Amgen Q3 2022 Earnings Call Transcript

Quartr
Provided by Quartr
November 3, 2022

There are 16 speakers on the call.

Operator

Name is Jason, and I will be your conference facilitator today for Amgen's Third Quarter 2022 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. There will be a question and answer session at the conclusion of the last speaker's prepared remarks. I would now like to introduce Arvind Sood, Vice President of Investor Relations. Mr.

Operator

Sood, you may now begin.

Speaker 1

Okay. Thank you, Jaeson. Good afternoon, everybody, and welcome to our Q3 call. So we continued with our execution during the quarter with a focus on driving volume growth for our key products and advancing our innovative pipeline. Leading the discussion Today will be our Chairman and CEO, Bob Radway.

Speaker 1

We have posted some slides for your reference and my customary reminder that we'll be making some forward looking statements and use non GAAP financial measures to describe our performance. So with that, I would like to turn the call over to Bob.

Speaker 2

Okay. Thank you all of you for joining our call. In the face of both macroeconomic and industry specific challenges, Amgen remains laser focused on delivering for patients and shareholders. Benefit of that focus was evident in the 3rd quarter with volumes up a healthy 8% and 16% outside the United States. These results reflect the strong underlying demand for our medicines and the value they bring to patients even in challenging economic times like those prevailing at the moment.

Speaker 2

Revenues for the quarter were down 1%, reflecting a 5% Net price decline consistent with what we communicated earlier in the year and a 2% impact from foreign exchange. All told, 11 of our products generated record sales in the quarter and non GAAP earnings per share increased 15% with free cash flows reaching $2,800,000,000 for the quarter. Looking forward, we remain focused on several growth drivers. With the recent closing of the ChemoCentryx acquisition, we're excited to have Tavneos in our portfolio. Tavneos is the first new treatment for ANCA associated vasculitis in more than 10 years and we're confident that we can leverage our decades of experience in inflammation and nephrology to bring this innovative medicine to many more patients moving forward.

Speaker 2

2 recently launched products, TESSPIRE and LumaCrest We're off to solid starts. TESPYRE is performing well in asthma and we have studies underway for several other indications for that product as well. Lumacraft is performing well globally with patients, Payers and prescribers recognizing the importance of this innovation. With combination studies underway, we're exploring The many different ways this product may benefit patients through time. We have a number of key products led by Repatha, Otezla, Prolia and EVENITY that we know can benefit millions more patients globally than they do today.

Speaker 2

And let's not lose sight of the fact that these four products collectively generated $2,000,000,000 in 3rd quarter sales with volume growth of 17%. We've built an industry leading biosimilars business, Having now launched 5 products in markets around the world and we're months away from being the 1st company to launch a biosimilar to Humira in the U. S. AmgenVita is already the most prescribed Humira biosimilar in Europe, giving us confidence as we prepare to enter the U. S.

Speaker 2

Market. Looking forward, our next wave of biosimilars to Stelara, Soliris and EYLEA are well positioned with our having now successfully completed Phase III trials for all three of these molecules. We have many potential new medicines advancing through our innovative pipeline, including opaziram, tarlatanab, rukatinlimab, femratuzumab and AMG133. These 5 molecules and several others that you'll hear about shortly from Dave Reese, our Vintage Amgen, which is 1st in class medicines that make a big difference for patients suffering from serious diseases for which there remains a real need for new and better treatments. Finally, we have a highly engaged and committed workforce And I want to thank them as always for their great work.

Speaker 2

With that, let me turn over to our CFO, Peter Griffith.

Speaker 3

Thank you, Bob. We're pleased with our execution this quarter and we are on track to deliver against our long term objectives, most importantly serving patients. Our recently closed acquisition of ChemoCentryx adds the newly launched innovative product to our portfolio, TAVNEOS, a 1st in class and best in class approved treatment for patients with ANCA associated vasculitis. Let's walk through our Q3 financial results before discussing our 2020 guidance. The financial results are shown on slide 6 of the slide deck.

Speaker 3

In Q3, we recognized total revenue of 6,700,000,000 This represents a modest decline of 1% year over year. Excluding the impact of foreign currency, Total revenue and product sales grew 2% and 1% respectively. Earnings per share of $4.70 grew 15% versus our recast Q3 2021. Recall those results included $400,000,000 recorded in R and D expense related to our upfront payment to license rights to AMG 451, roketinlumab from Kiowa Kirin Corporation, KKC. Non GAAP EPS grew 1% excluding the $400,000,000 expense for the KKC license.

Speaker 3

Myrtle will review product sales with you, but I would highlight that our established product portfolio generated almost $900,000,000 in product sales and continues to deliver strong cash flows to fund both internal and external innovation. Other revenues $415,000,000 increased 8% year over year. Non GAAP operating expenses decreased 8% year over year, primarily driven by the $400,000,000 payment to KKC in Q3 2021. Excluding the impact of the $400,000,000 upfront payment, 3rd quarter total non GAAP operating expenses increased 4% year over year, reflecting investments to advance our research capabilities and pipeline, while also supporting product launches and we delivered a 52.5 percent operating margin as a percentage of product sales. On a non GAAP basis, cost of sales as a percent of product sales increased 0.3 percentage points on a year over year basis to 16.1%, primarily due to changes in product mix, partially offset by lower manufacturing costs and lower costs associated with fewer COVID-nineteen antibody shipments.

