Q1 2020 Earnings Call

In addition to our efforts to develop a therapeutic antibody. We have also been engaged in discussions with multiple groups conducting platform trials in covid-19 and anticipate that otezla off to the clinic in the coming weeks to be investigated as a potential immunomodulatory treatment in adult patients with the disease. Finally you're contributing actively to collaborative efforts to Advanced Therapeutics for covid-19, including active the public-private partnership with the NIH. I want to close by acknowledging our staff or working tirelessly off and selflessly under these challenging circumstances to deliver for our patients their commitment and execution have been exemplary and I can't thank them enough now like to turn things over to avoid

Thanks, Dave and good afternoon everyone. We started the year with strong volume driven growth of 15% on a global basis with 10% in the US and 35% tax us growth was generated broadly across our portfolio of newer products more than offsetting declines in our mature Brands given the unprecedented nature of the covid-19 pandemic. I want to start by sharing your views on how disruptions in the global Healthcare System may impact our business and then I'll walk through what we're seeing at the product level jobs and what actions we are taking like others in our sector. We're seeing varying degrees of impact from covid-19 across our portfolio as physician-patient interactions are interrupted. He's reduced interactions have led to some delays and diagnosis and treatment which in turn reduces new patients starts.

Gator from iqvia suggest that patient office visits have declined by over 50% Although some of this is being offset by telemedicine and Telehealth services off data also show that some patients refilled prescriptions early and that there was a modest benefit of approximately a hundred million dollars from inventory in the quarter home finally increased utilization of patient affordability programs and changes in segments mix due to increased unemployment could negatively impact wage net prices treatments like Prolia that require in office administration by a healthcare provider have been negatively impacted on the other hand the product like otezla May benefit given that it provides a convenient oral option for patients compared with injectable or IV biologics some of which require monitoring.

despite this

Option or teams are responding to customer needs via remote interactions where identifying innovative solutions to help patients and we're supplying product reliably and consistently now, let me review some product details beginning with polio on a slight 12th Prolia grew 10% year-over-year from higher volume strong demand growth in January 8th was consistent with prior years in March. We began to see a negative impact on Prolia in office injections and have since observed a substantial step down in utilization versus prior years in more recent weeks. We're beginning to see signs of stabilization and we'll be able to provide more clarity on this when we report our Q2 results in July.

The importance of treating osteoporosis and patients are high risk of fractures critical. Our teams are working to address continuity of care issues and exploring novel Solutions such as home sites of care mobile nurse administered injections prescription fills that specialty and Retail pharmacies. We're also working with policymakers and advocacy organizations to address treatment challenges in this environment.

Moving to Identity which launched in Japan and the US in the first half of 2019 event. I posted a hundred million dollars in sales during the first quarter driven by continued uptake in Japan which represents roughly two-thirds of identity sales. We have attained share similar to those of established. Anabolic Therapies in the US. We saw an acceleration and gain entrance with improvements and persistence in q1 as clinics gained more experience as patients complete their one-year cycle of therapy with identity. We will work with healthcare provider to help transition these patients to Prolia identity and Prolia are a complimentary set of options to address the nine million factors that occur worldwide Palm Coast menopausal osteoporosis patience, and our teams are focused on ensuring these patients are not compromised during this pandemic.

Moving to repatha. We're off to a strong start in 2020 our efforts over the past eighteen months to improve access and affordability have yielded strong results as q1 sales grew by 62% year-over-year driven by 98% volume growth versus the same period last year new to Brand prescriptions in the US steadily improved in q1 growing 51% year-over-year and we held 80% market share exiting the quarter as we proceed in our last earnings call Thursday Contracting to improve access and affordability resulted in a step down and repaired as net selling price in q1. We expect net selling price to be relatively stable for the remainder of the year.

What's the name of it?

8:15 on a year-over-year basis net sales grew 20% with underlying volume growth of 46% name of it Remains the market leader with 48% of total prescription share today almost 330,000 patients have been prescribed Elevate by more than 33,000 prescribers with the recent addition to CVS National preferred formulary. We now have access to 93% of covered lives which led to a 19% growth quarter-over-quarter in a brand prescriptions net price was sequentially War due to expanded access with CVS and higher co-pay utilization that occurs each year in the first quarter wage. These factors were partially offset by the proportion of paid prescriptions increasing to almost 90% up from 81% in Q4 of 2019.

Next to our inflammation portfolio starting with otezla integration has been seamless evidenced by 23% year-over-year growth driven by volume these results with planned label expansion give us confidence in our ability to realize the full Global potential double Tesla as an affordable option with a very well-defined efficacy and Thursday profile in the current covered environment will Tesla provides a convenient oral option for patients is conducive to telemedicine and does not require a lot monitoring.

