Amgen Inc. (AMGN) Earnings Call Transcript & Summary

Pleasure to have Amgen management with us today. I feel like between Shawn, [indiscernible] and myself covering Amgen for like 14 years now, I have not seen this type of setup come up in terms of pipeline readouts for Amgen in a long time. So I'm very curious what's on top of your mind, Peter, I want to jump right into it.

Great, Umer. Well, thank you for inviting us. With me today, Paul Burton, our Chief Medical Officer; Justin Claeys, our Vice President of Investor Relations. So we're delighted to be here and strong execution driving innovation at speed and scale. So three points to make there following up on what shared with the group. We've closed Horizon. We've added a Rare Disease business, demonstrating our willingness to pursue the best innovation, whether it's internal or external. And second, to your point, driving our pipeline, rapidly advancing a number of first-in-class, best-in-class medicines through our organic pipeline, including three breakthrough therapy designations, two of which came in the third quarter. And then finally, our volume-driven growth, evidence of the value physicians are seeing in prescribing our innovative medicines to seriously ill patients. So what did that do? That resulted in 4% revenue growth in the third quarter, 6% non-GAAP EPS growth. And our volume growth was 11% worldwide. Underneath that was 12% volume growth outside the United States, inside of that 27% volume growth in our JPAC region. We updated guidance to $28.0 billion to $28.4 billion on revenue for the year. Remembering that Horizon comes in effective October 6, the close date, we raised the bottom of the range on EPS, raise the midpoint. We're now at $18.20 to $18.80 a share for 2023 and increase the dividend 10%, $2.13. But to your point, record sales of seven brands, both EVENITY and BLINCYTO, greater than 50% growth year-over-year in the third quarter, a Repatha workhorse, cardiovascular 31% growth year-over-year in the third quarter, 44% volume growth. Now let's turn to the oncology pipeline. We've got Dr. Burton with us today. I'm sure you'll have a lot of questions around that. At ESMO, we talked about tarlatamab, a positive potentially registrational enabling medicine for small cell lung cancer, breakthrough therapy designation. We announced top line results for LUMAKRAS and Vectibix. Vectibix is our medicine in colorectal cancer, and that combination is for metastatic colorectal cancer. And then finally, BLINCYTO, moving into earlier lines. And BLINCYTO, we like to remind our colleagues that that's the first BiTE out first bispecific T cell engager for B-cell in the new indication of B-cell acute lymphoblastic leukemia. We're very excited about that for patients and moving that -- working with regulators and moving that into earlier lines of treatment. And let's finish up in that pipeline with Xaluritamig for prostate cancer, again, another bispecific T cell engager. So both Xaluritamig and tarlatamab, are bispecific T-cell engagers, showing unequivocal activity in solid tumors, very exciting for patients and, of course, good news for the oncology pipeline. And let's just finish up on 193, AMG-193, first-in-class MTA cooperative PRMT5 inhibitor, and we've seen activity in 6 solid tumors. The four late-stage programs we have, we certainly will talk I'm sure about Maridebart cafraglutide, now known as Maritide, formerly AMG 133.

Which drug is that? I've never heard of that one.

We've all stipulated to Maritide now. I think it's because they got nervous when I showed up and started talking about Maridebart cafraglutide because they figured at some point, I'd trip on that one, but I haven't. But that's the obesity drug. And we just finished a Phase II enrollment and look for topline data in the back half of '24. Number two, Olpasiran LP(a) molecule. We think it's a first-in-class, best-in-class, good data so far, but we'll see what happens in the investigation, Phase III cardiovascular outcome trial on that, rapidly enrolling. Three, we've got indications we're exploring on TEZSPIRE, including in COPD. And just finally, to wrap it up, rocatinlimab, first-in-class OX40 monoclonal antibody being studied for severe atopic dermatitis, which we think there's about 30 million patients around the world, maybe 10 million or so, which are addressable. We're excited. We like what we see. First and foremost, tumors starting with the patients. So at Amgen, we're now up to over 26,000 colleagues with those who joined us from Horizon, and we're working hard advancing that pipeline organically.

Excellent. There's a lot to unpack there. So I want to go one by one. Peter, maybe just to kick things off on the -- because it's a big R&D year coming up. There's an expectation for some R&D increase into next year and very much more modest as how consensus is thinking about it. How are you thinking about sort of -- and this is not necessarily a '25, '26 guidance per se, but how are you broadly thinking about the R&D resource allocation that Amgen would have to do to fund some of the pipeline developments?

I think that's a really fair question. And I think this year, we've increased our guide for non-GAAP R&D. I think we've increased it up to about 10% year-over-year. And that's indicative of what we see Umer in this pipeline. We think it's very important to expand and accelerate in these opportunities that we have in front of us.

So you're not going to underfund just for any ratios?

