Amgen Inc. (AMGN) Earnings Call Transcript & Summary

Hello, everyone, and welcome to Oppenheimer's 32nd Annual Healthcare conference. I am Jay Olson, one of the biotech analyst at Oppenheimer and I want to thank you all for joining us here today. It's a real pleasure to welcome Amgen to our conference, and it's an honor to introduce Arvind Sood, Head of Investor Relations, Peter Griffith, Chief Financial Officer; and Rob Lenz, Head of Global Development. We're super excited about all the progress at Amgen and really appreciate the opportunity to catch up with you all today. So thank you so much for participating in our conference. And with that, I'll turn it over to you, Peter, for opening remarks.

Well, Jay, thank you very much, and we really genuinely appreciate the invitation to the 32nd Oppenheimer Healthcare Conference. So we recently had an opportunity to discuss what we expect to deliver through 2030 with the investment community. February 8 was our business review day. We expect to deliver mid-single-digit revenue growth and more than double our earnings per share through the end of the decade, which is through organic growth. We've outlined the drivers of our revenue growth over the rest of the decade, multiple innovative growth products, notably Repatha, Otezla, Prolia and EVENITY. Biosimilars. We've launched 5 molecules to date and expect to launch an additional 6 over the decade. We expect to more than double our 2021 biosimilar sales by 2030. Recently launched products in our pipeline, we have 2 new products that we recently launched, LUMAKRAS and TEZSPIRE. Otezla is now approved for a new indication mild-to-moderate psoriasis. We also have a robust pipeline of novel medicines that we'll discuss in more detail shortly. Finally, for our biologics, with loss of exclusivity later in the decade, Prolia and XGEVA in '25 and [indiscernible] in '29, we have highlighted that biologics historically erode at a slower rate than small molecules after patent expiry. A decade ago, we had 40% of our revenue that was facing loss of exclusivities. Those same biologics still account for about 10% of our revenues, generating meaningful cash flows for us to reinvest into innovation even almost 8 years after that. So let's turn to 2022. Recall from our remarks that last month's business review, we've guided to total revenues of $25.4 billion to $26.5 billion. This range reflects the impact of net selling price declines, no new contributions from biosimilar launches in 2022, declining Neulasta sales and foreign exchange headwinds. Recall that the first quarter is historically our lowest revenue quarter. This reflects the effect of insurance reverifications, co-pays and deductibles for patients. And just a reminder that we book our share of BeiGene's results 1 quarter in arrears under the equity method of accounting, so we will be booking our share of BeiGene's Q4 2021 results in Q1 2022. So with BeiGene recently reporting their fiscal 2021 results, we expect other income and expense in the first quarter of 2022 to be approximately $400 million. As BeiGene reported a larger loss in the fourth quarter than we anticipated based upon the publicly available consensus information that we use to estimate our results for the year. For full year 2022, we continue to expect other income and expense in the range of $1.4 billion to $1.6 billion of expense as we said last month. Now we see accelerating growth into 2023 with the U.S. launch of AMGEVITA in January 2023 as a key driver, continuing post-launch momentum from TEZSPIRE, LUMAKRAS and sustained growth from key brands, including Repatha, Otezla, Prolia and EVENITY. Now turning to the pipeline, in addition to TEZSPIRE and LUMAKRAS, we have 10 innovative molecules advancing through our mid- and late-stage pipeline. As we discussed in our business review, our innovative pipeline addresses significant opportunities of unmet need across inflammation oncology and general medicine. With our Head of Global Development, Rob Lenz, joining us today, we're happy to address these programs in further detail. Now in our discovery research engine, we're building differentiated research capabilities in 3 areas: human data, multi-specific drugs and generative biology. This will be important for our growth engine beyond 2030 and will accelerate opportunities into this decade. So we've made important progress in our quest to expand internationally. Our collaboration with BeiGene is going well. We expect sales outside the United States to account for 35% of our total sales by 2030. And finally, we will continue to be predictable and responsible stewards of shareholders' capital. The capital allocation hierarchy begins with investing in the best innovation, whether it is internal or external. We will continue to seek value-generating deals with a focus on those that create value for our shareholders, not just the shareholders or the sellers. And we will continue our cash returns to shareholders through a competitive payout ratio of growing dividends and opportunistic share repurchases. And with that, Jay, I'll turn it back over to you.

