Amgen Inc. (AMGN) Earnings Call Transcript & Summary

All right. Good morning, everyone. Welcome to another great session here at the Jefferies 2022 in-person Global Healthcare Conference. It's great to see so many faces and friends. Up here on the stage with us we have Arvind Sood, Vice President of Investor Relations, who everybody knows; as well as Murdo Gordon, EVP of Global Commercial Operations. He's running everything behind the scenes in terms of commercial operations and sales. We obviously have a lot to talk about. We'll go right into it.

First, I guess, just maybe big picture for Arvind and Murdo about 2022. We're sort of coming out of COVID. You have guidance. I guess as an analyst, I was sort of surprised we didn't raise guidance. But without getting the nuances of 2022, maybe just talk about your outlook for 2022, and how you guys feel about numbers and things as we're coming out of COVID and how are things tracking along and how you feel about it?

Yes. Thanks, Mike, for the question. It's great to be here. Yes, we have been fairly explicit about the guidance that we have provided for this year. Prior to giving the guidance for this year, of course, we gave guidance through the end of the decade, and we have estimated that between now and the end of the decade, our revenues on average will grow in the mid-single digits and our earnings per share should be in the high single digits or low double digits, again on average over this period. So I think in many ways, the first quarter was a good indication of the guidance that we have provided longer term, in that, we had a 6% growth in revenues, 15% growth in earnings per share. So we are very much on target, on track to deliver against the objective that we have communicated on a full year basis.

And we're sort of asking a lot of these questions to a lot of these companies as we get through the year, but as COVID has sort of unlocked, I mean we are here at a conference in-person, Murdo, things are getting better around the country and around the world?

Yes. As we said, Mike, on the first quarter, definitely January and February were affected by COVID, I mean, kind of residual disruption in health care system, and that's mostly physician practices being short-staffed and some patient movement. We saw a strengthening in March, and we continue to see strengthening. It does vary by therapeutic area. So in oncology, we're still somewhat limited in access to our customers, and that makes sense given that they're treating an immunocompromised patient population. But in cardiology, we're at 80%, 90% pre-COVID levels of interaction. So what we're seeing also and the leading indicators in our business, so new patient starts primarily, we see some strength across the portfolio there. So back to Arvind's point about volume-driven growth, we're back on track to being able to generate that new patient population.

Good. Good. So that takes us into some of the key commercial programs. You are in the midst of various launches. I'm going to start with what is most timely, which is the wonderful world of KRAS. You have obviously launched LUMAKRAS. You're well into that launch. I think there's various Wall Street debate about how that launch going. But maybe talk about that and how you're feeling about the LUMAKRAS launch this year, and then we'll get into a little bit of how the competitive profile shakes out.

Yes. Look, we're really excited to be bringing a product like LUMAKRAS to the market, 40 years of trying to drug KRAS G12C as a target and the scientists in Amgen and Dave Reese's team have done a phenomenal job of a broad development program, a global development program. So our launch now isn't just in the U.S., we're also launching in Germany, we're launching in France, we're launching in the U.K. and we're launching in Japan. Those are just the markets where we've secured pricing and reimbursement and so we're in full commercial launch mode. And then we've got 40 other countries where we've had regulatory approvals. So we're really pleased with that momentum that we're now achieving. As to the U.S. launch, what we've seen is really nice rapid uptake in the patient population where the KRAS G12C status is known. And so anybody who is in front of their medical oncologist, and they're progressing from frontline to second line treatment choices, if that KRAS G12C status is in front of that medical oncologist, we get 80% of those patients. So that penetration is really good. The challenge is in some of these oncology networks and the community setting in the U.S., which is where the vast majority of lung cancer patients received their treatment, many of them haven't yet had the sophistication to bring their testing, data and their NGS data into the EMR system so that it's available for that medical oncologist as that patient progresses frontline to second line.

You're seeing as they are in second line or even in third line -- or let's say, second line, that community oncology practices haven't been able to see necessarily that those were KRAS patients. It's an electronic medical records thing, you're not at MD Anderson, it's a security setting, and they might actually not know that. So that's actually just an awareness thing that needs to recruit.

It's administrative and awareness. So one of the things that COVID did was that it impacted a lot of these networks in terms of staffing for IT infrastructure, EMR teams. The path report -- like if you did a thoracic panel, generally, you got a KRAS G12C status, but it's buried in the pathology report. It needs to be populated in a field in the patient record and the electronic medical record in a visible place. And that's what...

And like if you were to estimate, what do you think you're missing, 20%, 30% underrepresenting what could be happening because of that kind of thing?