Speaker 3

Excluding the $400,000,000 upfront payment, non GAAP R and D spend in the 3rd quarter increased 10% year over year, primarily due to higher late stage program support and research and early pipeline spend, partially offset by lower marketed product support. Non GAAP SG and A expenses increased 1% year over year. We continue to focus on prioritizing key investments and activities, while driving productivity, automation and digitalization. Non GAAP OI and E was about $370,000,000 in In the Q3, this was driven by increased net interest expense and our share of BeiGene results because of our use of the equity method of accounting. Our OI and E was lower than anticipated due to gains from liability management that we do not expect to the same extent in future quarters.

Speaker 3

We have a strong balance sheet, generate significant cash flow and retain significant financial flexibility to execute strategic business development opportunities and execute on our multiple capital allocation priorities. In the Q3, we executed on the following. First, our recent acquisition of ChemoCentryx is a clear example of investing in the best innovation, in this case external for patients. 2nd, investing in our business through capital expenditures, including advancing construction on our new environmentally friendly facilities in Ohio and North Carolina. 3rd, returning capital to shareholders through growing dividends, including $1.94 per share in the quarter, representing a 10% increase from Q3 2021.

Speaker 3

And 4th, opportunistic share repurchases, the final settlement of the accelerated share repurchase ASR program occurred in the Q3 and we have repurchased about $6,300,000,000 of shares year to date. Turning to the outlook for the business for 2022. We're pleased with our execution through the Q3. For the full year, we now expect to absorb About $560,000,000 in FX headwinds against product sales based on recent FX rates, of which we absorbed nearly $400,000,000 through the Q3. And this is net of our hedging activities, Reflecting our strong execution through the Q3 and despite challenging foreign exchange dynamics, we're updating our 2022 revenue guidance range to $26,000,000,000 to $26,300,000,000 We are updating our non GAAP EPS range to $17.25 to 17.85 dollars This range encompasses both FX headwinds of approximately 3% or $0.45 for the full year based on recent FX rates and costs associated with our acquisition of ChemoCentryx incurred between closing and year end.

Speaker 3

I'll share a few additional points to consider for the remainder of 2022 with a particular focus on how these trends are likely to impact Q4. We expect FX headwinds to reduce product sales in Q4 by about $165,000,000 The U. S. Government has agreed to purchase $290,000,000 of Endplate. We will recognize about $200,000,000 of those sales in Q4 with the remainder in 2023.

Speaker 3

We have completed the previously discussed divestiture of Gensinta, our Generics business in Turkey and will no longer recognize product sales and operating expenses from that business effective November 2, 2022. Sales of that business annualized at approximately $90,000,000 We now expect full year other revenue for 2022 between $1,500,000,000 to $1,600,000,000 versus our prior guidance of $1,400,000,000 to 1,600,000,000 When comparing against our recast 2021 results, we continue to expect full year non GAAP operating expenses to reflect a low double digit decrease year over year. We continue to expect 2022 non GAAP operating margin as a percentage of product sales to be roughly 50%. We continue to expect non GAAP cost Sales in the range of 15.5 percent to 16.5 percent as a percentage of product sales. We now expect non GAAP R and D expenses in 2022 to decrease 5% to 8% year over year compared to our recast 2021 non GAAP R and D expenses, which include the $400,000,000 upfront payment we discussed above.

Speaker 3

We expect non GAAP SG and A spend to be roughly flat year over year as a percentage of product sales. We expect OI and E to be in the range of $1,600,000,000 to $1,700,000,000 with 4th quarter results closer to the 1st and second quarter results. For the full year, we now anticipate a non GAAP tax rate range of 13.5% to 14.5%, down from our prior guidance of 14.0% to 15.0%. As you consider your modeling for 2023, recall that tax law changes enacted by Puerto Rico in June of 2022 that replaced the Puerto Rico excise tax, the PRET, in favor of an income tax will increase our 2023 income tax expense, while reducing by roughly an equivalent amount our cost of goods sold. Note however, there will be a one time residual negative impact in 2023 related to the amount of the press currently capitalized in inventory that will be charged to cost of goods sold without a corresponding tax benefit.

Speaker 3

This charge is slightly larger than the benefit previously recognized with the implementation of the PRIT in 2011, which was discussed in our 2011 Form 10 ks. Summing up, since the business review in February, Much has changed at the macro level with the strengthening of the U. S. Dollar, persistently high inflation, higher interest rates and the passing of the Inflation Reduction Act. Despite these headwinds, we have executed well in 2022.

Speaker 3

As we plan for 2023, we anticipate that these headwinds will continue. We're adapting our operating plans and expect to successfully execute against them. Like previous years, we expect to provide 2023 guidance on our Q4 earnings call in January. Our confidence in the long term growth of Amgen remains strong. I thank our millions of patients for their courage and my 25,000 colleagues for their mission driven work on behalf of those patients every day.

