huge unmet medical need. And as Peter mentioned, we had both updated data from the pivotal Phase II trial at ASCO a few days ago on particular overall survival data over a year, extraordinary in mostly third line patient population with this disease. The median duration of response now over 11 months, with longer follow-up, that could even increase. We'll see what that number looks like over time. But I think also really just an exceptional result. We've seen a sort of extraordinary outpouring from around the field, not only in terms of what this means for patients, which is profound, but also just proof of principle that the undruggable has finally been drugged. And I think, renewed efforts across a variety of targets now. As you mentioned, the FDA actually used basically every tool at its disposal in this review with breakthrough therapy designation. RTOR, real-time oncology review, as you pointed out, which clearly helps expedite their review of the application in parts as it comes in, in real-time as the name implies as opposed to in one large bolus. And I think that represents simply a recognition on their part of the unmet medical need and the patient demand for therapy in this area. I think those programs, one of the real questions are, can you generalize them to other therapeutic areas? And I think our impression is, certainly, there's a lot of interest at the FDA in doing that, taking something like the RTOR pilot and extending that to other therapeutic areas. And then to finish, as you said, incorporating some of what we've learned from the pandemic in terms of the virtualization of clinical trials and the ability to ship investigational product directly to patients as opposed to sites. The FDA is clearly interested in with my peers. We have ongoing dialogues about what are the things that we've learned that should actually be incorporated as standard operating procedure going forward. So I'm quite optimistic that we'll see real change that comes out of all of this.

Okay. Great. Great. I guess on the -- one follow-up is just on the post-marketing commitment. One of them is to look at a lower dose of LUMAKRAS. And so maybe just talk us through that. And again, why FDA is asking for that. Do you think that has implications for future cancer drug development at all? Or is this something that you see as more specific to the LUMAKRAS program?

Yes. They're really -- probably the 2 biggest post-marketing requirements here are the head-to-head trial, the Phase III trial against docetaxel. That's fully enrolled, and so we'll provide guidance as we go along in terms of when we expect the readout from that study, but that has completed enrollment, it enrolled very, very quickly, an international trial. We downsized it based on discussions with regulatory agencies, and it's now powered on a progression-free survival primary endpoint. And then as you mentioned, there's a dose comparison study that's part of the requirement here. You may have seen that the FDA has started talking now about what they're calling project optimists, which is in oncology, potentially moving away from maximum tolerated dose to an examination of minimally effective dose. And that's probably a good framework to understand this particular request, and I expect this to become much more routine going forward. I don't think it's a one-off that you're going to see in this program. So watch that space, but don't be surprised if you see this across oncology development programs. It's worth pointing out that it's something we routinely do in other therapeutic areas. Most Phase IIb studies, for example, have a dose-ranging component that has not been the historic norm in oncology for various reasons. Many of them good ones, 20 or 30 years ago, but a little different now in an era of precision medicine. So I think it's part of a larger landscape.

And I guess, do you think that will almost slow things down in a sense that if you and others have to do more dose exploration work in that kind of early-stage setting, will that delay drugs getting to the market? Or do you think most of these will be similar to your situation, and it will be a post-marketing requirement? Like assuming these are accelerated approval decisions for unmet need cancers?

Yes. There's probably no generic answer. I suspect that's going to be customized per development program. For drugs like LUMAKRAS, where there's a breakthrough therapy designation. Maybe that comes a little later to not slow things down and make the drug available to patients. It also -- it's going to depend a lot on the profile of the drug. Remember, we have a very good tolerability profile and so that's one thing that's quite important. If you had a drug that was very toxic, you may want to do this earlier. So again, I don't see any generic answer to that question. And I think these development programs will be customized.

Okay. Okay. Great. Maybe, Peter, you touched on this a little bit in your prepared remarks, but just remind us what the company has said regarding LUMAKRAS guidance this year? And then anything else on the commercial prep side that you guys are still working through or you're pretty much fully ready to go now?