We recognize this. We guide and have guided and are maintaining that guide of roughly 50% operating margin in '23. But we realize, and we've shared this with investors and we want to make sure our colleagues understand that when there's opportunities like we have right now, we're going to address those. We're going to do everything we can in prioritization and productivity to reallocate that money from other functions into research and development. We're good at that at Amgen, certainly generative AI and so forth, offers this opportunity to do that. But we realize it's very important to fund these and move them along, and we are committed to that at Amgen.

Got it. Okay. Excellent. Excellent. So that's number one. The other one is from an SG&A perspective, again, I'm just thinking broad strokes right now. Obviously, 2023 to '24, there's the Horizon SG&A, which gets added on. But beyond that, consensus is generally assuming flattish in part because of some of the [ Prolactal ] expectations that are modeled in the way they have been. Is there any broad strokes on SG&A medium term as you think about spending pushes and pulls to think about?

Just think about this year. I think this year, we're also stating OpEx overall, up about 10%. I think we said about half of that is Horizon, and so as we go through the year. So we always watch SG&A very carefully. What I would say on that, Umer, and this is a really good question, is that we see an opportunity here to continue to invest in some of the in-line portfolio, too, which comes through there. We've indicated to investors, in fact, at the end of the second quarter with Repatha and even Otezla that we're in the market, and we're investing in those because we think we're in a position of strength to go at those in terms of the capital that we have to invest in those. We expect those investments to continue into the first half of '24, and we think those are really important also. And as long as we're kind of on that on the expense side, I would just drop down into OI&E just really quickly for a minute, and we guided to about $700 million or so in the fourth quarter. And we see that and as we indicated, we believe that run rate will continue in 2024 in OI&E. And we've looked at a few of the models out there, and we've seen that -- we don't think everybody has recognized that yet. But our capital structure is a little bit different right now. We expect to end the year with a significant amount of more debt than we did when we started it. We raised about $28 billion to fund Horizon. So it's important to remember, that's coming into the non-GAAP OI&E in the fourth quarter and also into '24. So that's how we think about the expense structure, and Amgen will always continue to be as efficient and effective as we possibly can. And #1 capital allocation, #1 capital allocation in the capital hierarchy is innovation, both internal and external. And so we'll remain committed to that.

Peter, I wanted to just pick up on one point, I think it's important. So -- and I know Umer, you've been flowing us for a long time. So you might recall that almost 10 years ago now, we did a business review in 2014, and we talked about significantly increasing our margin into 2018. And one of the elements of that was this idea that Peter mentioned of a productivity program across the company. And so really, that was in anticipation of an environment where prices would be going down over time. But so then you have a bit of a conundrum, right? How do you grow the business? How do you invest and grow volumes while you're facing reducing prices? So what the company did, again, a long time ago and has been executing on is this idea of a productivity program where each year, leaders look across the business, they figure out a way to streamline processes, to get more done for less. And as Peter said, AI provides kind of a nice lever in that regard as well. So I just wanted to -- it's something that maybe goes a little bit under the radar because it's not really sexy, it's just blocking and tackling, but that's what it frees up resources and allows us to really put money back in the business.

Got it. Got it. Very helpful. Very helpful. I want to tie this now towards bigger picture as well. But just before I do, historically, I remember one of the points I've discussed with you, Justin, with Arvind has been -- on average, Amgen would do about $4 billion worth of buybacks. Obviously, there's some leverage right now and the Horizon deal is just getting closer. That's not something that's anytime soon. But Peter, how are you sort of broadly thinking about that? Again, this is not a 2024 question, but medium term, when could Amgen be in a position to start getting back in that direction again?

Well, prior to going as Vice President of Investor Relations, Justin was a Treasurer. So I'll suggest to him that [indiscernible] question, which we thoroughly interrogate all the time. It's a very fair question. Justin?

You're giving me flashbacks to when we were meeting with the rating agencies and staring into their eyes.

Well, if he was meeting with the rating agencies he didn't have a tie on this morning.

No, thanks, Umer. And I mean, I guess, first point is that I think Amgen has quite a track record of returning capital to shareholders. And it's been obviously share repurchases in the early days of Amgen and then an abundance of dividends going forward. At the time of the Horizon announcement, we obviously wanted to be thoughtful and we wanted to be helpful to our investors of how to think about the capital structure. We knew this would be an important question. So the first thing we did is we actually laid out how we think about debt and leverage. So we shared our 2022 debt-to-EBITDA ratio, which was 3.2x, which we hadn't previously done. And then what we committed in the various communications is that we would return to that same debt-to-EBITDA ratio by the end of 2025. So that kind of frames up the deleveraging period, if you will.

So for the next couple of years, repurchase is not the first priority?

Yes. And I would say that maybe the way to think about it is our practice has been year-by-year to give guidance on share repo. So we'll obviously have more to say on our earnings call for next year on that. And sorry, just last point, Umer. We did also say the business review last year that we would have a payout ratio of greater than 60% through the decade, and that would be in both share repo and dividends, and that certainly holds and we're on a good track to meet or exceed that.

