Q3 2019 Earnings Call

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Arvind Sood: I would now like to introduce Arvind Sood, Vice President of Investor Relations. Mr. Sood, you may now begin. Okay, thank you, Ian. Good afternoon, everybody. Thanks for joining us today. We have a lot of ground to cover, so I'll keep my comments very brief. I'd like to begin by acknowledging those who are new to their coverage of our company, with the most recent being Geoff. Also, I want to correct an oversight on my part from a Q2 call as I inadvertently forgot to acknowledge Evan Seigerman of Credit Suisse who initiated coverage back in the second quarter. A warm welcome to both Evan and Geoff.

I would I like to choose Arvind sued vice President of Investor Relations Mr. suit you may now begin okay. Thank you and good afternoon, everybody. Thanks for joining us today. So we have a lot of grown to cover so I'll keep my comments very brief.

I'd like to begin by acknowledging those who are new in their coverage or for a company with the most recent being Geoff Meacham Who's not bank of America Merrill Lynch.

To want to correct and oversight on my part from a Q2 calls as I inadvertently forgot to acknowledge Evan Seigerman of credit Suisse, who initiated back in the second quarter.

A warm welcome to go a covenant yep okay.

Arvind Sood: Okay, so on to our Q3 results. Continued execution on our strategy, launch progress, and pipeline advancement are some key themes that come to mind as I think about our third quarter results. To discuss these in some detail, I'm joined today by Bob Bradway, our chairman and CEO. After Bob's comments, our CFO, David Milleen, will review our financial results for the third quarter and provide updated guidance for 2019. Our Head of Commercial Operations, Murdo Gordon, will then review our product performance, followed by Dave Reese, our Head of R&D, who will provide a pipeline update. We'll use slides to guide our discussion today, and a link to those slides has been sent separately. Just a reminder that we'll use non-GAAP financial measures in today's presentation.

Okay. So onto our Q3 results continued execution.

On our strategy launch progress in pipeline advancement are some key themes have come to mind as I think about a third quarter results.

That's cool season, some detail I'm joined today by Bob Bradway, our chairman and CEO .

After Bob's comments, our CFO , David Molina, who will review our financial results for the third quarter and provide updated guidance for 2019.

Our head of commercial operations Murdo Gordon will then review or product performance, followed by Dave restart head of R&D who'll provide a pipeline update.

Well you slides to guide our discussion today and a link to those slides what's on separately.

Just a reminder, that will use non-GAAP financial measures in today's presentation and some of those statements would be forward looking statements or 10 kids subsequent SEC filings identify factors that could cause our actual results could differ materially. So good that I would like to turn the call it over to Bob Bob Okay. Thank you urban and good afternoon.

Arvind Sood: And some of the statements will be forward-looking statements. Our 10K and subsequent SEC filings identify factors that could cause our actual results to differ materially.

Arvind Sood: So with that, I would like to turn the call over to Bob. Okay?

Bob Bradway: Okay, thank you Arvind, and good afternoon everyone. I'll begin the call today with some comments about our third quarter performance. While also touching on the industry environment and how we're responding to it strategically. Several years ago, we realized the need to transform certain aspects of our business to stay ahead of the curve and position ourselves for sustained long-term growth. Anticipating pressure on drug pricing, for example, we emphasized the importance of innovative medicines that can grow over time through volume and access. And that's what we're seeing again in the third quarter from brands like Prolia, Patha, and Amavig, which generated double-digit volume increases. It's not just these brands that are exhibiting volume growth. A number of our specialty products, including Parsiviv, Coprolis, and L'Infito, also registered double-digit volume increases.

Everyone.

I'll begin the call today with some comments about our third quarter performance.

So touching on the industry environment, and how we're responding to strategically.

Several years ago, we realize the need to transform certain aspects of our business to stay ahead of the curve and position ourselves from a sustained long term growth.

Anticipating pressure on drug pricing for example, we emphasized the importance of innovative medicines that can grow overtime through volume and access increases and that's what we're seeing again in the third quarter from brands like Prolia.

So the name of big generating double digit volume increases.

It's not just these brands that are exhibiting volume growth a number of our specialty products, including parcel do promos and Cyto also registered double digit volume increases and in aggregate for our portfolio. This is the seventh quarter in a row that we've reported volume growth globally, we think that bodes well for a long.

Bob Bradway: And in aggregate for our portfolio, this is the seventh quarter in a row that we've reported volume growth globally. We think that bodes well for our long-term outlook. As you're aware, drug prices have indeed come under pressure. In the U.S., for the first time in more than 40 years, as the Council of Economic Advisors recently reported, the CPI Prescription Drug Index actually declined over the previous 12 months by 0.7%. This broad price decrease in 2019 is consistent with our own experience, against this backdrop, a flow of innovative medicines that address major. [inaudible] Dave Reese will discuss this in a moment.

Term outlook.

As you're aware drug prices have indeed come under pressure.

In the U.S. for the first time in more than 40 years as the council of economic Advisors recently reported.

C P I prescription drug index actually declined over the previous 12 months by 0.7%.

Broad price decrease in 2019 is consistent with our own experience.

Against this backdrop.

Flow of innovative medicines that address major.

Unmet medical needs will be more important than ever.

Bob Bradway: We're excited about our pipeline, and we're investing to rapidly advance it. Thanks to a set of productivity capabilities embedded throughout our organization, we've been able to increase our R&D spending this year, up 8% in the third quarter, while keeping overall expenses flat. We've been especially focused on building differentiated capabilities in discovery research. For example, we think recent collaborations with the UK Biobank and Intermountain Healthcare will enable us to extend our industry-leading human genetics capability. Over time, we expect a better understanding of human genetics will enable us to dramatically improve both R&D cycle times and success rates. And with our new evolution deal completed earlier this year, we're positioning Amgen for what we anticipate will be a new era of multi-specific drug development, focusing initially We made a strategic decision several years ago to build a branded biosimilars business, leveraging our world-class biologics development and manufacturing capabilities.

The increase will discuss in a moment, we're excited about our pipeline and we're investing to rapidly advancing.

Thanks to a set of productivity capabilities embedded throughout our organization, we've been able to increase our R&D spending this year up 8% to know third quarter, well keeping overall expenses flat.

We've been especially focused on building differentiated capabilities in discovery research.

For example, we think recent collaborations with the UK Biobank, Intermountain healthcare will enable us to extend our industry, leading human genetics capabilities.

Overtime, we expect to better understanding of human genetics will enable us to dramatically improve both R&D cycle times and success rates.

And with our new evolution deal completed earlier this year, we're positioning Amgen for what we anticipate will be a new era of multi specific drug development.

Focusing initially on targeted protein degradation.

We made a strategic decision several years ago to build a branded bio similars business, leveraging our world class Biologics development manufacturing capabilities.

Bob Bradway: Our first three biosimilars, M. javidii, M. javidii, M. javidii, M. javidii,

First three bio Similars M. davita tension tea, and then basi generated about $173 million into the third quarter and or Annualizing at approximately $700 million.

Bob Bradway: Kanjinti and Mbassi generated about $173 million in the third quarter and are annualizing at approximately $700 million. We expect our growing portfolio of reliable, high-quality biosimilars to be an important growth opportunity for us in the years ahead. The demand for quality health care is growing globally, and this has led us to steadily expand our geographic presence. In the third quarter, our product sales outside the U.S. grew by 15 percent, with volume growth of 23 percent. We expect sales outside the US to account for an increasing percentage of our total product revenues over time. We're excited, for example, to have recently launched Repatha in China, our first product entry into the world's second largest pharmaceutical market. We expect this to become an important market for us over time, just as we can now see Japan emerging as an important new opportunity for us. In 2020, we look forward to assuming full ownership of our very successful collaboration with Astellas in Japan. The world's third largest pharmaceutical market. We think our portfolio of products is well suited to the needs of an aging population in China and Japan, in particular.

We expect our growing portfolio reliable high quality bio similars to be an important growth opportunity for us in the years ahead.

The demand for quality health care is growing globally and this has led us to steadily expand our geographic presence.

In the third quarter or product sales outside the U.S. grew by 15% of with volume growth of 23%.

We expect sales outside the U.S. to account for an increasing percentage of our total product revenues over time.

We're excited for example to have recently launched Repatha in China, a first product entries into the world second largest pharmaceutical market.

We expect this to become an important market for us through time, just as we can now see Japan emerging as an important new opportunity for us.

2020, we look forward to assuming full ownership of our very successful collaboration with a stellus in Japan.

World third margins from a market.

We think our portfolio of products as well suited to the needs of an aging population in China and Japan in particular.

Finally, let me reiterate that we're excited about our planned acquisition of would have Otezla as announced in August .

Amgen has been a leader in the treatment of inflammatory diseases for decades within Brazil, Our recent launch of Ams <unk> and Europe pipeline opportunities like kids apparel, you, Matt well Tesla will significantly strengthen our information portfolio.

It will also enhance our geographic trends as we're acquiring global rights to the product, which is approved in more than 50 markets worldwide.

We expect fuel Tesla acquisition to close before the end of the fourth quarter, giving us an asset that will add to our long term growth.

Of course, we look forward to welcoming new Tesla team Amgen.

Our capital allocation priorities remain intact.

Can you to invest in the growth of our business internally and through business development aligned with our stated strategy. While also providing attractive returns to our shareholders are growing dividend and continued share repurchases.

Bob Bradway: Finally, let me reiterate that we're excited about our planned acquisition of Tesla, which was announced in August. Tesla has been a leader in the treatment of inflammatory diseases for decades. With Enbrel, our recent launch of Amgevita in Europe, and pipeline opportunities like Tezapelumab, Tesla will significantly strengthen our information portfolio. It will also enhance our geographic setting.

Before I turn the call over to David Let me just note that I'll say, a few words about him and his planned retirement at the end of our call David over to you. Okay. Thanks, Bob.

Overall, we're pleased with the strong performance in the third quarter as investments in support of or newer products continued to deliver volume driven growth, including over 20% in our ex us markets, enabling stable performance again this quarter.

Bob Bradway: As we're acquiring global rights to the product, which is approved in more than 50 markets worldwide, we expect the Otesla acquisition to close before the end of the fourth quarter, giving us an asset that will add to our long-term growth. Of course, we look forward to welcoming the Otesla team to Amgen.

Turning to the financial results on page six of the slide deck.

Worldwide revenues at 5.7 billion declined 3% year over year.

Worldwide product sales at 5.5 billion declined 1% year over year as a growth.

For our newer products was slightly outpaced by declines in are mature brands impacted by increasing competition due to patent expirations.

David M. Reese: Our capital allocation priorities remain intact. We will continue to invest in the growth of our business internally and through business development aligned with our stated strategy, while also providing attractive returns to our shareholders through a growing dividend and continued share repurchase. Before I turn the call over to David, let me just note that I'll say a few words about him and his planned retirement at the end of our call. David, over to you.

Other revenues declined to 120 million year over year due to a prior year milestone payment.

We expect full year other revenues of between 1.1 and 1.2 billion.

non-GAAP operating income of 2.8 billion declined 6% from prior year.

non-GAAP operating margin was 51% for the third quarter as we continue to make incremental investments in our products and pipeline.

To drive growth and maximize shareholder value.

Consistent with prior guidance third quarter non-GAAP operating expenses were flat year over year, we expect full year 2019 operating expenses on an absolute basis.

David M. Reese: Okay, thanks, Bob. Overall, we are pleased with the strong performance in the third quarter, as investments in support of our newer products continue to deliver volume-driven growth, including over 20% in our ex-US markets, enabling stable performance again this quarter. Turning to the financial results on page 6 of the slide deck, worldwide revenues of $5.7 billion declined 3% year over year. Worldwide product sales at $5.5 billion declined 1% year over year as growth for our newer products was slightly outpaced by declines in our mature brands impacted by increasing competition due to patent expiration. Other revenues declined by 120 million year over year due to a prior year milestone payment. We expect full-year other revenues of between $1.1 and $1.2 billion. Non-Gap Operating Income of $2.8 billion declined 6% from the prior year.

To be ups slightly versus 2018.

As a reminder, we expect to see a 15% increase in non-GAAP operating expenses in Q4 versus Q3, reflecting the typical pattern for the business.

On a non-GAAP basis cost of sales as a percent of product sales was flat year over year at 13.9%.