Good question, Terence. Look, they're fully ready to go. They're going hard at it, and they were ready on a moment's notice. So we're -- first, as I said in my prepared remarks, we're delighted for the patients. The approval came a week ago Friday, and Murdo and the team in commercial were ready to go as was our operations and manufacturing team well ready. And we were ahead of the curve there to make sure we got to the patients as fast as possible. So we're happy to be in it, ahead of the PDUFA date. We've got it included in the 2021 guidance for, as you know, with Amgen, we don't provide specific product guidance, but we've got a range in there that contemplates various scenarios. So we'll see what happens. We're hopeful that the biomarker testing gets accomplished quickly and gets to the attention of the clinicians and that this can -- medicine can get out to these patients just as quickly as possible. So there will be -- we'll see what kind of potential bolus there might be in them here to start. But most importantly, we're ready to go full speed commercially on it, and we're delighted for the patients.

Okay. Great. I guess, Dave, the other topic coming out of earnings is just the combo opportunity set with KRAS. And obviously, you guys have a pretty broad program here on multiple different combinations through this kind of master protocol. Maybe just, again, remind us how much data we're going to see this year? And then has it proved, it seems like from my perspective, it's maybe been a little bit more challenging to develop some of these combinations than maybe we all initially thought and maybe is that the correct assumption? Or is this just typical cancer drug development, this is par for the course?

Yes. I think let me answer the last part first there. I think it is more of the latter, what you described. I mean, remember, we've only been in the clinic 32, 33 months, number one. Number two, it took 40 years to get a KRAS inhibitor. So it's fair to say that there are some outstanding questions. And it's, I think, important for everyone to understand as well that this is not what you're accustomed to as another receptor tyrosine kinase, for example, like EGFR or HER2 or ALK or some of the other molecules for which targeted therapies are available. And so the underlying biology is a little different here, and we need to sort that out as well. In terms of the combinations, what you can expect over the second half of the year are EGFR combinations, both small molecule and antibody combinations on initial tranches of data and then MET combination data as well. And we've got well over 10 different combinations in the clinic. And so as we get line of sight to when we have meaningful bodies of data on those, we'll provide guidance as to when you can expect those as well. It's certainly fair to say that in the next 12 months or so, there will be a pretty large data flow.

Okay. And when on MET combo, I know I think that's the one that's kind of furthest along here. When would you guys or when would you be able to provide us with visibility if that would be sufficient for an accelerated approval?

Yes. That would be hard to speculate on. I would say that the expansion cohort there is open to all comers. And so we expect it will be primarily non-small cell lung cancer and colorectal cancer, just based on the prevalence of or the frequency of KRAS G12C mutations. So as we get longer follow-up and more patients there will provide guidance in terms of specific indications.

Okay. And then maybe one other follow-up is just, obviously, there's a lot of focus on the PD-1, PD-L1 combo opportunity here, just given the potential to -- potentially move into frontline setting in lung cancer. And so I noticed that you have CodeBreaK 100 and 101, and there's 2 different PD-1 PD-L1 cohorts. What's the difference between -- like why do you guys split those out in that trial?

Yes. There really is no difference. CodeBreaK 100 was up and running. And so that's where we started. And then we transitioned enrollment to CodeBreaK 101 for the checkpoint inhibitor combination. So no one should overread any sort of meaning into that. That was really just the kind of operational and logistic choice. And so we'll continue to look at that. And as I've said before, we're looking at not only combination therapy, but potentially sequential therapy as well. There have been challenges with other small molecules in terms of PD-1 combinations or actually a variety of molecules in terms of checkpoint inhibitor combinations. And that's something that I think we need to work out empirically right now in the clinic.

Okay. And when you say sequential, do you mean like you're giving kind of one drug for a certain cycle and then you're giving a second drug for the next cycle? Or is that a plan?

Yes.

Okay. And is there any precedent we can look to in oncology for that kind of a sequencing?

Well, I mean, if you go back to the beginnings of oncology, when we started treating leukemia with some success, for example, you have induction therapies and then consolidation therapy. So I think there's a long history of this. And the question is how to -- what's the optimal biologic sequence, and that's what we're trying to sort out right now.

Yes. Okay. Okay. Understood. Maybe just the last one on LUMAKRAS before we go to some of your other pipeline opportunities. But just would love your latest perspective just on the competitive profile. I mean, it's a question that I think we frequently get, as you think about the other KRAS inhibitor out there. And again, how do you think you stack up at this point given what we know? And what are the key questions or outstanding things that you're going to be looking for when we see their data later this year?

