Amgen Inc. ($AMGN)

I'm Tazeen Ahmad. I'm one of the senior biotech analysts here at the bank. It's my pleasure to have our next presenting company, Amgen. Sitting up on stage, our several members from the Amgen team. Thanks in advance for making the trip over from California. We really appreciate it. So we have Peter Griffith, who is Executive Vice President and CFO; we have Jay Bradner, who's Executive President of Research and Development; and then we, of course, have Casey Capparelli, who is Vice President, Investor Relations. Gentlemen, thank you for making the trip again.

Thank you for having us.

Okay. So maybe we could do a quick overview of the company and some important comments that you -- or statements that you need to make before we go into more detail. So I'll turn it over to Peter for that.

Great. Tazeen, thank you. Good morning, everyone. I would just add, coming over to Las Vegas is there's traffic coming over. But in today's world, there's a lot less going back. So we'll take advantage of that. So thank you for having us. We are glad to be here. I've got a few prepared remarks I just want to run through and cover before we go to Q&A. We believe, first of all, there are a lot of ways for us to win. And look forward to the discussion around that, and especially winning for patients. We're pleased with the strong first quarter performance, which reinforces 2026 as a springboard year for Amgen. This is a year in which we expect the rapidly growing products we have to offset the impact of the patent expirations and increased competition. In the first quarter, we did exactly that. Revenue was up 6% year-over-year. Product sales were up 4% year-over-year. Non-GAAP earnings per share was up 5% year-over-year, strong financial discipline exercised by the company. We've got significant breadth and depth across the portfolio. 16 products delivered double-digit or better sales growth in the first quarter year-over-year. 17 products annualizing at $1 billion or more in the first quarter based on first quarter sales. Importantly, our six key growth drivers, Repatha, EVENITY, TEZSPIRE, an then our innovative oncology, rare disease and biosimilar portfolios accounted for nearly 70% of our product sales in the first quarter, and they grew at 24%. An aggregate rate of 24% growth on those six growth driver categories in the first quarter. Repatha, EVENITY, TEZSPIRE, each hold leadership positions in underpenetrated disease areas where there are millions of patients yet to be treated. These medicines all grew at 20% or more in the quarter and are well positioned for continued growth this year and through the decade. Our rare disease portfolio grew 25% year-over-year, and we see significant opportunities ahead as we scale those therapies in this category by reaching additional patients, expanding into new indications and launching into new geographies. UPLIZNA exemplifies this opportunity. It's experiencing continued growth across multiple B cell-mediated autoimmune diseases. Pretty good for CFO, Jay.

Pretty good.