Speaker 3

This concludes the financial update. I'll turn it over to Murdo.

Speaker 4

Thanks, Peter. We saw strong volume growth in the 3rd quarter with an 8 We delivered record quarterly sales for 11 products including EVENITY, TESPYRE, Amgevita, Bechtabix, Kyprolis, nplate and BLINCYTO and double digit volume growth for several additional products including Repatha and Lumicras. Excluding the impact of foreign exchange, 3rd quarter global product sales grew 1% as our volume increases were offset by a 5% I'll start now with our general medicine business, which includes Prolia, Evenity, Repatha and Aimovig. Overall revenue for this portfolio grew 14% year over year, driven by 20% volume growth. In bone health, Prolia sales grew 7% year over year, driven by 8% volume growth.

Speaker 4

EVENITY, which complements Prolia in our bone portfolio had record sales of $201,000,000 for the quarter, driven by 45% volume growth in the U. S. And 30% volume growth outside of the U. S. Repatha sales increased 14% year over year driven by 52% volume growth, which was partially offset by lower net selling price.

Speaker 4

In the U. S, we generated 32% volume growth aided by broad adoption of Repatha by cardiologists and increasing adoption by primary care providers. We also saw declining net selling prices in the U. S. As we offered higher rebates to support broad Medicare Part D and commercial patient access.

Speaker 4

Looking ahead to 2023, we expect less year over year U. S. Price erosion than we saw in 2022. Outside the U. S, sales of Repatha grew 26% driven by 73% volume growth.

Speaker 4

Net price Clients outside the U. S. Were primarily a result of Repatha's inclusion on China's national reimbursement drug list as of January 1, 2022. Overall, we remain focused on addressing leading cause of morbidity and mortality by bringing Repatha to patients in need all around the world. Moving to our inflammation portfolio, Otezla sales increased 3% year over year for the quarter.

Speaker 4

Otezla saw 9% volume growth, partially offset by lower inventory and unfavorable foreign exchange impact. In the U. S, Otezla remains the leader in bio naive psoriasis patient share, And we see broader adoption of OTEZLA among patients with mild to moderate psoriasis. Looking forward, we expect continued strong volume growth Given OTEZLA's established safety profile, strong payer coverage and unique position as the only systemic oral that can treat a broad spectrum of patients with psoriasis regardless of the severity of their disease. Enbrel sales decreased 14% year over year for 3rd quarter driven by lower net selling price, unfavorable changes to estimated sales deductions and a 3% decline in volume.

Speaker 4

Enbrel remains an important product for patients due to its long track record of efficacy and safety. I'm very pleased with our strong U. S. Launch of TESTBIR, which generated $55,000,000 of sales in the 3rd quarter. Allergists and pulmonologists have prescribed TESBIR across a broad range of patients with severe uncontrolled asthma.

Speaker 4

We're also seeing initiation in both Biologic naive and previously treated patients. Physicians acknowledge test fire's unique differentiated profile and its broad potential to treat the 2,500,000 patients worldwide with severe asthma who are uncontrolled without requiring any phenotypic and biomarker testing. We recently completed our acquisition of ChemoCentryx, which adds TABNEOS to our portfolio. TABNEOS recently launched as a 1st in class treatment for ANCA associated vasculitis or AAB. This is a serious systemic autoimmune disease that leads to inflammation and eventual destruction of small blood vessels.

Speaker 4

This inflammatory disease can lead to permanent organ damage and in some severe cases can be life threatening. TABNEOS represents a significant advance in treatment for the 8000 to 10000 U. S. Patients a year who develop severe active disease or experience major relapses of AAV. AAV is often managed by rheumatologists and nephrologists, where Amgen has a strong market presence and We look forward to applying our deep expertise and inflammation experience to help many more patients manage AAV with TABNEOS.

Speaker 4

Moving to our hematology and oncology business, our 6 innovative products grew 8% year over year with 10% volume growth. For vectabixin and Enplate, strong volume growth in the quarter benefited from timing of shipments to our partners in Japan. Our launch of lumacraz is progressing well with revenues of $75,000,000 in the 3rd quarter. Quarter over quarter Sales declined 3% driven by lower net selling price due to a $12,000,000 unfavorable price adjustment resulting from our reimbursement approval in Germany. This was partially offset by 15% volume growth.

Speaker 4

In the U. S, lumikraz has been prescribed to over 3,700 patients by over 2,200 Clinicians in both academic and community settings. Outside the U. S, lumikraz has now been approved in over 45 countries. We've launched in 30 markets and are rapidly pursuing reimbursement in the remaining markets.

Speaker 4

As we've noted before, Near term, the market for lumikraz is focused on the 7,000 U. S. And 20,000 ex U. S. Patients in the second line setting.