And as I sort of bring it all together then, the big lever from a P&L perspective, and again, I have a lot of R&D specific stuff to get into, but just to round out the P&L. The biggest lever now, in my opinion, is obviously the Prolia XGEVA, where, in my opinion, there's a very extreme position being modeled for consensus, which is the Amgen 10-K, which guides to the very first patent, which is 2025, and that's what's been modeled in for erosion. Over the years, I always learn Amgen and Amgen's lawyers. So I realize there's patent state all the way out to mid-2030s on Prolia XGEVA franchise. I realize there's only so much you can say on this broader topic, but I can already see in core dockets that you guys are fighting this pretty hard against the biosimilar players that are going after this opportunity. How are you guys thinking about as a base case, what a realistic launch scenario would look like? Because to me, 2025 seems very unrealistic.

Well, this is a really important question because it's the bone franchise. And we believe in the long-term growth outlook there Umer, we feel good about progress that we've made in the bone franchise. And each year, as you said, we provide the disclosures in the 10-K, I wouldn't encourage our colleagues to look through that thoroughly. We don't -- our outlook assumes multiple entrants after the LOE in '25. So that's how we think about it. But I would add to all of you, EVENITY is coming on very strong. And so when we think about EVENITY, as I mentioned earlier, greater than 50% growth in the third quarter year-over-year. This is a bone strengthener. And I think in the United States, we see -- just so I get the numbers right here, we see about 3 million patients in the U.S. treated for postmenopausal osteoporosis, about 40% at a high risk for fracture. Only 6% of those right now are in the bone strengthener. So we feel great about EVENITY. And we see that as a key part of our franchise through the end of the decade and beyond. And we see Prolia is continuing to be an important component of our bone franchise going forward. But we don't anticipate pulling a rabbit out of the hat on this or anything along those lines. We think good, steady growth. We'll play really hard on Prolia because we think it's really a terrific medicine, but EVENITY is coming on strong. So the bone franchise is very important to us. We'll continue to invest in that, and we're looking forward. I think this year, we're going to deliver Prolia to over 7 million patients around the world. So what a fantastic medicine for those with osteoporosis disease.

Got it. Excellent. Peter, I'm forgetting this. I don't know if you were at Amgen when the 2030 guidance was given out, but consensus is, forget how much it's off, it's nothing like the Amgen expectation on 2030 from an EPS perspective. I realize when that guidance was given out some of the key drivers of that were very different than the drivers that we're about to talk about on the pipeline front. But -- and again, pipeline evolves, data evolves. As we sit here today, where do you see the biggest disconnects between consensus is just flat on EPS, and you guys are talking about a potential 50% to 75% higher EPS. Where do you see the biggest disconnect?

Great question. So I went back and I keep it home. [indiscernible] For those of you that's been described as a mountain slide, the Lasagna slide, this spaghetti chart, any number of various descriptions. At the end of the day, it's really the components of what we talked about in February of 2022 on our growth trajectory to 2030. So we've said all along, we feel we're on track to meet our 2030 objectives and that Horizon is additive to that. So I want to make that very, very clear. The first part of the chart was the pipeline, and it was LUMAKRAS, aspire in the rest of the pipeline. So as we sit here today, and I think we'll probably spend a significant amount at the time. Dr. Burton on the pipeline and the wonderful news there for patients. First and foremost, we feel really strongly that the pipeline is continuing to evolve in a very positive way for patients, and as a result of that for shareholders going forward. Biosimilars, we talked about a '21 base of about $2 billion, more than doubling that by 2030. That continues to be a strong area. We think buy and bill is a good place for us there. We'll continue to focus on that. As we say about biosimilars, it's new molecules and new markets that we'll go into that will continue to drive that. Umer, Repatha. Okay. Repatha grew again, 31%. It printed a great quarter, but the most important thing is cardiovascular disease is the #1 killer in the face of the planet. We've got 90% coverage now with payers in the United States. We feel this is a really important advance going forward. And we're working really hard. We're inflecting into the primary care physicians now out of the cardiologists, not out of. But in addition to the cardiologist, Otezla, even though it's had some challenges here and a little bit of a flattening, if you will, with some of the competition coming in both from the free drug from the topicals a little bit earlier in the year and the other oral that came in with some free drug there. We are confident in Otezla. We're spending on it. We think there's a great opportunity between the mild and the severe indications there. It's the only systemic that is available for that. So we continue to invest in that. So we remain confident in that. The rest of the currently marketed pipeline that we had back in '22. BLINCYTO, I mentioned, is up 50%. We'll talk with Dr. Burton about moving that into earlier indications. The hem/onc portfolio, I believe is up about -- was up about 16% in the quarter year-over-year. And so we've -- TEZSPIRE grew rapidly. I think in the third quarter, it was up to about $161 million product sales. So there's a lot of really good news. We like breadth and depth. It's going well. And then we have a portfolio of other products. They're declining a little bit. But as we shared at Business Review Day, the decline in biologics tends to be a slower erosion than others. So we like that profile too, it adds cash flow that we can then reinvest into the pipeline. On top of all that, rare disease business, and we feel good about that. We like that as the fourth leg of the stool. So we think that's additive going through to 2031 and beyond. So we like the picture. We think it's an execution story now. We think we've got the cards in hand and it's time for us, and we've always been really good at execution, and we're doubling down on that -- it really hard for shareholders.