Thank you, Peter, for that overview. That's a great setup.

And since we received a number of inbound questions about Amgen's pipeline, I thought we'd jump right into some of them, starting with LUMAKRAS. And for the combination of LUMAKRAS with PD-1, I guess we should see some data this year. Could you please help us understand what to expect from the readout especially since we've seen some data from Mirati, I don't know if there's a read across from that, but Mirati had some initial PD-1 combination data last year. And then maybe just talk about your development and registration strategy for a first-line PD-1 combination with LUMAKRAS?

Sure. So the PD-1 combination is part of a broader strategy that we have to advance LUMAKRAS into the frontline non-small cell lung cancer patients. And really, if we think about this in sort of 2 major approaches or strategies that we're currently pursuing. One is to go into patients who really have the highest unmet need and really aren't served well by current therapies, and that includes patients with low PD-L1 expression or those who co-harbor STK11 mutations, these in general are patients that aren't well served by the available therapies. And to that end, we have an ongoing Phase II monotherapy trial in exactly those patients. And then we also have a comprehensive combination study that we're assessing in addition to PD-L1s or PD-1s, a number of other more than 10 combinations to really kind of optimize treatment and bring LUMAKRAS in the front line. And then in terms of specifically for the PD-1 combinations, we have been and we continue to invest that. And that can either be in direct combination or potentially it could be sequentially, right? And the ultimate intent here is to identify the safest and most efficacious approach to identifying that combination. I'll just note the PD-1s have been sort of notoriously difficult to combine with targeted agents, particularly the small molecules. There's examples in the BRAF, EGFR, or MEK space, et cetera, where that's been challenging. So we continue to generate data there, and we are planning to submit those data to be presented at an upcoming congress in the middle of this year.

Excellent. Thank you. We look forward to that. And then I guess for non-small cell lung cancer and noncolorectal cancer tumor types, is there a tumor agnostic registrational pathway for LUMAKRAS that you're considering?

Yes, absolutely. So we do have an ongoing tumor-agnostic cohort that has been opened for a while on enrolling patients across a number of tumor types. And actually, we recently analyzed a portion of that, the pancreatic cancer cohort that was within that larger tumor-agnostic cohort and we presented those data from the pancreatic patients actually last month at the ASCO plenary series. And just by way of reminder, that was a cohort of 30 late-line pancreatic cancer patients. And that showed LUMAKRAS resulted in a 21% response rate and an 84% disease control rate, which we and the investigators found quite compelling. And so as data continue to accumulate in the pancreatic cohort within there as well as the other tumor types, we will use those data and engage with regulatory authorities on the appropriate path forward.

Great. That's helpful. And then for upcoming AACR meeting, it seems like you have a couple of abstracts on LUMAKRAS. Anything in particular we should be looking out for there?

Yes. I highlight one presentation that I think will be particularly interesting to a variety of folks. And that's the long-term outcomes from the CodeBreaK 100 trial of LUMAKRAS, this is going to be presented in a late-breaking oral presentation on April 10. And this presentation is going to share what is now the longest follow-up data that's ever been generated and presented with the G12 -- KRAS G12C inhibitor. And what folks will see is LUMAKRAS continues to show very meaningful benefit lasting out 2 years. So I think it's a really nice extension of -- the evidence of clinical benefit that this transformational therapy is bringing to patients. Another presentation is a preclinical analysis that demonstrates in non-small cell lung cancer. Tumors that -- those tumors that have a loss of STK11, that's the mutation that I mentioned pertains of particularly bad prognosis in its patients. It's actually associated with heightened sensitivity to therapeutic intervention of a combination of an anti-KRAS G12C and an MCL1 inhibitor. So it suggests that there's an opportunity there for combination therapy in those patients with STK11 mutations with, say, a LUMAKRAS and an MCL1 inhibitor. And I think it's just a nice example of how we continue to drive the understanding and the evolution of the underlying biology in G12C tumors to inform really how best to interdict in patients and have the biggest impact. So those are 2 I'd highlight.

Great. Thank you for that preview. We'll look forward to learning more details at AACR. Maybe just to shift gears over to TEZSPIRE for a moment. You've got several Phase III and Phase II studies running. Can you talk about when we might see data from those studies? And also, any thoughts on the commercial opportunity from additional new indications for TEZSPIRE?

