Amgen Q3 2023 Earnings Call Transcript

Presentation

[Operator]

My name is Julianne and I'll be your conference facilitator today for Amgen's Third Quarter 2023 Financial Results Conference Call. [Operator Instructions]

I would now like to introduce Justin Claeys, Vice President of Investor Relations. Mr. Claeys, you may now begin.

[Justin Claeys, Vice President of Investor Relations at Amgen]

Thank you, Julian. Good morning and welcome to our third quarter 2023 earnings call. Bob Bradway will lead the call and be followed by a broader review of our performance by Murdo Gordon, Vikram Karnani, who joined Amgen from Horizon Therapeutics following the October 6, 2023 acquisition close, Dave Reese and Peter Griffith. Given the timing of the Horizon Therapeutics acquisition close, our third quarter results do not include any contribution from Horizon. Vikram will provide select information from Horizon's third quarter product sales for future context. You should have received a link to our slides that we have posted. Through the course of our discussion today, we will make some forward-looking statements and use non-GAAP financial measures to describe our performance and just a reminder that actual results can vary materially.

I would now like to turn the call over to Bob.

[Robert Bradway, Chairman and Chief Executive Officer at Amgen]

Okay. Thank you, Justin and thank all of you for joining our call. It's an exciting time here at Amgen and we're continuing to execute well this year, serving many more patients around the world, with medicines such as Repatha, EVENITY and TEZSPIRE, advancing a number of promising first-in-class medicines rapidly through our pipeline and preparing for our next wave of biosimilar launches.

However, as this is our first earnings call following the close of our acquisition of Horizon Therapeutics, I thought we might turn our attention there first. The Horizon acquisition coupled with our purchase of ChemoCentryx, which we acquired little more than a year-ago gives Amgen a significant rare disease business that fits squarely within our overall strategy and will be additive to the growth we expect from our base business.

At the heart of our strategy of course is innovation, first or best-in class medicines that make a big difference for patients suffering from serious diseases. The medicines in our rare disease portfolio like TAVNEOS, Tepezza, KRYSTEXXA and UPLIZNA fit this description perfectly and they'll benefit from Amgen's decades of experience in inflammatory diseases. These medicines are also early enough in their lifecycles that we can positively impact their growth by leveraging Amgen's capabilities and process development, lifecycle management and manufacturing.

Finally, we spent the past decade or so building out our international footprint with Amgen medicines now available at about 100 countries. And today our rare disease sales come almost exclusively from the US, so we'll be able to leverage our global presence to quickly bring these medicines to patients around the world. You'll hear more in a minute from Vikram Karnani, who joined us through the Horizon acquisition and is leading a newly-created rare disease business, that is now the fourth leg of Amgen's commercial stool alongside our inflammation, oncology and general medicine businesses.

Turning to our financial performance in the quarter, total revenues were up 4% and earnings per share were up 6% compared with a year-ago. Volume increased 11% globally, which represents our fourth consecutive quarter of double-digit volume growth and we achieved good balance across all of our geographic regions and therapeutic areas. Seven of our medicines generated record sales in the quarter and I'll highlight one of these, BLINCYTO, which delivered 55% sales growth in the third quarter. We see continued upside potential for BLINCYTO as it is increasingly used in earlier lines of therapy and as practice guidelines are updated to reflect the role this medicine can play in treating a broad range of patients with acute lymphoblastic leukemia.

Turning to our pipeline, we have the opportunity to discuss six potential first-in-class oncology assets with you recently following ESMO. Three of these have earned Breakthrough Therapy designations from the FDA, Tarlatamab, BLINCYTO and LUMAKRAS in combination with Vectibix in colorectal cancer. We also continue to progress trials for Bemarituzumab in gastric cancer for xaluritamig and prostate cancer and for AMG 193, our PRMT5 inhibitor, which has generated responses across six solid tumors.

I'll just quickly note that AMG 193 was identified through our proprietary DNA encoded library technology, which we added through the 2019 acquisition of New Evolution and it demonstrates our leadership in the emerging field of multi-specific drugs that can address pathways that have long been recognized, but considered inaccessible to traditional drug discovery efforts.

In other pipeline news, we've completed enrollment in our Phase 2 obesity study for Maridebart cafraglutide, which was formerly known as AMG 133 and finally the FDA has accepted our BLA for biosimilar to EYLEA. Looking at our business, we feel we have good momentum across-the-board. We have everything we need with the portfolio, the pipeline and the people to deliver attractive sales and earnings growth through the end-of-the decade and beyond. And as always, I want to thank Amgen employees around the world, including some 2000 new colleagues, focused on rare diseases for their commitment to strong execution on behalf of the patients we serve.

With that, I'll now turn it over to Murdo Gordon. Murdo?

[Murdo Gordon, Executive Vice President, Global Commercial Operations at Amgen]

Thanks, Bob. I'm pleased with our performance in the third quarter, execution is strong across the business with record quarterly sales for seven brands and robust volume growth across our general medicine, inflammation and Hematology-Oncology portfolios. Product sales increased 5% year-over-year. Volume growth was 11% with strength across our regions, US volume growth was 11% and volume growth in our Europe, Latin America, Middle East and Canada region was 8%. Consistent with our international expansion strategy, Asia-Pacific continues to be our fastest growing region with 27% volume growth in the quarter.

Starting with our general medicine business, which includes Repatha, Prolia, EVENITY and Aimovig. Overall revenue for these four products grew 21% year-over-year in the third quarter, driven by 20% volume growth. Repatha sales increased 31% year-over-year in the third quarter, with volume growth of 44%, partially offset by lower net selling price. In the US, volume growth of 45% was driven by a record number of new patients starting treatment, more than doubling year-over-year. We saw a declining net selling prices in the US, primarily driven by new formulary coverage by CVS in July for commercial patients.

Outside the US, we saw 43% volume growth with strength across our regions. There are still many more patients around the world who can benefit from Repatha and we're rising to meet that challenge by investing and executing to drive awareness amongst physicians and patients. In the US, we have significantly expanded our primary care sales force and activated more than 15,000 new prescribers this year. We're also increasing promotion to patients through direct-to-consumer media efforts.

Transitioning to bone health, Prolia sales grew 14% year-over-year in the third quarter, primarily driven by 7% volume growth and higher net selling price. We expect volumes for Prolia to grow supported by real-world evidence data presented earlier this year that demonstrate Prolia's superiority in reducing fracture risk when compared to Alendronate in treatment-naive patients with post-menopausal osteoporosis.

EVENITY had record sales of $307 million for the quarter, driven by 48% volume growth. Osteoporosis disproportionately impacts postmenopausal women in the diagnosis and treatment rates for these patients are low. In 2023, we expect approximately 3 million patients in the US will be treated for post-menopausal osteoporosis. An estimated 40% of treated patients will be at very-high risk of fracture, but only 6% of those high-risk patients will be treated with a bone building product.

EVENITY plays an important role in the bone builder market, with a 58% share in the US and a 44% share in Japan. There's much more work to be done and we'll continue to invest to ensure EVENITY reaches the patients who need it. Otezla sales declined 10% year-over-year, driven by lower net selling price, unfavorable changes to estimated sales deductions and lower inventory levels, partially offset by 1% volume growth in the US.

Otezla net price declines were driven by higher rebates to support and expand access for commercial and Medicare Part-D patients. Our US Otezla business has been impacted by free drug programs associated with new treatment options, that have entered the psoriasis marketplace. We're beginning to see a reduced impact of these free drug programs as physicians and patients are experiencing barriers to access, given prior authorization requirements for these newer therapies.