I would say to date, when we do a review of, say, top 25 accounts, 2/3 of them have this system in process where they can retrieve that KRAS G12C status, 1/3 of them are still working on it.

Is that community? Or this is top 25 customers?

U.S. community.

Top 25 U.S. community practices.

Network.

1/3 -- networks. 1/3 don't have staff.

Still working on it. And we've...

Okay. That's a good estimate.

Yes, we've deployed field teams. We've deployed IT professionals. We've deployed EMR experts. So we have the systems in place, but they are somewhat understaffed in how they're able to do this.

So you're working hard on growing LUMAKRAS. You've talked about how there's some opportunity there to improve awareness of KRAS G12C. Obviously, a competitor is seeking accelerated approval with a December PDUFA date or their program, adagrasib. Maybe just coming away from ASCO, you could provide some commentary now that there's data out there, guys, on how you feel about your product profile compared to others and what you like about what you see.

Yes. I mean I continue to be impressed by our own data and our own product profile, the 2-year follow-up data that we had out at AACR showed that 32.5% of patients are still alive at 2-year follow-up on a targeted therapy. So that's impressive durability. I think it positively surprised a lot of investigators who were expecting a more limited durability given other targeted therapies sometimes show. So that's really encouraging. And I think in the field talking to thought leaders, talking to community oncologists, that's impressed them. And I think it's raised the urgency for them to give their second-line cancer patients, non-small cell lung cancer patients, the option of LUMAKRAS. We are very careful at Amgen not to do a cross-trial comparison, okay? We're very careful not to pull individual patients from ongoing clinical trials and show them as a [ PICT ] set. So it's hard to comment on data when that does happen. But what I will say is registrational data set to registrational data set, there is a differentiation emerging, and it's in favor of LUMAKRAS and it's on safety and tolerability on Grade 3, 4 tox. So I like how our profile has held up. I like the anecdotal feedback we get from customers who have multiple patients on the product and how good patients feel while taking the drug. That has to be a consideration when providing cancer care treatment. You don't want to cause debilitating or life-limiting side effects while you're treating their cancer. And I think LUMAKRAS has a really nice risk/benefit profile for that.

Right. So a key product differentiation that you've seen as you're particularly pleased about your GI safety, tolerability, nausea. All of those grade 3 things that were...

Yes, GI and beyond. I mean we continue to see QTC prolongation reported with that asset. And we haven't seen that in our own data set, okay?

Anecdotally, do you feel like the patients that are on LUMAKRAS now, because you said you were talking with people in -- who are using the drug, I feel like those are the sicker patients. And so duration of response and duration of therapy and all of that, you are getting the sicker patients, so you expect the patients over time to get better as well, and that's positive for sales and just overall durability. So people are talking with people on...

Yes, I think it's fair to say that our follow-up data was a heavily pretreated patient population. I think in the market now, we're getting patients who have maybe experienced 1 line of therapy, maybe combination I/O chemo, maybe I/O monotherapy and then they'll move on to LUMAKRAS. So I think hopefully, that means we get even better durability. But we'll have to see in our confirmatory trial, and we'll have to see as real-world evidence accumulates.

So part of the bigger picture for LUMAKRAS is moving it upstream and also in combination therapies. So combination is great because that should prove efficacy and durability and people stay alive longer. So moving it upstream is more patients and also combinations provide bigger opportunities. Can you comment about moving upstream, and I'm specifically talking about a second-line confirmatory study CodeBreaK 200 as well as combination use, and you have guided to data coming up on PD-1 combos and on SHIP2 combos. Comment on both of those opportunities.

Yes. I think you mentioned CodeBreaK 200, obviously, that trial continues. It's an event-driven trial, so we'll see when that reads out. That obviously will be a nice data set to understand comparative efficacy versus the docetaxel arm. And then for us, we are looking at frontline lung opportunity as kind of a broad array of different experiments we're going to have to run. So yes, multiple combinations, but also in different patient populations. And one of the things I've learned, having worked in the area for as long as I have, is you really have to think about the stratification of patients according to their PD-L1 status given that I/O therapy is the mainstay now of frontline treatment. And the market is really 1/3, 1/3, 1/3, right? So 0% PD-L1 expression, 0% to 50% and then 50% and above.

So what first line studies are being run, Arvind? Can you just...

It's not like STK11. There's just different first line studies I can remember.

