Amgen Inc. (AMGN) Earnings Call Transcript & Summary

All right. Well, welcome once again to the 44th Annual TD Cowen Healthcare Conference. I'm Yaron Werber from the Biotech team, and it's a great pleasure to moderate the fireside chat next with Amgen, first fireside chat for the day, so have very high expectations. With us today is Peter Griffith, the Chief Financial Officer; Paul Burton, Chief Medical Officer; Justin Claeys, VP of IR; Casey in the audience as well. So gentlemen, thanks for joining us. We appreciate it. Peter, let me turn it over to your opening remarks, and then we'll dive into Q&A.

Thank you, Yaron. Thank you, TD Cowen. It's great to be here at the 44th conference. Listen, we're here today on behalf of 27,000 plus colleagues at Amgen. Our mission is to serve patients. And this is an exciting time for Amgen. We see significant long-term growth opportunities across all 4 of our therapeutic pillars. Numerous catalysts this year, including 2 PDUFA dates in June. I'll talk about those in a moment. Five Phase III and 3 Phase II data readouts. Obesity is an exciting area that's getting a lot of focus these days, and we're excited by our platform in obesity also. But I'd like to highlight that we have strong opportunities across all 4 of our pillars and both for in-line brands and for the pipeline. Let's start with General Medicine. Our in-line products continue to deliver strong volume growth in 2023, with Repatha 37% volume growth and EVENITY at over 44% year-over-year. These products both had record sales for the years. We had 18 products with record sales in 2023. We see continued significant growth for EVENITY and Repatha given the low penetration and their very large addressable patient populations and oncology strength across the portfolio, in particular with [indiscernible] following positive Phase III data in earlier treatment lines and updated NCCN guidelines. We look forward to the BLINCYTO, June 21, PDUFA date, and see significant growth potential from earlier lines of therapy and subcutaneous administration. We also have a June PDUFA date for tarlatamab, and we're going to be ready to launch and bring this first-in-class medicine to patients suffering from small cell lung cancer. I'd like to remind you that tarlatamab is the first bispecific T-cell engager to show unequivocal activity in a common solid tumor. TEZSPIRE continues its strong launch, sales of $567 million in fiscal '23, including significantly expanding coverage with major pharmacy benefit managers to over 80%. Rare Disease business, anchored by 4 highly innovative medicines early in their life cycles, TEPEZZA, KRYSTEXXA, UPLIZNA and TAVNEOS. We recently highlighted these programs at our Rare Disease Investor event just a couple of weeks ago. I'm pleased to share that since that event, TEPEZZA has been approved in Saudi Arabia, as we seek to serve patients around the globe. So let's turn to the pipeline. We're rapidly advancing multiple potentially first-in-class and/or best-in-class medicines across the 4 pillars with key data readouts in 2024. I'm sure we'll cover MariTide and obesity in the Q&A, but I wanted to make a few key points first. We believe MariTide is a novel, differentiated medicine. It's a bispecific antibody peptide conjugate that targets key metabolic pathways involved in obesity. In our Phase I clinical trial, MariTide was well tolerated and showed 14.5% weight loss with 3 doses over 12 weeks. The weight loss effect was durable, with over 11% of the weight still off after 150 days. The commercial formulation will be supplied in a convenient handheld auto-injector device with once monthly or less frequent subcutaneous injection. The Phase II clinical program designed to explore optimal dosing strength and schedule has completed enrollment with almost 600 patients and we'll have top line results later this year. MariTide is designed to antagonize GIPR based on extensive human genetic data from our Amgen deCODE subsidiary, while also agonizing GLP-1. We're confident in its mechanism and encouraged by the Phase I results. We're evaluating a wide range of demand scenarios and are confident in our ability to supply MariTide, building on our track record of every patient every time. As context on our capabilities [indiscernible] 2023, we served 9 million Prolia and Repatha patients combined with over 30 million units, with the drug substance and fill finish fulfilled through Amgen's manufacturing network. We have manufacturing capabilities that could be further scaled. And our new Ohio and North Carolina facilities sit on sites that have well over 100 additional acres that could be developed to add capacity. More broadly across the pipeline, we have several rapidly advancing innovative oncology programs and [indiscernible] 193 in multiple solid tumors and [indiscernible] in prostate cancer. Olpasiran, [indiscernible] our potentially best-in-class Lp(a) targeting molecule has been seeing great receptivity from investigators and rapidly enrolled 7,000-plus patients in 1 year in our pivotal Phase III cardiovascular outcomes trial. We continue to enroll patients in Asia to ensure comprehensive demographic representation and satisfy regional regulatory requirements. Enrollment is expected to complete the first half of this year. Rocatinlimab, our first-in-class OX40, being studied in atopic dermatitis with data from the first Phase III study anticipated in the second half of this year [indiscernible] investigating in multiple additional indications with COPD, data readout anticipated in the first half of this year, Phase III data in chronic rhinosinusitis with nasal polyps anticipated in the second half of this year. Rare disease, we have a number of exciting pipeline opportunities, which we highlighted in the investor event I referred to a moment ago. I'll remind everyone that we [indiscernible] of our Q4 earnings call, as you think about the outlook for the first quarter, we have a seasonal pattern in what we do [indiscernible] with the Horizon products and biologics generally, as patients experience changes in health care coverage at the beginning of each year. So as a result, first quarter product sales are expected to be the lowest quarter of the year, as usual, but [indiscernible] up mid-single digits and total revenue up 20% year-over-year versus the first quarter. Just to remind everyone, the first quarter for Amgen in 2023 was about $6.1 billion. We expect non-GAAP operating margin in the first quarter to be around 43%, which reflects the sales timing, increased investment on commercial brands, which we started making in the second half of 2023, and continued into the first half of this year. And also the timing of the synergies on Horizon, which are on track for the 3-year period, but we closed a deal later. So those synergies are being phased in. So we expect operating margin, though, to accelerate in each of the subsequent quarters and for a full year non-GAAP operating margin of about 48%. So a great time to be at Amgen. We're on the verge of an inflection driven by breadth and depth of these opportunities across all 4 pillars. Our pipeline is the best in our history, addressing tough to treat diseases, where we have the potential to reach many, many more patients. We're confident in the longer-term growth outlook and very pleased to be with you here today, Yaron. And we're happiest in all this for patients. We're here to treat serious disease. So with that, I'll turn it over to you for Q&A, Yaron.