We have strong conviction in the growth potential of Otezla. With this unique indication for all severities of psoriasis, combined with an established clinical profile, broad payer coverage, a lack of testing required for initiation and convenient oral administration. To realize that potential, we have increased our investment to ensure physician and patients understand both the importance of treating psoriasis systemically and the safety and efficacy profile that Otezla offers.

We're already seeing positive results from that increased investment, including significant growth in the number of patients requesting educational information and taking action on the Otezla website that generally indicate preparation for a discussion with the healthcare professional. We've also recently increased our dermatology sales force by 20% to educate physicians about the benefits of Otezla for appropriate patients. With these increased investments, we expect to drive a return to growth for Otezla.

Enbrel sales decreased 6% year-over-year, primarily driven by an 8% decline from unfavorable changes to estimated sales deductions. Year-over-year volume increased 1% in the third quarter and the number of new patients in the US starting treatment increased by 22%, driven by improved payer coverage and Enbrel's 20 plus year track-record of safety and efficacy.

For the remainder of 2023, we expect our improved coverage will lead to continued growth in new patients and declining net selling price. TEZSPIRE continues to show strong growth with $161 million in sales in the third quarter. Sales increased 21% sequentially, driven by 18% volume growth that benefited from the launch of our self-administered pre-filled single-use pen, which was approved by the US Food and Drug Administration in the first quarter.

We've now obtained coverage of the patent with the majority of pharmacy benefit managers enabling easy access and convenience self-administration for patients in the US, with severe uncontrolled asthma. As we expected, TEZSPIRE's both penetrated and helped grow the US asthma biologics market.

In 2023, the number of new patients on asthma biologics has increased by over 20% year-over-year and TEZSPIRE share of this expanded market is approximately 20%. Sales of TAVNEOS were $37 million in the quarter, with 26% quarter-over quarter volume growth. In the US, approximately 2,300 patients have now been treated with TAVNEOS by over 1,500 healthcare professionals. We continue to see an increase in awareness of TAVNEOS by rheumatologists and nephrologist and exiting the quarter, we saw an increase in new patient start forms.

Looking-forward, we expect to bring TAVNEOS to even more patients with ANCA-associated vasculitis. AMGEVITA sales increased 30% year-over-year for the third quarter, driven by 53% volume growth, partially offset by lower net selling price. Ex-US sales increased 10% driven by 22% volume growth, partially offset by lower net selling price.

Moving to our Hematology-Oncology business, which includes LUMAKRAS, KYPROLIS, XGEVA, Vectibix, Nplate and BLINCYTO. Strong commercial execution and compelling new clinical data drove 15% volume growth year-over-year for these six innovative products. BLINCYTO sales grew 55% year-over-year to a record $220 million for the third quarter. Volume growth of 56% was supported by broad prescribing to acute lymphoblastic leukemia patients following positive data from the registration-enabling E1910 study presented late 2022 and updated NCCN guidelines that were issued in May.

Long-term, we see significant additional growth potential for BLINCYTO from earlier lines of therapy. LUMAKRAS reported $52 million in sales for the third quarter, a decline of 31% year-over-year. $22 million of this decline was driven by ongoing reimbursement negotiations in France. We see future growth opportunities for LUMAKRAS driven by launches in new markets and our comprehensive global clinical development program.

Vectibix sales increased 2% year-over-year for the third quarter to a record $252 million, driven by higher net selling price and 4% volume growth, partially offset by unfavorable foreign-exchange impact. KYPROLIS grew 10% year-over-year, primarily driven by 8% volume growth. And Nplate sales increased 45% year-over-year for the third quarter, resulting from a $142 million order from the US government.

In the fourth quarter, we expect to fulfill an additional $62 million order for Nplate by the US government. Given the strong performance of our hematology-oncology products and the exciting new positive data presented at ESMO on our oncology pipeline, we look forward to helping more patients with their cancer therapy.

Overall, our execution is strong across the business, driving growth and demonstrating our dedication to serving patients and with the expansion of our rare disease portfolio, we're excited to serve many more patients around the world who can benefit from our therapies.

And with that, I'll turn it over to Vikram.

[Vikram Karnani, Executive Vice President at Amgen]

Thanks, Murdo. We're excited to bring together Horizon's medicines, pipeline and rare disease expertise with Amgen's history of leadership in inflammatory diseases, global infrastructure and world-class biologic capabilities. For those that are not as familiar with Horizon's portfolio, I will spend the next few minutes providing some background on our rare disease medicines.

Horizon's business delivered $945 million of sales in the third quarter, representing 2% year-over-year sales growth with multiple positive leading indicators, let me describe in more detail. TEPEZZA the first and only medicine approved for the treatment of Thyroid Eye Disease regardless of disease activity or duration generated $453 million of sales in the third quarter, representing 2% quarter-over-quarter growth. We are confident that now as we have officially joined forces and have onboarded the full commercial team, we will make significant progress in advancing this important product over-time to patients.

We are driving several initiatives to continue to build the US Thyroid Eye Disease market. In the third quarter, we saw a greater than 50% year-over-year increase in the number of TEPEZZA prescribers, supported by the April 2023 FDA label update to treat patients with thyroid eye disease, regardless of disease activity or duration. We are pleased with this progress and are continuing to educate the physician community on new clinical data and updated indication across the full-spectrum of TED patients.

Second, large national and regional payers are continuing to make favorable policy changes to help eligible patients access TEPEZZA. To date, we have obtained favorable policy changes for greater than 30% of US covered lives, which are expected to take effect later this year and early next year. As a reminder for TEPEZZA, there is a time lag between a patient being identified for TEPEZZA treatment and treatment being initiated. It can take-up to 90 days for a patient enrollment form to move through the prior authorization process. Once that step is complete, then the patients infusion needs to be scheduled at an appropriate site of care. This process takes time and we have taken several important steps to minimize the time between patient identification and treatment initiation.

Finally, we continue to see approximately 100,000 patients that moderate-to-severe disease in the US that are appropriate for TEPEZZA, with the majority of these patients in low clinical activity score settings. Therefore, the patients -- the FDA's lable update, combined with favorable medical policy changes by payers and supported by the expanding base of prescribing physicians gives us a significant opportunity to reach more patients. These positive execution trends underpin our confidence in TEPEZZA's growth potential in the US.

Moving on to market outside the US, we continue to see international expansion as a meaningful long-term growth opportunity for TEPEZZA, which received its first ex-US approval in Brazil in the second quarter of this year. We are particularly excited about the opportunity to leverage Amgen's long-standing presence in multiple major ex-US markets, including Europe and in Japan, where we have reported positive data from the Phase 3 OPTIC-J trial. We also continue to enroll a TEPEZZA Phase 3 trial in Japanese patients with chronic or low clinical activity thyroid eye disease.

KRYSTEXXA, the first and only medicine approved for uncontrolled gout delivered a record $253 million of sales in the third quarter, representing 32% year-over-year growth. Sales are now annualizing at a $1 billion run-rate. Performance in the third quarter reflected continued strong uptake in both the rheumatology and nephrology segments. Strong results were driven by execution across all phases of the patient journey, demand-generation, stakeholder education and adherence to treatment.