Pretty good. In innovative Oncology, our portfolio grew 2% year-over-year, driven by our bispecific T-cell engager portfolio or BiTE medicines which are expanding what is possible for patients across multiple cancers. We remain particularly encouraged by IMDELLTRA, which is rapidly becoming a standard of care in late line small cell lung cancer. Our biosimilars portfolio remains strong, driven by sales of PAVBLU this year. It's generated sales in excess of $14 billion cumulatively since we launched them in 2018. The portfolio is an important contributor to our growth is well positioned as the next wave of biosimilar candidates advances through Phase III development. Let's turn to the pipeline. Our confidence continues to build in Meritide as a differentiated treatment for obesity type-2 diabetes and obesity-related conditions. We're executing effectively across the enterprise from clinical development to manufacturing as we advance Meritide's broad Phase III program and build and optimize our manufacturing capacity ahead of launch. We expect Meritide to be important for weight loss induction, long-term weight maintenance and for patients switching from weekly GLP-1 therapies to Meritide with the potential for as few as four or six injections per year. Our approach reflects how obesity care may evolve. Patients need effective initial weight loss and practical durable maintenance options. Beyond Meritide, we see strong potential across a number of other programs in late-stage development, including Oplisiran, our Lp(a) lowering medicine in Phase III development, Dazodalibep in Phase III for Sjögren’s disease and Zaludirimig, which is in Phase III for late-stage prostate cancer. On the tax front, there are two related matters with the same core issue. Value attribution. The IRS is arguing that our Puerto Rico operation should be treated as if they were essentially a limited value contract manufacturer. We strongly disagree with that position. We've got 2,500-plus colleagues who are United States citizens there, the majority with technical degrees. It's a very complex operation. There are two tax periods in question. 2010 through 2015 and 2016 through 2018. The 2010 through 2015 tax court matter is not new. There have been no changes in our position on the status of that case. It's been fully tried and litigated. We remain highly confident in the case we presented at trial, and we continue to expect a decision no earlier than the second half of 2026. As expected in the ordinary course of the IRS audit process, we received a draft notice of proposed adjustment, what I call a NOPA in April for similar transfer pricing issues for the 2016 to 2018 period. It's just an early step in what we would expect to be a multiyear process. It's not a final determination. And importantly, our comment to Puerto Rico continues to grow. Since our first quarter call, we announced an additional $300 million in investment building on the previously announced $650 million in our Puerto Rico facility, Puerto Rico is a core part of Amgen's United States manufacturing network with advanced manufacturing capabilities for biologics, deep expertise all the way around. We strongly disagree with any characterization of these operations as limited value contract manufacturing, and we continue to believe the IRS claims are without merit and our reserves are appropriate. So now let me close. We're executing against the plan we laid out for 2026. The first quarter demonstrated the strength and breadth of the business, the growth drivers are performing. The pipeline is advancing, and we're maintaining financial discipline while investing for the long term. We believe there are a lot of ways to win for patients at Amgen and for shareholders and staff. Over to you, Tazeen, for Q&A.

Okay. Perfect. Peter. I think you just discussed everything that I wanted to say.

We're so glad about that.

No, there's plenty to talk about. You're a big company with many exciting things going on. So one of the things that I wanted to spend a couple of minutes on was Repatha, which has been outperforming now, and it looks like the pace of outperformance is increasing. So I wanted to get your thoughts about where the demand is coming from? And why do you think like the interest in this particular asset at this time has increased with physicians and patients.

Well, I think -- first of all, I'll invite Casey and Jay to jump in. Repatha is, first of all, it's such an important medicine and what we hope is a developing cardiometabolic armamentarium for patients that Amgen is working on when we look at the rest of the pipeline. But Repatha itself increased 34% year-over-year to over $900 million in the first quarter, about $900 million. Strong volume growth, increasing urgency to treat patients across both secondary prevention and high-risk primary prevention. Strong prescribing momentum, new brand -- new to brand prescriptions. This is the one that I wanted to make sure I shared with you, Tazeen, increasing roughly 45% year-over-year in the first quarter. Supported by both cardiology in the primary care setting. So VESALIUS-CV, the recent guideline updates, they're simply reinforcing earlier identification and treatment of high-risk patients. particularly in primary prevention, where the majority of patients are treated. Access and affordability, they are no longer gating factors. Repatha is on virtually every major U.S. formulary. Most patients are paying less than $50 a month. Amgen now provides another avenue for patients to access Repatha and then the underpenetrated thesis is so important, approximately 100 million patients globally still not -- still not at an LDL-C goal and PCSK9 inhibitors are still way underpenetrated. So we see a long runway for growth. We expect Repatha to continue to grow through the end of the decade, as I mentioned, and we put it as our number one growth driver for the company.

Where do you think peak sales could be just based on the pace that it's at?

We don't give peak sales, but I would just refer you to that underpenetrated population. When we think about 100 million patients out there, and there'll be heterogeneous treatments. I know there's potential oral treatments and so forth. But we're so confident in Repatha. We're confident in the data. The data is so strong for Repatha and so compelling. And so we're going to continue to work as hard as we possibly can to help all those patients in those underpenetrated areas get their LDL-C down to the recommended levels.

And is your sales force rightsized for the expectations that you have for growth over the next several years? Or do you think that you could make tweaks to that?