Thanks, Peter. Maybe I'll start -- can you guys hear me? Yes. Maybe I'll start by just asking a little bit when you did the Horizon deal, when you announced the deal, you said it's going to be $500 million in terms of synergies by 3 years. [indiscernible] to delay this guidance is for the deal to be accretive year 1, right, in fiscal year '24. Can you talk maybe about that and how the synergies are happening?

Yes. Two things. So we said it would be accretive from 2024. And we said that December '22, thinking it was going to close earlier 2023, and it didn't, due to a number of factors in the Washington, D.C. area. And so we got it closed down on October 6. And so we're pleased with that. And we indicated pretax cost synergies of at least $500 million in year 3. We're on track for that. And we're -- I would just remind everyone, this is not a synergy-driven deal. What this is, is an opportunity to build a rare disease pillar that we're excited about. It's a great strategic fit. And there's opportunities for synergies, great. But we think TEPEZZA, UPLIZNA, KRYSTEXXA, and we had already had TAVNEOS [indiscernible] ANCA-associated vasculitis off the ChemoCentryx acquisition in October of 2022. We're very excited about the rare disease pillar. So not synergy driven. Looking forward to revenue growth. On track, though, for what we said about synergies when we announced the deal in December of 2022.

And then just remind us on TEPEZZA. I think you're filing in Japan and thereafter in Europe. And that's going to be on track for approval first half next year or so. How do you see the launch dynamics there? Do you have the data sets that you need? Is it a question of reimbursement? Or is there other studies you want to run there too?