We continue to anticipate 2019 full year cost of sales on an absolute basis.

To be slightly up based on volume growth, reflecting our industry, leading manufacturing capability.

As you begin to model 2020 financials note that we expect cost of sales as a percent of product sales to be generally consistent with 2019.

Third quarter research and development expenses of 977 million were 8% higher year over year due to increased investments in support of our early and late stage oncology programs.

Research and development expenses.

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David M. Reese: Non-GAAP Operating Margin was 51% for the third quarter as we continue to make incremental investments in our products and pipelines to drive growth and maximize shareholder value. Consistent with prior guidance, third quarter non-GAAP operating expenses were flat year over year. We expect full-year 2019 operating expenses, on an absolute basis, to be up slightly versus 2018. As a reminder, we expect to see a 15% increase in non-GAAP operating expenses in Q4 versus Q3, reflecting the typical pattern for the business. On a non-gap basis, cost of sales as a percent of product sales was flat year over year at 13.9%.

17.9%.

For the full year 2019, we continue to expect the R&D spend trajectory on an absolute basis to increased by a high single digit percentage as our pipeline advances.

As communicated in our August coal, we highlighted that we expect 2020 R&D investment to increase by about 500 million as we invest in our innovative pipeline programs and new Otezla indications.

SGN a expenses decreased 5% on a year over year basis in Q3.

Driven primarily by reduced general and administrative expenses.

And productivity efforts.

We expect that for the full year SGN expense on an absolute basis will decline year over year.

With regard to 2020 in addition to the six to 700 million increase related to the Otezla acquisition. We also expect SGN expense for the base business to increase modestly year over year, as we continue to expand or international business, including China engine.

David M. Reese: We continue to anticipate 2019 full-year cost of sales on an absolute basis to be slightly higher based on volume growth, reflecting our industry-leading manufacturing capability. As you begin to model 2020 financials, note that we expect cost of sales as a percent of product sales to be generally consistent with 2019. Third quarter research and development expenses of $977 million were 8% higher year over year due to increased investments in support of our early and late stage oncology programs. Research and Development Expenses as a Percent of Product Sales were 17.9 percent.

Pan Rover bio similar business and begin product launch preparation for advancing innovative oncology and non oncology pipelines. These investments will exceed the benefits over 2020 productivity initiatives.

Other income and expenses were a net 199 million expense in Q3. This was favorable by 23 million on a year over year basis.

We expect full year 2019 expense of about 675 million.

Looking ahead to 2020, we expect all Oh, I, Andy net expense to increase reflecting a cash scroll down for the Otezla acquisition.

David M. Reese: For the full year 2019, we continue to expect the R&D spend trajectory on an absolute basis to increase by a high single-digit percentage as our pipeline advances. As communicated in our August call, we highlighted that we expect 2020 R&D investment to increase by about $500 million as we invest in our innovative pipeline programs and new OTESLA indications. SG&A expenses decreased 5% on a year-over-year basis in Q3, driven primarily by reduced general and administrative expenses and productivity efforts.

The non-GAAP tax rate was 15.2% for the quarter 2.2 point increase versus the third quarter 2018.

Primarily due to a prior year tax benefit associated with intercompany sales under us corporate tax reform.

non-GAAP net income decreased 8% and non-GAAP earnings per share decreased 1% year over year for the third quarter to $3.66 per share.

David M. Reese: We expect that for the full year, SG&A expense on an absolute basis will decline year over year. With regard to 2020, in addition to the $600 to $700 million increase related to the Otesla acquisition, we also expect SG&A expense for the base business to increase modestly year over year as we continue to expand our international business, including China and Japan, grow our biosimilar business, and begin product launch preparation for our advancing innovative oncology and non-oncology pipeline. These investments will exceed the benefits of our 2020 Productivity Initiative.

Turning next to cash flow in the balance sheet on page seven.

Free cash flow for the third quarter of 2019 was 3.2 billion. This was inline with the results from the third quarter last year of 3.1 billion.

Consistent with our principles, we continue to provide significant cash returns to shareholders. In Q3, we deployed 1.2 billion to repurchase 6.2 million shares at an average price of $188 per share.

We plan to repurchase an incremental one to 1 billion over shares in Q4.

Additionally, our third quarter dividend was $1.45 per share an increase of 10% over last year.

Cash and investments totaled 20.9 billion a decrease of approximately month 9 billion from the third quarter of last year.

David M. Reese: Other income and expenses were a net $199 million expense in Q3. This is favorable by $23 million on a year-over-year basis. We expect full year 2019 OI&E expenses of about $675 million. Looking ahead to 2020, we expect OI&E net expense to increase, reflecting a cash drawdown for the Otesla acquisition.

Primarily due to share repurchases and debt repayments.

Our debt balance stands at 29.8 billion as of September Thirtyth.

A reduction of 4.6 billion from a year ago, as we paid down maturing debt.

Turning to the outlook for the business for 2019 on page eight.

We remain on track with our plans to deliver solid results, while investing for the future.

David M. Reese: The non-GAAP tax rate was 15.2% for the quarter, a 2.2 point increase versus the third quarter of 2018, primarily due to a prior year tax benefit associated with intercompany sales under U.S. corporate tax reform. Non-GAAP net income decreased 8%, and non-GAAP earnings per share decreased 1% year over year for the third quarter to $3.66 per share. Turning next to cash flow in the balance sheet on page 7, free cash flow for the third quarter of 2019 was $3.2 billion. This was in line with the results from the third quarter last year of $3.1 billion. Consistent with our principles, we continue to provide significant cash returns to shareholders. In Q3, we deployed $1.2 billion to repurchase 6.2 million shares at an average price of $188 per share.

With regard to or updated outlook for 2019 revenue, we're increasing our revenue guidance to 22.8 to 23 billion from our prior range of 22.4 to 22.9 billion.

This reflects solid revenue performance as well as ongoing competitive dynamics associated with Neulasta and other legacy products.

We're also increasing our 2019 non-GAAP earnings per share guidance to 14, 20 to 14 45 per share.

From the previous $13 and 75 to $14 in 30 cents.

In terms of the non-GAAP tax rate or 2019 guidance range of 14% to 15% is unchanged.

We expect capital expenditures of approximately $650 million this year.

Note that our guidance excludes the impact to deal with Tesla acquisition, which we expect to close by year end.

As we approach the end of 2019, we're pleased with our progress again. This year as is customary will provide full 2020 guidance on our January call.

David M. Reese: We plan to repurchase an incremental one to one and a half billion of our shares in Q4. Additionally, our third-quarter dividend was $1.45 per share, an increase of 10% over last year. Cash and Investments totaled $20.9 billion, a decrease of approximately $9 billion from the third quarter of last year, primarily due to share repurchases and debt repayment. Our debt balance stands at $29.8 billion as of September 30th, a reduction of $4.6 billion from a year ago as we pay down maturing debt.

This concludes the financial update I now turn the call over to Murdo.

Thanks, David and good afternoon, everyone you find product sales information starting on slide 10.

In the third quarter volumes grew by 3% year over year, which represents as Bob mentioned, the seventh consecutive quarter volume growth net selling prices declined 4% year over year, resulting in reported net sales declining by 1%.

We have a stable outlook for our base business and 2020 and with the anticipated addition, although Tesla we expect revenue growth next year.

David M. Reese: Turning to the outlook for the business for 2019, on page 8, we remain on track with our plans to deliver solid results while investing for the future. With regard to our updated outlook for 2019 revenue, we're increasing our revenue guidance to $22.8 to $23 billion from our prior range of $22.4 to $22.9 billion. This reflects solid revenue performance as well as ongoing competitive dynamics associated with New LASTA and other legacy products. We're also increasing our 2019 non-GAAP earnings per share guidance to 1420 to 1445 per share from the previous $13.75 to $14.30. In terms of the non-GAAP tax rate, our 2019 guidance range of 14 to 15% is unchanged. We expect capital expenditures of approximately $650 million this year.

Now, let me share some product details starting with Prolia on slide 12.

Earlier delivered another strong quarter with 18% growth year over year, driven by volume coming from increasing rates of new patient growth as well as strong repeat rates recall that prolia experience is consistent seasonal trends.

The launch of those NFC, which has been recognized by the osteoporosis community as a highly innovative therapy is off to a solid start a sales more than doubled sequentially.

Worldwide 8.9 million fractures due to osteoporosis occur each year, that's a fracture every three seconds.

In the U.S. there are approximately 2 million patients who have had an osteoporosis related fracture and our greatest risk of having another fracture within the next one to two years. We believe is entity is an important option to offer these patients.

Within the U.S., we've received a permanent reimbursement and J code, which should facilitate uptake in Japan, which currently represents the majority of the Vanity sales uptake has been very encouraging if anything it creates a solid foundation in Japan, upon which we anticipate adding Tesla and that will keep us inability to deliver.

David M. Reese: Note that our guidance excludes the impact of the OTESLA acquisition, which we expect to close by year-end. As we approach the end of 2019, we are pleased with our progress again this year. As is customary, we will provide full 2020 guidance on our January call. This concludes the financial update. I now turn the call over to Murdo.

Our international expansion strategy.

Next on sort of pass on Slide 14, Q3 sales grew by 40% year over year as we continue to be the market leader of the Pcsknine class worldwide unit girls was 87% year over year driven by the you. This new to brand U.S. prescriptions are steadily improving growing at 58% year over year.

Murdo Gordon: Thanks David, and good afternoon everyone. You'll find product sales information starting on slide 10. In the third quarter, volumes grew by 3% year-over-year, which represents, as Bob mentioned, the seventh consecutive quarter of volume growth. However, net selling prices declined 4% year-over-year, resulting in reported net sales declining by 1%.

Although we're pleased with the growing use of repatha and helping to lower LDL cholesterol. The fact still remains that cardiovascular disease is much to comment in our society. Today every year 30 million people globally will suffer a heart attack or a stroke approximately seven out of 10 adults in the us with cardiovascular disease.

Murdo Gordon: We have a stable outlook for our base business in 2020, and with the anticipated addition of Otesla, we expect revenue growth next year. Now, let me share some product details, starting with Prolia on slide 12. Prolia delivered another strong quarter with 18% growth year-over-year, driven by volume coming from increasing rates of new patient growth, as well as strong repeat rates. Recall that Prolia experiences consistent seasonal trends.

The elevated LDL C. Despite optimal that learning treatment.

The importance of lowering LDL C levels as a means to lower the risk of cardiovascular event in high risk adults is increasingly recognized by professional cardiology societies, including American Heart Association, The American College of Cardiology, and most recently the European Society of Cardiology, which now we recommend.

LDL C levels of less than 55 milligrams per deciliter in high risk patients and less than 40 milligrams per deciliter in patients with two prior cardiovascular that's pcsknine inhibitors like Repatha complete critical role in helping patients achieved their cholesterol lowering objective.

Murdo Gordon: The launch of Avenity, which has been recognized by the osteoporosis community as a highly innovative therapy, is off to a solid start, as sales more than doubled sequentially. Worldwide, 8.9 million fractures due to osteoporosis occur each year, a fracture every three seconds. In the U.S., there are approximately 2 million patients who have had an osteoporosis-related fracture and are at greatest risk of having another fracture within the next one to two years. We believe Eventity is an important option to offer these patients. Within the U.S., we've received a permanent reimbursement in J-code, which should facilitate uptake. In Japan, which currently represents the majority of Evenity sales, uptake has been very encouraging. Evenity creates a solid foundation in Japan upon which we anticipate adding a Tesla, and that will keep us in the ability to deliver on our international expansion strategy. Next, on slide 14.

Removing barriers for Pcsknine use is an important factor in ensuring this health crisis is effectively addressed in the U.S.. We're pleased that access is improving.

72% of commercial plans now require physician attestation, only and that's up from just 23% last year.

Additionally, more plans are removing specialty pharmacy mandates moving repatha to more accessible retail pharmacies, which no fill in majority of Repatha prescriptions overall in the U.S. commercial approval rates increased from 39% to 59% and the abandonment rate for Medicare patients has improved meaning.

Really.

Affordability is a concern for Medicare patients and in 2020 approximately half of all Medicare patients, who have prescribed repatha will have an affordable copay of less than $50.

