Amgen Inc. (AMGN) Earnings Call Transcript & Summary

I am Michael Yee, managing director and senior biotechnology analyst at Jefferies. I'm very happy to have a few members of the Amgen management team up here with us on the left here, Peter Griffith, Chief Financial Officer. We also have the pleasure of having Ian Thompson, Senior Vice President of U.S. Business Operations. And of course, on the far end there, Justin Claeys to keep everybody in check. I would love to maybe just turn the discussion first to Peter. I know Peter would love to make some opening comments about the state of affairs at Amgen. You have an obesity drug maybe, so I'm sure you'll comment about that. But if you could just give us some brief comments about how you guys are feeling about the year and the outlook, that would be great. And then we'll go into some of the topics.

Great, Mike. Thank you very much. It's great to be here. We're delighted to have Ian with us today. Ian is our Senior Vice President of U.S. Business Operations, on the operating team and just back from ASCO and BIO. So we're delighted to have him with us. Look, this is an exciting and transformative period at Amgen. We're expanding our global reach with our existing medicines, advancing a diverse range of potentially first-in-class and/or best-in-class therapies in our mid-stage pipeline. We're redefining what's possible in research as we harness transformative technologies. We're committed to creating value for patients, staff and shareholders. And currently, obesity is a major focus. We hope our Q1 earnings call may clear our strong confidence in the potential of MariTide. At a high level, we announced that the MariTide interim analysis for the Phase II study is complete, that we are confident in MariTide's differentiated profile and are actively planning a broad Phase III program, including obesity, obesity-related conditions and diabetes. We've also initiated activities to further expand manufacturing capacity with both clinical and commercial supply in mind. We now expect 2024 capital expenditures of $1.1 billion to $1.2 billion versus our previous guidance of $1.1 billion as a result of these activities. I'd remind you that Amgen has a long history of every patient every time in supply. In fact, during the last global public health crisis, COVID, our supply chain worked very, very well. We even manufactured antibodies for colleagues in the industry at that time. We had the chance to meet with investors following the first quarter earnings call. We were asked an important question. How do we view the business beyond obesity? Well, in short, we have great confidence that we're on a path to delivering attractive long-term growth through the end of the decade and beyond, not just because of obesity, but rather from the breadth and depth of opportunities across our 4 therapeutic area pillars, general medicine, oncology, inflammation and rare disease, each of which have strong momentum and plenty of room to grow. We're driving growth in our marketed products and driving our innovative pipeline. We recently shared exciting news of IMDELLTRA's approval in the United for the treatment of adult patients with extensive stage small cell lung cancer with disease progression on or after platinum-based chemotherapy. This approval is the second line or later, setting and marks a pivotal moment for patients battling this very serious disease. We're excited about IMDELLTRA's potential and rapidly advancing into earlier treatment lines with 3 Phase III studies underway. This builds upon the success of BLINCYTO, which was our first approved bispecific T cell engager for the treatment of acute lymphoblastic leukemia. BLINCYTO is now annualizing at over $1 billion of sales and has a PDUFA date this month for approval in the frontline setting. I'd also like to highlight another really important bispecific T cell engager, xaluritamig, which is rapidly advancing for the treatment of prostate cancer based upon promising early data. We shared encouraging Phase II data for TEZSPIRE at the American Thoracic Society last month that reflects the attractive potential of this medicine in chronic obstructive pulmonary disease, the third leading cause of death worldwide, where new treatments are very much needed. Now in rare disease, yesterday, you saw we announced positive Phase III data for UPLIZNA, an IgG4-related disease, a devastating disease with no currently approved treatment. The trial met its primary and all key secondary endpoints, showing a statistically significant 87% reduction in the risk of IgG4-related disease flare compared to placebo. We're encouraged by these data and look forward to bringing this therapy to patients living with IgG4-related disease. And I think importantly, Mike, these data reaffirm our confidence in the long-term growth outlook for our rare disease pillar. We're looking forward to additional Phase III readout this year for UPLIZNA in myasthenia gravis. And we also have 3 other Phase III readouts coming this year. TEZSPIRE and Nplate, which are additional indications in marketed products right now and also rocatinlimab in atopic dermatitis. We just received FDA approval for BEKEMV, an interchangeable biosimilar to SOLIRIS, and our first biosimilar in rare disease, which we expect United States launch in March 25. We recently announced the development of ABP 234 and KEYTRUDA, as we look to build upon the global leadership we've established in biosimilars. And we continue to create value for patients, staff and shareholders in our biosimilars business. The pipeline is advancing on a strong foundation provided by marketed products, I'd like to remind you that Repatha was up 33% in the first quarter, EVENITY and our bold -- and our bone franchise was up 35%, BLINCYTO, up 26%; TEZSPIRE, up 80%. The rare disease portfolio, including TEPEZZA, KRYSTEXXA, UPLIZNA and TAVNEOS for ANCA-associated vasculitis almost $1 billion in the first quarter. Let me provide some commentary on the second quarter. We continue to expect total non-GAAP operating expenses, the sum of cost of sales, R&D and SG&A over the second and third quarters to grow at a rate comparable to the first quarter, which, as a reminder, was 33% year-over-year. Before jumping into Q&A, I'd like to remind you that you need to recognize to protect the integrity of the MariTide study, we're limited to what we can say about MariTide before completion of the ongoing study. In sum, we have a broad range of medicines in hand today and coming through our pipeline that are going to enable us to meet the needs of millions of patients around the world with serious and grievous illnesses. And with that, Mike, I'll flip it back over to you for Q&A.