I don't know this. I don't recall seeing this, but I'd be curious, is there any management compensation tied to the long-term EPS targets and the 2030 guidance targets?

We have -- and again, it's in the proxy. We tend to have 3-year and our long-term investment.

But that three years is kind of backing its way towards the...

Keeps rolling. And I can assure you, we think at Amgen really in 4 time frames, this will just to take one more minute and then I'll let you get to Dr. Burton. We think about the current year. And we focus on that, we need to achieve that. We think about the forward 12 quarters because all of you ask us what's going to happen with what -- with maybe expiries and significant events in the next 3 quarters -- So next 3 years or 12 forward -- 12 quarters, if you will. We think about through 2031 now, and then we think beyond that. In February '22, we talked about BioNext. We talked about our targeted protein degradation, our induced proximity platform and moving that forward. So we think about those 4 time frames, how do we allocate capital, how do we manage the business. We're always thinking that way. It's really important. That's how the top of the house thinks at Amgen. And when we think about that, we're always fully committed first to patients and then, of course, to creating value for staff and shareholders after that. But that's how we think about it, Umer. We always think long term, but at the same time, we hold those, if you will, as Scott Fitzgerald said, those opposing thoughts in our mind to make sure we're allocating capital and managing the business for all 4 of the time frames.

Excellent. Fantastic. Well, maybe that's a good segue having now led the sort of broad stroke on the P&L to transition to R&D side of it. AMG 133, I still don't know what its actual name is, but that's all I know. But your GIPR antibody. The first question that's coming up and maybe this is where I want to kick things off is, and we'll talk about efficacy. We'll talk about the durability and all those things. But a question that's percolated in a lot of investor conversations has been around bone density changes, especially as it relates to -- and I don't know where this has come up very much, but there's some preclinical paper -- there's a couple of preclinical papers that surface quite rapidly if you Google this and which talk about GIPR agonism would be associated with bone density preservation, but antagonism, which is the Amgen approach, would presumably have a theoretical risk of bone density changes and it's actually created a little bit of a question mark that heading into the Phase II readout, I'm sure there's some risk around bone and fracture and things along those lines. So I'm just curious how you guys are thinking about that broadly? And to what extent do you have any visibility on a pooled blinded basis on the ongoing study?

Okay. Very good. So AMG 133, as Peter said, Maridebart cafraglutide. We call it Maritide for obvious reasons internally. Subcutaneous injection molecule given every four weeks combines two parts, right, as you say, GIPR being antagonized. So let's take the first part around fractures. We have not seen any fracture risk in preclinical studies at all. Clearly, we need to assess that in larger human studies, which we're obviously doing, and we'll pay careful attention to that. But I can tell you that through the deCODE part of Amgen, which is very powerful human or data engine that we acquired some years ago. We've been able to do huge individual human-based studies, 350,000 people, where we can look at individual who have that variant who don't have GIPR. So it kind of parallels what we're seeing with the molecule, what we're doing with the molecule in real life. When we do those analysis, we don't see any increased fracture risk, and we can even -- and have enriched that analysis population for people with post menopause or osteoporosis. So we can really tailor the analysis to address that question at least in the real world to the best of our ability today is there fractures that does not appear to be one.

Now maybe just on the interim. Should we talk about the interim analysis?

So we've done -- maybe just stepping back briefly, we've done a Phase I study as you know -- when we take Maritide, we looked at range of doses from 140 milligrams out to 420 milligrams. At day 29, we saw a 5.3% reduction in weight loss at day 29, that's impressive, right? Out at day 85, we saw a 14.5% reduction in weight loss. So even in Phase I, it shows clear what we believe is to be differentiated and impressive clinical effectiveness. We're in Phase II now. That's a study that's already enrolled nearly 600 people. And it includes people who have diabetes and those who don't have diabetes. So it's broad. We have an unblinded data monitoring committee who review the data frequently, and the message has clearly been continue the study as planned. So that's very reassuring. We will, Umer, to your point, perform an unblinded interim analysis next year. That's planned. And it's important because it will allow us to then really think about the Phase III design. One thing I would make a clear point for people to take away is, I don't think there should be an expectation of a rapid Phase III start following that interim analysis. We're doing the interim. We want the study to maintain its rigor -- so we won't be talking about the data openly at that time publicly because this study will be ongoing. And it's not a go-no-go decision point. It really is, let's see now what a larger population of patients shows us, get as much data as we can and then use that in a very databased way to inform Phase III study design, which we do internally. We know it's fast moving as a space. We believe we have a molecule here with clear differentiated effectiveness. We want to go quickly, but we want to go rigorously and thoughtfully as well.

Got it. Okay. Makes sense. And the Phase III gaining factor being you need 52-week data, is that what FDA requires, that's why interim could not inform the Phase III initiation?