Look, we're -- I'll let Paul speak about other studies we might run in TEPEZZA, but we're very excited about the opportunity there. And breadth and depth of prescribers has grown. We're excited to add ophthalmologists, endocrinologists. We got the addition to the label in April of last year. That's strong payer coverage, up over 50% now, at the end of the year. So we're excited about that. I would remind everyone, we talked about mid-single digit growth [indiscernible] year-over-year in the first quarter. And we've got a great opportunity to use. Amgen's wonderful [indiscernible] and well-built down commercial footprint around the world. So Paul, anything you want to add on approvals?

I would say, as you say, orphan drug designation in Japan, on track in Europe. We're obviously doing a study to examine subcutaneous administration of TEPEZZA. [indiscernible] Terrible disease, thyroid eye disease. Anything we can do to improve patient compliance and ease, we'll do it. So that study is ongoing as well.

What is it going to take to get coverage to 80%, up from 50%?

In our survey, that's been one of the headwinds for the brand.

Sure.

Look, we're focused together as a team. We're working really, really well [indiscernible] Amgen. And we're delighted to say we're working well together. We will work towards that [indiscernible] much payer coverage is possible because we're all about access for the patients, right? [indiscernible] not going to do them any good if they can't get it at the infusion center. And so we're on that, Yaron. We think there are great opportunities there to move forward with the payers. It's a very important medicine for a very debilitating disease. And so we'll stay on it, and we're confident that we're going to be able to up the payer percentage.

Yes. Let me ask you a question in terms of the long-term guidance, because this is an area I get a lot of questions on. That guidance was done subsequent to some of the recent deals, right, ChemoCentryx and Horizon. [indiscernible] you said it was before.

Yes.

And then those deals, you've always said that business development is going to be upside to that guidance. If I recall, the IRA got passed after the guidance, right? So can you talk about -- the IRA obviously was a big unknown when you gave that guidance. That's going to shift dynamics for the whole sector. [indiscernible] And you've done some deals subject to that. How do you still view that long-term guidance in kind of direction how the business is going?

Look, first of all, the direction of the business is great. So if you look at what we talked about in February 2022, you think about the organic -- the innovative pipeline, we just talked about, it's been great. If you look at biosimilars, still strong. You look at our in-line products, we just talked about 18 and with record sales last year. So we feel great about that. But performing well and on track with the long-term objectives that we shared before. Horizon is additive. It's the foundation of our fourth pillar in the company, rare disease. Recall that we issued guidance for this year, $32.4 billion to $33.8 billion. Backing that up with the business review key drivers. We talked about volume-driven growth. And we saw record sales in '23 on our brands through volume-driven growth. We talked about Repatha, Prolia, EVENITY, TEZSPIRE, BLINCYTO, and some others. Last year, we delivered double-digit volume growth in each of the 4 quarters. That was underpinning [indiscernible] back at the business review. So check there. Next was the additional growth from the pipeline. We just shared what we see going on in the innovative pipeline, which is very exciting. So since then, we've progressed many programs. We'll talk, I'm sure, about MariTide, Olpasiran, tarlatamab, bemarituzumab. We had described growth from our biosimilars business. We talked about more than doubling our biosimilars base of $2 billion in 2021 by 2030. We feel great about that. And finally, we stated at the business review, it was simply an organic plan. And the business development would be additive. So since then, I don't know that business development had much to do with the IRA here or not, but it has a lot to do with and we're very pleased with acquiring ChemoCentryx in October '22, and TAVNEOS for ANCA-associated vasculitis, and just really pleased to have Horizon with us in establishing that rare disease pillar. So everything has been strong since then. We feel really good about creating value for patients, staff and shareholders over the long term.

Paul, let's shift over to you. I think that -- I'm getting a lot of questions as everybody is very interested, obviously, in MariTide. The paper that was published about a month ago, obviously, built on the [indiscernible] data set that we saw sort of in December subsequent to that. Looked very good on efficacy, gave a lot more information on biomarkers, a lot more granularity on patients by dose and time on therapy. And in the ongoing Phase II, and I'm going to focus specifically on obesity, I believe there are 7 different dosing schemes. There's 4 different ones in the diabetes segment, right? And you've tested a whole bunch of doses in Phase I SAD; and in the MAD, you even tested a higher dose than the 420 mg. 420 mg is the one we're focusing on, obviously. At the higher dose on the SAD, it didn't seem like nausea and vomiting got worse. Actually got better. So even at the 420 mg, you sort of peaked out. But when you looked at the earlier doses that were lower, the therapeutic window was a lot wider. So can you talk about your ability to titrate? And this titration scheme, does it have to be every 4 weeks? Or can you do maybe an every 2-week scheme initially as you dose up from low doses, get patients stabilized, and look at the efficacy at that point?

