Amgen Inc. (AMGN) Earnings Call Transcript & Summary

Good morning, everyone. I'm Michael Yee, Senior Biotechnology Analyst here at Jefferies. And very excited to continue on with our next fireside discussion here at the Jefferies Healthcare Conference. I am quite pleased to have members of the Amgen team up here with us. That includes the CFO, Peter Griffith, Executive Vice President, Murdo Gordon, and of course, 1 of the best IR leaders out there, Justin Claeys, who we all know. I would love to give maybe Peter or Murdo an opportunity just to make some opening comments, obviously, the company has a lot going on commercially been executing quite well and crushing numbers and some of the legacy stuff. But obviously, some of the R&D pipeline is a big focus, and I'm sure everyone will be at ADA in a couple of weeks. So maybe Peter or Murdo, you'd love to give some opening comments about the state of Amgen, and then we'll go into some key questions.

Mike, thank you. And Murdo, Justin, we've got Adam, our Treasurer here with us today. We're really glad to be here. We really appreciate it, Mike. But Mike, I can't let it go the video this weekend, right? I can't let the video go. I had my 4-year-old grandson Cameron walked in. He looked at the video, and he said, is that Mike, He said that it's not okay. He said that's not okay. But in all seriousness, we're glad to be here. You got a shot on in the video today. And thank you And so look, we are really excited about the business. We're excited to be here. So with that, we're seeing strong momentum and the breadth and the depth of what we're doing. We're seeing innovation at speed and scale at Amgen. First quarter revenues increased 9% and earnings -- non-GAAP earnings per share were up 24% year-over-year. The strength was broad-based, as you saw, with 14 products delivering double-digit growth. Many of the near-term growth drivers were very strong in the quarter. We have an exciting pipeline advances across the therapeutic areas. So let's start with General Medicine. Repatha and EVENITY together delivered over $1 billion in revenue in the first quarter, up 28% year-over-year. Significant opportunity ahead for both brands, and I'm sure you'll hear a lot from Murdo on that. With 100 million patients globally in need of further LDL cholesterol lowering and 90% of very high-risk patients for postmenopausal osteoporosis, not receiving appropriate therapy. In obesity, our 2 Phase III studies for MariTide in chronic weight management are initiated and enrolling. At the ADA meeting in June, we look forward to sharing further details of the 52-week MariTide data from Part 1 of our Phase II trial, along with additional data from our previously discussed Phase I pharmacokinetic study testing lower starting doses of MariTide. And for our LP(a) therapy olpasiran, our secondary prevention Phase III cardiovascular outcomes trial is fully enrolled. Now let's go over to rare disease. UPLIZNA recently launched as the first FDA-approved therapy for IgG4-related disease. And we're now on track for December 14 PDUFA date and generalized myasthenia gravis for UPLIZNA. Mike, I know you're interested in TEPEZZA and which addresses the complex patient journey, many patients with low clinical activity scores or CAS scores are undiagnosed or not referred for appropriate treatment. So educating physicians across specialties, particularly endocrinologists and general ophthalmologists is essential. We've expanded our field force and are executing our commercial strategy to better reach these prescribers. Now let's go over to inflammation. TEZSPIRE continues to grow in severe uncontrolled asthma. We have an October 19 PDUFA date for chronic rhinosinusitis with nasal polyps, and we're enrolling patients in Phase III studies in both COPD and eosinophilic esophagitis. Now let's go to oncology with ASCO last weekend. Our industry-leading bispecific T-cell engager platform is progressing very well. And we're excited about the potential patient benefits from BLINCYTO and B-cell acute lymphoblastic leukemia. IMDELLTRA in small cell lung cancer and xaluritamig in advanced prostate cancer. We're also looking forward to 2 Phase III readouts this year for bemarituzumab in first-line gastric cancer. Biosimilars generated $735 million in revenue in the first quarter, up 35% year-over-year, driven by our latest United States launches of PAVBLU and WEZLANA. We're also advancing BEKEMV as biosimilar to SOLIRIS in the United States on April 2 and are advancing our next wave of biosimilar candidates, including biosimilars to OPDIVO, KEYTRUDA and OCREVUS, all of which are now in Phase III. With respect to the second quarter '25 and specifically the outlook for operating expenses, let me remind our audience and you of our comments from the first quarter earnings call that we had certain research and development expenses previously expected in the first quarter that we now expect in the second quarter including milestone payments and other investments. And with that said, we expect the second quarter at 25% year-over-year non-GAAP total OpEx growth in the low teens. And finally, let me acknowledge the interest in the macro and policy environment, including the tariffs, taxes and pricing. It's a fluid situation. We're not speculating on any specific policy proposals or implementation mechanisms at this stage. With that said, we firmly believe that society needs more innovation, not less. And we remain actively engaged with policymakers on policies that improve patient access while supporting sustainable and important innovation in research and development and in manufacturing. And with that, Mike, back to you.