I think the interim analysis will certainly inform our Phase III design around...

Doses and all that?

Yes, doses, dosing frequency. What I think -- look, what is important are a few things. One is, I would say we're really at the infancy of weight control as an industry in our understanding also of what people want. So velocity of weight loss, magnitude of weight loss and durability of effect are clear, we want to be able to balance all of that across a broad patient population. And we also recognize that these are going to be very large studies. Peter mentioned that they're going to be big studies to do. We can have a very large safety database that will then continue into the real world. So I think the goal of the interim is to get as much data as we possibly can to then design a robust, large platform of studies as we go forward.

Got it. Can we speak to the weight loss kinetics data from data seen to date? And I ask that in particular because there's a lot of question marks around what's the sort of peak weight loss you guys can get to? I know there were -- I think there was three injections and you got to mid-teens. But the question really is, we saw Victoza -- We saw Ozempic and Trulicity in the mid-teens. We saw Mounjaro about 20, and we now have CagriSema approaching mid-20s. Could Amgen be competitive with that mid-20s bar? Do you anticipate that to be something that the Phase II should be able to show us?

Yes. Yes, we do. I mean, again, look at day 29, just over 5%, that's important by day 85, over 14%, as you said. We're exploring different doses, different dosing regimens, duration of dosing. So yes, we believe that we have a differentiated and highly effective molecule here.

And just to add one point there, Paul. So when we think about the potential differentiation or the applicability of Maritide, obviously, weight loss percentage is one component, but we think there's many other factors that are important. I mean, as Paul mentioned, the dosing is we're studying -- we had monthly in the Phase I. We're looking at different dosing options in Phase II. To the extent that there's challenges in real world compliance today with existing therapies, that could be an important feature as well. So obviously, while we know there's a lot of focus on the weight loss percentage, we would maybe encourage folks to not look solely at that parameter.

That makes sense. That makes a lot of sense. Remind me, I was looking back at the Phase I. These were non-diabetics, is that right?

Yes, principally, yes.

These are nondiabetics. So when we talk about mid-20s weight loss, are we referring to obese because I know obese always track a little ahead of diabetics. Could diabetics get the mid-20s as well, long wait loss?

Look, I think, honestly, we'll have to wait and see the data. It's -- I would think it's feasible, but we have to wait and see the data.

And is there any reason to expect A1c for whatever reason not being as competitive on this or no reason to think that?

No. No. I think when we think about the breadth of the people that we really want to study in Phase III, there's a couple of groups to go after. One is people with obesity and an important medical condition, for example, heart failure, where you can target a study to look at a heart failure endpoint, and you improve outcome by obesity management. The other is to take an obese population who have coexisting comorbidities like prediabetes or A1c diabetes, sleep apnea and things like that, can you, as corollary collateral impact improve those outcomes. I think we can. I think there's certainly opportunity to do that.

Got it. So in the ongoing trial right now, and it's clear we talked about the weight loss aspect of it. I know you referred to various dosing regimens as well. So my understanding is there's only 2 cohorts A or B in the ongoing study.

Diabetic and non-diabetic. B is diabetic.

So embedded within each cohort is different doses and different regimens, is that right?

Yes, so multiple. So we'll be able to study a broad range. And as Justin mentioned as well, we are going to look at less frequent dosing, whether that's in the initial setting or as we get in.

Got it. And when we think about less frequent dosing, I remember there was the graph you guys showed where you dose till day 90 and then you put on values, 3 follow-ups until day 210. I don't know if they were exactly at 1 month fall-over or a little longer than that. But the first time point after day 90 when the drug was off, it was about a month after, the effect was very much sustained, which to me implies that every two month could be possible. The second time point after, which would then imply -- two months after the last dose, I noticed it was starting to tick back up. So that implies to me perhaps quarterly may not be possible, at least for induction, for maintenance it may be, I'd be curious how you guys think about the possibility of a quarterly regimen?

Look, I think compliance, adherence, perseverance will be important. But balancing optimal dosing regimens with clinical benefit is key to us. Peter mentioned it, right? We think about the patient first in what can we do.

And just the general caveat to, obviously, the Phase I data was exciting and informative, but pretty small patient numbers there. So we'll have a lot more information coming out of Phase II.

Maintained out to day 150. I think it's an important takeaway. Let's see what the bigger clinical experience in Phase II now gives us.

What commercial feedback are you guys hearing on this broadly, if you can have a quarterly [ in grid ]?

Yes. I mean I think we're...

I don't think market understands the potential for that right now.

Yes. It's a question we get a lot, is there room for a third player and how might Maritide fit in with the other options. And we do feel like the different dosing profile could be a differentiated point about Maritide.

Is there YTE substitutions on FC? Is that how it's doing it? Or it's not half-life related, it's just the continuity of the weight loss?

I think it's -- yes. I mean, look, I think to be honest question -- answers to questions like that, I think will also come up at Phase II. Again, I would say I think we're really at the infancy of understanding how these medicines, molecules will work in patients -- about their differentiated effects.