Fantastic. Well, thank you for those comments, and thank you for that update. Maybe just starting off, I know you have things other than obesity, absolutely, we will hit on those. But maybe starting with MariTide since you brought it up first in your opening comments. You could talk a little bit about perhaps why the disclosure in the Q1 earnings call, what amount of information you saw that would drive such strong comments and your confidence around differentiation because the key question that we continue to get is, what is differentiation, what do they even see. There's been no data presented. There are no numbers. It's just comments on an earnings call. So what did you see and what -- and how much information do you see to drive that commentary?

Well, Mike, that's a great question. I would just say with the interim analysis, we're seeing a differentiated profile with MariTide. We're confident that it's going to address unmet medical needs in obesity, obesity-related conditions and diabetes. We're very pleased with the results. As we said, thus far and with the overall conduct of the ongoing MariTide Phase II trial. And just recall that the ongoing Phase II study test multiple doses, monthly and less frequent dosing and specific dose escalation regimens. And in terms of the final data readout, we hope to see data that furthers our confidence in MariTide and informs our Phase III planning. And we anticipate, as we have all along, we're on time, we believe, for the Phase II study readout in late 2024. So look, overall, we're very pleased with the results that we've seen thus far, the overall conduct of the trial, as I said, in the differentiated profile. We're actively planning and expect to initiate a broad Phase III program with obesity -- obesity-related conditions and diabetes, as I said. We've initiated activities to further expand manufacturing capacity. And so we feel like we're in a really important position in this global public health crisis. The last thing I would add Mike is, in terms of the patient experience, we expect to deliver MariTide in a convenient handheld patient-friendly auto-injector device with a monthly or less frequent single-injection administration, assuming eventual approval. So we're all ahead go on it. And Mike, I would just emphasize, too, that we are going to be an important player in this global public health crisis. And we're committed as a company to that, to this therapeutic area. And we're going to invest and thoughtfully and prudently use shareholder capital to do that.

We find it -- we -- the market finds it surprising that you can say all these things with such confidence based on just an interim or a peak of hundreds of patients. What do I imply out of that, that the data are so strong and so clean and all the doses have continued, not one arm has stopped, I think you have said that. So if there was a safety issue or a dropout issue or a tolerability issue that you probably wouldn't be continuing that type of design for whatever reason that is. And so given the fact that you haven't, you've seen enough information that for your big pharma company, not a little small biotech and your legal counsel that, that allows you to say those types of comments.