Moving to Enbrel sales were 1.2 billion in q1 and included a $70 year-over-year benefit from favorable changes and accounting estimates related to the deductions consistent with prior Trends prescription volumes declined 5% year-over-year. We continue to expect a limited benefit from net selling price in 2028 vs 2019 in this environment. We're supporting Ambrose strong continuing basis of patients in maintaining their course of therapy through disruptions and out-of-pocket costs. As you know, umbrella has been on the market for over 20 years and does not require routine lab monitoring.

Just late eighteen another contributor to our inflammation franchises and Jovita which for three consecutive quarters is the number one adalimumab biosimilar in Europe took $86 million dollars of sales in q1 switching to our hematology and oncology business are Innovative portfolio of six Brands collectively totaled 1.3 billion dollars a quarter growing by 11% year-over-year certain products, like xgeva may be impacted in the current environment due to disruptions in physician-patient interactions with all the others including the lastest on Pro and our oncology biosimilars in bra and penty provide greater value.

let me

Highlight some of our larger product Skype rollis grew 14% year-over-year led by a 21% increase in US sells which was driven by expanded use in second and third lane multiple. Myeloma, neulasta declined 40% year-over-year recall that q1 of 2019 benefited from a 98 million dollar bar to order which did not repeat this quarter on Pro continues to be the preferred choice and it's helped quarter over quarter share at 54% despite facing an additional competitor the 2010 CC n guidelines recommend increased use of gcss to minimize the risk of febrile neutropenia in cancer patients on Pro provides a unique value proposition particularly know as patients can receive their g-csf treatment without having to return to their site of care.

Are to oncology biosimilars and ginty generated $234 billion dollars in sales globally in the first quarter in the US they sold 108 million and 96 million respectively with market shares exiting q1 at or above 27% We continue to see encouraging adoption rates and Clinics with Hospital adoption accelerating. These biosimilars are increasingly valuable given the cost savings. They provide switching to Nephrology starting on site twenty-four get off the serious nature of end-stage renal disease patients require dialysis treatments three days per week. Therefore. We're not seeing a meaningful impact on the use of the engine medications in the the patients that would attribute to covid-19 in q1 epogen sales declined 29% primarily due to lower net selling price from our contractual wage.

And with the Vita and approximately twenty million dollars of unfavorable changes in accounting estimates sense of our sales declined 42% year-over-year due to the impact of generic competition off as a reminder supplemental patent protection certificates for cinacalcet of expired in major markets, which could result in a significant decline in extra money in 2020 possible grew by 39% year-over-year in the first quarter independent and mid-sized dialysis providers already utilized possible for a majority of like cinematic patience. Well FMC and the vehicle continued to increase adoption in summary. I'm truly inspired by the entrepreneurial Spirit of our employees who are home patients and healthcare providers in this unprecedented time. And with that I'd like to turn over to Pizza.

Thank you murder. Oh good afternoon, everyone.

Before reviewing our results and guidance. I would like to take a moment to build on Bob's comments regarding the unprecedented covid-19 demek and provide additional insights and how he's responding to and navigating through the associated macroeconomic challenges.

First we confront these challenges from a position of strength. Our fundamentals are strong with over $8 billion of cash and Investments and a business that generated to be home in a free cash flow in the first quarter. We are in a strong financial.

Remain committed to our Capital allocation principles shown on slide twenty-eight which start with investing in internal innovation.

We will patiently evaluate external Business Development opportunities. They clear our hurdle rate and are consistent with our areas of therapeutic Focus.

Our Capital expenditures remain a high priority including our industry-leading environmentally-friendly next Generation bio manufacturing facility in Rhode Island.

We will continue to return Capital to our shareholders. Our Capital allocation principles will continue to build on our efficient capital structure which result of an optimal weighted average cost of capital.

Now I will briefly walk through our first-quarter financial results before discussing our 2020 Guidance. The financial results are shown on slide twenty-nine of the slide deck.

The first quarter marked another period of solid performance as we grew volume 15% increased investments in the business and delivered 17% on a year-over-year non-gaap EPS growth.

You one revenues at six point two billion increased 11% year-over-year.

In the quarter, we saw worldwide product sales increased 12% to 5.9 billion as our portfolio transition was strong growth from our newer products outpacing declines material products.

Now on to the rest of the p&l.

Total operating expenses for the quarter increased 7% year-over-year.

For the full year, we now expect total operating expenses to grow in the high single-digit percentage range. You're over a year on an absolute basis.