Murdo Gordon: Q3 sales grew by 40% year-over-year as we continue to be the market leader of the PCSK9 class. Worldwide unit growth was 87% year-over-year driven by the U.S. New-to-brand U.S. prescriptions are steadily improving, growing at 58% year-over-year. Although we're pleased with the growing use of Repatha in helping to lower LDL cholesterol, the fact still remains that cardiovascular disease is much too common in our society today. Every year, 30 million people globally will suffer a heart attack or a stroke. Approximately 7 out of 10 adults in the U.S. with cardiovascular disease have elevated LDL-C, despite optimal lipid-lowering treatment. The importance of lowering LDL-C levels as a means to lower the risk of cardiovascular event in high-risk adults is increasingly recognized by professional cardiology societies, including the American Heart Association, the American College of Cardiology, and most recently, the European Society of Cardiology, which now recommends LDL-C levels of less than 55 milligrams per deciliter in high-risk patients and less than 40 milligrams per deciliter in patients with two prior cardiovascular events.

Although the blended net price of Repatha in the U.S. declined in Q3 2019 versus the previous year, partly due to contracting for better access and partly with the advent of the lower list Repatha list price Repatha net selling price was relatively stable sequentially.

With lower list price Repatha now representing over 50% of total prescriptions. The original list price SK, you will no longer be available for sale effective December 31st of 2019.

Now on to him as they go on slide 15 on a quarter over quarter basis unit volume grew 12%.

Although reported net sales declined by 20%, primarily due to $19 million of unfavorable changes in accounting estimates for sales discounts in prior periods. These adjustments result from a higher proportion of our paid business coming from the lower priced Medicaid population than initially anticipated.

As a reminder, we reported $20 million a favorable changes in accounting estimates in Q4 of 2018, demonstrating the impact on net price of early variability in source of business.

Considering other a 4 million migraine patients in the U.S., who are eligible for CGM RP treatment hemolytic has significant potential remaining to penetrate this market. Each week approximately 7000 patients start see GRP therapy and to date more than 260000 patients have been prescribed DEMA Vic.

Murdo Gordon: PCSK9 inhibitors, like Repatha, can play a critical role in helping patients achieve their cholesterol-lowering objectives. Therefore, removing barriers to PCSK9 use is an important factor in ensuring this health crisis is effectively addressed. In the U.S., we're pleased that access is improving, as 72% of commercial plans now require physician attestation only, and that's up from just 23% last year. Additionally, more plans are removing specialty pharmacy mandates, moving Repatha to more accessible retail pharmacies, which now fill a majority of Repatha prescriptions. Overall, in the U.S., commercial approval rates increased from 39% to 59%, and the abandonment rate for Medicare patients has improved meaningfully. Affordability is a concern for Medicare patients, and in 2020, approximately half of all Medicare patients who are prescribed Repatha will have an affordable copay of less than $50.

Additionally, the number of prescribers is consistently increasing as more than 30000 physicians have no prescribed came as a since launch including 10000 primary care prescribers.

Even as big as a market leader with 50% of total prescriptions exiting Q3.

Regarding pricing, we're pleased to see the transition of patients from our free drug program to paid demand is progressing nicely increasing from 74% in Q2 to 81% at the end of Q3.

Additionally, our recent agreement with Cvs Caremark rounds out our strong access position going into 2020.

Moving to our hematology and oncology business the portfolio six brands collectively totaled $1.2 billion in the quarter growing again by double digits at 12% on a year over year basis.

Murdo Gordon: Although the blended net price of Repata in the U.S. declined in Q3 2019 versus the previous year, partly due to contracting for better access and partly with the advent of the lower list price Repata, the net selling price was relatively stable sequentially. With lower list price Repatha now representing over 50% of total prescriptions, the original list price SKU will no longer be available for sale effective December 31st, 2019. Now on to Amovig on slide 15.

As for some of the larger brands within this portfolio Lakes Chiva grew 10% in Q3 year over year, driven by volume as a remainder of the NCCN guidelines recognized 60, though with preferred status over zoledronic acid.

He said in castration resistant prostate cancer reinforcing XT the superiority in this indication.

Colas grew 15% year on year, driven primarily by 12% volume growth with the breadth of prescribers continuing to increase.

We continue to invest behind Kyprolis and add to the growing body of clinical evidence demonstrating kyprolis important role in the treatment multiple myeloma as the recent results of the candour study indicate and you'll hear more on this from Dave release.

Murdo Gordon: On a quarter over quarter basis, unit volume grew 12%, although reported net sales declined by 20%, primarily due to $19 million of unfavorable changes in accounting estimates for sales discounts and prior periods. These adjustments result from a higher proportion of our paid business coming from the lower priced Medicaid population than initially anticipated. As a reminder, we reported $20 million of favorable changes in accounting estimates in Q4 of 2018, demonstrating the impact on net price of early variability and source of business. Considering there are 4 million migraine patients in the U.S. who are eligible for CGRP treatment, Amavic has significant potential remaining to penetrate this market. Each week, approximately 7,000 patients start CGRP therapy, and to date, more than 260,000 patients have been prescribed Amavic. Additionally, the number of prescribers is consistently increasing, as more than 30,000 physicians have now prescribed Amavic since launch, including 10,000 primary care prescribers.

Moving on to end Bro sales increased 6% year over year, driven by increases in net selling price and changes in accounting estimates offset by unit volume declines of 2% due to continued competition.

Q3 results included a benefit of approximately $60 million and changes in accounting estimates related to sales discounts.

We're making investments in ambarella, including the Enbrel, many with auto touch device multi use product, which continues to receive positive feedback from rheumatoid arthritis patients overall.

We expect volume trends to continue while we anticipate a modest benefit from net selling price on a full year basis in 2019.

We are investing substantially behind or inflammation portfolio, which has been strengthened by the reaffirmation of Ambrose intellectual property. Our pending addition of Otezla, our bio similars of M., Davita and ABP 710, which is our biosimilar remicade the potential of TESTOPEL enough for asthma as well as a number of other asset.

Et cetera earlier in the R&D pipeline.

Now onto some of our more mature brands on slide 20 in Q3, Neulasta sales declined 32% year over year with a 31% decline in the U.S.

Exit share of new last in the U.S. was comparable to Q2 at just under 80% in the long acting segment with on pro unit volume declining slightly on a sequential basis.

We're encouraged by how well on pros performed so far demonstrating the confidence that our customers have in the reliability and quality of our supply along with our broader commercial services.

Murdo Gordon: Amovig is the market leader with 50% of total prescriptions exiting Q3. Regarding pricing, we're pleased to see the transition of patients from our free drug program to paid demand is progressing nicely, increasing from 74% in Q2 to 81% at the end of Q3. Additionally, our recent agreement with CVS Caremark rounds out our strong access position going into 2020. Moving to our hematology and oncology business, the portfolio of six brands collectively totaled $1.2 billion in the quarter, growing again by double digits at 12% on a year-over-year basis. As for some of the larger brands within this portfolio, Xgeva grew 10% in Q3, year-over-year, driven by volume. As a reminder, the NCCN guidelines recognize Xgeva with preferred status over Zoledronic Acid in castration-resistant prostate cancer, reinforcing Xgeva's superiority in this indication.

We anticipate that additional competitors could launch in the U.S. is sometime in the future, but the timing is uncertain, reflecting the complexity of developing in manufacturing molecules in this space.

Looking forward recall that Q4 2018 benefited from a 55 million dollar BARDA order that we do not anticipate repeating this quarter.

Finally outside of the U.S. Neulasta declined 40% due to increasing competition.

Switching to nephrology, starting on slide 21, Q3, Epogen sales declined 15% due to lower net selling price, which is a function of our contractual pricing commitments with davita.

Meanwhile, our ines declined 5% year over year in Q3, driven by lower volume due to increased competition. We expect aranesp sales to continue to decline at a faster rate with both long acting and short acting competition in the us.

Turning to sense bar on slide 23, as a result of some at risk generic launches year over year sales declined 73% $109 million for the quarter.

Given the ongoing legal proceedings, the remains uncertainty about the magnitude of future U.S. Sensipar sales.

Murdo Gordon: Katkolis grew 15% year-on-year, driven primarily by 12% volume growth, with the breadth of prescribers continuing to increase. We continue to invest in Kyprolis and add to the growing body of clinical evidence demonstrating Kyprolis' important role in the treatment of multiple myeloma, as the recent results of the CANDOR study indicate. And you'll hear more on this from Dave Reese.

Parts of the grew by 54% in the third quarter as a reminder, independent and mid sized dialysis providers already utilized possible from majority of their calcimimetic patients, while SNC and davita are slowly increasing adoption.

On a quarter over quarter basis trends were impacted by purchasing patterns, which included a larger purchase in Q2.

Our bio Similars recorded sales of $173 million in Q3, and our noted on slide 25.

Murdo Gordon: Moving on to Enbro, sales increased 6% year over year driven by increases in net selling price and changes in accounting estimates, offset by unit volume declines of 2% due to continued competition. Q3 results included a benefit of approximately $60 million in changes in accounting estimates related to sales discounts. We're making investments in Enbrel, including the Enbrel Mini with AutoTouch device, a multi-use product that continues to receive positive feedback from rheumatoid arthritis patients. Overall, we expect volume trends to continue, while we anticipate a modest benefit from net selling price on a full-year basis in 2019. We're investing substantially in our inflammation portfolio, which has been strengthened by the reaffirmation of Enbrel's intellectual property, our pending addition of Otezla, our biosimilars of Amgivita and ABP 710, which is our biosimilar to Remicade, the potential of Tezapelimab for asthma, as well as a number of other assets that are earlier in the R&D pipeline. Now on to some of our more mature brands on slide 20.

Our Biosimilar strategy continues to come to fruition with two successful launches in Europe and two recent launches in the U.S. Our global sales are already annualizing at approximately $700 million with the adoption of can ginty and invest in the us.

And continued growth of can GMT and MTV to outside the U.S. The uptake as a result of customers recognizing the quality and importance of Amgen supply chain as well as our commercial capabilities and services our experience in commercializing innovative products along with our established presence in existing commercial resources.

In these therapeutic areas provides us with a productive operating model.

These factors helped to reduce costs to the healthcare system, while also generating a return for shareholders.

When looking at factors for success in the US in terms of access we have attained coverage in the majority of national commercial accounts.

Making good progress in Medicare Cats as of Q4, we've received reimbursement codes for both contingency and invalidity and believe this will be a catalyst for further uptake.

When looking at prescribers, we've seen very encouraging adults and adoption rates in the clinic segment, while non threeforty be hospital adoption is showing signs of acceleration.

Outside the U.S., we continue to see important differences between products and markets in terms of uptake in price erosion submarkets that are experiencing strong uptake at more discounted pricing levels, while other larger markets, including Germany, and France exhibit a more balanced and sustainable opportunity.

Murdo Gordon: In Q3, NuLasta sales declined 32% year over year, with a 31% decline in the U.S. Exit share of NuLasta in the U.S. was comparable to Q2 at just under 80% in the long-acting segment, with on-pro unit volume declining slightly on a sequential basis. We're encouraged by how well OnPro has performed so far, demonstrating the confidence that our customers have in the reliability and quality of our supply, along with our broader commercial services. We anticipate that additional competitors could launch in the U.S. sometime in the future, but the timing is uncertain, reflecting the complexity of developing and manufacturing molecules in this space. Looking forward, recall that Q4 of 2018 benefited from a $55 million BARDA order that we do not anticipate repeating this quarter. Finally, outside of the U.S., New LASDA declined by 40% due to increasing competition. Switching to nephrology, starting on slide 21, Q3 epigen sales declined 15% due to a lower net selling price, which is a function of our contractual pricing commitments with DaVita. Meanwhile, R&S declined 5% year over year in Q3, driven by lower volume due to increased competition.

Again, we are able to leverage our expertise and footprint in oncology, well and jovito will benefit from and synergize nicely with the addition of Otezla.

In summary, we plan to continue to drive volume uptake of our more recently launched products well defending our mature brands to deliver better outcomes for patients and the healthcare system now let me turn over to decrease.

Thanks, Murdo and good afternoon, everyone. As we've previously discussed our key strategic priorities in R&D include increasing our success rates, improving our speed to market and ensuring access and use for innovative products.

Core component of this strategy is the use of human genetics, and Allied genomic and Proteomic technologies.