So I would point to a very comprehensive program, Mike, that we are running with LUMAKRAS. In many ways, slightly higher level, but it's in the very early phases of this commercial trajectory. We are running 10 combination trials and, of course, these are being done as a means to move the product to earlier lines of therapy, but we are not just relying on combination therapy to accomplish that. We also have monotherapy trials. And to your point, these are in patients who have PD-L1 negative tumors and/or who are STK11 mutants. In addition to that, Mike, I would also point out that we are looking at other tumor types. So we presented some data in pancreatic cancer, early data. We also have a trial ongoing in colorectal cancer. Now granted that the prevalence of KRAS G12C is much lower, it's in the 2% to 4% range as compared to about 13% in non-small cell lung cancer, but again, I just mentioned those again, as a means to point out that it's a very comprehensive program that we are running.

Yes. And just to highlight further on the segmentation of frontline lung if we can even replicate what we've done in second line, so 40% response rate, 30% survival at 2 years. In PD-L1 non-expressers, that's a very competitive profile for a KRAS G12C patient. And I think there's thought leader interest. There's community oncologist interested in understanding whether or not LUMAKRAS should be the go-to frontline treatment for PD-L1 negative patients who also have a KRAS G12C mutation. So those are the kinds of experiments that will run in that segment, and that it's a full 1/3third of front line.

Right. Okay. So I'm going to press Arvind a bit on what you guys have said about upcoming combo data. I know that data is coming per se, everyone is eagerly anticipating it, albeit with low expectations. Competitor reported out some data, I guess, on Monday evening, talking about some pretty strong efficacy with PD-1, and particularly safety and tolerability, which is what I think people like. So going back to Murdo's comment about safety and tolerability, there are some concerns in combination with PD-1, particularly on ALT elevations. Can you comment on how to think about the therapeutic window for your combinations. Because that's what the competitor is talking about.

So we have a combination with the PD-1 and the SHIP2. And that data, Mike, is expected to be presented at a medical conference. We haven't identified that as of yet only because we wait until we actually get an acceptance, but that's expected to be presented towards the end of summer.

And see Jefferies note for their estimate. [ World lung ] is our estimate. But keep going.

No, that's all I was going to say that we expect to have that combination data by the end of the summer.

Okay. And what's the plan? If it looks good, you're accelerating it forward? You need to look at the overall profile? I'm just saying people have very low expectations.

I mean we'll obviously see what the data shows. We have been looking at both an outright combination as well sequential therapy with the PD-1. So again, I would not want to comment on that up until we actually turn the card and see the data.

Okay. If you have any questions on any of that, please raise your hand as well and I'll look for the -- for any questions at the end of this. Let me also be fair to some of the other programs because in the last proportion of time we have, I want to hit on, number 1, TEZSPIRE. That is a launch that you just reported sales on the first quarter. Again, I think people are watching that, albeit it will take some time. But actually, I think you guys have been quite bullish about the opportunity despite the fact that we sort of think asthma and in a COVID environment, people are probably a little bit reluctant to have a huge adoption of a new drug, but you say that people who have asthma are very actively followed, even despite COVID. So how are you feeling about that launch? And is there anything that's supposed to accelerate it? Or it's just quarter-by-quarter, slowly getting out there.

Yes. I mean I'll go back to where my comments started with LUMAKRAS. Yet again, the scientists at Amgen and at AstraZeneca delivered a first-in-class novel mechanism to treat a severely debilitating disease. So I think when you think of our indication, Mike, it's like severe uncontrolled asthma. So there is a patient population out there who is having frequent exacerbations of their severe asthma despite being on a biologic. And so there is a demand for a novel mechanism. And the beauty of TEZSPIRE, of course, is the simplicity of how you would treat patients. You don't need to do all the phenotyping and biomarker work. You can treat a broader spectrum of patients and regardless of their eosinophilic status, and for pulmonologists in particular, that simplifies their work. These guys are really busy. You mentioned COVID. They've been slammed for the last 2.5 years. So if you can come along and give them another tool in their toolbox that can help them treat a very severe population that they feel is refractory to their current treatment or they're having exacerbations despite their treatment, then I think it's a good day for them in their practice. The other physician treating population that we're focused on are allergists. Now they tend to be a little bit more, hey, I still want to do the phenotyping, I still want to do the biomarker work, but I really like the broad spectrum of treatment opportunities that I can provide my patients with your product, which is TEZSPIRE.

Okay. So it's sort of a no-brainer if they're low eosinophils. If they're higher eosinophils, maybe some of those physicians might -- they just want to -- they want to know.