On a non-gaap basis cost the sales is the percent of product sales decreased by 1.6 percentage points to 13.1%

driven primarily by lower manufacturing costs partially offset by an increase in Milestone expense

for the full year we continue to expect cost of sales is the percent of product sales to be generally consistent with 2019

research and development expenses of $927 million were 8% higher due to higher spending on otezla an AMG 510 partially offset by cost recoveries from our collaboration with Beijing

for the full

Here. We also expect R&D spend on an absolute basis to increase as we invest in our Innovative Pipeline and new otezla indications with these increases partially offset by R&D recoveries received from our Beijing collaboration.

sg&a expenses increased 12%

Tesla and for the full year, we continue to expect sg&a stand to increase primarily due to otezla spent.

Our q1 non-gaap operating income at 3.2 billion increase 15% for prior-year non-gaap operating margin was 53.9% for the month compared to 52.4% in q1 of 2019.

Their income and expenses were in that $335 million expense in q1. This is unfavorable by $177 million on a year-over-year basis.

This year-over-year change was due to lower interest income on cash balances as well as Market fluctuations of publicly traded Securities held in our Venture portfolio.

We anticipate non-gaap other income and expense to be a net expense for the upper end of the 1.2 billion to 1.4 billion range. We previously provided.

Recall that we will begin recording under the equity method of accounting our share of Beijing profit or loss beginning in Q2.

The non-gaap tax rate decreased 1.8 percentage points versus q1 2019 to 12.8%

non-gaap net income was 2.5.

17% year-over-year for the first quarter supported by a 5% reduction in Share account versus q1 2019

Journey next to cash flow in the balance sheet on slide Thirty during 220. We generated strong cash flow reflecting a diversified portfolio products coupled with industry-leading cost structure free cash flow with 2.0 billion and Q 12020 vs. 1.7 billion in q1 2019.

In q1 twenty-twenty, we return to total of 1.9 billion to shareholders through dividend payments, totaling over $900 million and over nine hundred million to repurchase 4.3 million shares in an average price of $219 per share.

For the remainder of the year, we plan to maintain our quarterly dividend of $1.60 per share and we'll execute opportunistic share repurchases that will result in an amount if the lower end of our previous guidance of three to five billion dollars for twenty $20.

Fashion Investments totaled eight billion at the end of q1 2020 a decrease of 18.3 billion from the end of q1 2019. This decrease was primarily driven by the otezla in Beijing transactions cash returned to shareholders in the form of share repurchases as well as net debt repayments partially offset by free cash generated during the.

Additionally, I note in twenty-twenty. We plan to make 1.75 billion dollar payment in debt payment at maturity payments.

We issued five billion of long-term debt in February in order to take advantage of market conditions for refinancing our long-term debt maturities and twenty twenty and partially those in 2021. We will continue to be opportunistic with strong access to Capital markets that outstanding at the end of the quarter totaled 31.8 billion and carries a weighted average interest rate of 3 points.

years

Turning to the outlook for the business for twenty twenty starting on slide Thirty-One.

Our guidance provided in January contemplated a broad range of outcomes due to the uncertainty related to the covid-19 impact. We expect some degree of uncertainty in Cortland Avenue and earnings over the year.

We currently expect that. We will see the greatest impact later in Q2 which stabilization and then partial recovery occurring during the second half of the year.

And now turning to slide 32. We are reaffirming our Guidance with the revenue range of 25.0 billion to 25.6 billion and a 9 a.m. A PPS range $14.85 to $15.60. We will be monitoring the businesses the Dynamics underline these assumptions evolve across and will review our latest perspectives with you at our next earnings call.

We are now guiding to Capital expenditures the $600 million versus our prior guidance of seven hundred million reflecting a change in the timing of spend rather than a change to our investment, please.

Addition additionally, we are reaffirming our non-gaap tax rate guidance of 13.5% to 14.5% for the full year.

This concludes the financial update.

I've been with Amgen a little over 6 months and is the privilege to serve patients every day here by supporting and enabling the engine difference.

And each day during this covid-19 disruption. I'm reminded that Innovation is the miracle drug.

Was that I'll turn it back over to Bob for some closing remarks before my closing remarks. We'll go to Q&A. So let's let's open it up for Q&A and remind our callers at the thought process that will follow advice certainly as a reminder ladies and gentlemen, if you'd like to queue up for a question, simply, press star or follow the number one on your telephone keypad. Again, that is star one. Time. We ask that you please limit yourself to asking one question during this Q&A session.

our first question is flying of

Olson with Oppenheimer J. Your line is open.