Yes. I mean, I'll let them talk about their data. I love our molecule. I think it the -- one thing we've seen is this tremendous consistency of behavior, really from the start of the development program. If you look at the original ASCO Phase I presentation when we presented 10 patients, what, 2 years ago. That waterfall plot, you can more or less be extended, and it looks exactly like the Phase II pivotal trial waterfall plot. So having that sort of understanding of the behavior of the molecule, I think, is a great advantage as we take it forward now into other indications and, in particular, in combination. So we're full speed ahead. We've got well over 800 patients enrolled in 5 continents now. We're filed in 8 jurisdictions around the world, including FDA, of course, where there's an approval. Those reviews are moving along briskly. And so we're just thrilled with what we're able to bring to patients here.

Okay. Okay. Great. Maybe back to you, Peter. You touched on the Kyowa Kirin deal here for the OX40 antibody in atopic dermatitis. And that follows the Otezla deal that you guys announced last year. And so it seems to me like you're making a more concerted push here in immunology. And so is that the right read on it? Is there more that you guys are looking to do here as you think about building that out? I mean, historically, you've had ENBREL as the anchor but again, it seems like you have been somewhat more active on immunology now over the last 12, 18 months or so.

I think that's a good question, Terence, but I really want to look for balanced shape in the portfolio. That's really what we're trying to do. And we've had some really great opportunities. So Otezla actually time flies. That was $13.4 billion of our shareholders' capital we deployed in November of 2019 now. So we're kind of well into that, time flies. We -- you mentioned Kyowa Kirin. We made the preclinical acquisition of Rodeo earlier this year, too. So another commitment in that space, inflammatory bowel disease is where that one might go. We're hoping that turns out to be helpful and productive for patients. So we'll continue to size and shape the portfolio. It's our capital allocation hierarchy. Just to remind everyone, we always start with internal innovation. We've got -- we're very committed at Amgen to making our capital expenditures every year to keep everything front and center. We're finishing up our plant up in Rhode Island. It's a next-gen plant, very ESG friendly. So we'll continue to make that. But next, we go to external innovation, and that's really, really important. As you say, we try to size and shape the pipeline that way. And so that's what we've been doing. We always want to be patient and where we're a really good buyer for the opportunity. And I think in the case of Otezla, I think in the case of Prime, I think in the case of Kyowa Kirin, it works really, really well. I think in particular, KHK4083 is a great opportunity for us to partner with Kyowa Kirin who we collaborated -- started collaborating with in the mid 1980s. And so this is company we are extremely comfortable with and they with us, and we're looking forward to partnering with them around the globe. And we're optimistic about that. So you'll continue to see us be patient waiting for those kinds of opportunities. We'll continue to wait until they clear our hurdle rate. So they're prudent deployments of our shareholders' capital. We'll continue to stay in the corridors. You talked about certainly inflam and immunology, onco, cardio. Those are the 3 areas. We've got tremendous discovery research. And if we find something in one of the commercial areas, bone, nep, neuro, we're happy to jump in there, too, but the first 3 are most critical for us. And finally, we're always looking for opportunities like Otezla, which has demonstrated that Amgen is a world-class integrator of opportunities. We do it promptly. We do it effectively. We realize that's the way we're going to achieve our returns on these situations. So we look for situations too, where on a timely basis, we can integrate. So thanks for the question on that. Well, we're continuing to be active, looking for opportunities. Since we're Amgen, we get to see just about everything out there. And we get through it quickly. We've got a great team that sorts through inorganic opportunities. Dave Reese team with Dave Piacquad, who's been doing BD for 4 decades and has a tremendous team in BD and Murdo we're partnering with commercial in there and go forward. So we're being very thoughtful about it. But we certainly realize now it's a good time for us to be out there, continuing to be thoughtful about finding additional opportunities beyond the 3 we've done this year.