Well, a lot to unpack there. Let me start with the fact that 1 of the big surprises is that the commercial business certainly for the last few quarters, it seems quite evident that people who are aren't even looking at some of these things because there's so much focus on MariTide has been doing quite strong. EVENITY, Repatha, some of these numbers are up significant double digits. And nobody thought that was going to be the case a couple of years ago, and these are crossing multibillion now. So maybe for Murdo or for Peter, do you expect that, that type of significant growth can continue, and that's why you feel so confident about the numbers this year even in the face of a biosimilar of denosumab which was a thing that people were quite concerned about like a year ago. Here we are now, I think when just launched like yesterday, I saw an announcement. So where are you with the risks of the biosimilar offset by the fact that you've got strong growth of your products that are going to offset that. So you're going to grow through a biosimilar against your biggest drug. Can you comment on that dynamic?

Yes. Thanks, Mike. We're really pleased, obviously, with the execution of our commercial and medical and all our customer-facing teams around the world. But if you look at our portfolio, and Peter went through it pretty rapidly. If you look at the major growth drivers that are already approved and in market and in line, you've got Repatha, you've got EVENITY, you've got TEZSPIRE. They're the very large market products with a lot of untapped growth potential. Then you go into innovative oncology, think BLINCYTO, think IMDELLTRA, which we just...

Tarlatamab, which is a big thing at ASCO.

Yes, big data at ASCO showing for the first time ever a 40% improvement in overall survival in second-line small cell lung cancer. Then you go into the rare disease portfolio with 4 key products, growth driving there and expanding international. And then you look at our biosimilars portfolio, which is also growing nicely through the time period that you mentioned in the last few quarters. So we have a portfolio that isn't just 1 big product or 2 big products. It's a very broad portfolio of growth drivers. So very pleased with that. You mentioned Repatha specifically. Yes, it's been a long journey. I can attest to that. But we are very pleased now with the way we've opened up access in the U.S. and the way Repatha is also growing around the world. In the U.S., we're seeing over 40% growth through the first quarter. That will continue in terms of being able to expand the volume of patients that we treat. We've substantially improved access now with over 50% of commercial lives having no prior authorization. You can prescribe Repatha with no attestation, no prior authorization at retail, it's a very easy product now for patients to get. And then we've got a catalyst for Repatha in the back half of the year with the VESALIUS trial that's in a primary prevention, high-risk patient population. So we're trying to prevent that first heart attack or stroke by adding Repatha for aggressive LDL management in that patient population. So there are a number of really good catalysts. The other thing with Repatha this year is we will see less year-on-year price erosion. So for the last few years, price erosion has taken some of that volume growth out when it comes to net sales evolution. This year, we'll see more of that top line volume growth come all the way through. EVENITY untapped patient population very low penetration so far. We have the responsibility of selling that product booking sales in the U.S. and Japan. The Japan markets way ahead of the U.S. in terms of patient penetration. And if we just catch up to that, that will be an impressive thing.