Got it. But the half left of the antibody was sub 1 month. That was clear. So I always assumed it was not some YTE substitution or anything like that. Okay. It's just a PD effect could help it last 2 or perhaps 3 months. And that could also differ between induction versus maintenance?

It could, yes.

Okay. That makes sense. That's very interesting. That actually did not appreciate that much. There was one moderate AE in Phase I, literally 1 on the 140 and the 280 doses. Do we know what that was, if it was anything of relevance to know?

No. I mean I think the important point is that the unblinded data monitoring committee continues to look at data safety and the effectiveness as well as the study should continue as...

And anything on cardio stuff because we know heart rate elevations, arrhythmias are something that's been known with [indiscernible]

Nothing really to comment on at this time.

Could that conversely be a differentiator? Because I know it's been a common finding with other [indiscernible] programs.

Potentially? Again, I think let's look at the 4 data set when we have it, as Peter said, next year, and we will.

Okay. Got it. Very interesting. So maybe that's a good segue then into the mystery oral. We have a hypothesis on what that is. One of my colleagues is here, we were looking through some of your patent filings. So we're not going to put you on the spot on whether it's a delta 5 -- or not. But what I can ask you is, in the ongoing Phase I, it seems like one cohort was dropped in the single ascending dose. And to me, if somebody ever asked me if a fifth dosing cohort has dropped in the SAD portion of the study, I'm always assuming an MTD was hit perhaps. But I know this question came up on the last earnings call as well, how are you guys characterizing sort of the progression of that Phase I?

Look, we do Phase I studies to dose range and find. And I've been doing drug development for a long time. What I've learned is that yet to be adaptable, and we had to cover of the doses that we wanted to explore. And you do a Phase I study to get a sense of -- is the drug generally safe. Does it have effectiveness, and that's what we're doing. So we'll -- we may drop doses, arms, we may add arms. That's just the nature of drug development. I don't think there's anything else to read into this.

I guess as you're thinking about broadly speaking about this oral in development, it doesn't have to be a 15% or a 20% weight loss. Is that a framework you guys are running with as well? It could be a 5% to 10% weight loss and just be additive to some of the oral glips that are being in development. Are you thinking of it like that?

Justin might want to comment as well. The one thing I would say again is I really do believe we're at the infancy. We're right at the takeoff. What do people out there in the real world want in terms of weight management? And how does that change if you have important comorbidities, severe diseases? I think there's plenty of room to think about all sorts of different weight loss strategies and management approaches with medicines that are less profound, greater, different durations and balancing that will be, I think, the most important thing.

Yes, I totally agree with that, Paul. I think you said it well. It's not a single parameter that we're solving for -- the whole -- the overall profile of the program. And given how heterogenous. I mean, if you look at the patient numbers, they're staggering right, so we have to believe that there's going to be many subpopulations who might have different solutions.

Interesting, different subpopulations, so with different comorbidities and how some of these programs could be positioned for that. So it doesn't even have to necessarily be an oral for all obesity, for example?

No.

I mean if you look at some of the numbers, I think one that we've seen that is in the public literature, is over 650 million obese people in the world, right? So obviously, that's not going to be A to Zs for all those people.

I see. I see. And if I may just expand on that just a little more, how much visibility from a safety and the trial progression standpoint do you guys have right now, knowing that it's Phase I so it's not necessarily some double-blind randomized trial per se, how much visibility do you have on that right now?

Well, look, we obviously scrupulously monitor and oversee the study constantly. We look at blinded clinical events and safety events as well. It's as Dave Reese said. It's a Phase I study. It's -- we're trying to get a handle on how this molecule performs in people. So we intensely follow it, but company couldn't.

Got it. From a safety perspective, at least, like I said, where I kind of started this conversation that one arm is dropped and could be for any number of reasons, it's not simply assuming that all it's because there's a clear DLT, that can't be a base case in interpreting something like that, that there's like a safety observation that it works.

Look, as I said, we do this studies to dose range and to dose find and to get a sense of are we covering the targets efficiently, and that's what we wanted to do, and that's why we made the changes.

Got it. Got it. Got it. And in terms of prioritization, I got to believe, at some point, you always sit down Peter, and you're like, well, you know what, we're going to invest in R&D, but then there's limitations to the direction we can go. Is there like a blank check on anything obesity program related? Or is there a prioritization or is there populations that haven't be selected? How are you guys thinking about that? You're having some of these discussions.

I'm glad you asked that question. I was thinking about that earlier when you asked the question about how we are viewing R&D investment in the next couple of years. And we would just view this as a situation where really for patients we need to explore as many indications as might make sense. So we are viewing this as an area where we will expand and accelerate...

So the bar could be different.

The bar could absolutely be different.

In terms of willingness to how you guys correct. And from an internal perspective, is it fair to say 133 is the flagship program internally and then oral evolves depending on how it does maybe positioned in certain populations? In an ideal world, if you had an oral combination partner with it, it could be perhaps positioned for oral, but is 133s the mainstay oral maybe for subpopulations?