Our commercial group, they -- is my colleague who plays hockey says. Our commercial group skate to where the puck is going to be. Because the head of commercial, Murdo, also a massive hockey fan too. So we love that saying from Wayne Gretzky. And so they're skating to where the puck is. They're always dynamically reallocating our resources to make sure they meet the needs of the prescribers and the patients to make sure we deliver that medicine around the world at the right time to the right patients.

The group has overcome so many barriers. And I think that it's an incredible and special group of people that care a lot about market access, which is so vital to a medicine and secondary now primary prevention to really reach patients around the world. There are very few barriers now to receiving Repatha. I still sit with cardiologists, they don't understand that. It has been 8 years since we had guidelines. Now we have solid guidelines. They may not go far enough, but they're solid and improving and call out PCSK9 monoclonal antibodies by name. There's a radical decrease in the number of step-through requirements virtually no prior authorizations to reach the majority of patients. And now with Amgen now, patients can access Repatha quite independently and with a very favorable access price. And so this group has done an incredible amount of work in the journey of Repatha to be prepared for this moment where with primary prevention data and the string of manuscripts that will come from that VESALIUS-CV study awareness and the demand for Repatha is rising.

Okay. Maybe one more question on commercial and then we'll go to pipeline. You guys have had a good early launch to UPLIZNA and gMG. You entered a crowded space, one that's expected to become more crowded. So maybe for Jay, as you think about FcRns, as you think about the potential of Regeneron to launch its C5 into the space late this year into early next and other mechanisms that are earlier stage, -- what's giving you the confidence that the UPLIZNA approach is the right one for gMG? And you've talked now many times on calls about how you expect this could become the first-line drug of choice among patients over time.

I would say that the short answer is efficacy, which is very, very strong, and though it's hard to do cross-trial comparisons, the efficacy is better. Second is durability that we observed engendered response rates really improving through the course of the first calendar year therapy. I'd say third is convenience. Patients don't want to experienced their disease, they also don't want to be reminded of their disease treating themselves. This medicine is given every 6 months after the loading dose, which is quite remarkable. And then fourth is it targets the actual causal biology. Myasthenia gravis is fundamentally driven by autoreactive antibodies produced by a group of cells, B-cells and pre B-cells. And UPLIZNA targeting CD19 works to deplete exactly those cells, a broader group of cells than, say, a CD20 monoclonal antibody that has a limited utility here. And so I think that these four really important features. I mean, any one of them could be strong enough to compel a physician to prescribe. But all four of these, including the fact that to date, the medicine has been rather well tolerated. That's big for these patients. And so I think we're not surprised, but we're delighted to see the increased uptake and interest in utility of UPLIZNA. And after neuromyelitis optica spectrum disorder after IgG4-related disease, after generalized myasthenia gravis, the pattern that we're observing is that diseases driven by autoreactive antibodies should respond to UPLIZNA. And if you look at that list in chatGPT or your favorite medical textbook like Harrison's, that's a long list of diseases that we're prioritizing and sequentially, just line them up and knock them down. And the next two for UPLIZNA will be autoimmune hepatitis in CIDP.

Okay. So let's stick to gMG for 1 more minute. Where are you seeing the early patient pickups coming from? Are they switch patients? And what are they switching from? And what percent of the usage right now is in treatment-naive.

Thanks. I'll leave it to Casey to discuss the specifics, but we are seeing uptake in both biologically experienced and biologically naive patients.

Yes. And it's roughly a 50-50 split between those two groups at this point. Tazeen, it's a little bit early to be characterizing exactly what therapies individuals are switching to. But as you can imagine, with other therapies that are on a more treated on a more frequent basis, every time they're in the physician's office, there's an opportunity to switch to UPLIZNA as well. And patients are looking for exactly the attributes that Jay described.

Okay. And then on the one that you're pursuing, one of the two that you're pursuing next CIDP, one that's been dominated by FcRn. You also have IVIG as an indicated usage drug. How are you thinking about the dynamics of that market versus what you're seeing so far with gMG?