What are you -- so the net of those is that you are very confident about the strength of some of these volume growth businesses that you just mentioned, they are definitely -- have been beating numbers. And I think people are concerned that this year, certainly for the next 6 months and going into '26, that there's a biosimilar denosumab that is launched [indiscernible]. So what are you seeing out there? Are things within your expectations? I don't know prices of these things have been announced yet. But what should we expect? What should we expect to hear and what should we expect to happen because denosumab biosimilar is available.

I think -- I'm not sure what all the competitors will do. But so far, we've seen nominal differences in WAC pricing. So slightly lower than the innovator.

But the first one, I think, is out there from...

Sandoz launched yesterday. I think 10% to 14% depending on...

Okay. So modest...

Yes, they have 2 brands out 1 to XGEVA and 1 Prolia. But we -- again, this is something that we've been seeing all along. We understand the biosimilars business. We're a biosimilar competitor. We understand the dynamics of it competitively. We understand provider preference, particularly in the buy and bill space, which is where we are here with denosumab. Obviously, our roots in oncology have helped us understand the XGEVA picture. And then we are unique in that we are the only company with the footprint that we have in osteoporosis for Prolia. So I think we're in a good competitive...

So in the osteoporosis standpoint, as part of the -- like it Wall Street sees somewhere there's a biosimilar pricing and the collapse and maybe it falls by 50%. But you think that there is a particular advantage because of osteoporosis, which is, I think, 65% or 70% of the sales of denosumab that's unique because these are buy-and-bill centers treating elderly women with this injection. And so it's not just like a cancer biosimilar where everyone just swaps over. Is that...

I think it's different mostly in how the product flows through the supply chain. In oncology, you've got a concentration of GPOs and networks in the community that are relatively easy for a biosimilar competitor to cover with a field force with a contracting. In osteoporosis, it's a little bit different in that there are a lot of individual clinics that are buying small amounts that add up to a large amount.

So there's not going to be a salesperson come on over to them from Sandoz.

Well, -- there will be some, but footprint that we have is just a little more competitive than what we think the biosimilars will be able to deploy.

So when you take strong growth on your branded products that we've mentioned, some offset on denosumab this year. We're going to look for the second and the third quarters coming up. You said 10% to 14% discount that's at least the gross price. There could be some rebating and expenses, Peter, what was in the expectation at the beginning of the year and I don't recall exactly what you did the guidance, but I don't think there was much raising of guidance in the first quarter post EPS. But as you get more visibility, you're going to look at your guidance this year and based on what you guys are seeing, which seems bullish that you'll come back to the guidance.

Mike, we always look at guidance. We're very thoughtful and we've got a very strong well-controlled process on that at Amgen. But when we look at our operating margin as a percentage of product sales -- that's something we're very focused on. I have been thinking about that for many, many years, all the way back to when Justin Claeys was in corporate FP&A 12 or 15 years ago. And that's important to us because our investors expect us to be very efficient with the capital we deploy. Having said that and having had a guiding principle of about 50% of product sales, for our operating income percentage for any number of years now, this year, we guided about 46%, okay? And we said we need to earn that flex, that flex down. We've got a pipeline that's really important to patients. And Murdo covered some of that -- I covered some of that in my opening remarks, whether it's olpasiran Phase III, absolutely MariTide, whether it's our oncology medicines, and then -- so we think about that. That's the #1 allocation is innovation. In this case, we're grateful for patients, for staff and for shareholders, how strong that pipeline is to allocate that capital into that. As we go along here in the next few years, look, we're going to have -- we've got an opportunity to do a great launch in IgG4-related disease in UPLIZNA. We got a great opportunity to get IMDELLTRA out what Murdo said, this important medicine. So we'll stay focused on that. And we're also, at the same time, while it's not OpEx, Mike, it's CapEx. We're deploying capital to build capacity. 14% volume growth in the first quarter. So we're continuing to deploy capital there. So we want to be very predictable and disciplined on our capital allocation, innovation, investing in the business, returning capital to shareholders and to our debt holders. We're on track to get back to our pre-Horizon capital structure by the end of the year. So all in all, we are very disciplined. You probably ask me the next question would be, what are you doing to be as efficient as possible. And I would just make 1 note that as most companies our size, regardless of industry, we're pushing ourselves very, very hard on technology and AI. We're not going to work beyond the speed of accuracy and controls but we're going to push ourselves on that. And we've been doing that for a long time. We moved our head of R&D, as you know, Dave Reese as our Chief Technology Officer. We have high expectations of ourselves. And we know our investors do also on this. So we're going to stay focused on that.