Well, I think right now, we're focused on 133, but we really see this, as we've said previously too, Umer is a platform opportunity. And I think what Justin said, what Paul mentioned too, there's many subpopulations, there's many aspects to this in terms of comorbidities and so forth. So we want to be flexible in and adapt to the situations. And as we've said, we're prepared #1 capital allocation to invest in the best innovation, internal or external. So we're going to push ahead on this in a very strong way. I would say right now, Maritide or AMG 133 is really on the top of the priority list, making sure that we fund that and accelerate it according to what Paul and our development group and so forth come to us with in terms of the ideas that we need to pursue.

Got it. So Peter, obviously, you approach these things from a CFO perspective, but also a bit from this perspective as well. But I'm just curious, between yourself, David Reese, Paul, has there been a conversation that look? In first half next year, we have this non-incredin oral data in-house maybe there's a possibility for an external transaction where we have some sort of a collaboration or something of that sort with an oral GLP and that's like a fixed dose combo of sorts, which we could structure into a larger program. Has there been considerations along those lines? Or is that not a direction you guys are going down?

We -- I would click up one notch on this and just share with our colleagues and with you, Umer, that we're always focused from a business development perspective with a very wide aperture. So we're always thinking how should we pursue what's out there. And when you think about business development opportunities at Amgen, we're structurally agnostic, whether it's collaboration or licensing or acquisition. We're structurally agnostic. We've got a really strong program there. So it's really Dave Reese, Murdo, myself, Paul, we all participate in how we're looking at opportunities out there, and that's led by Rachna Khosla. Senior Vice President of Business Development, has been with the company over 10 years and does a great job with her group of seeing what's out there in terms of opportunities and integrating that into our internal thinking. So it's a very -- when we say our first capital allocation is the best innovation internal, external, we really mean it because we want to find the best out there, obtain it, bring it in. So we just want everybody to rest assured that's how we're viewing this opportunity.

Makes sense. Paul, I'm sure you've looked at some of the data sets that are emerging for oral glips. There are some one-off ALT observations, companies that are reasonably comfortable with that regardless, they're dosing through those. Do you think there's scope for differentiation with your oral on safety versus some of the other oral obesity data sets that we've seen over the last couple of years?

Yes. I think is the simple answer. Again, we're early -- we're only in Phase 1. We still have a long ways to go, I think, to increase that data set and really understand. And again, I go back to that point of we're right at the start. This is just [indiscernible]. It's such a huge unmet need, obesity alone, obesity with comorbidities, severe disease. So many -- I think there's so much optionality here.

Yes. And so comorbidity is one of the ones that comes to mind, obviously, especially with this type of mechanism for your oral could be more liver fat or NASH like indications with obesity, things along those lines?

Yes. I think as Peter said, look, we think very, very broadly about the opportunities here or whether that's NASH [indiscernible] , any combination of...

Makes sense, yes. Okay. Excellent. Maybe then transitioning past obesity because you have a little bit of other pipeline as well. As much as that's the only one people are going to care about now. You have a Phase III trial of an OX40 program. I get surprised when you get almost no questions on it. I know one of your competitors is very focused on that target as well. They're a little behind. But one of the differentiations I did notice in the emerging data for your Phase II program -- in your Phase II data set was there were more -- there was -- when I looked at that safety table, it reminded me of the safety table for a COVID vaccine in terms of the fever and chills. And I'm curious, to what extent is that a true patient observation? And how important is that to a patient experience? And could that be a very important commercial differentiator, you guys versus competitors? Because that's clearly something they're going to lean in on a lot.

Okay. So maybe just 30 seconds on rocatinlimab. So it is our OX40 antibody. It's been in Phase II. We're studying it principally in atopic dermatitis, Peter mentioned earlier. In the Phase II study, the EASI, the XMet area severity index came down by 60%. So it clearly is a molecule with important, strong efficacy. We're in now this seven program ROCKET Phase III platform, looking at adults, adolescents, combotherapy, monotherapy, combination with steroids. And where does it fit in? It fits in, I think, in -- there's a lot of people who are taking AR413 inhibitors, JAK inhibitors, they have tolerability issues. They're not all patients response. There's a clear area here where rocatinlimab could sit. You're right in the Phase II study published in onset that fever and chills was an important with the higher rates of adverse events, most common adverse events. One thing though from that study that the physician is important to me is that the rates of adverse events leading to discontinuation, 21% in the placebo arm, 9% in the Roka arm. That's important. So it says that people will take the medicine and stay on it. We've enrolled over 1,500 people. So I think physicians and investigators are voting -- with their voting there to say, look, this is a tolerable, manageable medicine. So we see it as a fever and chills something important. We'll obviously -- we scrupulously monitor safety. We'll report it. We'll discuss it with physicians, patients as they think about it. But we don't think it's something that really needs to be managed into Phase III or overly rotated on.