The FDA approved KRYSTEXXA's label change for combination with methotrexate in July 2022. We have seen a steady increase in uptake since then. Immuno modulation usage remained above 70% of new patient starts in the third quarter. We see an opportunity to redefine KRYSTEXXA with methotrexate as a standard-of-care and reach even more of the over 100,000 uncontrolled gout patients in the US. UPLIZNA sales increased 54% year-over-year in the third quarter to $67 million. International expansion is also underway with UPLIZNA now launched in multiple ex-US markets, including Germany, France, Italy, Spain and Brazil.

Additional indications in development also support UPLIZNA's long-term growth potential with Phase 3 trials underway in both IgG4 related disease and myasthenia gravis. The rest of Horizon's portfolio generated $173 million of sales in the third quarter, primarily driven by our portfolio of ultra-rare medicines, RAVICTI, PROCYSBI and ACTIMMUNE. We see an opportunity for this basket of products to continue to generate robust robust sales.

Before I turn it over to Dave Reese, I want to take the opportunity to thank all my colleagues in the rare disease business for maintaining their focus on patients throughout a period of distraction over the last several months. Looking ahead, we are excited to work together by leveraging Amgen and Horizon's combined capabilities to ensure our medicines reach more patients even faster, who are suffering from serious and rare diseases globally.

I'll now turn it over to Dave.

[David Reese, Executive Vice President, Research and Development at Amgen]

Thank you, Vikram and good morning, everyone. I'd like to begin by welcoming our new colleagues from Horizon. We are excited to be integrating Horizon's R&D capabilities with Amgen's to advance the promising Horizon Pipeline. For R&D, the third quarter was one of high-quality execution as we progressed our innovative pipeline with important oncology data readouts, the addition of two breakthrough therapy designations and completion of enrollment on key studies. We also advanced our innovative pipeline through rapid enrollment on multiple registration-enabling studies.

Starting with general medicine, we have completed enrollment in the Phase 2 study of maridebart cafraglutide in-patients with obesity with or without diabetes. The goal of this study is to generate data that will provide optionality to design a broad Phase 3 program, leveraging the unique properties of maridebart cafraglutide that could potentially allow us to take a differentiated approach. We anticipate top line data from this 52-week study towards the end of 2024.

The Phase 3 outcome study Olpasiran are potentially best-in-class LP (a) targeting small interfering RNA molecule and atherosclerotic cardiovascular disease is enrolling very well. In inflammation beyond severe asthma, we are investigating additional indications with TEZSPIRE including separate Phase 3 studies in chronic rhinosinusitis with nasal polyps, which is fully enrolled and eosinophilic esophagitis.

We also have a Phase 2 study in COPD, it isn't fully enrolled with top line data anticipated in the first half of 2024. This study has recruited a broad population of COPD patients, including patients with both high and low eosinophil counts. Rocatinlimab a first-in-class anti-OX40 monoclonal antibody being investigated in-patients with moderate-to-severe atopic dermatitis, recruitment is off to a strong start on the ROCKET Phase 3 clinical development program. We have now randomized over 1,500 patients across the program. We are excited to present additional data from our expanded rheumatology portfolio following the acquisition of Horizon, including data from a Phase 2 study of [Indecipherable] and Sjogren's Syndrome, along with data from KRYSTEXXA, Tavneos, Otezla and other molecules from our broad portfolio at the American College of Rheumatology Convergence 2023 Meeting in November.

I'll be brief with my remarks on our oncology portfolio given the detailed oncology review last week. Based on the E1910 Phase 3 study, the FDA has granted BLINCYTO Breakthrough Therapy designation for the treatment of adult and pediatric patients with CD19 positive, Philadelphia chromosome-negative, B-cell precursor acute lymphoblastic leukemia during the consolidation phase of multi-phase therapy. We see future growth in BLINCYTO from advancements into earlier lines of therapy and subcutaneous administration.

BLINCYTO also serves as a blueprint for how we plan to rapidly progress Tarlatamab and Xaluritamig into earlier lines of therapy unsettings of lower tumor burden. Along with experts in the field, we are very encouraged by Tarlatamab, our BiTE molecule targeting DLL3. At ESMO, we presented data from DeLLphi-301 a Phase 2 study in late-stage small-cell lung cancer, where we saw impressive response rates, durability of response and overall survival in a setting where patients typically have limited options and a very poor prognosis. We are submitting these data to the FDA and are pleased that the FDA has granted Tarlatamab Breakthrough Therapy designation for the treatment of adult patients with extensive stage small-cell lung cancer with disease progression on or after platinum-based chemotherapy.

Given our confidence in these data, we are rapidly advancing Tarlatamab into earlier lines of treatment with multiple Phase 3 studies underway or planned. Based on emerging clinical data, we are discontinuing PSMA targeting bispecific AMG 340 and we will focus our efforts on rapidly advancing Xaluritamig in metastatic castrate-resistant prostate cancer. We expect Xaluritamig dose expansion cohorts to be fully enrolled by the end-of-the year and are planning to initiate additional studies in-patients with earlier-stage prostate cancer.

With AMG 193, a small-molecule MTA cooperative PRMT5 inhibitor, we are encouraged by the responses we've seen across six MTAP-null solid tumors, the manageable safety profile and preclinical evidence of CNS penetrants are now rapidly enrolling dose expansion cohorts.

And with that, I will turn things over to Peter for the financial update.

[Peter Griffith, Executive Vice President and Chief Financial Officer at Amgen]

Thank you, Dave, I'll review our third quarter results before discussing our updated 2023 guidance. Turning to our third quarter financial results, which are shown on slide 44, total revenues of $6.9 billion grew 4% year-over-year and non-GAAP earnings per share of $4.96 grew 6% year-over-year. The growth in revenues was due to product sales increasing 5% year-over-year, driven by a 11% volume growth. Third quarter total non-GAAP operating expenses increased 4% year-over-year. We advanced our pipeline and invested in growth opportunities in the quarter, while delivering a non-GAAP operating margin as a percent of product sales, up 52%.

Non-GAAP cost of sales as a percent of product sales increased 1.3 percentage points on a year-over-year basis to 17.4%, primarily driven by higher profit shares and changes in product mix. Non-GAAP R&D expenses in the quarter decreased 2% year-over-year due to lower spend in research and early pipeline activities, partially offset by higher spend in later-stage clinical programs and marketed products. Year-to-date, non-GAAP R&D expenses increased 5% due to higher spend in later-stage clinical programs and marketed products, partially offset by lower spend in research and early pipeline.

Non-GAAP SG&A expenses in the third quarter increased 1% year-over-year. We continue to focus on prioritizing key investments, digitalization, driving productivity and accelerating use cases for artificial intelligence. Non-GAAP OINE were a net $225 million expense in the third quarter. The year-over-year favorability was driven primarily by higher interest income and the change in Beijing accounting from equity-method to mark-to-market investments, with the impact included only in our GAAP results.

Our third quarter non-GAAP tax-rate increased 3.2 percentage points to 16.1% primarily due to the 2022 Puerto Rico tax law change that replaced the excise tax with an income tax beginning in 2023. We continue to execute on our capital allocation priorities. First, we continue to prioritize investments in both internal and external innovation. In the third quarter, we increased investments in programs including Maridebart cafraglutide, I'll call it Mari from now on, Rocatinlimab, TAVNEOS and ABP 206 are biosimilar to OPDIVO. Second, we continue investing in our business for long-term growth, including through simultaneous construction of our state-of-the art manufacturing facilities in Ohio and North Carolina. We're excited for the anticipated licensure of our Ohio facility in the first-half of 2024, additionally, we're making investments in all parts of our business to leverage the power to generate AI opportunities.