So your branded drugs are growing. The impact of denosumab with you think is manageable and that you should be able to grow through that. And we will see that. I think when you look at this year's numbers, the guidance was for growth, I believe, in the exact numbers. And therefore, you'll take a look at the guidance this year after we get past denosumab and we'll see what the numbers look like, okay. So then, therefore, 1 of the other developments, if the numbers are strong, are going to be based on what also the opportunity is for MariTide. So in just a few weeks, we'll be at ADA -- you guys are going to be presenting, I think, in a 1-hour session, it's all sort of split up. But there's a 1-hour session on MariTide. What should the takeaways be for people going to ADA? And what should -- what is the messaging from Amgen about how MariTide is going to compete against tirzepatide and some of these other big programs because I think people are still trying to scratch their head, how is MariTide going to compete. Lilly is a formidable competitor, right, Murdo?

I don't know.

What's the takeaway coming away from ADA?

Well, we respect all of the incumbents in the market, but our product is highly differentiated from what's available. So it starts with that. I mean, as a marketer, if you don't have a differentiated offering, it is hard to compete, but we have a differentiated offering, the only peptide antibody conjugate in the category. We've obviously given the top line, Jay has been very clear with what we presented so far on the Phase II trial that we'll read out on the 52-week data in its entirety at ADA. A couple of things just to keep in mind that are very clear. Weight loss up to 20%, very clear that dose escalation is important for the tolerability of the product. And we had a number of cohorts in this trial where we didn't dose escalate. So you'll see those data and then you'll see in the same presentation, a Phase I PK study, which we've alluded to publicly already. You'll see that dose escalation actually significantly improves tolerability of the product. And we will take those learnings and apply them into Phase III. This is the tricky part. We're going to show 52-week data from a Phase II trial that was intended to cover the range of possible ways of treating patients with MariTide many of which we have not taken into Phase III, many of which we have taken into Phase III. So the real challenge will be for people to look at what we present at ADA and then look at our Phase III program and from that, reduce what the profile of MariTide to be in the market.

Right. So to be clear, you've started Phase III big studies, but you haven't disclosed the doses or the titration?

That's correct.

Okay. So when we go to people are going to ADA see the original Phase II design, which was designed to cover a whole range of different doses, including the titration. But to be fair, Wall Street initially saw some of that data and the -- it's been verbally said on that conference call what the GI and nausea rates were. But Wall Street was a bit sour on those numbers and the stock went down. And then you have disclosed that you have a further titration enhancement in Phase I that you think significantly lowers those numbers, to be fair. I think those numbers have also been disclosed. But the weight loss has not been disclosed yet. So people think like, well, Murdo, you're going lower dosing, lower dosing. Maybe that improves tolerability, but how are you going to get more weight loss? And you guys are saying, you will see good weight loss with that.

Yes. I think what you're going to see, just to remind everybody, you're going to see some cohorts in the Phase II with no dose escalation, right? And then you're going to see a Phase I trial where we did a 2-step dose escalation. And what we've learned from that will allow us then to optimally design the dose escalation in the Phase III. We are still confident, though, that our dose escalation, given the profile of MariTide will be a good patient experience and will not compromise maximum weight loss.

Will we have some weight loss follow-up numbers on that new titration that was initially disclosed back in November?

Well phase -- this was a Phase I trial. So we weren't really looking for efficacy.