Speaker 4

Longer term, we expect lumikrast growth to come from earlier line therapy and the potential of lumikrast to treat other tumor types. Sales of our oncology biosimilars declined 25% year over year. While our biosimilars for Ambasi and KANJINTI both hold leading shares, We expect continued net selling price deterioration and accelerating volume declines driven by increased competition. The most recently published average selling price for IMVASI in the U. S.

Speaker 4

Declined 37% year over year and for KANJINTI declined 30 8% year over year. Over time, we expect long term growth in our biosimilars business to be driven by the addition of new molecules and additional launches. We're preparing ourselves for the upcoming launch of AMGEVITA, our HUMIRA biosimilar in the U. S. In early 2023, followed by the next wave of biosimilar launches to Stelara, EYLEA and Solaris.

Speaker 4

Overall, I'm very pleased with our execution in the quarter. Our international presence and diverse portfolio of products position us well to deliver on the execution of our long term growth strategy. And with that, I'll turn it over to Dave.

Speaker 5

Thanks, Murdo, and good afternoon, everyone. I'd like to start by welcoming our new colleagues from ChemoCentryx. We're excited that you're now part of Amgen. For research and development, the Q3 was one of continued execution where we presented new data on several programs and continue to progress our innovative clinical pipeline. Beginning with general medicine, this coming weekend at the American Heart Association meeting, we plan to present data from a Phase 2 study of opaciran, a lipoprotein targeting small interfering RNA molecule in subjects with elevated Lp.

Speaker 5

We also plan to present additional data from the Repatha foriA and Repatha open label extension studies highlighting the association between the significant and sustained achievement of low and very low LDL cholesterol levels and lower rates of major cardiovascular events. Data from the single and multiple dose cohorts of a Phase 1 study of AMG133, a multispecific that inhibits the Inhibitory Polypeptide Receptor or GIPR and activates the GLP-one receptor will be presented at the 20th World Congress on Insulin Resistance, diabetes and cardiovascular disease hybrid conference in December. As a reminder, the unique aspect of AMG 133 is the inhibition of the Gipper, an innovative approach that we chose to take based on human genetic data that suggests decreased expression of GIPR leads to lower body mass index and lower weight. We look forward to discussing the Repatha And opaciran data along with an update on AMG133 at our investor call scheduled for Monday, November 7. Turning to inflammation.

Speaker 5

In September, we presented data from the Phase 3 SPROUT trial where Otezla treatment resulted in significant improvement and measures of moderate to severe plaque psoriasis at week 16 compared to placebo in children's ages 6 to 17. We also presented data from the OTEZLA Phase 3 DISCRETE trial, where 16 week data demonstrated statistically significant improvements in genital psoriasis, including skin, itch and quality of life in patients with moderate to severe disease. Based on these results, Discussion with the FDA is ongoing for Discrete to add clinical data to the U. S. Prescribing information and discussions with regulatory authorities globally for Sprout are forthcoming.

Speaker 5

In September, TESBIR was approved in the European Union and in Japan and regulatory reviews continue in other jurisdictions. In oncology, we presented data from tarlatanab, a DLL3 targeting BiTE molecule being studying in patients with small cell lung cancer. These data demonstrated encouraging antitumor activity with notable response durability and survival. In this setting, tarlatanab delivered a confirmed overall response rate of 23%, a median duration of response of 13 months and a median overall survival of 13.2 months. We continue to enroll patients in a potentially registrational Phase 2 study in this setting.

Speaker 5

We're also investigating tarlatanab in combination with standard of care in first line small cell lung cancer in combination with AMG four zero four, a PD-one inhibitor in patients with second line or later small cell lung cancer and in neuroendocrine prostate cancer. In August, we presented data from our lumacraft In September, we presented data on lumacraft in combination with vectabix, where this combination demonstrated encouraging efficacy and safety in patients with chemo refractory metastatic colorectal cancer. Phase 3 trial continues to enroll using this combination. We also presented data from the global Phase 3 CodeBREAK 200 confirmatory trial where lumacraft treatment led to increased progression free survival and a significantly higher objective response rate in patients with KRAS G12C mutated non small cell lung cancer compared with docetaxel. Patient reported outcomes were also improved with lumacraft versus docetaxel.

Speaker 5

We've just received initial top line data 2 40 milligrams daily in patients with KRAS G12C mutated advanced non small cell lung cancer. Following discussions with regulators, we are planning to submit data from this study along with Codebreak 200 confirmatory Phase 3 data. As a reminder, we are investigating multiple potential to pass the first line treatment of non small cell lung cancer with lumacraft potentially segmented by PD L1 expression levels for the non small cell lung cancer population breaks down into roughly thirds across PD L1 high expressers, intermediate or low expressers and PD L1 negative expression. We've seen promising early data in the PD on non small cell lung cancer. Finally, I'm pleased to announce that the primary analysis of a Phase 3 study Evaluating the efficacy and safety of ABP-nine thirty eight, an investigational biosimilar to EYLEA compared with EYLEA met its primary endpoint in subjects with neovascular age related macular degeneration.