Yes. Okay. Great. So look, for MariTide, we think it's an extremely important molecule of medicine. As Peter said, many billions of people around the world are now living with obesity. In the study, we were able to see really consistent and reproducible reduction in weight loss across the different doses tested in the Phase I study. I would reiterate that there were no discontinuations due to adverse events, not at the higher dose, in fact, not on any of the dose groups studied. So I think that reproducibility, consistency of effect, which is [indiscernible] as you say, Yaron, with the biomarkers, look at the HbA1c data, very, very reassuring, I think, gives us great confidence in the molecule. In terms of titration, look, as you say, we're going to be studying 7 different dose-ranging, finding, scheduling options, 4 more in the diabetic patients. We'll have 600 patients worth of data in Phase II, as Peter mentioned, soon. But I would go back to that figure 4c in the Nature Metabolism paper. You can see there that even with once monthly dosing, you're indeed able to titrate people nicely down to a 14.5% weight loss [indiscernible] reduction. And you can then do that in a dose-dependent manner. So I think we have a lot of opportunity there to be able to get people to all sorts of different weight targets.

So even at the 420 mg, I mean, if you even looked at the lower doses, right, patients really weren't dropping out. But on the 420 mg, 4 out of the 8 ultimately discontinued by day -- mostly [indiscernible] by day 22 to 32. There was one patient that did stay on therapy, discontinued later on. But none of those [indiscernible] they're all mild. There was some emesis, obviously, and there was some nausea, but they weren't discontinued because of AEs and the AEs are typically over the first 2 days. [indiscernible] So in that specific arm, as I know we're so focused on all of us. What were the reasons that those patients ultimately discontinued? It was due to patient discretion. And these were admitted, right? So these were closely monitored?

Yes. So maybe I can make a few comments. As you say, this was a residential Phase I unit. So people come in, they spend time there, they're admitted. We very, very carefully train the centers. These are experience centers. They're absolutely tuned to pick up adverse events. And the individuals, the subjects who go into these studies are told, we want to hear about everything that is going on with you. So the fact that we can say that there were no discontinuations due to adverse events is really very important, right? We scrupulously look for that. So I think that's point one. As you say, the nausea is primarily associated with the first dose, goes right down to under 10% for the second dose. It's transient, it's mild. So we think it's very, very manageable. And coupled with the efficacy profile that we've seen, albeit in a Phase I study, it's reliable, it's consistent internally and externally. Again, we think it's really a very positive finding.

The 14.5% weight loss by 12 weeks, I mean, is off the charts relative to the other drugs in terms of rapidity of weight loss. You don't really need to go that fast. So how does that factor into your thinking and therapeutic window?

Yes. So I mean, I think these are the things that we'll be looking at as we see the rollout from Phase II. What is the degree of weight loss, [indiscernible] and the duration of weight loss. I think ultimately that's what consumers, patients will want to know about, and their physicians as well. I think, though, the fact, again, that we have many different dosing options, different dosing schemas, will give that flexibility to patients, to physicians, to think about what they want.

So the data, as you said, on biomarkers was fairly consistent and these were not diabetics, so you were seeing a nice A1c reduction, which you would expect. The one area that, small numbers, but the triglycerides and some of the LDL data on the fatty acids were a little bit more noisy, right? And they didn't show the immediate trends down that you would have anticipated with a GLP-1 up to 12 weeks or the 14% weight loss. Any thoughts on -- is it something about just the small numbers? Is there something about GIPR antagonism that maybe changes metabolism to a certain degree? I don't know -- what do you know about the mechanism?