Third, we have a strong track-record of returning capital to our shareholders and pay dividends of $2.13 per share in the third quarter, representing a 10% increase over the third quarter in 2022. The company generated $2.5 billion of free cash flow in the third quarter of 2023 compared with $2.8 billion in the third quarter of 2022. We will continue to generate strong cash flows. However, Q4 cash flow will be lower than historical patterns due to the timing of tax payments and Horizon transaction-related expenses.

Turning to the outlook for the business for 2023 on slide 46, we're pleased to have closed the acquisition of Horizon Therapeutics, we're updating of our full-year 2023 guidance to include Horizon financial results starting October 6, 2023, so our Q4 results will exclude approximately one-week of Horizon's results. We are raising our 2023 revenue guidance to $28.0 billion to $28.4 billion versus previous guidance of $26.6 billion to $27.4 billion.

For 2023, non-GAAP earnings per share, we are narrowing the range to $18.20 to $18.80 versus previous guidance of $17.80 to $18.80. We will add Horizon's business into Q4 without material non-GAAP EPS dilution. However, we do expect Q4 non-GAAP EPS to be lower than Q3 non-GAAP EPS because of planned investment increases in our business, including key assets in our innovative pipeline beginning with Mari, Olpasiran and AMG 193 and other strategic business investments, including generative AI use cases in all parts of our business. This sequential pattern is consistent with historical trends and in addition Q4 non-GAAP EPS will begin to include the recognition of interest expense, related to the Horizon financing as a non-GAAP expense.

Important additional points to consider as you model the remainder of 2023, we now expect other revenue for 2023 to be in the range of $1.2 billion to $1.3 billion versus our prior range of $1.1 billion to $1.3 billion. With the Horizon acquisition, we now anticipate full-year non-GAAP operating expense for 2023 to increase from our previous estimate of 3% to approximately 10% versus last year. Horizon represents approximately 5 percentage point of this 10% year-over-year increase.

We continue to expect the full-year 2023 operating margin as a percentage of product sales to be roughly 50%. We continue to expect non-GAAP cost to sales as a percentage of product sales to be between 16% and 17%. We now expect our non-GAAP R&D expenses to increase from our prior guidance of 5% to about 10% year-over-year. Horizon represents approximately 3 percentage points of this 10% year-over-year increase. The additional 2 percentage points are driven by planned increase in our investments in our innovative pipeline including Mari, Olpasiran and AMG 193. We continue to expect non-GAAP SG&A to be down year-over-year as a percentage of product sales slightly. We now expect non-GAAP OINE expenses to be in the range of $1.4 billion to $1.5 billion, up from our prior guidance of $1.1 billion to $1.2 billion.

We expect Q4 OINE to be about $700 million, reflecting interest expense-related to the Horizon financings, which will be included in our non-GAAP results effective October 6. And as you begin to model 2024, note that we expect 2024 OINE to be consistent with this Q4 run rate. This higher interest expense is driven by the $28 billion of debt rate for the Horizon acquisition at a weighted-average interest-rate of 5.6%. We expect to end 2023 with approximately $65 billion of long-term debt including the current portion of it and $11 billion of cash-and-cash equivalents.

For the full-year, we anticipate a non-GAAP tax-rate of 16.5% to 17% down from prior guidance of 17.5% to 18.5%. We expect approximately 540 million shares to be outstanding in Q4. This increase from Q3 is driven by the conversion of unvested Horizon equity awards and the Amgen equity awards.

Our 2023 capital expenditures are now projected to be approximately $950 million, up from our prior guidance of $925 million. The addition of Horizon's rare disease team further strengthens our confidence in delivering against our long-term growth objectives. We continue to allocate capital to advance innovation at speed and at-scale and I am incredibly grateful to our now 26,000 plus colleagues for successfully executing our mission of serving patients.

This concludes the financial update and now I will ask our operator, Julianne, please open the lines for Q&A and remind our participants of the procedure to ask their question. Julianne?

Questions and Answers

[Operator]

Thank you. [Operator Instructions] Our first question comes from Michael Yee from Jefferies. Please go ahead, your line is open.

[Michael Yee, Analyst at Jefferies Financial Group]

Hey guys, good morning. Thanks for all the details around the Horizon transaction. I just wanted to ask a question to David Reese, I mean David unless we're hiding under a rock I guess obesity like the biggest thing over now and wanted to understand your commentary and confidence around 133 and the profile around what you think that could be relative to leaders and how 786 would fit into that, given such a high bar for other orals? Thank you.

[David Reese, Executive Vice President, Research and Development at Amgen]

Yeah, sure. As we've discussed before, Mike, with 133 we believe we have a potentially differentiated product based on the mechanism-of-action, it's a bi functional to remind everyone that antagonizes kipper [Phonetic] based on genetic evidence, largely compiled by us with two blip one peptide staple to the molecule for that mechanism-of-action. As I noted in the remarks, we've rapidly enrolled the Phase 2 trial. There are multiple arms to this trial that explore three different doses, as well as different dosing intervals that I think will give us broad optionality going-forward.

We were quite pleased with the Phase 1 data in terms of depth of response, the kinetics of response, as well as persistence and these are the things that we will be looking at in Phase 2 as we go-forward. So it's full steam ahead on this program and we're looking-forward to data from the Phase 2 trial next year which will really inform the breadth of the Phase 3 trial that we're contemplating, which could be quite large.

In terms of AMG 186 or 786, this is an orthogonal mechanism-of-action. We're bringing in data and as we've indicated through the first-half of next year, so we anticipate presenting those data in determining the path forward. As you note, it's a high bar in this field and we'd have to see the sort of profile that would give us the confidence to invest broadly in molecule like that. I would also note, we've got a suite of preclinical molecules, many of them non-incretin based in terms of mechanisms of action that we'll be bringing forward over the next few years. So this is an area where we expect it to be a long-term player. Thanks.

[Operator]

Thank you, Michael. Our next question comes from Yaron Werber from Cowen. Please go ahead, your line is open.

[Yaron Werber, Analyst at TD Cowen]

Great. Thanks for taking my question. Peter, just for you, the $700 million run-rate, that was interest expense only, right, that's not including were you recording sort of the Beijing contribution in the line right above it in terms of other income. And then just secondly, again on your guidance, you also mentioned 3% to 10% increase year-over-year and you mentioned 5% to 10% going to R&D, the 3% to 10% increase, just remind us what that was because SG&A is expected to be down, right, slightly year-over-year, so I just missed what that was?

[Peter Griffith, Executive Vice President and Chief Financial Officer at Amgen]

Right. Thank you, Yaron. 700 is everything, so that's the full run-rate. And on the -- your question on R&D, as I said in my remarks, we focused our spending on the later clinical and end-market portfolio that was slightly offset by some decreases in early research. But we continue to spend and invest in the business and we'll continue to do that. As you can see, we're fortunate to have a significant number of opportunities in Phase 3 in the later stages. So that's what we'll stay focused on, we'll continue to differentially invest in the opportunities and innovation and we're very excited about that.

[Operator]

Thank you, Yaron. Our next question comes from Terence Flynn from Morgan Stanley. Please go ahead, your line is open.