Okay. Great. Maybe just a follow-up for Dave, on the clinical profile and how to think about maybe some other opportunities. Maybe just remind us, when might we see the data here that led to the deal? And then where do you really see this fitting in the paradigm? Because to me, it looks like we've got DUPIXENT becoming increasingly entrenched in kind of that front-line setting now. But again, it's obviously a different mechanism. You have the JAK inhibitors coming. They offer oral dosing profile, but maybe come with some safety liability questions. And then you have lebrikizumab, the Lilly drug, it's a pure IL-13. So how do you see this slotting in given that landscape, which looks to be increasingly crowded here?

Yes. No, it's a great question, Terence. I would answer it first by saying there's -- we think there's still a large residual unmet medical need. This is a disorder, atopic dermatitis of increasing prevalence. For context, there are roughly 25 million to 30 million patients with this disorder between the U.S., the EU, big 5 and Japan. It's increasing in prevalence as many autoimmune disorders are. So our intent would be to develop this for a fairly broad swath of patients. Given the natural history of the disease, these patients often cycle among the available therapy. So we think there's a huge opportunity to make an impact with a mechanism that, as you mentioned, is really unique or orthogonal to any of the other entities that are available right now. The data package is going to be presented more fully at the end of September at one of the major European dermatology meeting. So you'll get a look at that, at that point. But obviously, we're quite pleased with that and quite pleased with the partner. The last thing I'll add, and this kind of builds on what Peter was saying in response to the last question was that, obviously, we have a very long, rich history in immunology. We took advantage of that here, but we also have deCODE genetics. And their assessments here on the Rodeo acquisition were very important. And we're using what we think we have in terms of real insights to potentially inform indications beyond, for example, atopic dermatitis with KHK4083. So that is something that we'll talk a little bit more about in the future as we move along. But that's a critical piece. And autoimmune disorders, in particular, understanding the genetics of those disorders and how that informs drug development, I think, is a critical advantage.

Okay. Growth stay tuned, I guess. What -- any -- but can you provide any color in terms of OX40, like where, what cell type does it predominantly act through or anything more on the pathway, so we could maybe just get a general idea?

Yes. For those who aren't familiar with the pathway, this is -- it's a receptor. It's a co-receptor that is upregulated primarily on T factor cells. So those are the business sorts of T cells, and they're the ones that are typically causing the tissue damage in autoimmune disorders as well as T memory cells. And those are the ones that often provide this sort of residual pool of cells that can then become bad actors in autoimmune diseases and maybe responsible in part for why you see this waxing and waning natural history. And so the molecule itself, the monoclonal antibody, KHK4083 is an afucosylated antibody. What does that mean? Well, we believe it has a dual mechanism of action, both blocking the signaling pathway, but then enhancing cellular destruction, the ADCC pathway. And that depletes OX40 bearing cells, which are believed to be a real driver, and there's a lot of good evidence that they're a real driver in disorders such as atopic dermatitis and other autoimmune diseases.

Okay. Great. And maybe just the last question on this topic. So is this a subcu or is it IV? Or could you switch to a subcu?

When we present the data, I think we'll talk a little bit more about the anticipated dosing.

Okay. Okay. Great. Maybe just in the interest of time, the other kind of mid-stage pipeline effort that you guys have spent a lot of time working on is your BiTE platform here. And obviously, you've kind of honed in on a few key opportunities. I think still, one of the most frequent questions we get is just why is Amgen or why is another company optimistic about solid tumors? Obviously, we've seen interesting data. You guys have BLINCYTO approved for ALL. There's been data in non-Hodgkin's lymphoma, multiple myeloma as well. But on the solid tumor side, what gives you the confidence that these drugs in this platform could be potentially transformative for certain tumor types?

Yes. I would say, no, it's actually clinical data that we've got with data that we've shared in the AMG 160, that's the PSMA targeting program in advanced prostate cancer as well as data that we just shared, updated data at ASCO from the Tarlatamab or AMG 757 program that targets DLL3 in small cell lung carcinoma. I think we have unequivocal proof-of-concept in terms of ability to generate responses but also durable responses in these diseases in patients who have had typically multiple lines of therapy. So we shouldn't discount how important that is that this is now pushing into the solid tumor arena. With AMG 160, we're actively enrolling an expansion cohort. And so when we have the data from that, we'll share it, that I think will really tell us what the potential path forward is for that prostate cancer molecule. And then as we mentioned a few days ago at ASCO, when you look at the last 3 or 4 cohorts of patients from the Tarlatamab program, we really -- we like what we're seeing there. 70% of these patients were third line plus small cell lung cancer, where there's really no standard of care and the prognosis is very poor. And not only are we seeing responses in the sort of 25% to 30% range, but also duration of response, median duration was something like 8.7 months, which I think is very impressive in this patient population. So next steps for that program are, I think, regulatory conversations to say, hey, what does pivotal program potentially look like here. So more on that as we move through the year and we have the appropriate conversations. But I like the progress that we've seen on that program.