Well, look, I would say, as a therapeutic, you're going to increase insulin secretion, bring down glucose levels, get the body to convert glucose into glycogen and store it, and probably get lipolysis, so there's some breakdown, and reduce inflammation and reduce CRP. We saw that in the study. I was talking to somebody last night actually, who mentioned as well that it might be that there is an initial some breakdown of fat. So you do get this sort of mixed signal on triglycerides, fatty acids. Then over time will continue to show the profile that we expect. I think the best marker is HbA1c. I think the CRP is also extremely encouraging. But HbA1c as a measure of glycosylation of your blood cells, and the half-life of the red blood cells, about 120 days. So it really is a biomarker that integrates the biological effectiveness of this molecule over a 3- or 4-month period. It's very consistent with what we would expect to see. Comes down by about 0.5%, which even in these nondiabetic patients is quite profound.

Okay. Look, there's so much to talk about. Let's talk about rocatinlimab. You're going to have the first Horizon Phase III data in atopic dermatitis second half of this year. This [indiscernible] study involved, I believe, 2,400 patients in 7 studies in a year. And they've announced a new Phase III with an auto-injector. So it's a huge program, 3,000 patients in [indiscernible] AD alone. The questions we get a lot is [indiscernible] the competition, competitive dynamics against Sanofi, right? Sanofi has amlitelimab. It's a non-depleting OX40 ligand. Your's is depleting. You're obviously way ahead. Both ultimately subcu, probably every 4, every 8 weeks. You've added now into your Phase III program a loading dose, which wasn't included initially. Sanofi did have that in the Phase IIb. They didn't have that in the Phase IIa. What's the purpose for that loading dose? And was that the major sort of change you did early on in the program?

So as you say, a large program brought patients who are biologic naive and exposed, JAK experience, different ethnicity groups, adolescents as well. And it will also let us, as you say, you're on test at Q4 dosing pattern, then to Q8. Very safe. It appears to be a safe and effective molecule. And so we really want to [indiscernible] efficacy for these patients. So we think that adding the loading dose could do that. That proof, of course, will be in the pudding. But a broad program, we think, coupled with the safety and effectiveness, that breadth of patient exposure will be highly attractive.

So the one area that has gotten a lot of attention from KOLs is kind of 2 sides. One, your data seemed to have had more durability after discontinuation of therapy. But it is associated with some initial chills and pyrexia early on. And about 7% of patients did have some mouth ulcers. Can you -- because those were not really seen in the Sanofi, maybe because of the difference in mechanism of action. Can you talk about those AEs? And do you need to try to pretreat for them?

So let me take the mouth [indiscernible] ulcers, to begin with. About 7% of them primarily grade 1 or 2, so really quite mild. And in terms of the fever, it's really more fever, less chills. 80% of the patients who get that, it occurs around day 1 or 2. So it's predictable. I think that's very important for patients and their physicians. So when you take that in totality, we see it more as a tolerability issue. The patients have stayed in the study. As you say, we've been able to enroll 2,400 people into the study. And obviously, we'll describe this in the packaging set, but we think it's going to be a very effective and safe medicine for these patients.

So it's not usual that you see 8 Phase III studies, right, in one indication. A lot of the questions I'm getting is why not just run 2? Give us a sense on why you're doing 8?

Well, look, we have a safe [indiscernible] what we think is going to be a very effective patient medicine. We want to bring it to as many patients as possible. So we're studying all sorts of different scenarios and situations clinically. Monotherapy, combination therapy, patients who may have been vaccinated, adolescents, as well as people using topical agents. And to do something of that scope and ambition, you need a large clinical program. We're prepared to do that. We believe in the medicine, in the molecule. So we want to do a large program and answer those questions definitively.

Okay. terrific. Let's talk about TEZSPIRE. You will have Phase II COPD data this half, I think it's next quarter, and Phase III chronic rhinosinusitis with nasal polyp data as well. On the panels here at our conference, the KOL panels, both of them consistently every 6 months, we run these panels. They've been very, very positive in both indications. Can you talk about TEZSPIRE being upstream of IL-4/13 sort of very early in the pro-inflammation cascade? Does it ultimately signal also downstream via or prevent signaling via IL-33? And what do you expect to see in COPD relative maybe to Dupi?