Mike, I would just reiterate what you just said, all arms remain active. Patient dropout has not been an issue. And so we'll continue. And I understand why people want to ask -- drill in further. But we're going to continue to work really hard on this. We -- first and foremost, we want to protect the integrity of the study and make sure we protect that. That's first in our minds. We always -- Amgen is all about patients. We come to work every day and serve millions of patients around the world. And in this particular instance, we're going to be very thoughtful and careful about what we say. But at the same time, we're going to continue to move forward on the Phase III planning. We're starting to invest significantly. Mike, we raised our non-GAAP research and development guide from 20% growth year-over-year to 25%. We recognize that we're going to accelerate what we're doing there.

You wouldn't be spending more and telling everyone, you're going to be spending hundreds of millions of more in CapEx, I'd remind you to help us understand the manufacturing capacity and your ability to make this drug. If you didn't have the confidence in the green light to do that, if the data won't, what you say they were.

Mike, we think go to capacity for a minute. We think about...

Capacity, can you make the drug? How are you doing that?

So think about capacity is drug substance that we've shared with investors about North Carolina. North Carolina, Amgen, North Carolina will be...

Factory.

Brand new, it will be complete, licensed and up and going. We expect it to be in the first half of 2026. We plan that before MariTide showed up, and that's coming along nicely. And that's a significant opportunity for us, and we're very confident in that moving forward. We've also shared on the packaging and labeling in kind of the final drug product plant that we put up in Ohio. I say New Albany and then, Bob, who's -- Bob Bradway, our CEO from Columbus says, "Peter, you need to say Columbus." So I say Columbus, Ohio, but from -- in Columbus, that opened and was licensed in the first quarter of this year. And we believe that's one of the most technologically advanced plants.

That's what fill finish, that could be a fill finish for MariTide.

It could be. And right now, it's packaging and labeling, and so we're excited about that. And that's, again, a significant -- we have significant real estate available to us in those locations. And so we're very thoughtful about that. Amgen has always been very disciplined about capital expenditures. It's second in our capital allocation hierarchy that we share with you and with our investors, right? First is innovation. Second is investing in the business, CapEx. We're very thoughtful about that. And so it's important for us to have that capacity. And I would just suggest my point about every patient every time is we've always thought about that. So we start from a position of strength, we believe, in our network optimization and our capacity as it stands today.

Okay. So you feel confident in the data you have seen thus far, all doses continue, no dropout issues and all the arms continue. You feel confident that you can make the drug, it's 2 peptides, not 1, people ask me that. Isn't that twice as much peptide, Lilly says they can't even make all the peptide they want, how can you do 2 peptides in 1 versus 1 and also the fill finish. All that you think you can do, supply the market.

Look, we are prepared to do what it takes to supply every patient every time. But we are clear eye that this is a big task. We're very clear eye. But as Dr. Brad would tell us at this time, the ability, Amgen is very strong in process development. I would say, really a world-class group. So the ability to put those 2 peptides on in exactly the right place on the antibody is really important, and we're confident in that. We know we can do that. So we're prepared to all work together at Amgen to get this medicine to patients. This is the massive global public health crisis around the world, and we're on it. But I would say, Mike, too, at the same time, we delivered medicine to much different situation to 7 -- I think, it was over 7 million Prolia patients last year, over 1 million patients in Repatha.

Let me actually characterize that because, Justin, you and I have talked about these numbers before, and maybe Ian can comment. But not saying you would bring down the production for Repatha or other, but your point is actually if you do the numbers of patients treated each year for all the other antibodies you're doing already, not saying that, that would pick it up. But in terms of your existing capacity, it's not like you're a small biotech that has never done a drug, you're already making patients from -- drug for millions of patients for these other biologics.

It's absolutely right, Mike. And maybe the other way to dimensionalize it is that if you take those over 9 million Repatha and Prolia patients combined, that represented over 30 million units last year. And maybe the other point was MariTide...

Per year, 30 million units per year.

Yes, that's right, in 2023. And just for those 2 products.

Right. So I've actually done some maths, so it's like 100 million patients could be for the obesity market, and that would certainly be -- not saying that you would stop production of those drugs, it's not what we're saying. But that's the type of production just for those drugs you're already supplying, 30 million units.