Oh, hi. Thanks for taking the question and thank you for the work that you're doing to fight the covid-19 pandemic. I wanted to ask about the non-gaap operating margin and picked up nicely in the first quarter and I noticed that you lowered the expected growth rate slightly. So I was wondering how do you expect the operating margin to evolve over the course of twenty twenty and do you expect that higher operating margin to be sustainable in a closed covid-19 world. Thank you.

Jay thank you for the question. It's a good question. As I indicated. We we do project that for the full year. Our total effects will grow in the high six digit percentage range. We are confident in our cost structure in our productivity. We're cured Amgen. So I think our operating margin speaks for itself and we expect it to be an industry-leading cost margin going forward and twenty twenty and of course, we don't give any guidance Beyond 2020 on the margins.

Ian: My name is Ian, and I'll be your conference facilitator today for Amgen's first quarter 2020 financial results conference call. All lines have been placed on mute to prevent any background noise.

Unknown Executive: There will be a question and answer session at the conclusion of the last speaker's prepared remarks. In order to ensure that everyone has a chance to participate, we would like to request that you limit yourself to asking one question during the Q&A session. To ask a question, please press the star key, then the number 1 on your telephone keypad. To withdraw your question, please press the pound key.

We just to State the obvious today. We would have liked to have spent more on in q1, but you know, we were getting a little bit disrupted there as you know at the end of the quarter. So, let's see what it's like for remains before 6.

Arvind Sood: I would now like to introduce Arvind Sood, Vice President of Investor Relations. Mr. Sood, you may now begin. Okay, thanks, Ian.

Arvind Sood: Good afternoon, everyone. Thanks for joining us for our Q1 call. I hope you and your families are staying safe.

And our next question is line of Tim Anderson with wolf research. Tim near line is open.

Arvind Sood: We are, Bishan, with the COVID-19 pandemic. I know I speak on behalf of all my colleagues at Amgen when I say that it's a source of great pride that we work in an industry that can be a part of the solution. Before we start, I would like to recognize those who are new to their coverage of Amgen, including Tim Anderson of Wolf Research, Carter Gould of Barclays, and Michael Schmidt of Guggenheim. Over the past few weeks, I've talked with many of you, and you have expressed concerns and posed questions about how this COVID pandemic will impact our business. Including Supply Chain, Clinical Trials, Commercial Operations, and Growth Outcomes.

Thank you very much. My question is something that's probably a thorn in your side, which is the ongoing Enbrel patent Challenge and that's one of the the events for the company in 2020 the appeals court ruling and I'm sure you're confident in your in your positioning on how that will play out. But these things are never certain. So I'm wondering if you can just help us out. What plan B would be in the event that send those actually prevails is the largest product. I'm guessing you have some sort of contingency plan in place. I know it's a low probability event, but any perspective would be helpful.

Well, we're not going to go into details on that. Obviously. We continue to feel confident and in the intellectual property around envelope. So let's leave it off for now. Thanks.

And our next question is from the line of Chris Raymond with Piper Sandler. Chris Caroline is open. Thanks. So I know you guys have talked about the the collaboration with adaptive and your antibody program, but just there's a there are a lot of folks. I think that are working on similar sort of purpose-built products regeneron and beer and others. I wonder if you took a little bit more color on what differentiates you know what you guys are doing and and maybe also a little more color on timelines in terms of being in the in the clinic Etc. Thanks. No. Thanks Chris De Vries here. I'll take that question. Yeah. So as you know, there are a number of efforts going forward to develop therapeutic antibodies. You know, what we're trying to do both. I think that it's potentially unique here is number one combined adaptive capabilities in in you know, you know profiling with our immunology and particularly our wage

Bob Bradway: As our growth outlook will be defined by how these variables unfold in the future, we have modified the order of presenters today so you can get a good sense of how we are dealing with the uncertainties and remedial actions we are taking to run our business effectively. Our CEO, Bob Bradway, will commence the call with some opening comments, followed by our head of R&D, Dave Reese, who will provide a pipeline. Our head of commercial operations, Murdo Gordon, will give you a state of the business. And then our CFO, Peter Griffith, will bring it all together by helping you understand what all this means in terms of a growth opportunity. By the way, consistent with the recommendations for social distancing, we are all in different locations today.

Bob Bradway: So please bear with us as we'll try to make the best we can. Just a quick reminder that we'll use non-GAAP financial measures in today's presentation and some of the statements will be forward-looking statements. I would direct you to our 10K and subsequent filings, which identify factors that could cause our actual results to differ materially. So with that, I would like to turn the call over to Bob.

work based out of decode our goal of

So it's really identify a very high-quality therapeutic candidates. And you know, it's my belief that there may well be more than one generation of antibody Therapeutics off entering the clinic. So as we think about this, we want to balance speed of development, which of course is important with generating the highest quality of candidate and off as work progresses. We we are up and running in the laboratory. But you know, we will provide guidance as you know, in terms of clinical time as that work unfolds, but that that collaboration is actively perceiving right now.