Sure. So I'll just to remind folks, TEZSPIRE is a drug that has a unique mechanism in that, it inhibits something called TSLP. And the relevance of that is TSLP is really located at the top of the inflammatory or inflammation cascade. So there's strong rationale to believe that inhibiting TSLP could actually have benefit in a broad number of inflammatory conditions. And so to that end, as you alluded to, we have 3 ongoing clinical trials in different indications. We have an ongoing Phase III in a disease called chronic rinocytositis with nasal polyps. There is very significant overlap in patients who have asthma as well as patients who have nasal polyps. And in fact, when we looked at the completed Phase III asthma trial with TEZSPIRE, we looked at the population who had both asthma as well as nasal polyps. And in the patients that have nasal polyps, tezepelumab demonstrated a very significant improvement in their asthma exacerbations, which maybe isn't surprising, but it was not used to see. But interestingly, we also showed in that population that TEZSPIRE ameliorated or improved their nasal polyps symptoms. And that's what gives us a lot of confidence that the ongoing Phase III, a dedicated study in patients with the nasal polyps will read out positively. And we expect those results to be in -- coming out in 2024. We have 2 other ongoing Phase II trials. One is in COPD, and the other is in chronic spontaneous urticaria. Those are both expected to read out right around a year, plus or minus from now. And then we're also planning another Phase III in eosinophilic esophagitis, and that's a disease where we actually received orphan designation recently from FDA. And so I'd say in terms of the commercial opportunity, we obviously feel that there's significant residual unmet need there, and they represent meaningful commercial opportunities. In terms of the quantification around that, I think once we see data from these studies, we'll be in a much better position to comment on the potential for the details of the commercial opportunity.

Okay. That sounds great. And then I know there's a lot of growing excitement around your cardiovascular pipeline starting with Olpasiran. And lipoprotein(a) is an important target. There's also some competition heating up there, which is great for patients. And we're just wondering what your latest thoughts are on the eventual market dynamics for Olpasiran and any other competitors on the horizon? And I guess, what should we expect from the Phase IIb readout that's coming up here in the first half of the year and next steps for Olpasiran?

Yes. So we agree, this is a very attractive target. The genetic and epidemiologic data are crystal clear, high levels of LP(a) are associated with and almost certainly driving increased risk of cardiovascular disease. Contrasting it to LDL, the available therapies today really don't in any way meaningfully reduce Lp(a) levels. And another difference is, unlike LDL, lifestyle modifications and other things really don't change the levels of Lp(a). They're genetically determined and they basically are sort of in variance all the time. And the other thing that's important to note is, one, we think it's a big opportunity, roughly 20% of patients have elevated levels of Lp(a) driving the cardiovascular -- atherosclerotic cardiovascular disease. And the genetic data also suggests that basically the lower you can get to, the better. So there's no clear association of people that have genetically low Lp(a) with any untoward effects, right? And so that, we incorporate all that in our strategy. And so how we're approaching this is with a molecule called Olpasiran, this is a small interfering RNA. It's in the midst of a Phase IIb trial. We expect that trial to read out in the coming months. And then we look forward to presenting that -- those data in the second half of this year. And in terms of what to expect from that Phase II, I would say essentially the same as what we saw in the Phase I. And just by way of reminder, what we saw in Phase I, including in patients that have high baseline Lp(a) levels is a very profound 90%-plus reduction in Lp(a) with this approach. And importantly, it was durable. So we saw not only the people achieve 80%, 90% reductions on average, but those lasted for more than 3 months after a single dose. And so the Phase II is evaluating multiple doses, different dosing paradigms that we may bring forward into the Phase III program in a larger patient population. And I'd say that we're sort of planning for success here, and we'll be poised to move very quickly to gear up the Phase III trial, assuming that we get positive data out of that Phase II trial.

Excellent. Well, we're looking forward to those results is super high area of unmet medical need. And another interesting and exciting opportunity in your cardiovascular pipeline, AMG 133, you had some initial data at -- during your business review. Can you tell us more about the molecule and the data that you're seeing coming out of your Phase I study for AMG 133?