I'd say more similar than different. I mean the medicine has to work there, but it targets, again, the underlying biology. It meets the patient where they're at with a convenient dosing schema. I should hope that if active, the durability would be another strong feature given the pharmacodynamic suppression of CD19 positive B cells is so durable with this afucosylated monoclonal antibody. So I would say provided strong efficacy, which is really the anchor of why this medicine is so desirable in myasthenia gravis, generalized myasthenia gravis. I think in CIDP, it stands to be very much the same story.

When should we expect to see data on that?

We haven't as yet indicated when that study will read out..

Yes, we'll be starting those two Phase III studies later this year.

Okay. And are those the extent of indications that you want to pursue for UPLIZNA? Or are there others behind it?

No, there are additional indications for UPLIZNA. And I would also share that because we've been in CD19 for so long, and you must know we have an FDA-approved and broadly utilized standard of care frontline acute lymphoblastic leukemia, CD19 called blinatumomab, BLINCYTO for its leukemia use case and intravenous continuous infusion that in our fridges and in our labs, we have a number of molecules targeting this target and this pathway and have built a whole program around B-cell depletion, leveraging CD19. Some of those diseases will track very nicely to an UPLIZNA use case and others will use a pipeline agent. But I would expect to see proof of concept, if not additional data in lupus with and without nephritis and other disease states.

Okay. All right. So now let's move on to some of your pipeline assets. Let's start with Meritide. So there seems to be a bifurcated reaction to this drug. It's either this is great. It's going to be a market share leader in the obesity space or there's not enough data right now for us to kind of know where it's going to land. What is the real differentiation? You've got a mechanism GLP, but it's going to be dosed less frequently. How is that going to compare to a multitude of other companies that might hope to launch around the same time as you guys would. So maybe help the market better understand this drug. Mechanistically, why do you think it could have some advantages over just being another GLP on the market?

Thank you. Well, I would start by saying that Meritide is a very special molecule, and it's not that complicated. It's a GLP antagonist antibody with GLP-1 agonist peptides that has dramatic efficacy on weight loss is extremely well tolerated at target doses that benefits from dose escalation just like all the other ones and it's given less frequently. So I don't think we should overcomplicate it. It's very simple. If GLP-1 peptides were twice a day, they'd be less exciting than every week. And if a mechanism that if a medicine that exploits this mechanism can be given monthly or as Peter shared, maybe every 8 weeks, where we've already shown and presented data demonstrating real efficacy, maybe every 12 weeks, as we've indicated, we've some maintenance data that gives us conviction there, and we continue to study every 8 and every 12 weeks in prospective and now Phase III trials. I wouldn't overcomplicate it. It's a very active increasing based weight loss medicine that is just given less frequently. And that's very special. The antibody core affords an opportunity for patients not to inject themselves every single week. And as we continue to see in real-world evidence, weekly injectables are challenging for patients to stay on. And if half of patients are stopping the use of these medicines at 6 months or 12 months, are the patients getting what they need, the protection for these serious diseases are the payers getting what they deserve for providing access to these medicines. And so the features of Meritide could improve patient persistence and for chronic diseases, that really, really matters. But I wouldn't overcomplicate it, an incretin-based medicine that is given less frequently.

As said by CFO.

Simple as it gets.

Tazeen, think 52, 12, 6, 4, which one of those do you want if you're getting poked?

Yes, it's a fair point. When I got my flu shot, I didn't ask if it could be weekly. And so let's see how the data appears when we read out these Phase III studies, but we are very confident in the profile of this medicine, the design of these trials. Their execution has gone very, very well. And I wouldn't overcomplicate it.

Okay. Now what about the tolerability profile? I think there's been some questions about it. You're looking at various titrations [ cavada ] anything you could share on that front?