Following on our collaboration with Intermountain health disclose last quarter. We were pleased to announce that we joined the public private consortium to complete the whole genome sequencing nearly half a million individuals in the UK biobank.

Decode with the welcome Sanger Institute will perform sequencing to rapidly generate data in this most ambitious whole genome project to date.

We believe in the power of human genetics to transform medicine have built an industry, leading platform and anticipate well over 2 million participants in our databases at the conclusion of these product project.

And inflammation, our collaboration with Astrazeneca and Tesla Pelling AMAP continues to advance enrollment in our phase three study in adults in adolescence with severe uncontrolled asthma has completed and we expect the primary analysis in late 2020.

Murdo Gordon: We expect R&S sales to continue to decline at a faster rate with both long-acting and short-acting competition in the U.S. Turning to Censipar on slide 23, as a result of some at-risk generic launches, year-over-year sales declined 73% to $109 million for the quarter. Given the ongoing legal proceedings, there remains uncertainty about the magnitude of future U.S. Censipar sales. Parsibuv grew by 54% in the third quarter. As a reminder, independent and mid-sized dialysis providers already utilize Parsibuv for a majority of their calci-mimetic patients, while FMC and Avita are slowly increasing adoption. On a quarter-over-quarter basis, trends were impacted by purchasing patterns, which included a larger purchase in Q2.

We also recently began enrolling patients in a phase two study of peasant palivizumab for the treatment of PD and we continue to accrue patients in our fees to a topic dermatitis study.

Also in inflammation, we are enrolling patients in a phase two study of MG 570 for the treatment of systemic lupus erythematosus or SLB.

AMG Fiveseventy as a first in class by specific antibody peptide conjugate that targets I costs ligand, which modulators T cell function and b cell activating factor or BAF. These two inflammatory mediators are elevated unnecessarily and we believe averaging 570 has the potential to provide clinical front.

If it for patients suffering from this disease.

Finally, we continue to enroll proof of concept studies with AMG fiveninety to our ill to view team designed to enhance regulatory T cell function in auto immune diseases, and we expect data from these trials beginning in 2020 .

Murdo Gordon: Our biosimilars recorded sales of $173 million in Q3 and are noted on slide 25. Our biosimilar strategy continues to come to fruition with two successful launches in Europe and two recent launches in the U.S. Our global sales are already annualizing at approximately $700 million with the adoption of Kanjinti and Mvasi in the U.S. and continued growth of Kanjinti and Amjavita outside the U.S. The uptake is a result of customers recognizing the quality and importance of Amgen's supply chain as well as our commercial capabilities and services. Our experience in commercializing innovative products along with our established presence in existing commercial resources in these therapeutic areas provides us with a productive operating model. These factors help to reduce costs for the health care system while also generating a return for shareholders.

In bone health, we're pleased with the CH MP issued a positive opinion for of entity in the treatment of severe osteoporosis in post menopausal women at high risk of fracture and with no history of myocardial infarction or stroke.

This is an important step and along with our partner you Phebe, we look forward to the European commissions final decision later this year.

Working closely with the Ministry of Health Labor and welfare and the Pharmaceuticals, and medical devices agency and Japan of entities prescribing information was updated by making the potential cardiovascular risk more prominent and adding information to help ensure its proper use.

Turning to oncology I'll begin with AMC 510, our first in class KRS T. 12 see inhibitor.

We have the opportunity to present data from 76 patients in our first in human monotherapy study at the World long and ESMO conferences, where we reported responses in multiple tumor types with no dose limiting toxicity.

And our monotherapy program our phase two study in non small cell lung cancer continues to enroll briskly since initiation in August .

Murdo Gordon: When looking at factors for success in the U.S. in terms of access, we've attained coverage in the majority of national commercial accounts and are making good progress in Medicare accounts. As of Q4, we've received reimbursement codes for both Kenjinti and Invasi and believe this will be a catalyst for further uptake. When looking at prescribers, we've seen very encouraging adoption rates in the clinic segment, while non-340B hospital adoption is showing signs of acceleration. Outside the U.S., we continue to see important differences between products and markets in terms of uptake and price erosion. Some markets are experiencing strong uptake at more discounted pricing levels, while other larger markets, including Germany and France, exhibit a more balanced and sustainable opportunity. Here again, we're able to leverage our expertise and footprint in oncology, while Amgevita will benefit from and synergize nicely with the addition of Otezla. In summary, we plan to continue to drive volume uptake of our more recently launched products while defending our mature brands to deliver better outcomes for patients and the healthcare system. Now, let me turn over to Dave Reese.

We've also rapidly enrolled and initial phase two cohort of colorectal pan cancer patients at that target dose and as the data mature we will determine the development path in colorectal cancer.

We're also moving forward with a suite of phase one be combination studies, including PD, one mek and other targeted therapies.

Our next clinical update will be in 2020 , when we have accumulated a meaningful amount of data from these phase two and combination studies.

And our bite development programs to blend Cyto phase three studies in pediatric patients with acute lymphoblastic leukemia at first relapse were stopped early due to the treatment benefit of blend cyto when substituted for a portion of the standard chemotherapy blocks.

These results have the potential to be practice changing since patients with high risk relapse CLL have a poor prognosis with standard therapeutic approaches.

Later this year, we've we will be presenting data on AMC 673, a half life extended bite molecule targeting cdthirty three and Mel.

AMG Fivenine six directed against FRB, three and Glioblastoma and we anticipate data for AMG seven to one or half life extended bcm bite molecule next year.

In the Kyprolis program as Murdo mentioned, the phase three candor study investigated kyprolis dexamethasone and Darzalex KD versus the can proliferate dexamethasone doublet in relapsed or refractory multiple myeloma.

David M. Reese: Thanks, Murdo, and good afternoon, everyone. As we've previously discussed, our key strategic priorities in R&D include increasing our success rates, improving our speed to market, and ensuring access to and use of our innovative products. The core component of this strategy is the use of human genetics and allied genomic and proteomic technologies. Following on from our collaboration with Intermountain Health, disclosed last quarter, we were pleased to announce that we had joined a public-private consortium to complete the whole genome sequencing of nearly half a million individuals in the UK Biobank. Decode, together with the Wellcome Sanger Institute, will perform sequencing to rapidly generate data in this most ambitious whole genome project to date. We believe in the power of human genetics to transform medicine, have built an industry-leading platform, and anticipate well over 2 million participants in our databases at the conclusion of these projects.

The study met its primary progression free survival or PFS endpoint with TDD, reducing the risk of progression or death by 37% compared to cupola plus dexamethasone alone.

The median PFS for Kyprolis, plus dexamethasone was 15.8 months of the median PFS for TDD was not yet reached.

These data demonstrate that these two potent therapies can be effectively combined and may provide a potential treatment option for patients who have relapse that need to revlimid sparing regiment, we look forward to discussing these results with regulators.

In hematology FDA approved an updated indication for end plate that expands treatment to newly diagnosed and persistent adult patients with high TP who've had an insufficient responds to corticosteroids immunoglobulins or splenectomy.

We've also begun enrolling phase three and plate study for the treatment for chemotherapy induced thrombocytopenia.

Before leaving our therapeutic areas I'd like to say few words about a decision we've made to reshape reshape our neuroscience research efforts.

We believe that in order to compete effectively we need to make investments in the areas and platforms that will position us for long term success.

David M. Reese: Inflammation, our collaboration with AstraZeneca on tezapelumab continues to advance. Enrollment in our Phase 3 Study in Adults and Adolescents with Severe Uncontrolled Asthma has completed, and we expect a primary analysis in late 2020. We also recently began enrolling patients in a Phase II study of tezapalliumab for the treatment of COPD, and we continue to accrue patients in our Phase II atopic dermatitis study. In inflammation, we are enrolling patients in a phase 2 study of AMG 570 for the treatment of systemic lupus erythematosus or SLE. AMG 570 is a first-in-class, bispecific antibody-peptide conjugate that targets ICOS ligand, which modulates T-cell function, and B-cell activating factor, or BAF. These two inflammatory mediators are elevated in SLE, and we believe AMG 570 has the potential to provide clinical benefit for patients suffering from this disease.

Through careful evaluation of our pipeline and the challenges inherent in developing drugs for major neurologic diseases. We have made the decision to end our Neurosciences research and early development programs with the exception programs centered on neuro inflammation that will be pursued by our inflammation Ta. This.

It was a very difficult decision and we know it will be a disappointment for our staff in the scientific community.

Over the years many people at Amgen have devoted time and energy toward developing medicines for patients with neurologic conditions and I'd like to think and acknowledge them for their efforts in particular, bringing aim of big to migraine patients as the first and innovative new class a medicines with a tremendous achievement.

Aim of big is making a meaningful impact on the lives of migraine patients around the world and we will continue to actively support the program, including ongoing clinical development.

At the same time, we are exploring other models to capitalize on our genetics capability and advance our broader efforts in neuroscience and will provide guidance on those activities in the future.

Let me conclude with a quick update on Biosimilar, our phase three non Hodgkin's lymphoma study of ABP 798, our Biosimilar Rituxan and successfully completed and we expect to submit delay in the us in Q1, 2020 and finally, the FDA review of ABP seven.

David M. Reese: Finally, we continue to enroll proof-of-concept studies with AMG-592, our IL-2 mutant designed to enhance regulatory T-cell function in autoimmune diseases, and we expect data from these trials to begin in 2020. In bone health, we were pleased that the CHMP issued a positive opinion for Avenity in the treatment of severe osteoporosis in postmenopausal women at high risk of fracture and with no history of myocardial infarction or stroke.

And 10, our Biosimilar Remicade continues to progress toward the pursuit for target action date in December .

Okay. Thank you, David let's turn it over.

To you and perhaps you can open up the lines for questions and remind our callers in the procedure that will follow thanks.

Ladies and gentlemen, as a reminder, if you like to ask a question you may do so by pressing star followed by the number one on your telephone keypad Rudolph will who would like to request that you limit yourself to asking one question during the Q and a session. So we may get to everyone.

Our first question just want of Ronnie goal from Bernstein Ronnie.

David M. Reese: This is an important step, and along with our partner UCB, we look forward to the European Commission's final decision later this year. Working closely with the Ministry of Health, Labor, and Welfare and the Pharmaceuticals and Medical Devices Agency in Japan, Avenity's prescribing information was updated by making the potential cardiovascular risk more prominent and adding information to help ensure its proper use. Turning to oncology, I'll begin with AMG 510, our first-in-class KRAS G12C inhibitor. We had the opportunity to present data from 76 patients in our first in-human monotherapy study at the World Lung and Esmo Conferences, where we reported responses in multiple tumor types with no dose-limiting toxicity. In our monotherapy program, our Phase II study in non-small cell lung cancer continues to enroll briskly since initiating in August.

Hi, Good afternoon. Thank you for taking my question on I'd like to start actually with the last comment you made about ending neuroscience Im sure. It was a difficult decision and a lot of us a falling through other companies and we've seen some really interesting breakthroughs, especially when it come to nucleic acid base Madison.

Can you talk a little bit about that decision you know your decision. The other option, obviously was a double down and go even more innovative.

What drove that decision in terms of your thinking and if you can kind of like coach. It in terms of how you feel about the neurology market and what it takes us exceeding it will be great.

Dave once you take it.

Sean it that offer any thoughts effective yeah running so this was a very difficult decision and as you pointed out there are new therapies, becoming available some of them nucleic acid based on many of those I think are targeted at orphan our niche diseases and consistent with our desire to.

Who generally target diseases with a large public health impact.

Based on what we felt was the state of the art in terms of understanding the passive genesis of major diseases, especially neurogenic neuro degenerative diseases.

David M. Reese: We have also rapidly enrolled an initial phase two cohort of colorectal cancer patients at the target dose, and as the data mature, we will determine the development path for colorectal cancer. We are also moving forward with a suite of Phase I-B combination studies, including PD-1, MEK, and other targeted therapies. Our next clinical update will be in 2020, when we have accumulated a meaningful amount of data from these Phase II and combination studies. In our BITE development programs, two Blincito Phase III studies in pediatric patients with acute lymphoblastic leukemia at first relapse were stopped early due to the treatment benefit of Blincito when substituted for a portion of the standard chemotherapy block. These results have the potential to be practice-changing since patients with high-risk relapsed ALL have a poor prognosis with standard therapeutic approaches.

And our overall portfolio.