That's right, 30 million for those 2 products last year. And one other point to remind folks of is with MariTide, we are looking at monthly or even less frequent dosing. So when you think about your fill finish requirements, it could be a different calculation.

Right. So when you do out the math for Lilly, they're doing 52 needles per year per patient. You're talking 12 at the most. And then what seems to go and appreciate is that you're reiterating that there's arms that have a period where you're transitioning to possibly quarterly. I think you use less frequently, but not been told quarterly. And therefore, it's even less per patient.

That's right. We said monthly or even less frequent.

Okay, okay. And then lastly, in terms of the data disclosure towards the end of the year, how are you thinking about this event, are you press releasing it? Is there a trigger point to put out the data? Is there a conference? What should we expect in terms of that? And how are you thinking about all that?

Yes. We haven't specified the exact disclosure. I mean what I think we would typically see is some sort of top line release, and then details presented at the future medical conference, more to come in.

Okay. And then if I may also ask beyond that. So when you put out all this data for 133, you're planning to move into multiple Phase III studies, can you talk a little bit about about that, you're planning to do more diabetes studies? Are you doing MASH? Are you doing sleep apnea? What are you thinking about? Just so we have an expectation of what areas you're going in besides a huge Phase III obesity study.

Yes, just to reiterate what Peter said, we're looking at a broad Phase III program. We're looking at obesity-related condition and diabetes. We haven't been more specific than that. But I think to Peter's point, we're looking at this as a big public health crisis, and we want to help whoever we can.

Okay. And then moving beyond even 133 to suggest your commitment further to obesity, I know you discontinued 786, the oral small molecule that you had. If you look around the landscape or have come to our private biotech down Tuesday, there are many companies with other oral mechanisms from CB1 to oral Amylin to DNP to all sorts of other mechanisms. Remind us, you have other candidates you're moving into IND as well, so we should be tracking these other ones.

Justin, do you want to share with us?

Yes. What we've talked about is the fact that we're looking at this not just as MariTide, but taking kind of platform approach, if you will. We haven't been too specific about exactly what the targets are, but we have said that we're looking at both injectables and orals. We're looking at both incretin and not incretin based. Those are still in preclinical right now, but we'll have more to say as those move along.

Justin, maybe it's fair to remind Mike and our colleagues in the audience that Amgen has been working around obesity group, probably as long as you've been there.

That's right. Exactly, yes. It's not a new...

Well over 10 or 15 years.

That's right. Not a new area for Amgen.

Okay. Fantastic. Okay. So we will look forward to the update. Again, you've reiterated your confidence around that. I know many times the market remains skeptical until they see the numbers, maybe when they see the numbers, stock is already high with them. I think everyone, in terms of investor feedback, it's that until we see the data, we're just going based off commentary off the conference call. And so that's why I ask these questions, I want to understand your confidence around them. And you're telling us that you've seen the data, you've looked at the data, and you're investing further in it and nothing has changed.

Obesity is a critical global public health crisis. And Amgen -- this moment is made for Amgen.

And you said you will be a player...

This moment is made for Amgen. We're going to work as hard as we possibly can to be a key player in this industry. And I would just say we've got Ian here and I brought him all the way from California. So hopefully, you can ask him a little bit about IMDELLTRA and some of these incredible drugs for oncology...

So I want to ask about 2 or 3 other things. So after everyone gets comfortable with obesity, we -- then everyone starts to ask, "Well, do they have anything else?" I think you actually mentioned that comment. And so one of the things I would like to ask about is, if you may, you are also a major dermatology immunology player and OX40 and the opportunity in atopic dermatitis, people ask me, OX40, what are you talking about, Dupixent is not the standard of care. Can you just talk a little bit about OX40, IPF and tarlatamab, 3 major developments going on this year and talk a little bit about this because there are some Phase III OX40 data for atopic dermatitis, which could be multibillion. And you guys have said that you think this is going to be great, and you're going to be filing.

Great. Yes, why don't you start with the tarlatamab.

Tarlatamab, okay.

We'll work our way back to rocatinlimab, which I mentioned we have a Phase III readout that I will share later this year.