Yes. I'd break tolerability into two conversations. One is tolerability at target dose. It's extremely well tolerated at target dose. You could be on 350 milligrams of this, you could get it every single month. And as we've shown with the Manhattan plots from Phase II, the drug is just innocuous, just very well tolerated by patients. And the reason for this is it's an antibody core. So you're just kind of marinating in it. It's just smooth exposure. When you do a pill or a weekly injectable, there's a spike, a medicine is absorbed and then it's metabolized, absorbed and then it's metabolized. And the part of the brain that experiences nausea and vomiting is called the area postrema and the hypothalamus and it responds to these jolts. And so if we see, let's say, the data from oral GLP-1s as presented to date and you look at their Manhattan plots, which is how symptoms are tracked over time, there's just a scattering persistence of nausea and vomiting. I think some data was even disclosed today about switching from injectables to orals. And there was real associated almost 19% nausea, significant vomiting moving to more frequent dosing. Meritide a target dose is just smooth exposure and a smooth experience. upfront treatment. Here, Meritide is more similar than different to other injectables, that to get a GLP-1 medicine on board you need to start low and go slow with dose titration. And we've learned, as every other company has prosecuting this mechanism, that no dose escalation is worse at 1 step, that 2-step is better than 1 step -- and as we shared on our earnings call that 3-step is unsurprisingly better than 2 steps ploy 3-step dose escalation in our Phase III studies and have real confidence that the upfront experience with Meritide will be competitive and on treatment experience will be extraordinary.

Okay. And let's talk about the opportunity for it to be used in the maintenance setting.

Yes. None of these diseases go away after 52 or 72 weeks, which is how we're studying these medicines in clinical investigation. And in this room in rooms like it, those numbers matter, and we're going to deliver great numbers. But in clinical practice, these physicians are seeing patients, and these patients are experiencing these diseases for a whole lifetime. And so how patients can remain on therapy and derive durable benefit for their whole lifetime because we're not curing obesity with these medicines. But we are effectively treating it. We are effectively treating associated diabetes and many other related conditions. We and others have become very interested for what happens after the primary endpoint. And through long-term extensions and now dedicated Phase III clinical investigation, we intend to characterize the benefits of Meritide when used for an additional year after a year of treatment or beyond. And there, we believe that one might even require less Meritide than the acute and treatment phase because the long-lasting antibody has long-lasting effects. And so we've seen data in Phase II clinical investigation in our Part 2 extension that every 8-week and even every 12-week dosing can maintain lost weight. And the field of obesity is not surprised by this because they've talked about this metabolic set point for a long, long time, and these medicines are reducing that set point and then keeping the weight off. We now want to follow up on this strong signal in two ways. One is could maintenance Meritide be less frequent than treatment Meritide. And second, if we can switch from Meritide to a less frequent Meritide, could we get people off weekly injectables to a much more convenient maintenance Meritide? And so we announced in our earnings call that we are initiating clinical investigation on a maintenance as well as on a switching to Meritide experience that will feature less frequent dosing. This is very important to translate efficacy which is what you see on a clinical trial to effectiveness, how well medicines can work in the real world.

Okay. How long do you expect this maintenance study that you announced to last?

Well, we have, I think, reported on clinicaltrials.gov, the length of the maintenance studies, and they'll be about a calendar year.

Okay. And in terms of pace of enrollment, do you think that this is going to be quickly enrolled?

The long-term extensions are invitations to patients who've been on the Phase III clinical trial to continue. And there, we expect real followership, really strong participation because when we did our Phase II clinical study and we offered patients to complete on to a maintenance, I think we had more than 90% conversion. Is that right, Casey?

That's correct.

Yes, more than 90% participation. So you get an e-mail or your doctor or clinician asks you, could you be interested to keep taking this medicine for a year and more than 90% signed up for that, which is people voting with their feet and their thumbs. So we're expecting very strong participation. And in fact, all of our clinical studies of Meritide have enrolled ahead of expectations. These are a strong set of clinical trials.

Okay. So we'll stay tuned on updates from these studies as we go forward. Let's maybe take a minute to talk about a couple of other pipeline assets and indications. I wanted to maybe spend a little bit of time on Lp(a) because you've got a competitor that's going to have data coming, I think, later this year, for which nearly everyone expects there to be a read-through for Amgen. So rather than me talking to investors about what the right read-through should be, I thought I would ask you, Jay, what is the right read-through to be thinking about when we see the Novartis data released for Lp(a) later this year?