[Terence Flynn, Analyst at Morgan Stanley]

Great, thanks for taking the question. Maybe a two-parter for me for Peter as well. Peter again, I know you went through a lot of numbers there at the end. But in terms of the revenue guidance raise for the year, can you just characterize if that was all coming from the Horizon portfolio or if there was any other contribution from the underlying base business. And then the second part of the question is, just any directional help with how to think about 2024 tax-rate as I know there is a number of moving pieces from some legislation, but then you obviously have the Horizon deal close, so just directionally can you help us out on 2024 tax rate? Thank you.

[Peter Griffith, Executive Vice President and Chief Financial Officer at Amgen]

Yeah, so. Excuse me, on the -- on the tax-rate, let me start with that 2024 tax-rate, we'll guide on that as we always do at the beginning of the year. I would just say I think you're thinking about the global minimum tax and Pillar two and I would just note, there is no consensus or predictability about how that whole OEC, the framework is going to be implemented. I know different countries are doing different situations. Rest assured, we look at everything, optimize our position as appropriate on something like that. So we'll give you guidance on that next year at the beginning of the year.

First part of the question? Yeah, on revenue, but we don't really break that down. I would just suggest that we continue to see strength in the business and we continue to see our in-line portfolio perform very, very well. I would just note, we had seven products with record sales in the quarter, we had Repatha up 31%, up in the quarter year-over-year and we've continued to see the hematology oncology portfolio was up 16%. So everything is strong in our base business. We're excited about that base business that continues to perform really well and we're very excited to have the rare disease business now.

And looking-forward to having that as, as we said is kind of the for still our commercial drugs forward. So, we're seeing a good strength around the business in different areas and we'll just continue to give more-and-more medicines to patients. I'd note, 11% volume growth is really important underneath that 12% volume growth outside the United States and underneath that 27% volume growth in J-Pac, our fastest-growing region. So, that's how we're looking at that. We're pleased with the momentum and we're pleased to be able to raise to $28.0 billion to $28.4 billion.

[Operator]

Thank you, Terence. Our next question comes from Salveen Richter from Goldman Sachs. Please go ahead, your line is open.

[Salveen Richter, Analyst at The Goldman Sachs Group]

Good morning, thanks for taking my question. With regard to the Horizon transaction now that it's closed, could you just walk through the -- the outlook for Tepezza and the other assets as we look to 2024? Here you talked about initiatives that you have to expand the patient population in ex-US being a growth lever. Just maybe walk us through that and when we might get updated long-term guidance including Horizon? Thank you.

[Robert Bradway, Chairman and Chief Executive Officer at Amgen]

Yeah, maybe we'll take this in two-parts, Salveen, it's Bob. Obviously, we're not going to provide 2024 guidance here this morning, but we'll see whether we can give you a clear sense of the things that are exciting us when we look at those products for heading into next year. And just generally on the question of long-term guidance. As you've heard us say on a number of occasions, we remain confident that we're on-track to meet or beat the objectives that we established for 2030, but in some ways now frankly we're more focused on what we can deliver through 2031 and soon-to-be 2032 as well. So, we reviewed in-depth review of the oncology portfolio, a couple of weeks ago and gave you a good sense for the moving pieces through the end-of-the decade and we may seek to present picture of the business in that way now heading into next year, so that you can get a more comprehensive deep-dive into the different segments of the business that are driving growth. But let's turn to your first question, which is the outlook for Horizon and the initiatives that are underway, in particular with respect to Tepezza, KRYSTEXXA and Neulasta.

So, Vikram, why don't you fire away?

[Vikram Karnani, Executive Vice President at Amgen]

Yeah, thanks for the question. I think as I said in my prepared remarks, we have a lot of -- lot of positive leading indicators as we look at the business, I start with Tepezza. We're continuing to build that US TED market following the FDA's April 2023 label update. And that really helps us get the medicine to TED patients regardless of disease activity or duration. And what we've seen following that label update is that the payers are continuing to update their medical policies and make them more favorable to that more of these patients more in the low cast setting on the low clinical activity score setting can now access Tepezza. And I think finally from an execution standpoint, we see newer prescribers from both ophthalmologists, as well as Endocrinologist increasing 50% year-over-year in this third quarter.

So, all of these indicators for Tepezza are positive and we feel good about the execution of the team. And as I said, we have now combined forces with Amgen and together we should be able to drive business in a positive way moving forward. Think talking about the story around Tepezza also is one of international growth. While we see a lot of positive trends in the US, we're pretty excited about what we can do as a combined company for patients outside the US as well. We've talked about Brazil getting approval recently, we've got [Indecipherable] OPTIC-J as our trial in Japan. We've talked about the chronic trial that's enrolling and finally we're getting ready for other markets and we hope to bring the medicine to many more markets now as part of the combined company than we were talking about previously.

So Tepezza both signs very positive in the US as well as globally. And as we've talked about the results for KRYSTEXXA and UPLIZNA, both those medicines performed really, really well. We have immuno modulation with KRYSTEXXA being a major driver since the label update last year, that has continued to drive uptake since that time. We see that continuing into the future. And with UPLIZNA is the fastest-growing biologics in neuromyelitis, optica spectrum disorders or NMOSD and we see that momentum continue both in the US, as well as outside the US. So, I think when I look at the overall portfolio, we have -- we're operating from a position of strength and now we can expand that even further with a combination with Amgen.

[Salveen Richter, Analyst at The Goldman Sachs Group]

Thank you, Vikram.

[Operator]

Thank you, Salveen. Our next question comes from Jay Olson from Oppenheimer. Please go ahead, your line is open.

[Jay Olson, Analyst at Oppenheimer]

Oh, hey, congrats on all the progress on so many fronts. Could you talk about your investments in AI technology and how that may influence your drug discovery and development over the next five to 10 years? Thank you.

[Robert Bradway, Chairman and Chief Executive Officer at Amgen]

Sure, I'll ask Dave Reese to address that, Jay.

[David Reese, Executive Vice President, Research and Development at Amgen]

Yeah. Thanks, Jay. This is an area where we're very excited. I'd like to characterize it as the hinge moment where we're seeing the coming together or the unification of technology and biotechnology. I really think this is going to effect over-time a qualitative change in how we do drug discovery and drug development. So everything from protein structure, prediction, protein-protein interaction, our prediction at the molecular level to multi omic analysis on extraordinarily large datasets which can -- which is only tractable through AI or machine-learning, dense clinical trials, data and then real-world evidence and real-world data. When you look across that spectrum, I believe we probably have the largest datasets in the industry.

And so we are putting the tools in-place and the foundation of models to really mine those data for deeper insights into biology and then all the way out into the market, we'll talk about this more over-time. But this is going to be an area of investment and it can be overhyped, it's not a panacea, but it is absolutely going to be the most powerful tool we've seen in the long, long time.

[Operator]

Thank you, Jay. Our next question comes from Umer Raffat from Evercore ISI. Please go ahead, your line is open.

[Umer Raffat, Analyst at Evercore ISI]

Hi, guys. Thanks for taking my question. Dave, I have a two-part question on AMG 786, the oral for obesity. First, I noticed you guys dropped a cohort in your SAD portion of the trial, is that because you ran into MTB. And then also, I noticed the exclusion criteria around suicide ideation were intensified and I can't tell we could be reading into that or not, would love to get any color. Thank you

[David Reese, Executive Vice President, Research and Development at Amgen]

Yeah, thanks. On the latter, I wouldn't over think that at all, I don't think there's anything there. In terms of the dosing that we do, this is always adjusted as we move through Phase 1 trials. As I indicated, we're bringing in the data now, we're taking a look at that and the constellation of clinical data, updated preclinical data and I think we'll have that altogether as we go into next year and that will determine the potential path forward for AMG 786 and just to remind everyone, this is a target that is not an incretin based target.