So I won't repeat what you said in the introductory remarks, Peter. We are very excited to have tarlatamab on the market. Now what I will do is having just come back from ASCO is share 1 or 2 updates in terms of where we are. So we've been on the market now for 2.5, 3 weeks. Obviously, ASCO was part of that. What we see is a significant amount of interest. We have 8 clinics actively using IMDELLTRA. And what we can see is that as we predicted, the ratio of use between community and specialty is starting to play out. So 70% of the non-small cell -- the small cell cancer patients are in the community. And right now, about 80% of the business that has been generated has occurred in the community setting. We also said that the academic centers that have the experience with advanced therapies, the bispecific therapies having used BLINCYTO also cell therapy would probably get the most rapid adoption. We're starting to see some of that. 1 or 2 of those centers are just moving a little bit slower because of protocol changes, getting it set up in the EMR, things like that. But what we are seeing is strong clinical conviction around IMDELLTRA and a bit of an attitude of -- this is a huge sense of urgency for patients. So physicians and treatment teams and care teams are working rapidly to solve some of those barriers to use and are working through that. We're obviously working closely with them...

What are the things like came away from ASCO about that, that I thought interesting about tarlatamab, as we did host a lung cancer expert, and they basically reminded us that at least in the second line, by the way, second line label, not just third line label is that the patients are pretty sick, and they're in pretty bad condition, so it can be tough because so far progressed, but in first line, and tarlatamab would be a much better opportunity as the patients are healthy and the market is bigger. But that Phase III study is already ongoing. So you feel confident this will be a first-line product in just a couple of years.

These patients are extremely [ sick ]. The 5-year survival rate is in low single digits, that's just a very, very difficult situation. In our study, I think 75% of those patients enrolled in our study have already been on a PD-1, 20% [indiscernible] meds. So very, very difficult situation, very few or no advances in this space, certainly extensive phase lines. We are rapidly accelerating into earlier lines, and we're excited by that opportunity and moving fast with the study as we speak.

Okay. Good.

Mike, on that, I would just want to add on the bispecific T cell engagers, we've always said we believe addressing it with a lighter tumor burden with a lower tumor, it's really important. And we're -- that's phase -- that's getting into first line on IMDELLTRA. Xaluritamig we're working to -- we've got some trials we're scheduling and getting into with men with lighter burden there.

Prostate.

Correct, prostate cancer.

Second bispecific.

We think they are really -- this is really important. And we got to see what the data says. We think with the lower term...

That's the steep 1.

That's correct.

Steep 1 which had responses and huge PSA responses, and that's moving forward.

Yes. Oh, yes.

Make a quick comment also about the Phase III data in atopic derm. This is a potential monthly injection for OX40, rocatinlimab, it was mentioned again and reminded on the rare disease call, I guess, a couple of weeks ago. There's a competitor, Sanofi, who was here yesterday talking about that. They think they're great. But you do believe you have a Phase III new atopic derm drug with data coming shortly.

And again, in terms of focusing on unmet need and difficult patient situations, you've got 30 million patients around the world with atopic dermatitis, higher prevalence in children, 15% to 20% in children. And roundabout 30%, 40% of those patients in moderate to severe. And what you can see in the market is that many of the treatments available don't meet the needs of those patients, so that's a real opportunity for us.

Yes. And there's been a great focus on the post dupi. So dupi is obviously an amazing drug, great drug. But this prior Phase II did show responses in great efficacy even in post-dupi patients. And in this Phase III that's coming a good proportion of the patients who also have been on prior dupi.

That's correct. About 14% of the patients...

How much?

14%.

14% of the patients at baseline are already in post dupi, so that's something to look at. Good. Okay. So we're out of time. I could have spoken for a lot longer, but thank you guys for joining us up here. It's a long day of additional meetings, and I appreciate it and continue progress this year.

Thank you, Mike. I think we're glad to be here, and we would say, there's just so much more that we could talk about. Look, at Amgen, we're all about the patients, right, discovering, developing, manufacturing, getting these innovative medicines to patients with serious illness all over the world. So thanks for having us again.

Thank you, Peter. Thank you.