We made that decision to end our early neuroscience research efforts as.

As I mentioned, we are looking at ways to maintain a hand in neuroscience through alternative models and we'll discuss some of that.

In the future.

We believe the genetics will ultimately drive progress in this area and we will continue to work with de coda to generate insights.

I'd just add running just on the last point half the choosing the body or expressed in the brand and only brain and we have some unique resources to try to capitalize on insights around that and disease suggested will be exploring.

Potentially different models for doing that with venture capital and perhaps academic institutions as well.

I think more broadly, we're focusing our efforts and where we think we can be successful. So we are.

David M. Reese: Later this year, we will be presenting data on AMG-673, a half-life extended bite molecule targeting CD33 and AML 596, directed against EGFR V3 and glioblastoma, and we anticipate data for AMG 701, our half-life extended BCMA bite molecule next year. In the Kyprolis program, as Murdo mentioned, the Phase III CANDOR study investigated Kyprolis, dexamethasone, and Darzalex KDD versus the Kyprolis-dexamethasone doublet in relapsed or refractory multiple myeloma. The study met its primary progression-free survival, or PFS, endpoint with KDD, reducing the risk of The median PFS for Coprolis plus dexamethasone was 15.8 months, while the median PFS for KDD has not yet been reached.

Focused as you know in cardiovascular disease.

Inflammatory disease.

And.

ESCO disease.

It's an calls you course, so those are the areas that we're focused on them and expect to be successful densely molecules in those areas over the coming years.

And our next question is mine of dough, Kim from BMO capital markets, though.

Hi, Thanks for taking my question just wanted to ask about Tesla as you look past the closing of the potential acquisition.

How do you think about the disruption potential disruptions to the ongoing commercial operations with Tesla and how long it would take fully onboard.

And it's components.

Yes, thanks Dole its murdo here.

We've met with our potential future colleagues several times now.

Around the world at different forums, we met that.

A few all stops in town halls, Weve extended conditional offers of employment and we're really pleased by the uptake there.

David M. Reese: These data demonstrate that these potent therapies can be effectively combined and may provide a potential treatment option for patients who have relapsed and need a Revlimid-sparing regimen. We look forward to discussing these results with regulators. In hematology, FDA approved an updated indication for end plate that expands treatment to newly diagnosed and persistent adult patients with ITP who have had an insufficient response to corticosteroids, immunoglobulins, or splenectomy. We have also begun enrolling a phase three end plate study for the treatment of chemotherapy-induced thrombocytopenia. Before leaving our therapeutic areas, I'd like to say a few words about a decision we've made to reshape our neuroscience research efforts. We believe that in order to compete effectively, we need to make investments in areas and platforms that will position us for long-term success.

From Japan to the us in the right around the rest of the world. We see an eager highly engaged workforce, that's very interested in joining amgen so I.

I would say that we expect minimal disruption if any to ongoing operations I mean, we did set.

Patient continuity is our north star in this integration and everybody has been very focused on following that.

Great. Thank you.

And our next question, it's one of Chris Raymond from Piper Jaffrey, Chris.

Hi, Thanks.

Just on the Repatha pricing move I know you announced a while back.

You are phasing out the higher price desk at you.

Beginning in next year, but it's been I think just over a year I guess since you announced this move to have the tool.

SK use.

And it looks like so far this transition has been a pretty decent success I mean, because numbers relatively stable in the U.S.. So I guess I'm just wondering if commercially.

If there's been some learnings from this conversion and actually in this move that can be applied maybe to other areas, where perhaps theres.

David M. Reese: Through careful evaluation of our pipeline and the challenges inherent in developing drugs for major neurologic diseases, we have made the decision to end our neuroscience research and early development programs, with the exception of programs centered on neuroinflammation that will be pursued by our inflammation TA. This was a very difficult decision, and we know it will be a disappointment for our staff and the scientific community.

Healthy distributor margin.

Where are high list price perhaps.

Can impact of Medicare patient access.

Thanks.

Yes, Chris if I understand your question correctly, you are looking to see if theres any any lessons learned to apply to other products.

Yes, yes in the specialty category I think look I think its lessons have already been learn from revise I think we applied them to the launch of aim of they again, how we price that product.

I think that that's been a major reason for why patients who have been able to access came as they get relatively affordable co pay levels I'm also pleased with.

David M. Reese: Over the years, many people at Amgen have devoted time and energy toward developing medicines for patients with neurologic conditions, and I'd like to thank and acknowledge them for their efforts. In particular, bringing Amavig to migraine patients as the first in an innovative new class of medicines was a tremendous achievement. Amovig is making a meaningful impact on the lives of migraine patients around the world, and we will continue to actively support the program, including ongoing clinical development. At the same time, we are exploring other models to capitalize on our genetics capability and advance our broader efforts in neuroscience, and we will provide guidance on those activities in the future. Let me conclude with a quick update on biosimilars. Our phase three non-Hodgkin's lymphoma study of ABP798, our biosimilar retuxan, has successfully completed, and we expect to submit a BLA in the U.S. in Q1, 2020. And finally, the FDA review of ABP710, our biosimilar Remicade, continues to progress toward the BASUFA target action date of December. Bob?

Progressive made on the commercial side with Repatha, I think where it's less clear to us and it's still an area of work in progress is high we are advancing the evolution of access to Repatha at a fixed co pay preferred tier benefit in Medicare part D. We're happy that.

We're going to go into next year with roughly half of the lives in Medicare part D being able to access repatha at an affordable less than $50 copay, but we think that number should be much higher and we think that national plans and PBM should be moving.

To add Repatha as a preferred benefit so it's a it's a very fragmented healthcare system with a lot of different actors in the supply chain and I think that improvements can be made and we along with other companies in our industry and our partners on the.

Insurance and PBM side will hopefully come up with better solutions going forward.

And our next question is one of Geoff Meacham from Bank of America, Jeff.

Operator: Okay, thank you, David. Let's turn it over now to Ian, and perhaps you can open up the lines for questions and remind our callers of the procedure that will follow. Thanks.

Afternoon, guys. Thanks for the question and I'm glad to be back carbon.

Just had one for murdo.

On M&A gets its probably the highest profile launch I think at Amgen and with a lot of.

Operator: Ladies and gentlemen, as a reminder, if you would like to ask a question, you may do so by pressing star followed by the number one on your telephone keypad. We would also like to request that you limit yourself to asking one question during the Q&A session so that we may get to everyone. Our first question is from Ronnie Gull from Bernstein. Good afternoon, and thank you for taking my question.

Our discussion from you and others on the big unmet need in millions of eligible patients.

When I look at your slide 15, and I understand that the impact payers have on adoption, but why isn't there more of a tipping point more than a year into a launch you look at Lilly theyve seen good growth as well, but but no real inflection point either so just a question. What do you think is holding back the class and and how could you help accelerate the launch from here. Thanks.

Operator: I'd like to start with the last comment you made about ending neuroscience. I'm sure it was a difficult decision, and you know a lot of us are following it through other companies, and we've seen some really interesting breakthroughs, especially when it comes to nucleic acid-based medicine. Can you talk a little bit about that decision, you know, your decision, the other option obviously was to double down and go even more innovative? What drove that decision in terms of your thinking, and if you could kind of like coach it in terms of how you feel about the neurology market and what it takes to succeed in it, it would be great.

Yes. Thank you Jeff It did look it's still very early days and where we're pleased with the uptake over 260000 patients treated so far.

With EMA vague since launch.

We are really if you think about it we are really only know reaching a point in the market where good access has been provided we're now at 81% of our prescriptions being paid through some insurance benefit.

We're also really only scratching the surface as you mentioned looking at roughly 4 million eligible patients in the U.S. alone. So.

David M. Reese: Yeah, Dave, why don't you take a shot at that, and I'll offer any thoughts at the back end.

There's a number of activities we are investing heavily in direct to consumer promotion, we have a very.

David M. Reese: Yeah, Ronnie, so this was a very difficult decision. And, you know, as you pointed out, there are new treatments becoming available, some of them nucleic acid-based. But, you know, many of those, I think, are targeted at orphan or niche diseases, and, consistent with, you know, our desire to generally target diseases with a large public health impact, based on what we felt was the state-of-the-art in terms of understanding the pathogenesis of major diseases, especially neurodegenerative diseases, and our overall portfolio, we made that decision to end our early neuroscience research efforts. As I mentioned, we are looking You know, we believe that genetics will ultimately drive progress in this area, and we'll continue to work with DECODE to generate insights. Bob? I would just add...

Extensive and sophisticated digital campaign, along with as we have done since the very early days of our work in migraine.

Been able to activate a lot of the different patient organizations in this area. So I think given the benefit that patients are experiencing with him as a given the way in which is transforming the lives of.

Migraine sufferers and we see the lessors coming in from patients Theres really.

We have a lot of confidence that this market will evolve and I think.

Throughout the course of 2020 were looking for changes in the number of new patients that are coming into the C. GRP category on a weekly basis, we're running at around 7000 patient per week clip new patients to see GRP, we're hoping that that that grows into double digits throughout the course of next year.

Bob Bradway: Ronnie, just on the last point, half the genes in the body are expressed in the brain, and only the brain, and we think we have some unique resources to try to capitalize on insights around that. And as Dave suggested, we'll be exploring, you know, potentially different models for doing that with venture capital and perhaps academic institutions as well. And I think more broadly, we're focusing our efforts on where we think we can be successful.

And just add a clinical perspective, the drug works.

We.

We've got data out to 40 years now in some patients and we think that that foundation.

I will simply lead to increased uptake over time, so remain very optimistic about the prospects for this word was really a transformative medicine.

And our next question. This one of Terence Flynn from Goldman Sachs parents.

Hi, Thanks for taking the question.

Maybe just to from me Murdo just wanted to confirm that you said I think I heard this correctly that for 2020, you're expecting revenue growth for next year ex Otezla and then wondering what that assumes for overall price and David on margins any reason why we would expect a step down versus this year and then on the pipeline.

Operator: [inaudible]

Operator: And our next question is from Doe Kim from BMO Capital Markets. Doe, hi, thanks for taking my question. Just wanted to ask about Tesla. As you look past the closing of the Tesla acquisition, how do you think about the disruption, potential disruptions to the ongoing commercial operations of a Tesla and how long it would take to fully onboard the drug and its components?

We are some competitor K Ras data yesterday at a conference just wondering if you can offer your perspective. Thank you.

Parents actually opportunity to clarify what I said was our base business will be stable going into 2020 and with anticipated addition of Otezla, we will grow.

Murdo Gordon: Yeah, thanks Do. It's Murdo here.

Murdo Gordon: We've met with our potential future colleagues several times now around the world at different forums. We met at a few all staff meetings and town halls. We've extended conditional offers of employment, and we're really pleased by the uptake there. From Japan to the U.S. and around the rest of the world, we see an eager, highly engaged workforce that's very interested in joining Amgen. So I would say that we expect minimal disruption, if any, to ongoing operations. I mean, we did set patient continuity as our North Star in this integration, and everybody's been very focused on following that.

David I think you've been pretty comprehensive margins you want to add anything that can.

Tried to give a preview in terms of the components of calls for next year and so combination of what we're doing with revenue in those costs living gives the answer and I think importantly.

We've said in the past and we continue to believe the Companys overall capability in terms of delivering profitable to use is very good and will continue.

If I think there was a third question in there.

Maybe related to this molecule called KRS we.

Of course were aware of the data I'll, let others comment on those data as I mentioned, we are enrolling very briskly in our phase two non small cell lung cancer program, we've enrolled a cohort in colorectal cancer in phase two that we believe will inform the development pathway there.

Operator: And our next question is one from Chris Raymond from Piper Jeffery. Chris.

Operator: Yeah, thanks. Just on the Repatha pricing move. I know you announced a while back that you're phasing out the higher priced SKU at the beginning of next year. But, you know, it's been, I think, just over a year since you announced this move to have the dual SKUs. And it looks like so far this transition has been a pretty decent success. I mean, look at the numbers; they're relatively stable in the U.S. So I guess I'm just wondering if, commercially, there have been some learnings from this conversion and actually in this move that can be applied maybe to other areas where perhaps there is a healthy distributor margin, where a high list price perhaps can impact Medicare patient access.

And we've got a wide ranging combination therapy program. That's opening up so I think 2020 will be a very data rich year.