[Operator]

Thank you, Umer. Our next question comes from Robyn Karnauskas from Truist Securities. Please go ahead, your line is open.

[Robyn Karnauskas, Analyst at Truist Securities]

All right. Thanks for taking my question. I just have a follow-up to Salveen's question actually. So, TEZSPIRE so gotten a lot of market share, there is so much room to grow in the TED base. Can you walk me through like how Amgen can actually help grow that business because I'm confused by whether it's the hearing loss or reimbursement or what are really the levers that will actually grow that company -- grow that business, TEZSPIRE. But I think that there's a lot of room to grow and given your strength, you could probably make that work. So, how -- how do you intend to do that?

[Robert Bradway, Chairman and Chief Executive Officer at Amgen]

Okay, thank you, Robyn. So I think it's a two-part question there on TEPEZZA, we make that within two-parts to the combination of increments and Murdo, so go ahead. Vikram, why don't you start?

[Vikram Karnani, Executive Vice President at Amgen]

Yeah. Thanks for the question. As I said earlier, the -- I think one of the areas that has something that happened this year was the FDA update. Now when the -- when the label update to patients that are regardless of disease activity or duration, many of these patients who felt and more of these patients are being treated by prescribers, such as endocrinologists and ophthalmologists and that's what the team has been focused on working through making sure that our educational programs available to these physicians, so that we can widen our prescriber base from the original set of prescribers that started treating patients at launch.

So, it's really important to understand that expanding the prescriber base is a critical driver for that success going-forward. And as we've seen, new prescribers have increased 50% year-over-year. As we continue to work-through these new -- this low cast or low clinical activity patients, we also have to remember that when they are prescribed the medicine, payers need to open up access to the medicine. So our market access team has been working pretty diligently to make sure that payers continue to update their medical policies. And what we have seen is more than 30% of US covered lives are now eligible patients that can access TEPEZZA with more open or more favorable policies. This has to continue and both of these are areas that we will continue to work on as we go into early next year and beyond.

And maybe I'll turn it over to Murdo to add his comments as well.

[Murdo Gordon, Executive Vice President, Global Commercial Operations at Amgen]

Yeah, thanks, Vikram. Hi Robyn. I would add much the same way when we acquired ChemoCentryx and TAVNEOS. We realized that there was a low-level of awareness of TAVNEOS. What we did there was we added reminder messaging to some of our broader rheumatology covered sales forces to increase awareness of the data associated with TAVNEOS in ANCA-associated vasculitis patients. We've seen a corresponding increase in utilization, of course, driven by awareness of that product.

So the core team is still promoting the attributes of the product in educating physicians, but there is a broader group of field personnel, building general awareness of that product. What I think Vikram and I are talking about is, the Amgen teams that cover endocrinologist who were involved in the diagnosed -- diagnosing and treatment of Thyroid Eye Disease would be an ideal opportunity for us to broaden awareness amongst that community of endocrinologists who are diagnosing and treating Thyroid Eye Disease today to augment the great work that is happening with the rare disease teams under Vikram's leadership. So there's a number of things like that where we can scale and speed-up the building of awareness for example of the new data that Vikram was just describing and the broadening of the label language.

Vikram, also mentioned the international expansion. The original plan was quite ambitious for Horizon. We've actually increased the number of markets that we intend to file and launch in a shorter period of time, so that would be an additional opportunity for growth given the strength of the two companies now combined.

[Robert Bradway, Chairman and Chief Executive Officer at Amgen]

Might just add also Robyn, that in terms of the time course of events here, I think now that we flip back on a year of ownership of ChemoCentryx, we can really start to see the benefit of what Murdo just described kicking-in and over the last few weeks and months. So it takes a little bit a while, but I think our confidence is that over that period of time, we've been able to find ways that we can add distinctive value to that product and we're hoping to similar thing will happen with respect to the new rare disease molecules that we brought on-board, so that like walk-ins flip a light switch and suddenly things are performing on a different track, but rather come in, work together, identify the ways in which we can be additive in the marketplace. And, yeah, I'm hopeful that we'll see during the course of 2024, the momentum build for the combined organization on these products.

[Operator]

Thank you, Robyn. Our next question comes from David Risinger from Leerink Partners. Please go ahead, your line is open.

[David Risinger, Analyst at Leerink Partners]

Yes, thanks very much. So my question is on oral obesity development, regarding Phase 1 candidate 786, management has consistently emphasized that it also has a suite of oral preclinical product and so should we take-away that we should be viewing 786 as more of a wild card rather than something that Amgen has conviction and at this point? And when do you expect to be able to start Phase 1 for another oral preclinical candidate might that happen in 2024 or not until 2025. And then separately, just I wanted to squeeze in a quick financial question, do you expect Horizon product channel inventory work down in the fourth quarter to significantly constrain reported net Horizon sales in the fourth quarter? Thank you.

[David Reese, Executive Vice President, Research and Development at Amgen]

Yeah, thanks, David. Dave Reese, I'll start and then turn things over to Murdo or and Vikram. In terms of oral obesity molecule, 786 as I've said, it has a novel mechanism-of-action, it's a Phase 1 molecule, so you should view it as a Phase 1 molecule and we're bringing in as the day light and we'll take a look at that as we get into the new year and make a determination on potential path forward for that molecule. I wouldn't view it as anything more or less than a Phase 1 asset with a novel mechanism-of-action.

In terms of additional molecules and when we might file INDs and launch our first-in human trials, we'll give guidance as that portfolio advances over-time. Again, many of those molecules are targets that we emanated from deCODE genetics, our colleagues in Iceland and I'll provide further information as we get ready-to-move towards the clinic, but this is playing the long game. If you step-back, this field is in its infancy. We are just beginning to understand the complex metabolic arrangements that occur with obesity and there are clearly different forms of obesity. There's a lot of work to do and as I've indicated our intent here is to play the long game given that this is one of the major public health challenges as the 21st Century.

So let me now hand it over to Vikram and Murdo for any additional commentary on your second question.

[Murdo Gordon, Executive Vice President, Global Commercial Operations at Amgen]

Yeah, David, I just want to make sure that I heard your question right, it was about inventory and product wind-down. No, I don't think we were going to comment on that specific aspect. I think the -- our team remains focused on driving demand and working with physicians to educate them and expanding the use of Tepezza for appropriate patients and -- and that's where we're really focused too as a primary driver of net sales growth.

[Operator]

Thank you, David. Our next question comes from Chris Raymond from Piper Sandler. Please go ahead, your line is open.

[Chris Raymond, Analyst at Piper Sandler Companies]

Hey, thanks for taking the question. I just maybe a commercial question on your dermatology strategy and specifically on Otezla, just on the dynamic that you guys talk about with some free competitor drug, presumably that's Sotyktu scenario. And I think I heard you guys even calling this issue out for some time, but also with the investment that you're making in the dermatology sales force, I think, I heard you say today that you're increasing that sales force sort of 20% or so. Is the implication that once the competitor free drug program runs its course that Otezla volume should increase or what's your sense of what happens to volume? And maybe I'll ask it another way, that volume increase doesn't materialize, do you need additional derm portfolio offerings to support that added effort? Thanks.