Speaker 5

With these data and previously announced Phase 3 data from our biosimilar candidates to SOLIRIS and SOLARA, we have completed our goal of delivering positive Phase 3 data from 3 biosimilars in 2022. In conclusion, with an innovative portfolio, where approximately Three quarters of our clinical stage programs have 1st in class potential and a growing portfolio of biosimilars. We are well positioned to

Speaker 2

Okay. Thank you, David. And just now why don't we now open the line up for questions.

Operator

Our first question comes from Salveen Richter with Goldman Sachs. Your line is now open.

Speaker 6

Good afternoon. Thanks for taking my question. On AMG133 in obesity, Could you just help us understand how you'll evaluate the data in the context of existing therapies to make a move Forward decision and how you're thinking about differentiation here. Is it just a matter of taking a piece of the market given size? Or do you think there

Speaker 2

Dave, why don't you take that question?

Speaker 5

Yes. Thanks, Salveen. We know there's a lot of interest in this program. And as we mentioned, we'll be showing the data in full in the 1st week of December at the hybrid conference. Obesity is a large, very heterogeneous disease.

Speaker 5

It's a global public health problem. The things that I would look for in evaluating this molecule going forward will be the dosing, dosing interval, What are the kinetics of weight loss? How rapid is that weight loss? What is sustainability? And then finally, the overall tolerability.

Speaker 5

We do plan on using our extensive capabilities in human data to help shape our thinking and guide this development program as we move forward. Thanks.

Speaker 6

Thank you.

Speaker 1

Jason, let's take the next question.

Operator

Our next question comes from Matthew Harrison with Morgan Stanley. Your line is now open.

Speaker 7

Great. Good afternoon. Thanks for taking the question. I wanted to ask a question now that you've been through or hopefully been through most of the contract season for next year. I think one of the key investor concerns is obviously with biosimilar to HUMIRA coming next year, what impact that could have to Enbrel and Enbrel pricing dynamics for next year.

Speaker 7

So I'm wondering if you can just comment on how to think about the potential impact to Enbrel and its pricing next year? Thanks.

Speaker 4

Thank you, Matthew. It's Myrtle. We're obviously excited about the opportunity to launch the First biosimilar to Humira and so we are active in our discussions with payers and PBMs for that. We are not Seeing a massive amount of change to Ambrell's access going forward and we continue to believe we've got Good regard on the part of the payers and PBMs for the efficacy and the safety of Enbrel. And if there were to be a Change in Enbrel pricing it would be for volume gains.

Speaker 4

As I mentioned in my opening remarks, we're declining in volumes about 3% Year on year, our goal is to maintain that and maybe even improve upon it, but We're not quite finished in the contracting cycle.

Speaker 2

Okay, Jaeson, let's go to the next question please.

Operator

Our next question comes from Umer Raffat with Evercore. Your line is now open.

Speaker 8

Hi, guys. Thanks for taking my question. I have a 2 part question on what everybody wants to talk about, which is obesity. So Lilly and Novo, the 2 lead players in the GLP space, they both have early stage programs. I'm talking Phase 1 stage programs on triple agonists, etcetera.

Speaker 8

And one thing they always emphasize is that they have certain predefined thresholds for moving any of those programs forward. And those thresholds are off of incremental efficacy beyond the current most competitive products out there. And my question is, I imagine you're thinking about some of those thresholds too relative to Manjaro, perhaps CAGRISEMA. As you think about the progression of your program, and I'm curious if you could speak to that. And secondly, if you could just clarify for us, The low and the high dose data from single ascending dose you showed at your business review early in the year, Was that an average of the first three and the highest three of the 6 cohorts in Phase 1?

Speaker 8

Or was it

Speaker 4

the first two out of

Speaker 8

the 6 cohorts? I wasn't quite sure what the low and the high meant within the single ascending dose. And I remember there were 6 different cohorts within single ascending. Thank you very much.

Speaker 5

Yes. We'll get back to you on the latter half of that question. I'll remember off the top of my head, Umer, what that is. But we're going to have in a month, we'll have the full data set with all of the cohorts broken out. I think at that point it will be very clear.

Speaker 5

In terms of thresholds, as I discussed A short while ago, there are many potential avenues to differentiation here. Of course, degree of weight loss is one of them, but also Dosing interval, what the kinetics are, importantly durability, importantly tolerability, since a fair number of patients transition off of these agents for tolerability. So those are the sorts of things that we'll be taking a look at as we assess whether we've got a differentiated product and it's worth Large scale investment.

Operator

Our next question comes from Michael Yee with Jefferies. Your line is now open.

Speaker 4

Thank you. I'm going to ask another follow-up on 133. David, last quarter you said you Started the Phase 2, I actually didn't hear that here. Can you just talk about the actual status of where you are with 133? And also the fact that I believe it's been disclosed that you dialed back the GLP-one potency, so we should not be expecting Material diabetes types effects and this is not what we're looking for or people should be examining or scrutinizing.

Speaker 4

Thank you.