Yes. So TEZSPIRE, we know, is essentially a blocker of TSLP. TSLP is a part of the alarm in a family that is produced from epithelial cells early on in inflammation. As you said, it drives inflammation, type 2 inflammation, through IL-4, 5, 13. We saw in the inception study of urticaria that there was a reduction in those biomarkers [indiscernible] biomarkers. And in the respiratory setting, there's actually a paper just recently published looking at some translational medicine that shows that treatment with TEZSPIRE actually does reduce production of IL-33 as well. So we think its upstream can be part of the sort of master regulation of the pro-inflammatory response. I think it probably underpins why we do see really quite profound efficacy. And we're excited about COPD as well, because if you take bronchoalveolar lavage samples, TSLP is there. It seems to be part of the pathophysiology underlying that disease. And we think with an effective medicine and an effective molecule in TEZSPIRE that we should be able to bring clinical benefit there. We're doing a broad study, again, looking at patients with high and low eosinophils, bronchitis yes or no, smokers yes or no. Even severe disease. So we should have a broad spectrum of patients where we've tested this with COPD. And if it's effective, I think that will really bring big patient benefit. The proportion of people in this country, as CDC just recently published, remains at 6% with COPD and stable. There is an important unmet need.

Yes. So it's a much broader population than what Dupi and IL-33 are testing?

It is.

And then just shifting to the chronic rhinosinusitis. In the NAVIGATOR study, you did have a component of patients that had both CRS and asthma. Can you discuss that data. I know that looked at asthmatics and an FEV exacerbation in asthma. It wasn't looking specifically at CRS endpoints, but what's the crossover and what does that mean about the Phase III that's ongoing?

Yes. So I think it's encouraging. It gives us confidence in NAVIGATOR. There was an 85% reduction in the annualized rate of asthma attacks in those individuals who had, as you say, your nasal polyps. It's encouraging. Obviously, it's not definitive proof. That's why we're doing the study now and that should be reading out later. But again, it gives us great confidence.

And that data is coming by the end of the year as well, that's Phase III?

Yes, indeed by the end of this year.

I was going to -- any questions from the audience? We have about 2 minutes left.

I would add, just with TEZSPIRE , we're also studying now eosinophilic esophagitis as well.

It's in Phase III?

Yes. Indeed.

What percentage of patients you anticipate having high eosinophil counts [indiscernible]?

In the COPD study?

Yes.

Probably -- we can check, but probably about 1/3, I would think.

So maybe in terms of the next program, we can talk about the Sjogren's program with dazodalibep, which is now ongoing in 2 Phase IIIs. The 2 Phase IIs came out last year. One study was in systemic Sjogren's, the other one wasn't symptomatic. You've hit both of them, and now you're running 2 big Phase IIIs. I think the data is as early as 2026 in the first study. Can you maybe talk about CD4 ligand antagonism, why that's important in Sjogren's?

Yes. So Sjogren's is part of what we would call inflammatory connective tissue diseases, like Sjogren's dermatomyositis, idiopathic pulmonary fibrosis, and so on. And we are attacking all of those through different targeted pathways. Dazodalibep, as you say, is a CD40 ligand antagonist. I would say it's the first agent to show a meaningful improvement in outcome in patients with Sjogren's, either with systemic effects or with symptoms of Sjogren's. So that's very important. There are 2 well-established tools to measure the effectiveness, ESS, DAI and PRI, respectively. We're now doing those large studies for patients with systemic effects. They need to be Ro antibody positive with a disease activity index greater than 5. So they're moderate to severe. And then in the people with symptoms, they need to be either Ro or rheumatoid factor positive. And that combination probably represents about 85% of patients. So it's a broad swath of patients. And we think that the medicine, again, here has real utility to provide clinical benefit for an important unmet need.

Okay. Well, terrific, Peter, Paul, Justin. Thank you so much for coming, We appreciate it.

Thank you so much for Yaron. So Glad to be here. We're so excited about Amgen and all 4 of our pillars and serving patients.

Thank you.