[Murdo Gordon, Executive Vice President, Global Commercial Operations at Amgen]

Thanks for the question, Chris, this is Murdo. So let's just recapitulate what's happening in this market. At the beginning of the year, you had a number of new launches, not just Sotyktu with novel topicals coming into the market, as well as a novel oral and every one of those products had very generous free drug programs and that had two effects on Otezla. There were topical patients who would have normally moved their first systemic option who try the new topical treatments on a free drug basis. And at the same time, there was a launch of a new oral that had a very generous free drug program.

And so, Otezla which sources the majority of its growth from topical patients first systemic, in other words, biologic naive patients, Otezla got squeezed in the first and second quarter on the basis of those new programs coming into the market. What we've seen since those two events in the market is that the novel topicals have flattened out in their growth and have pulled back to some extent on their free drug offering. The other oral therapy Sotyktu continues to provide free drug and so continues to have some effect on Otezla. What we think will happen and we're already seeing the very early signals of this, is that we will continue to source our new growth from both topical patients bio naive patients, given that Otezla is the ideal for systemic agent.

We have established ourselves with really strong access in the market. So we don't need to provide free drug programs to the extent that everybody else is. And then as the contracting cycle for 2024 matures and we see what the actual access is for some of the other competitors and market, including the new oral, we should be able to give better guidance on our growth prospects for the future, but we almost certainly expect the impact of the free goods program to continue to reduce and that will help us grow Otezla.

The investments we've made are really just kicking-in this quarter. So the expansion in the field force and your number was right, by 20% the derm team was just deployed at the beginning of Q4. So they are only in-field as of a few weeks. So that impact is not in historical performance of the brand and our direct-to-consumer spend has been increased for the fourth quarter as well. So we will be able to tell you more as we go-forward, but we feel given the very large number of patients here who continue to persist on topicals, when they really are better candidates for a systemic agent, we'll convert to Otezla as we build into that market.

And just a reminder, we're the only product in the market that has a broad label regardless of severity of psoriasis. So we're optimistic and we're enthusiastic and that's why we've made these investments and we'll continue to look to add to our dermatology portfolio as we go forward.

[Operator]

Chris, our next question comes from Mohit Bansal from Wells Fargo. Please go ahead, your line is open.

[Mohit Bansal, Analyst at Wells Fargo & Company]

Thank you very much for taking my question and thank you for changing the time to make sure people can enjoy Halloween. So maybe one question on sequential growth, if I look at second quarter from third quarter, it seems like pretty much every product, even including Nplate accounts for the government budget seems to be down. I know that you warned about this in the second quarter call regarding Medicare donut hole, but can you talk a little bit about the dynamics there and how should be thinking about this going-forward?

[Murdo Gordon, Executive Vice President, Global Commercial Operations at Amgen]

Yeah, Mohit. I don't think every product is down, I think we had a number of products posting pretty significant double-digit growth in the quarter. And those are products that we continue to expect long-term growth from products like Repatha, EVENITY, Prolia, our hemo portfolio BLINCYTO in particular. So we're seeing some strength in our priority growth brands that we expect to continue to drive. Well, we did have in the quarter where a number of adjustments from prior-period on-net sales. So there was one particular adjustment on LUMAKRAS which was based on year-over-year change in the negotiations we have on reimbursement.

So in France for example, we have an early temporary access program, an ATU program, since 2021 LUMAKRAS has been available in France and we took a $22 million accrual in the quarter for those sales on the basis of price negotiations we're having in France. So we had a number of events like that relate to two price in a quarter. And as you mentioned, we are entering the donut hole for some of our products. So overall, I think unit volume growth very strong, a few price effects on select products in the portfolio and a little bit of donut hole impact.

[Operator]

Thank you, Mohit. Our next question comes from Gregory Renza from RBC Capital Markets. Please go ahead, your line is open.

[Gregory Renza, Analyst at RBC Capital Markets]

Great. Good morning, Bob and team and congrats on the progress and thanks for taking my question. Bob, just circling back to the obesity market again and as you and the team focused on really being fast being first or and/or best-in class across markets. I'm just curious how you and the team view and anticipate how different the obesity market can look and how you see the unmet need morphing by the time a program from Amgen is ready for prime-time. But would there be a need to look not just internally, but externally to accelerate those efforts, especially if things are evolving so quickly. Thanks again and congrats on the progress.

[Robert Bradway, Chairman and Chief Executive Officer at Amgen]

We're very excited about what we see so far emerging from our early work in obesity. I think over-time, you got a sense of this from Dave Reese. This is likely to be a heterogeneous disease, there are probably going to be a number of different ways to have to go at it, but what encourages us right now is what we think as an emerging differentiated profile for our approach versus the competition and maybe Murdo, you want to just jump-in and remind Gregory about the basis of differentiation that we see so far in our data from the competition and why we think that gives us a good foothold for entering the market.

[Murdo Gordon, Executive Vice President, Global Commercial Operations at Amgen]

Yeah, thanks Bob. I like the way the question was framed, sometimes gets framed as, what are you going to do with these entrenched products in the market and I'd just like to people have [Technical Issues] those market is and how much more is left unfold. What we're seeing in the early days as we're seeing a lot of patients trying these products losing weight, but then not persisting with their treatment and regaining weight. So we think that there is an opportunity in the market long-term for a product that can bring about very strong weight-loss both rapid and sustained over-time with convenient dosing. And I think that that's where 133 or maridebart cafraglutide really has an opportunity to differentiate itself from what is available in the market today

We've seen the durability of that product between doses, we think based on the Phase 2 in the number of different dosing cohorts we have being explored than that trial will be able to find the right balance of efficacy and the ability based on convenient dosing to sustain that weight-loss over-time and of course the goal here is not just to lose weight, but to improve a number of sequelae or outcomes from people who carry extra weight over the course of their life and that's what we're starting to see with others reading out in event. Trials will see more data as the medical congress has passed this next few months, but our hope is to bring about real improvement in outcomes with a highly efficacious and highly convenient product like 133.

[Operator]

Thank you, Gregory. Our next question comes from Geoff Meacham from Bank of America. Please go ahead, your line is open.

[Geoff Meacham, Analyst at Bank of America]

Good morning, guys. Thanks so much for the question. Murdo, it's been a long-time coming for Repatha [Technical Issues], are you guys finally hitting a commercial tipping point with payers or do you think there is an increasing interest among cardiologists like I guess, I wasn't sure how the current market is and looking-forward. How about the impact that you guys see it from a couple of the ongoing Phase 3s and 4s. Thank you.

[Murdo Gordon, Executive Vice President, Global Commercial Operations at Amgen]

Thanks for the question, Geoff. Yes, there has been a bit of a journey and the COVID pandemic didn't help us in our efforts to educate and convince cardiologist that they needed to do more, to be more aggressive in treating their patients LDL-cholesterol. I do think we've reached a tipping point in cardiology and I do think we've reached a tipping point with payers. We now have over 90% commercial lives covered. We anticipate being able to continue to progress our Medicare Part-D coverage and we're seeing the PCSK9 category, driven primarily by our 80% share of that category really, really starting to move now.

Our new patient volume growth is good, not just in the US, but around the world. We are now seeing more-and-more primary-care physicians using PCSK9s in combination with other drugs to more aggressively lower LDL in high-risk CVD patients. So the phases are pretty clear, payer coverage established, affordability for patients established, cardiologists now prescribing with frequency and now moving into primary-care and we'll be adding direct-to-consumer campaign investment to that mix. So, yeah, I think we've reached a tipping point on Repatha, Geoff and I'm bullish on what we can do to further expand that product both from a volume and net sales perspective.