Yes. And the other thing to remember is people's phenotype will vary over time. The asthma will change in its nature from an allergic type to a normal. And now that's something that also helps them, given that we work further upstream in the immune cascade, helps people, helps physicians think differently about how they can protect their patients. The other thing I'll say is we are in the medical buy-and-bill reimbursement channel in the U.S. being as a physician-administered product. I think allergists are very comfortable with that. So we've seen good uptake with allergists because of the types of services they provide. They're familiar with Medicare Part B and buy-and-bill. Pulmonologists will be a little bit more challenging until we get our permanent J code, which comes in early July. But the other thing I'm really pleased with is we look at the types of patients we're seeing in early treatment and we're getting a broad array of patients. We're not just getting low eosinophilic patients, we're also getting high eosinophilic patients. And we're sourcing them not just from dupi refractor, but dupi, XOLAIR, Fasenra. So we're getting, again, a broad sourcing of patients from the other agents in the category.

Who have either seen it or not seen that product. I mean allergists [indiscernible] high eosinophil patient and has not seen dupi.

Yes. Yes. Let me ask on another event coming up. First, you said -- we're talking about -- so let's move to psoriasis. So the good news is COVID is unlocking, businesses are -- doctors are back in. You're seeing things. This was something that did impact the derm business. So as that gets better, that's good for Otezla. There is another oral competitor coming up with a PDUFA date in September. That's deucravacitinib. Everyone is watching that. The efficacy is very strong. But again, safety, tolerability -- not safety, tolerability, but purported cardiovascular risk or black box for a program in psoriasis is possible. What are your -- what are you watching there? And what do you think -- how do you think things change if deucravacitinib does or does not get a black box? What does that mean for Otezla?

Yes. I mean, maybe just talk about Otezla and how it's progressing this year. You rightly pointed out, Mike, we have seen a return of new patient bio-naive psoriasis diagnosis.

TNF-naive, yes.

Yes. And that's -- we rely on that for Otezla growth. But we're not sourcing a lot of bio switches. That's not where we get our new patient growth. We get it from posttopical, bio-naive, new to systemic therapy. The thing that's helping us as well is not just the kind of return of patients to seeking care for their psoriasis post-COVID, but -- post-COVID, after lockdown and disruption of COVID, we're obviously still living with COVID. We're also seeing that the mild to moderate expansion of our indication is helping derms treat that milder patient. So patients that are fed up with topicals. And not necessarily because they've got large body surface area involvement, just because of where their psoriasis is. It could be on their neck, on their hands or on their face or...

So then an oral is...

So the derms are having success asking those patients, hey, how are you doing on your topical? And then variably starts a conversation about systemic therapy. And a lot of these patients are reluctant to go to systemic therapy, but the derms now with the milder patient indication, the broadening of our indication, feel comfortable starting those patients on Otezla. So our new prescriptions are growing nicely, brand prescriptions are growing nicely. The other thing that's happening is payers are reducing the prior authorization requirements for Otezla with that broadened label. And some payers have actually pulled prior authorizations. So there are no longer some prior authorizations for patients under certain payer systems. So that's really encouraging as well. So they see value in the medication, they see the indication being broader and we didn't have to pay additional gross to net rebates to secure that. So that moves us upstream in the continuum of disease. But it also leaves a lot of room for other products to come in, in the more moderate to severe patient type. If you're a severe psoriasis patient, Otezla is probably not where you're going to go. You're going to go to a biologic. But if you're a milder patient who struggle to control their disease with the topicals that are available, you're a perfect patient for...

Point being that one of the key things is, look, yes, there's a new oral but probably going to be a more severe patient population that we'll be looking at that. And that's more of an actually TNF competitive?

Yes. Look, when I was at the American Academy of Dermatology in Boston earlier in the year, and we sat down and we were talking to thought leaders given that the deucra data are out there. And I think even they are seeing, hey, it's good to have another oral. There are some who are wait and see because they want to know whether or not the long-term safety pans out. It took us a long time to understand Xeljanz, many years of cumulative experience. So there is that question for some. But then others, they're like, look, I wouldn't go there first. So I do think there's an opportunity for multiple orals in the market.

And then let's see what the label looks like.

Well, see what the label looks like. The one thing they said was it's not just whether or not they get a black box. One thing that they really appreciate about Otezla is there's no monitoring requirement. And so if there's any monitoring with the therapy, then it kind of automatically falls into that kind of biologic category where they have to do the monitoring.

Okay. Well, look, guys, a lot going on there, a lot of commercial launches, a lot of competitive dynamics out there. We look forward to watching the progress this year and a lot more clinical data coming out. So obviously, we're all paying attention to that. So thank you, guys, very much for joining us.

Thank you, Mike.

Thanks for having us.

Thanks for inviting us.