Speaker 5

Yes. No, I don't believe we announced we had started Phase 2, Mike, but rather that we're in planning. We do expect to be initiating The Phase 2 trial in the relative near term and once that gets launched, of course, we'll talk about design and give guidance in terms of Expected data availability. I wouldn't overthink the GLP-one component and I'm not sure That's on point. I think again when we share the data in a month you'll get a look at that.

Speaker 4

Thank you.

Operator

Our next question comes from Jay Olson with Oppenheimer. Your line is now open.

Speaker 1

Hey, congrats on the quarter and closing the ChemoCentryx deal. You had a lot of volume growth outside The U. S. In the Q3 and as an example, I think you said Repatha grew 73% ex U. S.

Speaker 1

With inclusion on China's national drug reimbursement list. Can you talk about the pace of product launches outside the U. S. And volume growth? And how you expect U.

Speaker 1

S. Versus ex U. S. Revenue mix to evolve over time? Thank you.

Speaker 2

Go, you want to jump in? Yes.

Speaker 4

Thanks, Jay, I think Repatha is a good example of how now with our broadened international presence, We're able to bring new products and new launches to the market fairly quickly. What we're seeing in China is Rapid expansion of Repatha. Recall, we were on the market for just over a year prior to securing national reimbursement. We did establish good understanding, education, awareness of Repatha. We were promoting it primarily for percutaneous coronary intervention patients or stent patients, where the unmet need was deemed to be highest amongst the private cash pay Patient group, but I think what you're seeing is there's real demand in these markets to help millions of patients who are at very high risk of coronary vascular disease.

Speaker 4

And so we're continuing to build out our business in Japan and China. We had good volume growth in Europe and obviously we also had good volume growth in the U. S. So we're excited about the evolution of Repatha and we continue to feel good about how that product will drive volume and revenue growth for us in the future. With respect to other launches, the other good example that we're seeing is just the lumacraz launch, Given that we've got approval in roughly 40 markets, we've got reimbursement in roughly 30 markets We're pursuing reimbursement in the remaining countries.

Speaker 4

Our teams, our oncology teams around the world are doing a very nice job of identifying I'm KRAS G12C second line patients and making sure that they have lumikraz as a treatment option. So I'm really pleased that the International presence we've been building for many years now is in full place, is functioning at a high level and delivering strong volume growth. Going forward, we have some partner products where we don't necessarily have the launches in every country where we have our partners to do that. But wherever Amgen has the global responsibility and rights for products, we're feeling very good about our potential and ability to launch them globally.

Speaker 2

And Jay, let me just add, don't forget in the slides that we shared with you this afternoon, we have the outside U. S. Data available for you on all the different products. You'll see the contribution from the international business there.

Operator

Our next question comes from Jeffrey Meacham with Bank of America. Your line is now open.

Speaker 9

Hey, this is Charlie on for Chad. Thanks for taking the question and congrats on the results. I just have questions regarding the, I guess the EYLEA as well as STELARA potential launch timing, I think given you mentioned that you already submitted the data to the FDA. I'm wondering, you're expecting to see the product launch come second half of next year and whether you anticipate how any pushback from J and J? And I guess similarly count for EYLEA, whether that launch timing is in the 2024 timeframe?

Speaker 9

And if you anticipate how any pushback from Regeneron? Thank you.

Speaker 4

Yes. Thanks for the question, Charlie. We're obviously pleased with the successful data readouts on those products and some that have been filed. We expect to be in the first wave of those Biosimilar launches and we're not disclosing specific launch timing on those for that.

Speaker 1

Jaeson, let's take the next question.

Operator

Our next question comes from Evan Seigerman with BMO Capital. Your line is now open.

Speaker 1

Hi, guys. Thank you so much for taking the question. I'm not going to ask about 133, but rather on lumacraft. So you had mentioned you had data from the dose reduction trial. You characterize how we should think about the relative efficacy of the lower doses versus the approved dose?

Speaker 1

And on the pembroke combination trial, I noticed in the slides, You talked about a dose expansion with a lower dose lead in. Are you also treating in combination with that lower dose?

Speaker 5

Yes. Thanks Evan. Look, we understand there's a lot of interest in the dose comparison data. We're just getting the top line results to the FDA and other regulatory authorities. So it's premature to share these data prior to their review and the appropriate conversations.

Speaker 5

In regards to the combination trial, I believe you're referring to with Checkpoint inhibitors, we're doing a lower dose lead in as I've mentioned before and then layering on top of that dosing The checkpoint inhibitors. So they are then given concurrently going forward.

Speaker 1

Okay. Thank you.

Operator

Our next question comes from Mohit Bansal with Wells Fargo.

Speaker 10

Great. Thanks for taking my question and congrats on the quarter as well. So I have a question regarding The 30% plus year over decline that we have seen with the buyers, couple of biosimilars, Is it on expected lines 3 or 4 years after launch? And how should we think about the other biosimilars you Having your portfolio, how should we think about the long term pricing dynamic there? Because it was an expectation that the pricing would probably stabilize after a certain point, but it doesn't seem like that in biosimilar work?