Sure. So AMG 133, it's a first-in-class, it's a multi-specific antibody that targets basically 2 critical pathways involved in obesity and deranged metabolism. The first is through agonism of the glucagon-like peptide or GLP-1. This is an approach that has clear human validation and the therapies that are currently on the market for treatment of things like diabetes. The second component is actually an antagonism of something called GIP receptor or GIP receptor. It was the gastric inhibitor polypeptide receptor. And the importance there is that we have generated, as have others, very compelling data from human genetics that strongly supports inhibiting that is related to low weight or low BMI. So the idea is combine those 2 approaches into a single molecule to hopefully drive incremental weight loss beyond what's seen, say, with currently available therapies. And you alluded to at the business review, our Head of R&D, Dave Reese, showed a plot from the single-dose data where after a single dose, we were able to see very profound weight loss, on average 8 kilograms. So almost 18, 20 pounds weight loss after a single dose. So the initial data are very promising. The Phase I is ongoing. We're now evaluating the drug in multiple dosing. And look forward to seeing those data and sharing it when appropriate.

Great. And another question, going back to your business review. You had very optimistic updates on Olpasiran, bema, your OX40 molecule, AMG 45, 1 and some of the solid tumor BiTE. Which of these do you think represents the next commercial launch for Amgen?

I don't -- we don't comment specifically on launch timing. So maybe I would just highlight briefly, and I know we're sort of coming up on time. So I'll take your lead here, Jay, on how much time we have, but a couple that I would mention in our late-phase pipeline that we're particularly excited about and we think are meaningful opportunities. One is AMG 451. This is our potentially first-in-class monoclonal antibody against the OX40 target, and this is a molecule we've already demonstrated very robust data in a significant Phase IIb trial in atopic dermatitis. And we're in the midst of gearing up a very comprehensive global Phase III program that we hope to kick off in the middle of this year. And it's a really interesting mechanism that we think has opportunity beyond atopic dermatitis and so looking forward to potentially interrogating other disease areas where we think it could be promising. And then I'll just mention a couple in the oncology area that are in the later phase development. One is tarlatamab. This is AMG 757. This is our first-in-class half-life extended bispecific T-cell engager molecule. And this targets something called delta-like ligand 3 or DLL3. And this target DLL3, it's expressed on a majority of small cell lung cancer tumors as well as a variety of other neuroendocrine tumors, things like neuroendocrine prostate cancer. And so this is a molecule where we previously shared data from the Phase I study in the relapsed/refractory small cell lung cancer patients, where we saw very significant activity, antitumor activity there, including 3 complete responses and a preliminary median duration of response of over 1 year. And this is -- these are patients who invariably after failing the front line, they progress very rapidly and typically measured on a number of weeks or a small number of months. So to see this durability and this robust response, including complete responses is certainly compelling and has compelled us to initiate our registration -- potentially registration-enabling Phase II study in third-line small cell lung cancer and that trial is underway. It's rolling very well. And then obviously, we're looking at ways and opportunities to bring that molecule to earlier lines of therapy as well. And then maybe the last one I'd mentioned the late-phase pipeline that we think is very encouraging is bemarituzumab. This is our first-in-class monoclonal antibody against FGFR2b. It's being studied in a pretty comprehensive global Phase III programming gastric cancer. So this is targets expressed in roughly 1/3 of patients with gastric cancer. FGFR2b is also expressed on a number of other cancers beyond gastric cancer and that includes things like squamous non-small cell lung cancer as well as various other cancers. And so we have a signal finding study that we're gearing up in squamous non-small cell as well as like a tumor-agnostic type of basket trial where we'll be evaluating it in a number of different tumor types. So we think the opportunity there is also quite significant.

Excellent. That's a super helpful overview of your later-stage pipeline. I really appreciate that. I do want to circle back on some of Peter's opening remarks and follow up on some of the long-term guidance. And Peter, you had mentioned that you expect ex U.S. revenues to contribute 35% of total revenues in 2030 with Asia Pacific, I guess, growing to 15% currently from around 5%. How should we think about the opportunity and maybe some of the challenges in Asia Pacific? And what do you need to happen in that region to drive that expected revenue growth in terms of competition, pricing and reimbursement.