Got it. Okay. So it's not so -- and you guys do have presumably some blended visibility, pooled visibility on the Phase III ongoing. Was there any changes as it relates to any premedication or something to manage some of these fever chills in the Phase III?

No. I think -- look, I think in general, they're relatively mild, and they're generally manageable.

And they're day 1 only kind of...

They're early. Yes, that's correct.

The other observation, what stands out to me in your OX40 data set is once the efficacy is kicked in, especially in the responders, even if you pull the medicine, it just stays for 6 months, which is highly unusual, maybe it speaks to the T cell mechanism. But the obvious question I had was, I don't know if we ever figured out how much OX40 do you need to take before which you can pull it. Why couldn't it be after, let's say, 3 or 4 injections? Why does it have to be 6 months' worth injection? Because if T cells are cleared out from the inflamed skin side, presumably, that's done by 1 to 2 months, and it could be done much sooner. Is that being experimented in the trial because it could have very clear commercial ramifications as well, right? Because if clinicians find out, well, I don't need to give it for 6 months before I turn it into an every 6-month regimen.

Yes. So look, I'd say a few things. We did the Phase II study. We studied a broad range of different doses, different dosing frequencies. I think we've been able to come up with a dose now or a regimen that is effective and works. And changing that would not be a good way to go forward. I think we've got an effective medicine, an effective molecule appears to show benefit. We're in these studies now, and we see a clear pathway to potential approvability. Obviously, it will be a review issue with regulators, but we want to get this molecule with this medicine to patients now quickly and address the unmet need. That said, we are studying though, the opportunity to go to less frequent dosing after the initial 24 weeks of therapy. So it may be that when we have a dosing regimen that appears to work, do that for those load monthly dosing, and then we can begin to transition dosing out later.

Okay. Got it. What about Dupi experienced or Dupi refractory? Is that a population that's on your mind?

Yes. They were in Phase II as well. About 15% of the patients.

Experienced?

Yes, had been on biologics, primarily Dupi. So we would imagine that, that proportion of people would probably be in this space.

But there's not a dedicated Phase III per se or anything?

No, there is not. That's correct. Across the several thousand people will have, there will be some good experience that we can report on. And it might be honestly that this is something we then address with a real-world evidence approach and post approval.

Got it. DLL3, I know the data was very interesting. We got a lot of investor interest. On one side, it's very late line like third line plus. On the other side, there's a massive amount of chemo shortage. So I'm thinking realistically from a commercial perspective, I understand it's supposed to be in super refractory setting, but with so much chemo shortage, there's generics getting pulled into commerce on some of those fronts. Are you guys ready and prepared for a launch, which where demand might perhaps outstrip what you might have initially thought about in a super third, fourth line setting?

So I know we're getting close on time. tarlatamab, DLL3, a remarkable molecule. We presented the data at ESMO. It was published simultaneous New England Journal of Medicine. And as you say, in late-line patients with small cell lung cancer as a ex-surgeon seeing these patients, we know in the real world, survival is maybe 3 to 5 months. Olatimab in the data we had over 14 months and most triple survival. I mean that's remarkable. It speaks to this whole bite platform. Peter mentioned it. We started with BLINCYTO. This is now the first time a BiTE's gone into solid cancer. [indiscernible] one in prostate, really remarkable. The BLINCYTO road map also says, look, that earlier you can get it into treatment potentially, an even bigger benefit you can provide to patients. We've seen that with BLINCYTO with the E1910 data. So your point is a good one. Can we pull back into earlier lines because we can provide more benefit to patients? We think so. We have ongoing studies, the 304 study and second line. We're doing even earlier line studies. I think the question from a chemo shortage and implications there. Honestly, I think it will be a review issue with regulators here in the U.S. and around the world. We're sensitive to it. We understand it. Justin if you would want the same thing about the launch, but...

Yes. I mean, certainly, from a launch point of view, we'll promote in the approved indication. As Paul said, wherever that we're in those discussions now. But of course, from a prepared standpoint, we have -- our operations team is great at looking at a whole range of scenarios. So I think -- I don't think it's so much an issue of supply. It's more about where we land from the approval.

Maybe just one comment. I know we're out of time. But I'd just share with all of our colleagues. At Amgen, it's every patient every time. We've never stocked out of anything. And we don't intend on doing that. I've had an opportunity in the last couple of weeks to visit our new facility in Ohio that will be up and running and licensed in the first part of 2024, and I had a chance last week to go to Singapore and see our facility there are kind of manufacturing in the future facility. Every patient every time, supply is always first and foremost at Amgen, we intend on being there for patients since we have been for almost 40 years.

Excellent. I had some of the stuff on the agenda, but I realize I need to be respectful of time. So I appreciate you guys being here. Good luck into all the data next year, but also, most importantly, I appreciate you clarifying some of the questions around specialty obesity, which were not so familiar, I feel.

Great to be here, Umer. We always appreciate [indiscernible]

It's great -- see you. We wish everybody great health. in 2023.