Speaker 4

Thanks for the question, Mohit. I think What's important to remember when you're thinking about U. S. Biosimilars is products in the buy and bill or medical benefit side We'll continue to see price declines over time because of the way in which the average selling price calculation works. Products on the pharmacy benefit side, so think Medicare Part D products or commercial insured retail pharmacy products.

Speaker 4

They are likely to have slower declines in the slope of their net price over time. Now both of those conditions depend on how many competitors for each molecule. So everyone's a little bit different, but I would hesitate to put a timeframe on the class of products. I think you need to look at each one of the molecules. One thing I will say is we've been very clear on where we're going to get growth in our biosimilars portfolio and that's by launching successive new biosimilars on top of our continuing base of business.

Speaker 4

Outside the U. S, biosimilar pricing tends to come down fairly rapidly and then can hold in some of the larger what we call retail markets. In markets where it's a heavy tender business, prices will continue to decline as long as there are competitors in the market.

Speaker 2

Okay. Just some of

Speaker 10

them are helpful.

Speaker 4

Got it. Thank you.

Operator

Our next question comes from Yaron Werber with Cowen. Your line is now open.

Speaker 11

Great. Thanks for taking my question. I guess just a couple maybe, David. The first one on 133, can you comment it's an antibody? Can we assume It's monthly dosing.

Speaker 11

And then secondly, for 938 against EYLEA, now that there's going to be high dose EYLEA, the 8 milligrams Approved, it's obviously the same underlying drug, just a different formulation. How does that impact what you need to do to bring in a high dose 938 to market and that'll drive versus the fiscal year 2025 potential launch? Thank you.

Speaker 5

Yes. Let me take the first part on 133. It is as I said, it's a multi specific or bifunctional molecule, meaning it's got an antibody component that inhibits the Gipper Receptor and then there's a component that agonizes GLP-one. So as you noted, you can expect Antibody like pharmacokinetics and we'll be sharing all of that in a month, but that's what On 938, let me ask Murdo to comment briefly on that.

Speaker 4

Yes. Yaron, we continue to Want to be able to have a full complement of competitive biosimilar products that compete effectively with their innovative parent products. And we've I think done that very successfully. Thanks to the talented team in our formulation and process development organization. So we feel confident that we'll be able to bring Various concentrations across the portfolio as needed.

Speaker 4

So we're working on that one.

Speaker 1

Yes, let's go to the next question.

Operator

Our next question comes from David Risinger with SVB Securities. Your line is now open.

Speaker 12

Great. Thanks very much. So my question is on biosimilars timing for 2023, please. Regarding AmgeVita, in light of your interchangeability study, which has an estimated completion in January, assuming that succeeds, When in 2023 do you think FDA will add interchangeability to the label? And then is Amgen planning to launch biosimilars STELARA in September at risk if patent litigation remains outstanding?

Speaker 12

Thank you.

Speaker 4

Yes, thanks again for the question. Let me take the second part first where we haven't made any statements about when we will launch our biosimilar to Stelara, but we're pleased that we've got strong data in hand and we're pleased that we've got The strength of the Amgen manufacturing network and commercial organization ready to go, and we'll track that Based closely, we expect to be in the first wave of launches on, Stelara Eylea and Stelara, the next wave of new biosimilar launches. And we expect to be in the market in early Feb in the New Year with Amgevita. The interchangeability stats an interesting one. I think over time that may grow in importance, but being first With AmgenVita, we understand it to be of lower priority from payers and PBMs, but we do expect to have interchangeability In a relevant timeframe for when the other biosimilar entrants to Humira come into the market.

Speaker 1

Thank you. Next

Operator

question comes from Robyn Karnauskas with Truist. Your line is now open.

Speaker 6

Hi, thanks for taking my question. Just going to follow-up with you on the Enbrel comments ahead of the biosimilar to Meyer launch. We've heard that Enbrel is often used as a 3rd or second line TNF. And so I was just curious whether You'd noted that you don't expect further pricing declines, but part of it is that when Enbrel HUMIRA launches that really you're already having to flow through Humira to get And Raul in many cases, and that's why there may not be motivation to have to compete on price. Just sort of clear and that's a detailed question, maybe help me understand the dynamics there.

Speaker 6

Thank you.

Speaker 4

Yes. Robin, thanks for the opportunity to clarify. I didn't say that we don't expect continued price declines on Enbrel. I said, We don't expect the current price declines to be dramatically different going into next year. So We do expect to continue to concede price on Enbrel as the category is quite competitive, but we don't see the slope of that changing dramatically.

Speaker 4

And Enbrel is used across a broad range of patient types in rheumatoid arthritis as well as And sorry, atic arthritis, I think what we see is we see a lot of frontline usage still and we do see some post TNF frontline usage. So I think that will continue. Not every patient is going to respond to TNF inhibitor and many Clinicians prefer the well demonstrated safety and efficacy profile of Enbrel and we think that will continue despite biosimilar options in the market. So that hopefully clarifies your question.

Operator

Our next question comes from Colin Bristow with UBS. Your line is now open.