No, I know that medicine well, and I'm following that research very closely as our -- as is this community. I would say that the read-through from the Novartis readout midyear will be sort of directional, but not absolute as to what to expect from our OCEAN(a) study that is forecast to read out later. It's a event-driven study. And the reason for that is that, number one, we're both testing a really strong hypothesis with very effective medicines. Lp(a), a genetically defined risk factor for atherosclerotic cardiovascular disease. Each Lp(a) particle is 6x more atherogenic pound for pound, than an LDL-C particle. And look at all that we know about LDL-C and its reduction in its management. experiments of nature have shown that a gradient that as Lp(a) ramps up in our blood streams, a risk for heart disease ramps up in parallel. And so both of these companies are testing the same hypothesis. I like our chances. Our medicine is quite a bit more potent than the Novartis medicine. If that medicine, pelacarsen reduces Lp(a) 70% to 75%, our medicine olpasiran flatlines Lp(a) more than 95% could matter. Second is our study has a slightly different endpoint. Novartis uses a 4-point MACE endpoint, major adverse cardiovascular events. We're using a 3-point endpoint. We didn't see from an epidemiologic standpoint, quite as much weight around stroke. And so we've thought to consolidate all of our alpha around the endpoints that we think will really move the needle for patients. And in that regard, Novartis is a good company with a good molecule, asking a good question. And so we're very interested to see the outcome, but the guidance, we think, would be -- for us would be directional.

Okay. And when the data does come out, does that allow you to make any changes if you need to? Would you think you would want to?

I think a late-stage protocol amendment would not be our preferred path forward. We are very confident in the design of this trial.

It's an event-driven study. So I think some folks had expected maybe it could come out later this year, but now you think expectations are sometime into next year. When would you have a better sense of guiding towards a data readout?

We -- there's a monitoring committee that's tracking these events. We're performing this study in collaboration with the leading global cardiovascular group. We and they have executed through the development of Repatha cardiovascular outcome trials in a very expert way. We are forecasting the event rate is not going to read out this year, and we'll have more to say about the readout as the aperture narrows on the target date, which is a certain number of events.

Okay. And maybe last question really quickly. How big do you think this opportunity is?

One in five humans is born with an elevated Lp(a). And we are studying secondary prevention first. But should that be positive, as for LDL-C, I would have a hard time explaining scientifically why that mechanism wouldn't work in primary prevention, which is a much bigger number of people. So it's a big opportunity.

Would you put it on the same level as LDL like statins and those types of drugs are bigger?

It feels like that. It feels like that. But Casey, what would you say?

I'd say it will be dependent upon the Phase III data.

Of course. And I guess if you needed to build a sales force for that, what kind of investment would you need?

I would say, and it's a good point. If you think about Repatha and what Peter described in terms of our cardiometabolic foundation that we built, very strong cardiology presence, very strong primary care presence. You can layer in olpasiran on top of that. And then also think about Meritide and the various metabolic diseases that we're studying with Meritide, but also fit right in. So we feel like we have the potential to have a very strong cardiometabolic presence in general, especially if you -- if we're successful with Meritide and with olpasiran on top of what we built with Repatha.

You actually bring up a good point. What type of overlap would there be in physicians prescribing Repatha and those who might prescribe it for Lp(a)?

It would be a high degree of overlap. Lipid management clinics are now measuring Lp(a) and the current guidelines from the AHA, one thing they got just absolutely right was recommending that patients know their Lp(a) number as all of us in this room should because even without effective medicines that we hope to have in the near term, knowing you have an elevated genetically defined risk that you can't eat better and it goes away, stop smoking it goes and go away, even Repatha doesn't make it go away, you approach your life a little bit differently perhaps. Maybe you do an extra 15 minutes on the treadmill every morning. And so I think knowing about Lp(a) is very important. And in that way, the community is activated. Lp(a) measurement is in the guidelines, and that leads to the question, okay, so what can we do about it?

Okay. With that, we're out of time. Thanks, gentlemen, for joining me today. Thanks, everyone, for listening..

Thank you, Tazeen, and thank you, BofA.