Okay. Great. Maybe over to Peter in just the last few minutes here, another question we get frequently is just how to think about our year margins for Amgen. Obviously, some of your older legacy products, higher-margin are coming under pressure from biosimilars. You have a number of new products coming, but some of those like tezepelumab are partnered products, again, you have Otezla now, small molecule products. So there is a business mix shift going on here. And so as you think about that and then maybe some of the manufacturing process improvements that you guys have been making. Maybe just help us think through the puts and takes on the margin side as we go into the back half of the decade here.

Yes, that's a very fair question, Terence. And we all need to be thoughtful about the price decreases, too, on an ASP basis. We've indicated we'll be mid-single digits this year. So certainly, we're having to start out with a little bit faster sprint in the first few yards of the race here each year or meters, if the case might be, wherever you might be. So look, we don't provide long-term guidance, but let's talk about this for a moment. We're going to continue to be a top-performing biopharma firm from a financial metric standpoint, and that includes operating margins. So the achievements made during the Amgen full potential transformation which occurred really from about 2014 to about -- culminating in 2019, left us with what we call a permanent productivity initiative here, which means every year, we kind of take a look at ourselves and see how we're going to improve from a productivity standpoint and challenge ourselves there. And that's an efficiency exercise. It's critically important. Included in that now is the digitization, transformation we're working on. We want to be one of the top digitized firms in our space, and we think that's really important. I would say it's table stakes, but it probably goes beyond that. So we're going to thoughtfully and strategically deploy that throughout the company and working actively on that. But I think as you think about product mix, you're right, we've got some shared products, but we do have efficiencies every year. Our operating and manufacturing group works hard to bring down that cost of sales as a percentage of product sales. So we'll continue to stay focused on that. We're going to remain flexible and adaptable, though, because it's attractive, both internal, our first allocation of capital or external innovation that comes around. Our objective is to grow our volumes and our after-tax cash flow. So we'll continue to do that. You're absolutely correct, there's more and more pressures, but we think we're up to the task. And we do -- this year, when you look at the 3 transactions, we've gotten through here. We are absorbing those operating expenses into our margin. We had indicated at the first quarter call -- in connection with the first quarter call that we expect an operating margin of roughly 50% this year. So we like to be very, very disciplined and thoughtful about that and using our shareholders' capital that way. So will continue to be that way, but you bring up some -- there's certainly some crosscurrents out there that we think about all the time, and we pay attention to. I think it goes, Terence. I think it goes to Amgen's long-standing quality of execution. So we want to hold that tradition and continue to work hard at that.

Okay. Great. Maybe just a last one for Dave. Anything in the early-stage pipeline that we didn't touch on that you think is underappreciated or an asset that maybe you'd want to highlight here for us to start to think about.

I think, Terence, you probably covered the major molecules right now. And we've got additional bites in development a little early in their dose escalation. And so if we start to see things of interest there, that would be something potentially next. And then I'd be remiss if I didn't call out some other pieces of the Phase II program as well, in particular, the AMG 890 program, which is small interfering RNA that targets Lp(a), which is clearly a driver of a good chunk of atherosclerotic cardiovascular disease that is not related to LDL-cholesterol. Phase II trial there has completed enrollment, and we're looking for that readout, actively thinking about what the major Phase III program would look like for that molecule. So I think that's one to really keep an eye on as well.

Okay. Well, I think we're up against time, guys, but Peter, Dave, Arvind, thank you so much for your time and insights today. We always appreciate it. Best of luck for the rest of the year and stay safe.

Thank you, Terence. Thanks for inviting us.

Thank you.

Thank you.

Thanks.