Speaker 13

Hey, good afternoon and congrats on the quarter. So I'll take another one on 133, if I may. As we think about time lines, it took Lilly and Nova around 5 to 6 years to move their GLP, from sort of Phase 2 initiation to the market. Is there any reason at all for us to think that there's any sort of abbreviated path here that you could explore? And just with those sort of aforementioned timelines in mind and the fact that this efficacy bar that we see now could be raised by one of the competitor

Speaker 5

Yes. Thanks for the question. I think let me start with again the disease itself obesity, which is a very heterogeneous disease. Obviously, it's one of the major public health problems globally right now. Our belief is that there are a number of diseases tucked within The label of obesity, some patients have primarily cardiovascular manifestations, others type 2 diabetes, Others mechanical problems.

Speaker 5

And so as I noted, we will be using our human data capabilities to further understand and potentially segment these populations to determine if there can be particular benefit in Sub segments of patients. And then I would just remind you of the things that we'll look for in this program as we go forward to see whether We have a differentiated molecule or not dosing again the kinetics in particular rapidity and sustainability of weight loss and then overall tolerability. Those are the things that we'll be looking at as we Take a look at Phase 2 data and determine as the field unfolds where we go from there.

Speaker 1

Jason, let's take the next one.

Operator

Our next question comes from Carter Gould with Barclays. Your line is now open.

Speaker 14

Great. Thanks for taking the question. Sorry to beat a dead horse here, but to follow-up on the prior question, how important is it that you also pursued diabetes alongside Any obesity indication or do you feel like you could just go after obesity and that might be able to suffice and work out commercially? Thank you.

Speaker 5

Yes. Thanks, Carter. That's a question we'll address as we go Forward, but I don't feel that it's essential that this be a diabetes medication. As I said, this is Obesity powers a large number of diseases and we're going to guide our development to where we think we get the most effect size.

Operator

Our next question comes from Michael Schmidt with Guggenheim. Your line is now open.

Speaker 1

Hi, this is Cide on for Michael. Thanks for taking our question. We have one on lumateras Coming out of worldwide conference with updated data on different combinations presented and in PD-one and SHPE-two, How do you think these different combinations can be positioned relative to each other? Do you have any updated view? And would you prioritize with data so far?

Speaker 1

Thank you.

Speaker 5

Yes. No, in terms of the combination SHIP-two checkpoint inhibitor combinations, We're enrolling Phase 2 trial now with the SHIP-two combination that will guide our development. That's a combination that could potentially be applied regardless of PD L1 expression levels. And then as I mentioned, we Are exploring in the PD L1 positive population a low dose run-in of lumacraft Then followed by layering on of the checkpoint inhibitor. And as those trials enroll, I'll provide guidance in terms of when we have Data readouts and those data will determine how we think about the first line population.

Speaker 5

Finally, let me remind everyone again that in the PD L1 negative population, we're going to be looking at a chemotherapy plus lumacraft combination.

Speaker 1

Jason, I see one more participant in the queue. So let's take one

Operator

Our final question is from Tim Anderson with Wolfe Research. Your line is now open.

Speaker 15

Thank you. I wanted to ask a 2 part biosimilar question related just to the U. S. Market and as what you think uptake will be like in Two disease areas that are a little different than most. So in the rare disease space where you'll have the biosimilars And then in the eye space with your biosimilar EYLEA, how do you think those will compare to disease areas where we already have precedence such as in oncology?

Speaker 15

I know the iSPACE is buying bill. I think rare diseases is not buying bill, but if you could compare those please.

Speaker 4

Yes. Thanks, Tim, for the question. As I mentioned before, you do have to look at each product slightly individually in the circumstances that would generate or drive uptake. If we go That would generate or drive uptake. If we go back to the oncology biosimilars, we had an assumption At the beginning of those products that patients may not get switched on the maintenance phase of their treatment, so mid cycle or mid course of treatment.

Speaker 4

And what we saw at least in the buy and bill space for both Ambassia and KANJINTI that was that oncologists were comfortable with the quality of the Amgen biosimilars and By the fact that they had access to our medical teams and our sales people who are out there calling on them, to help them understand the data behind our biosimilars. And so we did see mid course of treatment switching to our biosimilars. So I think The threshold for what we thought would be a hesitancy on the part of the prescriber was different. And I think that we're looking closely at both, SOLIRIS prescribers and EYLEA prescribers and we've done some in market research with both customer types. And we feel good about our opportunity to create value for the healthcare system by offering Biosimilar alternatives to those 2 branded products and we feel good about our chances of having a decent uptake on both.

Speaker 2

Okay. Well, again, let me thank all of you for joining our call. We appreciate your interest in Amgen. And let me just end by saying that We remain focused on ending the year strong and positioning ourselves for a good 2023 beyond. We look forward to Having a chance to engage with you again here in a few short weeks or Monday and then in a few short weeks thereafter at various conferences.

Speaker 2

So Thank you and we'll look forward to seeing you soon.

Speaker 1

Thanks everybody.

Operator

This concludes our 2022 Q3 earnings call. You may now disconnect.

Powered by Quartr
Earnings Conference Call
Amgen Q3 2022
00:00 / 00:00