[Operator]

Thank you, Geoff. Our next question comes from Chris Schott from J.P. Morgan. Please go ahead, your line is open.

[Chris Schott, Analyst at J.P. Morgan]

Great, thanks so much for the question. Just a question on longer-term margin. So I guess post Horizon and I guess with the ramp of your pipeline, including some potentially very large obesity studies over-time, I guess, just directionally, how should we be thinking about margins from here? I guess this is kind of 50% or slightly above 50% range, a reasonable target for the company or just any considerations we should keep in mind as we kind of balance I guess Horizon versus investment? Thank you.

[Robert Bradway, Chairman and Chief Executive Officer at Amgen]

We're not going to give updated margin guidance on this call, Chris, but I think we've been pretty clear about what the trail should look like, We're focused on remaining leading efficient player in our industry. We've been able to achieve leading operating margins over-time, is nothing that we see in the Horizon business specifically that would lead us to conclude differently from that. So we expect that at a full run-rate capitalizing on our in-place infrastructure internationally and manufacturing and process development that the margins in that business would be attractive in our hands. And the -- the reference Peter made to R&D spend earlier obviously to the extent that we get into a number of Phase 3 trials in the middle years here of the decade for LP (a) and for obesity products, that may have an effect on overall margins, but we'll have plenty of time to talk about that in advance, so that nobody surprised that the margin start moving around. So again, we've demonstrated a pretty consistent ability to manage the cost structure of the business and that's something that we're determined to maintain.

[Operator]

Thank you, Chris. Our next question comes from Evan Seigerman from BMO. Please go ahead, your line is open.

[Evan Seigerman, Analyst at BMO Capital Markets]

Hi, guys. Thank you so much for the color on the call today. So the growth in KRYSTEXXA is pretty impressive, just wondering how the mentioned $1 billion run-rate compares with your expectations going into the deal? And then taking a step-back we saw on the JAMA article about the use of type 2 diabetes net for gout, how are you seeing this in the broader gout space. Is this something we should be concerned about when it comes to KRYSTEXXA? Thank you.

[Robert Bradway, Chairman and Chief Executive Officer at Amgen]

Maybe we take this in two-parts. First, with respect to KRYSTEXXA, I'd say, KRYSTEXXA is performing very well and we believed it would, again we think there is a tremendously large unmet medical need here and that KRYSTEXXA with methotrexate is serving the marketplace well, so we're looking-forward to working with our colleagues on it. And overall, I'd say that the business is proceeding as we thought it would to this point, the things that we were that we thought were important to have in-hand like the chronic indication for Tepezza, like international datasets that were made available with the OPTIC-J trial, like the progress we've made in Brazil, etc, those were things that we wanted to have in-hand and now do.

And again [Indecipherable] also performing very much in-line as we expected it would. So we see three growth opportunities there and we see ways for the Amgen based business to add value to what Vikram will be running now in our rare business area.

And then with respect to the question on diabetes, I'll ask Dave...

[David Reese, Executive Vice President, Research and Development at Amgen]

I mean I think, the broader context here is important. These patients have severe uncontrolled gout. They are often facing amputations, for example, because of the severity of the disease. And so there are large number of these patients that are currently not being served in the market in clinical practice. And so our focus is on reaching those patients where the quality-of-life impediments are quite significant and the effects of the drug can be quite dramatic in improving the disease course and improving that sort of quality-of-life. So that's the focus right now and I wouldn't get distracted by some of the other potential associations.

[Robert Bradway, Chairman and Chief Executive Officer at Amgen]

Operator, I think we have two more calls in the long here, so why don't we take two more and then we'll thank our colleagues and let them get on with the day.

[Operator]

Certainly. Thank you, Evan. Our next question comes from Tim Anderson from Wolfe Research. Please go ahead, your line is open.

[Tim Anderson, Analyst at Wolfe Research]

Thank you. On AMG 133, maybe this is a silly question, but is it at all possible that you can start Phase 3 in 2024, the main way you do this would be to do an early or interim look of sorts at the Phase 2 trial before the primary completion date. And I know you're guiding for top line on that in late 2024, thank you.

[Robert Bradway, Chairman and Chief Executive Officer at Amgen]

Yeah, I mean, as we go through 2024, we'll give guidance on what we expect in the Phase 3 program to launch. As is customary in these programs, we will take an interim look, that will remain blinded, we will not release that externally, because this is a 52-week study, but that will help at least guide our thinking. Also recall that the FDA requires a certain safety database before you launch Phase 3 trials here. And so as we get into next year and start to have those conversations, we'll be able to give more definitive guidance as to when you can expect the launch of the Phase 3 program and what that suite of studies might look like.

And let's take our last question.

[Operator]

Thank you, Tim. Our last question will come from Colin Bristow from UBS. Please go ahead, your line is open.

[Colin Bristow, Analyst at UBS Group]

Hi. Good morning and thanks for taking the questions. Maybe just a quick follow-up on 133. Just as we think about this from a commercial perspective, this is obviously an antibody backbone. It's going to be an injectable. Just in light of margin that's achievable with this, just help us think through that. Thanks.Well, Colin, you rightly point out that this is an antibody backbone. The properties of that, obviously, as I was alluding to earlier, could be that you can dose it much less frequently than you have to with the current therapies on the market. We also think, given the potential differentiation on efficacy and possibly tolerability, that we will be able to establish a very strong position in the market for people who need rapid, deep, and sustained weight-loss that they can manage over time, so that they can gain the benefits, the reduction in cardiovascular risk, the improvement in outcomes from that treatment. But we expect, as Dave said, to develop this product across a suite of Phase 3 experiments and we expect to be able to take a decent share of the market, which will drive a good return on our investment in that product.

[Operator]

Thank you, Colin. I would now like to turn the call back over to Bob Bradway for closing remarks.

[Robert Bradway, Chairman and Chief Executive Officer at Amgen]

Okay, well, let me thank all of you for joining us this morning. And we hope that the choice of doing this in the morning frees you up to go enjoy the afternoon and evening of trick-or-treating wherever you are. But we again, appreciate your support. It's been an eventful few months at Amgen. And we'll look forward to having an opportunity to regather with you and report on the fourth quarter when we get to the new year. Many thanks.

[Operator]

[Operator Closing Remarks]

Participants

Corporate Executives

• Justin Claeys, Vice President of Investor Relations
• Robert Bradway, Chairman and Chief Executive Officer
• Murdo Gordon, Executive Vice President, Global Commercial Operations
• Vikram Karnani, Executive Vice President
• David Reese, Executive Vice President, Research and Development
• Peter Griffith, Executive Vice President and Chief Financial Officer

Analysts

• Michael Yee, Jefferies Financial Group Inc.
• Yaron Werber, TD Cowen
• Terence Flynn, Morgan Stanley
• Salveen Richter, The Goldman Sachs Group, Inc.
• Jay Olson, Oppenheimer Holdings Inc.
• Umer Raffat, Evercore ISI
• Robyn Karnauskas, Truist Securities
• David Risinger, Leerink Partners
• Chris Raymond, Piper Sandler Companies
• Mohit Bansal, Wells Fargo & Company
• Gregory Renza, RBC Capital Markets
• Geoff Meacham, Bank of America Co.
• Chris Schott, J.P. Morgan
• Evan Seigerman, BMO Capital Markets
• Tim Anderson, Wolfe Research
• Colin Bristow, UBS Group AG