For the K Ras program and will understand about where to go from there.

And our next question as much of Evan Seigerman from Credit Suisse Evan.

Well. Thank you for taking the question I want to congratulate David on his retirement and wish him the best and I've a question for the other David following up on what Terrence just ask so we've seen a lot of cable data recently much of it remains pretty early but looking ahead. What is your view on the eventual roll a 510 as monotherapy in lung cancer or do you all.

Ultimately believed that this is part of probably best served as in combination with chemo or checkpoint.

Operator: Yeah, Chris, if I understand your question correctly, you're looking to see if there are any lessons learned to apply to other products. Other therapeutic areas, yes.

Just get your thoughts there on how we think about potentially moving that offline. Thank you yeah, Edwin Thanks, and Thats a great question I think the ongoing clinical program is really designed to answer that question.

Murdo Gordon: Yeah, in the specialty category, I think lessons have already been learned from Raffat. I think we applied them to the launch of Amavig and how we priced that product. I think that that's been a major reason for why patients have been able to access Amavig at relatively affordable copay levels. I'm also pleased with the progress we've made on the commercial side with Raffat. I think where it's less clear to us, and it's still an area of work in progress, is how we are advancing the evolution of access to Raffat at a fixed copay preferred tier benefit in Medicare Part D. So it's a very fragmented health care system with a lot of different actors in the supply chain, and I think that improvements can be made. And we, along with other companies in our industry and our partners on the insurance and PBM side, will hopefully come up with better solutions going forward.

In monotherapy key things that will be we will be looking at in the data set overtime. In addition to the response rate will be importantly duration of response, and then I think progression free survival or median progression free survival. Many of the patients that we've treated to date or third fourth fifth.

Line patients, where response rates to single agent chemotherapy or quite low our with progression median progression is often on the order of a few months.

And so that those are some of the benchmarks that we'll be looking at in terms of monotherapy.

In terms of combinations in different indications.

Tumor cells can have very different wiring and I think as.

Overtime as we generate these data sets, we will determine in individual settings, whether monotherapy or combination therapy is most appropriate.

And then finally of course, we do have a keen interest in advancing the drug into earlier lines.

Operator: And our next question is a line from Geoff Meacham from Bank of America. Geoff?

Therapy, where we would hope that the magnitude of benefit.

Operator: Afternoon, guys. Thanks for the questions, and glad to be back, Arvind. I just had one for Murdo.

We'll be greater all and we will be orienting the development program in that direction as well.

And our next question is one of John Barber from Cowen and company Darren.

Murdo Gordon: It's probably the highest-profile launch, I think, at Amgen, with a lot of prior discussion from you and others on the big unmet need and millions of eligible patients.

Great. Thanks for taking my question.

Maybe David I was going to maybe just ask you. Another follow up Qs question with just piggybacking on what you said, assuming that Monotherapies, where youre going to go into in terms of a potential filing path from the phase two in lung cancer is what is your latest thinking is 50% response rate a PR.

Murdo Gordon: But when I look at your slide 15, and I understand the impact payers have on adoption, but, you know, why isn't there more of a tipping point more than a year into the launch? And you look at Lilly; they've seen good growth as well.

With a six month to ability is that really where the latest bogey is for a teekay distribute directed or is there a chance to file if the data shows you know foreign to have five months durability, if that's going to be though where it ends up and then just question on your formulation going to give us a sense is that what's the size of the tablets in the current ninesixty make though.

Murdo Gordon: But no real inflection point either. So the question is, what do you think is holding back the class and how could you help accelerate the launch from here? Thanks.

Thank you.

Yes sure so.

In terms of a monotherapy I don't know that I would want to put a stake in the ground there.

And it depends also on the patient population in prior lines of therapy. The patients that we have treated to date have all 100% of received platinum based combination chemotherapy and a very large majority, 90% or so have received prior checkpoint inhibitor beyond that there are very.

Murdo Gordon: Over 260,000 patients have been treated so far with Aimaveg since launch. We are really, if you think about it, we are really only now reaching a point in the market where good access has been provided. We're now at 81% of our prescriptions being paid through some insurance benefit. We're also really only scratching the surface, as you mentioned, looking at roughly 4 million eligible patients in the U.S. alone. So there are

A few available therapies and so I think it's against that backdrop that we will be looking at the efficacy and safety results in terms of the dosing.

The 960 milligrams is eight tablets, we have not had any reports of a tolerability issues and quite frankly that part is a non issue in the program right now.

Murdo Gordon: We are investing heavily in direct-to-consumer promotion. We have a very extensive and sophisticated digital campaign, along with, as we have done since the very early days of our work in migraine, been able to activate a lot of the different patient organizations in this area. So I think given the benefit that patients are experiencing with Aimaveg, given the way in which it's transforming the lives of migraine sufferers, and we see the letters coming in from patients, we have a lot of confidence that this market will evolve. And I think throughout the course of 2020, we're looking for changes in the number of new patients that are coming into the CGRP category on a weekly basis. We're running at around 7,000 new patients per week clipping new patients to CGRP. We're hoping that that grows into double digits throughout the course of next year.

Our next question this line of Michael Yee from Jefferies Michael.

Thanks Odd question for David recently, well on BC M&A Youve commented that you expect how FX and the data perhaps in early 2020 I wanted to ask your confidence on.

Thank you for that program to move forward to pencil, what you're looking for watch the hurdle is there any chance at that doesn't move into a pivotal maybe just comment on on on that update on what you're looking for thanks. So much.

Yeah, So I think where.

In addition to standard efficacy and safety, we will be looking at how the molecule stacks up in whats.

Crowded treatment landscape based on what we've seen from the continuous infusion.

Bite molecule Mg for 20, where we remain quite enthusiastic about the platform.

In general our approach in the bites after we've done.

Dose finding all and an expansion cohort to our intention will be generally to progress to a registration phase of the program and that would be our goal all four mg seven to one all of this of course contingent on data that we generate.

David M. Reese: Yeah, and just to add a clinical perspective, you know, the drug works. We've got data out to four years now in some patients, you know, and we think that that foundation will simply lead to increased uptake over time. So we remain very optimistic about the prospects for this. It's really transformative medicine.

And our next question this mine of Matthew Harrison from Morgan Stanley Matthew.

Hey, Greg Good afternoon. Thanks for taking the question I wanted to ask myrta on on by phone or if you gave us a nicer to round out of some of the market.

Operator: And our next question is one from Terrence Flynn from Goldman Sachs. Terrence? I thank you...

Dynamics I was hoping maybe you could just talk a little bit more detail about what you're seeing in the oncology launches versus the inflammation launches and maybe just give us some sense for what the breakdown of the revenue mix is right now.

Operator: Thanks for taking the question.

Operator: For me, Murdo, just wanted to confirm that you said, I think I heard this correctly, that for 2020, you're expecting revenue growth for next year.

Yes. Thank you Matthew we were pleased with the us.

Operator: Srinivas Jain, Anirudh Singh, Anirudh Singh, Anirudh Singh, Anirudh Singh, Anirudh Singh,

Oncology uptake I think whats really important to note is amgen's capabilities across our company are.

Operator: David on margins. Any reason why we would expect a step down versus this year? And then on the pipeline, obviously, there was some competitor KRAS data yesterday at a conference. Just wondering if you could offer your perspective. Thank you.

Known for our strength to in biologics manufacturing and providing a reliable quality supply to customers. So I think that first box that you would anticipate oncologists would be concerned about is well checked with the capabilities at Amgen and we've proven that on our innovative side and now were.

Operator: Terence, thanks for the opportunity to clarify. What I said was our base business will be stable going into...

Operator: David, I think you've been pretty comprehensive with the margins. Do you want to add anything to that, Karen?

We're demonstrating not with being.

Operator: No, you know, I've tried to give a preview in terms of the components of cost for next year. And so the combination of what we're doing with revenue and those costs, I think, gives that answer. And, I think importantly, you know, we've said in the past and we continue to believe that the company's overall capability in terms of delivering profitability is very good and will continue.

The end of the innovator total portfolio and first to launch with our Biosimilar I think from a behavioral standpoint.

Providers in the oncology market are more than willing to try high quality Biosimilars and we're seeing good adoption.

We're able to open accounts.

Relatively quickly so our breadth in the community oncology market is good.

We've provided.

Hi, good coverage in terms of payer reimbursement and now what we're working on is our.

David M. Reese: Yeah, related to this molecule called KRAS. We, you know, of course, we're aware of the data. I'll let others, you know, comment on those data. As I mentioned, we are enrolling very briskly in our Phase II non-small cell lung cancer program. We've enrolled a cohort of colorectal cancer patients in Phase II that we believe will inform the development pathway there, and we've got a wide-ranging combination therapy program that's opening up. So I think 2020 will be a very data-rich year for the KRAS program, and we'll understand where to go from there.

Non 340 be and 340 be hospital coverage and now that we've got permanent J code.

Our permanent coding in for reimbursement, we're in really good shape. So I think oncologists have behaved very consistent with what we had expected given some of the.

Uptake that we've seen on the supportive care site with the long acting Filgrastim franchise, and I think we were looking forward to continuing to supply those.

Community oncologists providers and academic oncology cancer centers with good commercial services and good patient support as well as that quality and reliable supply that we're known for.

Operator: And our next question is from the line of Evan Seigerman from Credit Suisse. Evan?

Different region, Murdo, but you want to comment on the experience within plan in Europe .

We've we've seen very quick uptake and penetration of the bio similar into the innovator compound with Amgen.

Operator: Hi all, thank you for taking the question, and I want to congratulate David on his retirement and wish him the best. And I have a question for the other David, following up on what Terence just asked. So we have seen a lot of KRAS data recently, much of it remains pretty early, but looking ahead, what is your view on the eventual role of 510 as monotherapy in lung cancer? Or do you ultimately believe that this is probably best served in combination, maybe with chemo or a checkpoint? Just get your thoughts there on how we think about potentially moving that up the line. Thank you.

We've been pleased to see that despite having multiple products early in the launch of that all launching at the same time that we've been able to to settle in on price points that are good for our profitability.

And as I mentioned earlier, we're also excited now that we've got on the ground inflammation focused customer facing organization. The addition of Otezla to that is very efficient one as we go forward.

And our next question is one of Geoffrey Porges from Leerink partners Jeffrey.

Thank you very much and just sort of a couple of follow ups for Dave If I may.

David M. Reese: Yeah, Evan, thanks, and that's a great question. You know, I think the ongoing clinical program is really designed to answer that question. In monotherapy, you know, the key things that we will be looking at in the data set over time, in addition to the response rate, will be, importantly, the duration of response. And then I think progression-free survival or median progression-free survival. Many of the patients that we've treated to date are third, fourth, fifth-line patients where response rates to single-agent chemotherapy are quite low with progression, you know, median progressions often on the order of a few months. And so those are some of the benchmarks that we'll be looking at in terms of monotherapy. In terms of combinations and different indications, you know, tumor cells can have very different wiring, and I think, over time, as we generate these data sets, we will determine in individual settings whether monotherapy or combination therapy is most appropriate. And then, of course, we do have a keen interest in advancing the drug into earlier lines of therapy, where we would hope that the magnitude of benefit will be greater, and we will be orienting the development program in that direction as well.

Dave.

I am sure and reviewing the competitors that are it will not have been lost and you compare the has a half a longer half life.

Great dosing frequency as well so wondering in the context of that have will you be starting BR. The dosing with 510 any of the studies and then could you just talk a little bit about ongoing research firm in this field is obviously exploding.

Does and how we're continuing research investment in carry around us and do you have backup molecules that you believe could have some of the attributes that compared to those molecules that are emerging.

Hi, Thanks.

Thanks, Jeff those are both good questions.

I would say to start I would say that when we were developing AMG 510, we outlined a set of target parameters for the molecule.

We wanted to achieve bio biochemically in terms of pharmacokinetics et cetera. Most importantly is the ability to inhibit the target over a dosing interval 24 hours.

We have we believe a wealth of data, suggesting that with a kobe lend inhibitor a couple hours of exposure above a threshold leads to complete inhibition of signaling over that dosing interval.

And we're convinced that our 960 milligram dose achieves that and in fact is well above that target threshold now that said of course, it's very common and small molecule development programs are early in the clinical development program to explore alternative doses and schedules.