Okay. So how do we know that you can get good weight loss with a lower step titration? How do we know that?

Well, you can see in the kinetics of the efficacy of the product, and you can model from that.

Okay. So I think one of the parts, too, is that in the Phase II, there was an initial titration and that weight loss is similar to no titration. So that's part of the messaging.

Yes. I think the curves for us look very good, and that's why we made the choice that we've made for Phase III.

And you guys have not disclosed too much on the actual injection. But in the Phase III, are you using a pen injection or that comes later? Or what is the administration in the Phase III?

We'll be talking about that at the ADA.

Okay.

And Mike, on that, we've been really clear.

This is like, yes, just a simple injection.

We've been really clear on that. This device can be very patient-friendly and incorporates in Amgen's long experience on use of devices. We have a fantastic process development group. We think it's as good as there is worldwide, best protein engineers, best at viscosity, best at excipients, good on patient-friendly devices all the way from the device we use for our EYLEA biosimilar to what we do in Repatha gets delivered to well over 1 million patients. So we understand what needs to be done on that and we'll talk about it at the right time, but we're very confident in terms of how that's going to get delivered.

And the most important part of this device is that the patient will only have to use it once a month or potentially even less frequently. So I think they'll enjoy.

You said pen and simple in these things. So people are -- they're skeptical, but you say you have it. By the way, Lilly just announced a collaboration to do a long-acting, I think, yesterday, so they're trying. But you have that and you're going forward in Phase III with it. So a lot of investors, particularly generalists just seem to believe that if you're giving this dose once a month, it's either a lot of drug or that there's tolerability issues. What are the things that will come out later this year because there's 2-year data, guys, that we're going to get more information on MariTide that's going to say, "Hey, look, see this is more differentiated or what would we get later this year that could be scenarios to help people understand how good this product could be.

Well, I think you're referring to what we call Part 2 or Phase II, where we follow patients out beyond 52 weeks for an additional year. So just a couple of things to keep in mind on that trial. The way that works is anybody who lost at least 15% weight loss or more is rerandomized into a prospective trial. And so the data from that part -- that second part of that trial will be available by the end of the year. And we'll make sure that we characterize the design of that trial because it's a little different than what people are used to. It's not just taking the existing Part 1 and following everybody for another year.

They do get randomized stay on a monthly -- in some cases, one arm comes off, that's cool because you see what goes on.

Yes.

In some cases, they just stay on for monthly, they could have more weight loss.

Yes, because we didn't see a plateau in the first 52 weeks. So we're curious to see. The challenge will be not having continuity of cohorts through that period.

Right because they were rerandomized or something, okay.

But we will see at least what different dosing intervals and/or different doses, including placebo, will do to that weight loss maintenance.

One of the arms is quarterly. Is that a totally plausible, viable scenario?

We'll see. But given the kinetics of MariTide and given that we're maintaining weight loss, it's possible that quarterly is a suitable dose for many patients.

And Mike, I would just add one point that in terms of the Part 1 to Part 2, over 90% of the patients who are given the choice to continue did continue. So in terms of the patient experience, we think that's a good...

Right. Yes. Well, first of all, the discontinuation rate, which is a lot of people that was very small to begin with and then you're saying people continued on.

That's right. It was 8% discontinuation rate in the dose escalation arms due to GI, 11% due to...

I mean, Murdo, that's a commercial question don't like that people say, well, the numbers, they look at the incidence table and they see this and they stack it at tirzepatide. But you guys have tried to emphasize that you think that the onset or the time course of that adverse event, if we have a plot is all like in the first dose, and you don't really see it in the second dose. Is that true? Is that a fair way to characterize it?

Well, it's what we've seen. We see the tolerability of the products in the dose escalation cohorts, all of the -- not all, but the vast majority of the nausea and vomiting was per first dose and on subsequent doses was very, very low. And that's another good reason for the persistency of this product to potentially be better and for the patient experience to be better. But let's level up here. We've got a product that we know we can dose escalate to improve that tolerability even on that first dose because we haven't optimized that yet. We don't think the Phase II is the best we can do.