A lot going on over there. Jay, thank you for the question. It's a great question. And certainly, as we go into Asia Pacific, where we're ready to do what we do at Amgen, which is compete intensely and win. So we've said that we expect Asia Pacific to be a meaningful driver of our long-term growth with greater than $1 billion of sales, and we went through $1 billion in 2021. Our growth strategy is focused on innovative volume-driven medicines as we always are, that address significant unmet needs in the region. China and Japan are obviously the 2 major areas of focus for us in the region. In China, our partner, BeiGene, continues to commercialize our oncology assets, XGEVA, BLINCYTO and KYPROLIS partnerships progressing well. We currently share our profits with BeiGene and rights on 2 of these 3 assets will revert to us over time, as we've said all along since we entered into the partnership with them in January of 2020. Between Prolia and Repatha, NRDL listings. We're also expanding our general medicine footprint in China. For Repatha, in particular, we see significant growth opportunities as many as maybe 30 million ASCVD patients in China by 2030. And so we're very pleased with that and look forward to that. We see further opportunities to list additional products on NRDL, although there's downward pressure on price, we think our innovative products can help reduce overall total health system cost. Beyond China, we're going to continue to progress in Japan. Recent approval of LUMAKRAS there, our growing general med presence, expected continued growth of EVENITY through the decade, 5 million osteoporosis patients in Japan. Otezla's approved in Japan. Repatha is the only approved PCSK9 inhibitor there. And finally, in the pipeline, we think bema, I usually say bema, I can now pronounce bemarituzumab, that gives us certainly a derisked Phase III asset in gastric cancer, a disease with high incidents as you know, Jay, in Asia Pacific. So we look forward to progressing our footprint out in Asia Pacific. It's really important to us. And as you said, we expect to contribute -- that overall outside the United States to contribute about 35% of total revenue in 2030 with Asia Pac growing to 15% from the current 5%. So it's a great question, and we're looking forward to executing on that.

Excellent. I really appreciate all the work you're doing in Asia Pacific to help those patients there. And I'm glad you mentioned Repatha. I know that's got a lot of growth opportunities ahead, especially since there's only a small proportion of patients understand who can achieve their LDL-cholesterol goal. What's the key to unlocking the huge market potential for Repatha? And how should we think about Repatha revenue growth in the U.S. versus ex U.S.? And then maybe if you could comment on the significance of the VESALIUS study in driving Repatha growth.

Let me take a stab at this, and Arvind and Rob can certainly come in. But I would just say we see meaningful growth potential for Repatha, globally, both U.S. and outside the U.S. And you asked about the U.S. and the U.S., we see about 50 million ASCVD patients by 2030. Large opportunity for additional PCSK9 penetration. It's growing. It remains low. It's still in single-digit percentages with U.S. cards and primary care providers. We're investing in Repatha's primary care footprint. We think that's critical to the growth. We expect to continue to grow this PCSK9 penetration over time. We've unlocked all the access barriers that Repatha grow -- growth rather, excuse me, affordability, a fixed co-pay broad access, 80% coverage of U.S. lives. That recent China NRDL formulary listing I just mentioned unlocks key, ex-U.S. growth, as we talked about, again, outside the U.S., China, NRDL, significant opportunity. I hear you mentioned VESALIUS. We think that can unlock a large incremental patient pool, maybe more than 750,000 patients, it's reflected in how we're thinking about Repatha and the summary is it's a very large worldwide addressable patient pool for Repatha and our 2030 outlook assumes we continue our market leadership to reach millions of these patients. And as you know, Jay, just a really serious disorders. So as we like to say with Repatha, lower is good, lowest it's best on LDL.

Excellent. That's super helpful. I think we're just about at the end of our time here. Any other closing takeaways you'd like investors to know about Amgen before we wrap things up?

Look, I would just say we're well positioned for growth throughout the decade. All the cards are in our hand. We're excited as a team to execute on this. It's an organic plan. So any inorganic activity, which we didn't have a chance to drill into today. We're always out in the market, thinking about business development and external innovation, 7 significant transactions last year from acquisitions to different types of structures, licensing and collaboration. So we look forward to moving ahead and really, first and foremost, continuing to deliver to patients and then the shareholders and our staff. So we really appreciate your invitation to join you today, Jay. Thank you so much for that. Thank you to Oppenheimer And we're delighted to have Dr. Lenz and Arvind join us, too. So we wish all, everyone great health and look forward to seeing you again soon.

Thank you so much. It's really a pleasure to catch up with you and really appreciate all the impressive work you're doing for patient's, and I look forward to future updates.

Thank you.