Operator: And our next question is from Yaron Werber from Cohen & Company. Okay.

And we will do that as part of the clinical pharmacology program going forward, including split dosing such as be I'd.

Operator: Thanks for taking my question. Maybe, David, I was going to maybe just ask you another follow-up KRAS question piggybacking on what you said, assuming that monotherapy is where you're going to go in terms of a potential filing path from phase II in lung cancer. What is your latest thinking? Is 50% response rate, a PR with a six-month durability, is that really where the latest bogeyman is for a TKI that's fairly directed? Is there a chance to file if the data shows you, you know, four-and-a-half, five-month durability if that's going to be where it ends up? And then just a question on your formulation, which will give us a sense, is that what's the size of the tablets in the current 960 mg dose? Thank you.

And then finally as you noted the field is exploding. That's a fact that is not a lost on US we have a variety of preclinical.

Efforts ongoing there, which will be happy to talk about at the right moment in time.

I think it's important as you follow this field to keep in mind that not all of those molecules are directly K Ras inhibitors bought inhibit other signaling or co signaling molecules in the pathway or have slightly different mechanisms of action and as we've seen in oncology over the last.

Several decades, we would expect us sort of plethora of different approaches around these targets.

And our next question is one of whom are Rhofade from Evercore ISI Rimmer.

Hi, Thanks, so much for taking my question.

David M. Reese: Yeah, sure. But in terms of, you know, the monotherapy, I don't know that I would want to put a stake in the ground there. And it depends also on the patient population and prior lines of therapy. You know, the patients that we have treated to date have all 100% received platinum-based combination chemotherapy, and the very large majority, 90% or so, have received a prior checkpoint inhibitor. Beyond that, there are very few available treatments, and so I think it's against that backdrop that we will be looking at the efficacy and safety results. In terms of dosing, 960 milligrams is equal to eight tablets.

When it back to you again on KRS as a surprise.

We've seen two very different you see disclosures on AMG 510.

At the 960 milligram. It was 140 at ASCO are the easy and then the easy declined to 65 and were long. So my question to you as what do we know about the median you see among patients that ended up being responders versus the median you see among patients that werent nonresponders. Thank you very much.

Yes, thanks, Thanks for that and I would point out that it's not unusual when you. Initially report phase one results are often on just a handful of patients on with small molecules. It's very typical to have quite large error bars around the various pharmacokinetic estimates so to see those move over time.

It's not surprising and as I mentioned, we're still at a target exposure in in our view C. Max here.

David M. Reese: We have not had any reports of tolerance issues, and quite frankly, that part is a non-issue in the program right now.

Is probably the most important parameter and we believe were well above our target threshold.

For quite a number of hours in fact, essentially through the entire dosing interval. We believe we only need to be above it for a couple hours to extinguish signaling so thats really what.

Operator: Our next question is from the line of Michael Yee from Jefferies. Michael?

Operator: Thanks. A question for David Reese as well. On BCMA, you've commented that you expect Half-Life Extended data, perhaps in early 2020. I wanted to ask your confidence in the ability for that program to move forward to a pivotal, what you're looking for, what's the hurdle? Is there any chance that that doesn't move into a pivotal? Maybe just comment on that update and what you're looking for. Thanks so much.

Drove us forward in terms of dose selection in the program and as I. Just mentioned, we will continue to explore other approaches as part of the standard clinical pharmacology program.

And our next question as one of some of them. So you need from Mizuho Slim.

Yeah. Thanks, guys.

Congrats.

On his retirement.

One from me on Neulasta, if I may so when I look at the neupogen and speeds over the last five years when the Biosimilar launch. It seems like you guys have held your NSP is more or less flat over the last five years.

David M. Reese: Yeah, so I think we, you know, in addition to standards and efficacy and safety, we will be looking, you know, at how the molecule stacks up in what's, you know, a crowded treatment landscape based on what we've seen from the continuous infusion bite molecule, AMG 420, where, you know, we remain quite enthusiastic about the platform. In general, our approach in the bites after we've done Dose Finding and an expansion cohort. Our intention will be, generally, to progress to a registration phase of the program, and that would be our goal for AMG 701. All of this, of course, is contingent on data that we generate.

Meanwhile, the Biosimilar feeds for neupogen have come down substantially and I'm wondering how you're thinking about that given what we're seeing with the neulasta numbers declining pretty quickly should we be expecting a similar strategy here to be price disciplined or what great price discipline can sandoz student.

If you could just a pine on that thanks, so much.

Yes, thanks, Phil in the the general rule in these types of markets is that the more competition you have the more number of players.

The more price competition, you usually see so I think it's too early to tell.

In the U.S. and the at least the too.

Allergy categories were in with both Bevacizumab and Trastuzumab and I think overall, we're pretty pleased with high prices holding in the long acting filgrastim.

Operator: And our next question is from Matthew Harrison from Morgan Stanley. Matthew?

Arena I think what we continue to do is make sure that people understand that our ability to supply a high quality products with reliability of that supply along with our patient programs, where we're able to we're able to hold on to share quite well and there's usually.

Operator: Hey, great. Good afternoon. Thanks for taking the question. I wanted to ask Murdo about bison. You gave us a nice sort of roundup of some of the market dynamics. I was hoping maybe you could just talk a little bit more detail about what you're seeing in the oncology launches versus the inflammation launches and maybe just give us some sense of what the breakdown of the revenue mix is right now.

The some ability for the innovator to hold on to share even at a price premium.

And that's that's usually in the 10% to 20% range.

Murdo Gordon: Thank you, Matthew. We're pleased with the U.S. oncology uptake. I think what's really important to note is Amgen's capabilities across our company are known for our strength in biologics manufacturing and providing a reliable quality supply to customers. So I think that the first box that you would anticipate oncologists would be concerned about is what is well-checked with the capabilities at Amgen, and we've proven that on our innovative side, and now we're demonstrating that with being the innovator of the total portfolio and first to I think from a behavioral standpoint, providers in the oncology market are more than willing to try high-quality biosimilars, and we're seeing good adoption. We're able to open accounts relatively quickly, so our breadth in the community oncology market is good.

And our next question if mine of Jay Olson from Oppenheimer Jay.

Hi, Thanks for taking the question I'm curious about TESTOPEL you map congratulations on completing enrollment of 1000 patient Navigator study can you describe the plans for submitting Abengoa you haven't number of other studies running including a steroid sparing study in adults what do you what date.

Do you need and what does the timeline to file and then as you contemplate commercialization, who are the target prescribers and how will cause Italian med fit into your commercial infrastructure. Thank you.

Okay, two parts to venture, yes, I'll start.

Typically we don't comment on regulatory filing timelines I would point out as you mentioned.

The core of any filing package will be the navigator study in their number of other studies that will provide.

Murdo Gordon: We've provided good coverage in terms of payer reimbursement, and now what we're working on is our non-340B and 340B hospital coverage, and now that we've got permanent J-code or permanent coding in for reimbursement, we're in really good shape. So I think oncologists have behaved very consistently with what we had expected given some of the uptake that we've seen on the supportive care site with the long-acting Fulgrastim franchise, and I think we're looking forward to continuing to supply those community oncology providers and academic oncology cancer centers with good commercial services and good patient support as well as that quality and reliable supply that we're known for.

Supportive data.

We expect those studies are 52 weeks in duration and so given that we've completed enrollment.

To that trial, you can expect roughly a little after a year from last patient enrolled bet you that the primary analysis our reads out following within.

Following that would then be filing let me turn it over to Murdo, who can address some of our commercial thoughts on the opportunity for TESTOPEL Lehman, Yes, clearly, we're working very closely with our partners that Astra Zeneca, who are very experienced in this area across restaurant G Pulmonology and even allergists, which are our target customers.

For the at least the asthma indications so lot of work being done there and we're looking forward to hopefully successful data.

And our next question is one of Cory Kasimov from JP Morgan Cory.

Murdo Gordon: Different region, Murdo, but do you want to comment on the experience with inflammation in Europe?

Hey, good afternoon, guys. Thanks for taking the question I guess I'll skip another K Ras one instead ask on the BD front.

Murdo Gordon: Yeah, we've seen very quick uptake and penetration of the biosimilar into the Innovator compound with Amgivita. We've been pleased to see that despite having multiple products early in the launch of that all launching at the same time, we've been able to settle in on price points that are good for our profitability. And as I mentioned earlier, we're also excited now that we've got an on-the-ground inflammation focused customer facing organization. The addition of Otesla to that is a very effective one as we go forward.

So given that you recently announced a meaningful transaction for Tesla and now you have a CFO transitions can be taking place would it be fair to assume that you'd hit the pause button another deals in a in the near to intermediate term or is it basically business as usual during this transition I think it's very much business as usual Corey we're we're very clear that our capital allocation.

Priorities remain intact.

We're continuing to look for ways to invest internally and externally and.

Also.

Growing the dividend buying back shares so.

We've got an active BD effort in those areas of our stated strategic focus therapeutically and geographically will maintain that.

Operator: And our next question is from the line of Geoffrey Borges from Leering Partners. Geoffrey?

In as a sub past six PM on the East coast, what it would take two last questions after which Bob will make a few concluding comments.

Operator: Thank you very much. And just sort of a couple of follow-ups for Dave, if I may. Dave, I'm sure in reviewing a competitor's data, it will not have been lost on you that your competitor has a longer half-life but a greater dosing frequency as well. So I'm wondering, in the context of that, will you be studying BIP?

Very well.

Our next question is might have Mohit bansal from Citigroup go ahead.

Great. Thanks for taking my question and I would like to talk with banking David for on the has yes.

Moving to Canrad.

We have recently learned that patient as could be one mutations in not just on value checkpoint inhibitors and they also represent about 30% of gave that you detect cancer. So just wanted to see if this is that you have looked at and could this be your entry as a first line agent follow your empty fight that.

Operator: [inaudible]

David M. Reese: Could you just talk a little bit about ongoing research? This field is obviously exploding. Does Amgen have a continuing research investment in KRAS, and do you have backup molecules?

Q.

Thanks, Mohit and Thats a great question. So we've got a very active biomarker program. We are sequencing as many of these tumors as we can and as we.

David M. Reese: B.J. K. B. M. E. B. M. L. C. M. A. O. D. N. E. H. M. S. F. M. N. M. L. D. M. K. W. Q.

Accumulate a larger number of patients who are both responders and Nonresponders. We will look to see if there are signatures molecular signatures that predict response or lack of response, the particular mutation that you called out.

Operator: [inaudible] Thanks, Geoff. Those are both good questions.

David M. Reese: You know, I would, to start, I would say that, you know, when we were developing AMG 510, we outlined a set of target parameters for the molecule that we wanted to achieve, you know, biochemically, in terms of pharmacokinetics, etc. Most importantly, the ability to inhibit the target over a dosing interval of 24 hours. You know, we believe we have, a wealth of data suggesting that with a covalent inhibitor, a couple hours of exposure above a threshold leads to complete inhibition of signaling over that dosing interval, and we're convinced that our 960 milligram dose achieves that and, in fact, is well above that target threshold. Now, that said, of course, it's very common in small molecule development programs early in the clinical development program to And then, finally, as you noted, the field is exploding. That's a fact that is not lost on us.

As one of them of course that we will be keenly focused on and as you mentioned it seems to associate with relative resistance to checkpoint inhibitors. So I think theres a lot to learn it took 40 years to get into the clinic with an inhibitor we've been there year.

We are very rapidly generating data I would think that when we present clinical data next year. We will also be able to have a first pass at a fair amount of biomarker data as well.

And our final question is from line of Kennen Mackay from RBC capital markets Kennen.

Hi, Thanks for squeezing in Arvin, let me offer my congrats on the quarter and guidance raise as well as congrats on the decision to pull the high priced repatha from the market by New year's Eve and on that note. Just a question for Murdo repurchase share of the suggestion on market has increasingly gained over probably going over the last couple of years I was wondering if you could comment on.

What you see us the big driver for that and also how you're thinking about the potential competitive impacts of the entry of Deutsche asset that includes around.

Hi, cholesterol, thanks, so much and congrats again.

Thanks, Ken in so why don't I start with the Repatha question and then perhaps turn it to date reached to talk about.