Right, you started at a lower dose.

We think we can do it even better. So first dose experience, improve it, weight loss up to 20%, maintenance options of every other month, potentially quarterly, but we're already improving at the monthly option. And then we're covering the waterfront with a Phase III program that will bring in ASCVD indications, CKD, chronic sleep apnea and on and on. So -- we're going into this market with a full package of clinical trials, a highly differentiated product and an offering that, quite frankly, by the time we launch, patients will be interested in because taking a weekly injection and in some cases, feeling nauseous on the day of your dose on a weekly injection will be an incentive for patients to look for something.

It's kind of interesting, Murdo, because in many cases, new patients, but there could be a significant amount is swapping. And so they've already been on a GLP-1 and a swap versus a de novo, maybe the side effects are even a little bit less. It's sort of interesting, you should -- are you planning to start a safety or some sort of design study where people are already on a drug and then they come on to this one?

Look, there are a lot of questions to answer with the promise that MariTide offers for patients. And we have a group of thought leaders advising us on ideas like that, and we're taking those ideas seriously.

Mike, maybe if I could jump in for a moment. Dr. Braden or Jay Braden would say, you brought the question up of generalists -- a big slug of drug or this is a...

Once a month.

But he constantly reminds people that this is a monoclonal antibody. This is different. And so with a couple of peptides conjugated to it. And so he would really make the point that the pharmacokinetics of that are much more stable for us, he believes, than these other medicines, which I think these are my words, and he may use them, but are a little bit sawtooth that may go up and down in the pharmacokinetics.

With people who are looking at the doses like MIRCERA as an example for those who familiar with MIRCERA, but also the tirzepatide dosing that is a peptide that is not an antibody with an Fc. So you cannot compare 420 milligrams to a peptide.

And Amgen is monoclonal antibody. I mean that's who we are, right. 80% plus of our approved medicines, 40% approved medicines are monoclonal antibodies. And that's who we are. And I think...

We'll show the data, they get around to it. We got to put up the data. Let's see the data and through this year. So lastly I want to hit on in the last minute is another important blockbuster because it's right around the corner, right? So Lp(a), you guys are a cardiovascular powerhouse. You're selling billions of dollars of Repatha. So Novartis is going to read out a Phase III Lp(a), many people think it could be positive. You have a product that's also in Phase III, you already complete enrollment. You think it could be better? It could be. What do you see out of Lp(a) in the last minute? And we should pay attention to this because Novartis reads out.

Yes. We definitely think we have an opportunity with olpasiran for a best-in-class profile. We've got a very large ongoing secondary prevention clinical trial. We're looking, obviously, very closely at what the competitors might put out between now and when our trial reads out. I'll just say 30-odd years ago, I was sitting in citywide endocrinology rounds in Toronto. And I heard about this independent atherogenic lipoprotein particle called Lp(a). So this is -- it's not new science in understanding the correlation between elevated levels of Lp(a) and elevated incidence of cardiovascular events. And so there's a volume of evidence that shows the correlation. The question is, when you have a drug like olpasiran that lowers Lp(a) by over 95%, can you knock down events? And our hope is that the answer to that is yes because we are still obviously working very hard to aggressively lower LDL. You can't do much about your Lp(a) diet exercise, lifestyle modification, won't bring it down. It's genetically determined. You got to have a drug. And I do think that the adoption behavior will be different because you won't have that, I'll eat better, I'll exercise.

Right, that's independent of diet, is that a factor.

Yes. So I think there'll be more urgency to treat, and we're starting in secondary prevention. If you think about the history of LDL, it usually starts in primary or it starts with just LDL modification. Here, we're starting about hard endpoints. So I think the promise of olpasiran is significant, and it's 100% overlap with what we're already doing with Repatha.

Guys, thank you so much. Look forward to the progress this year and the more data, and we look forward to all of the developments. So thank you guys very much.

Thank you, Mike.