David M. Reese: We have a variety of preclinical efforts ongoing there, which we'll be happy to talk about at the right moment in time. But you know, I think it's important, as you follow this field, to keep in mind that not all of those molecules are directly KRAS inhibitors but inhibit other signaling or co-signaling molecules in the pathway or have slightly different mechanisms of action. And as we've seen in oncology over the last several decades, we would expect a sort of plethora of different approaches around these targets.

On the development of other competitors and cholesterol lowering category.

First off thank you for recognizing.

The price.

Hi, there sorry, the decision to remove the oil LP from the market I think this this was something we signaled but it's something we feel is important to do to ensure that other actors in the supply chain make the right decision and provide the low list price repatha.

On their formulary and within their benefit so that patients can.

Operator: And our next question is from Umer Raffat from Evercore ISI.

Lower their out of pocket costs. So this is one where we've worked very closely with payers and we've we've made sure that both the prescribing community inpatients understand what we're trying to do here and that's to provide a very effective medicine for serious cardiovascular patients disease patients can bend.

Operator: Hi, thanks.

David M. Reese: Thanks so much for taking my question. David, back to you again on KRAS as a surprise.

David M. Reese: We've seen two very different AUC disclosures on AMG-510 at 960 milligrams. It was 140 at ASCO, and the AUC, and then the AUC declined to 65 at World Lung. So my question to you is, what do we know about the median AUC among patients that ended up being responders versus the median AUC among patients that were not responders? Thank you very much.

From an overall I think the execution on the ground has been very very strong the field teams both on the medical side and on the commercial side that are calling on cardiology.

Have been very good at explaining who the ideal high risk cardiovascular patient candidate is for Repatha and so we're running at approximately 70% share right now.

We don't see that declining we see it holding or modestly increasing we'll continue to invest in repatha to ensure that prescribers and patients alike receive.

David M. Reese: Yeah, Umer, thanks for that. And I would point out that it's not unusual, you know, when you initially report phase one results, they're often on just a handful of patients with small molecules. It's very typical to have quite large error bars around the various pharmacokinetic estimates, so to see those move over time is not surprising.

Option.

Using repatha to lower cholesterol and to reduce cardiovascular risk going forward. So.

We are feeling confident we're feeling like we're finally, making some inroads here and addressing these.

The risk reduction for these patients.

David M. Reese: And as I mentioned, we're still at target exposure. And, you know, in our view, C-max here is probably the most important parameter, and we believe we're well above our target threshold for quite a number of hours. In fact, essentially throughout the entire dosing interval, we believe we only need to be above it for a couple hours to extinguish signaling. So, you know, that's really what drove us forward in terms of dose selection in the program. And as I just mentioned, we'll continue to explore other approaches as part of the standard clinical pharmacology program.

Yes, and in terms of.

Other LDL targeting molecule has been public acid.

As an oral we think it really is going to occupy a different niche.

In the clinical landscape.

This will be used either on top of status or.

Patients who are close the goal or.

In those were not tolerant to status, we don't it's got a modest LDL lowering effect, we really don't see it as a direct competitor to repatha.

Plus around I think you know the what we will pay attention to in the long term or long term safety and then of course.

Operator: And our next question is one about Salim Saeed from Mizzou. Salim?

Cardiovascular outcomes data, which are still we think some years out that's what we'll be looking for in that space. I think then I'll turn it back over to Bob. Okay. Thank you ill wrap up let me just note that we're pleased with our performance through the first nine months of the year.

Operator: Thanks so much, guys. And my congratulations to David on his retirement. Just one for me on the new LASTA, if I may.

Operator: So when I look at the Neupogen ASPs over the last five years, when the biosimilars launched, it seems like you guys have held your ASPs more or less flat over the last five years. Meanwhile, the biosimilar ASPs for Neupogen have come down substantially. And I'm wondering how you think about that, given what we're seeing with the new LASTA numbers declining pretty quickly. Should we be expecting a similar strategy here to be price disciplined? Or what breaks price discipline? Can Sandos do it? If you could just opine on that,

Hope to share our enthusiasm for the long term outlook and Amgen driven by our recently launched innovative products as well as our Biosimilar medicines and are rapidly advancing pipeline opportunities. We think we're in a strong position to deliver long term performance for our shareholders and the patients whose these were seeking to address.

As previously announced David believe will be retiring next year and though this is not his last call with investors I wanted to take a moment fresh from his announcement to thank him publicly for his contributions. He has been an extraordinary leader for us since our CFO , who will leave Amgen a strengthened enterprise.

Murdo Gordon: Thanks so much.

Murdo Gordon: Yeah, thanks, William. The general rule in these types of markets is that the more competition you have, the more number of players, the more price competition you usually see. So I think it's too early to tell. In the US, at least the two oncology categories we're in with both Bevacizumab and Trastuzumab, and I think overall we're pretty pleased with how price is holding in the long-acting Fulgrastum arena. I think what we continue to do is make sure that people understand that our ability to supply a high-quality product with the reliability of that supply, along with our patient programs, we're able to hold on to share quite well. And there's usually some ability for the innovator to hold on to share even at a price premium, and that's usually in the 10 to 20% range.

The same time I'm delighted to welcome Peter Griffith to Amgen is David successor computers extensive financial and operational experience will benefit Amgen as we continue our efforts globally to serve more patients and drive long term growth I know the whole team joins me and welcoming Peter aboard and we'll look forward introducing him to all of you finally, I'd be remiss if I didnt.

Also thank the Amgen staff around the World, who continued to deliver on our mission to serve patients and to drive value for our shareholders. Thanks for your interest in the company. We look forward to talking to the next call great. Thanks to all of you for your participation if you'd like to continue the dialogue feel free to called me the IR to little bit standing by for several hours. Thanks again.

Ladies and gentlemen, this does conclude today's conference. We thank you greatly for joining us for Amgen's third quarter 2019 financial results Conference call. You May now disconnect now.

Operator: And our next question is from my love, Jay Olson from Oppenheimer. Jay?

Operator: Thanks for taking the question. I'm curious about tezapelumab. Congratulations on completing enrollment in the 1,000 patient navigator study. Can you describe the plans for submitting?

Okay.

Operator: BLA. You have a number of other studies running, including a steroid sparing study in adults. What data do you need and what is the timeline to file? And then, as you contemplate commercialization, who are the target prescribers and how will tezapelumab fit into your commercial infrastructure?

David M. Reese: Let's take it in two parts, Dave. Why don't you start? Yeah, I'll start. You know, typically we don't.

David M. Reese: You know, comment on regulatory filing timelines. I would point out, as you mentioned, the core of any filing package will be the navigator study, and there are a number of other studies that will provide supportive data. We expect, you know, those studies are 52 weeks in duration. And so given that we completed enrollment in that trial, you can expect roughly a little after a year from the last patient enrolled that the primary analysis reads out following within, you know, following that would then be filing. Let me turn it over to Murdo, who can address some of our commercial thoughts on the opportunity for tezapelimen.

Murdo Gordon: Yeah, clearly, we're working very closely with our partners at AstraZeneca, who are, you know, very experienced in this area across respiratory, pulmonology, and even allergists, which are our target customers for at least the asthma indications. So a lot of work is being done there, and we're looking forward to, hopefully, successful data and approval.

Operator: And our next question is from a line from Corey Kazimoff from J.P. Morgan. Corey?

Operator: Hey, good afternoon, guys. Thanks for taking the time to answer the question. I guess I'll skip another KRAS one instead of asking on the BD front. So given that you recently announced a meaningful transaction for Tesla, and now you have a CFO, transitions could be taking place. Would it be fair to assume that you'd hit the pause button on other deals in the near to intermediate term? Or is it basically business as usual during this transition? I think

Bob Bradway: It's very much business as usual, Corey. We're very clear that our capital allocation priorities remain intact. We're continuing to look for ways to invest internally and externally and, you know, while also growing the dividend and buying back shares. So we've got an active BD effort in those areas of our stated strategic focus, therapeutically and geographically, and we'll maintain that.

Operator: Okay, Ian, as it's past 6 p.m. on the East Coast, why don't we take two last questions, after which Bob will make a few concluding comments. Very well. Our next question is from Mohit Bansal from Citigroup. Mohit?

Operator: Great, thanks for taking my question, and I would like to start by thanking David for all the help over the years. Moving to KRAS, we have recently...

Operator: Patients with LKB1 mutations do not respond to treatment.

David M. Reese: Thanks, Mohit. And that's a great question. You know, so we've got a very active biomarker program. We are sequencing as many of these tumors as we can. And as we thank you.

David M. Reese: As we accumulate a larger number of patients who are both responders and non-responders, we will look to see if there are signatures, molecular signatures, that predict response or lack of response. The particular mutation that you called out is one that we will be keenly focused on, and as you mentioned, it seems to associate with relative resistance to checkpoint inhibitors. So, you know, I think there's a lot to learn. It took 40 years to get an inhibitor into the clinic. We've been there for a year, and we are very rapidly generating data. I would think that when we present clinical data next year, we will also be able to have a first pass at a fair amount of biomarker data as well.

David M. Reese: And our final question is from the line of Kenan McKay from RBC Capital Markets. Kenan?

Operator: Okay, thanks for squeezing me in, Arvind. Let me offer my congratulations on the quarter and guidance raised as well as my congratulations on the decision to pull the high-priced Repatha from the market by New Year's Eve. And on that note, just a question for Murdo.

Murdo Gordon: Repatha's share of the PCSK9 market has increasingly gained over, probably gone up over the last couple of years, so I was wondering if you could comment on what you see as the big driver for that and also how you're thinking about the potential competitive impacts of the entry of bambidoic acid and inclusiran in high cholesterol. Thanks so much and congrats again.

Murdo Gordon: Thanks Ken, and so why don't I start with the Repatha question and then perhaps turn it to Dave Reese to talk about the development of other competitors in the cholesterol-lowering category so that patients can lower their out-of-pocket costs. So this is one where we've worked very closely with payers, and we've made sure that both the prescribing community and patients understand what we're trying to do here, and that's to provide a very effective medicine for serious cardiovascular disease patients who can benefit from it. We don't see that declining; we see it holding or modestly increasing. We'll continue to invest in Repatha to ensure that prescribers and patients alike receive the option of using Repatha to lower cholesterol and reduce cardiovascular risk going forward, so we're feeling confident, and we feel like we're finally making some inroads here and addressing the risk reduction for these patients.

David M. Reese: Yeah, and in terms of, you know, other LDL-targeting molecules, bempedoic acid is an oral drug. We think it really is going to occupy a different niche in the clinical landscape. This will be used either on top of statins or, you know, in patients who are close to goal or in those who are not tolerant to statins. We don't know – it's got a modest LDL-lowering effect. We really don't see it as a direct competitor to Repatha. Inclisiran, I think, you know, the – what we will pay attention to in the long-term or long-term safety, and then, of course, cardiovascular outcomes data, which are still, we think, you know, some years out; that's what we'll be looking for in that space. And I think now I'll turn it back over to Bob. Okay.

Bob Bradway: Okay, thank you. To wrap up, let me just note that we're pleased with our performance through the first nine months of the year. We hope you share our enthusiasm for the long-term outlook at Amgen, driven by our recently launched innovative products as well as our biosimilar medicines and our rapidly advancing pipeline opportunities. We think we're in a strong position to deliver long-term performance for our shareholders and the patients whose needs we're seeking to address. As previously announced, David Milleen will be retiring next year, and though this is not his last call with investors, I wanted to take a moment fresh from his announcement to thank him publicly for his contributions. He's been an extraordinary leader for us as our CFO, and he will leave Amgen a strengthened enterprise.

Bob Bradway: At the same time, I'm delighted to welcome Peter Griffith to Amgen as David's successor. Peter's extensive financial and operational experience will benefit Amgen as we continue our efforts globally to serve more patients and drive long-term growth. I know the whole team joins me in welcoming Peter aboard, and we'll look forward to introducing him to all of you. Finally, I'd be remiss if I didn't also thank the Amgen staff around the world who continue to deliver on our mission to serve patients and drive value for our shareholders. Thanks for your interest in the company, and we look forward to talking to you on the next call.

Operator: Thanks to all of you for your participation. If you'd like to continue the dialogue, feel free to call me. The IR team will be standing by for several hours.

Operator: Thanks again. Ladies and gentlemen, this does conclude today's conference. We thank you greatly for joining us on Amgen's third quarter 2019 financial results conference call. You may now disconnect.

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