Bob Bradway: Okay, good afternoon, everyone. I want to acknowledge up front that this has been an extraordinary quarter for all of us. Global pandemic, economic disruption like none of us have seen before, and, of course, financial volatility that has been dizzying at times, but I hope you're doing well, and we're certainly grateful to you for joining the call. We're managing through the COVID disruption quite well and feel we're operating from a position of strength with a healthy balance sheet. A strong Portfolio of Products, and an organization that has proven itself time and again to be innovative, resilient, and able to adapt quickly to changing circumstances.

Chris maybe I could just add a comment about manufacturing, you know, obviously.

Bob Bradway: I want to take a few moments to share how we've been responding to COVID-19, and then we can dive into the details of the first quarter and what we see for the remainder of the year. We've mobilized our company around four priorities. First, taking care of our staff, our 23,000 staff around the world. Second, continuing to serve patients with an uninterrupted supply of our commercial and clinical medicines. Third, leveraging our core genetics, immunology, and antibody expertise in the fight against COVID-19. And finally, supporting the communities where we live and work. Our first priority from the beginning of the pandemic has been to ensure the safety of our people and their families. To encourage social distancing, Amgen staff worldwide are mostly working from home now.

Not a protein and we have great expertise and Manufacturing and scale and we think that one of the things we can bring to the party here is our ability to supply a vast number of patients with antibody.

And our next question is mine Jeff Meacham with Bank of America. Jeff your line is open.

For new guys. Thanks for the question. I guess when for Bob, but when you have the First full quarter of a Tesla in the mix, and now you looks like you you have a pretty competitive growth profile in the industry off from a top and bottom line perspective, so I know obviously fully expected, but either the growth acceleration or the volatility from covid-19 with your attitude towards Speedy. I'm just thinking about maybe a step up and the number of deals or maybe a increasing appetite for larger ones in this environment. Thank you.

Bob Bradway: We're encouraged that in a few markets, conditions have improved to the point where we've begun returning our people to the workplace, and we hope to expand our back-to-the-workplace activities in the coming months. I would also note that about a quarter of our staff are engaged in essential manufacturing and R&D activities that have required them to continue coming to the workplace every day. We're taking every possible measure to keep these employees safe, and we're grateful to them for their commitments to patients and to our business. All our staff are performing really well, as you can see from our results.

I think the environment is pretty fluid still Jeff so I wouldn't try to I'm not sure I'd like to declare an answer to your question at the moment. But other than to reiterate we think we're in a strong position talked about our balance sheet. We talked about our desire to allocate Capital to our internal Innovation as well as the external Innovation and and you know, we're pretty focused on on our strategy and we'll look at whether there are things externally they can help us strengthen our chosen areas, but maybe the other thing, you know, I would add just is a way to reiterate my appreciation to my engine colleagues as we have three very significant and successful Integrations in the first quarter. So it was a priority for us as a company to get off to a good start with uh, otezla and with beige and with our Japan transaction and we really feel we've done that over the you know, the first four months of the year, so I feel good about that.

Bob Bradway: At a time when health care systems around the world are being stretched to their limits, we're committed to working collaboratively with our partners in the healthcare ecosystem. We need to make sure that we're both responding to COVID-19 and meeting the ongoing needs of other seriously ill patients, which we as a society never intended. From a supply chain perspective, we've not experienced any significant disruptions, and we don't currently anticipate any shortages of our medicines due to COVID-19. With respect to clinical trials, our pivotal studies, including for AMG-510, TESLA, Tezepelumab, and Omekepsimacarbal, are fully enrolled and expected to read out this year, as previously announced.

And our next question is mine of Michael with Jeffrey's Michael hairline is open.

Thank you for the question and Congressional the progress and appreciate the color during this tough time. My question was for David on AMG 510. Of course, you didn't mention a updated ASCO. Can you just remind us how to think about colorectal cancer as a monotherapy? I guess what was new there and then excluding long and colorectal. There's there's an update them. You just remind us what would be the relevance there and then the timing on the Cabos which is which are not a task. Oh what to think about their and timing appreciate the update.

Bob Bradway: Other programs, such as our BITES and Oncology, have also continued to progress, and we're encouraged by the accumulating data there. Where programs have been interrupted by the COVID pandemic, we're busy making plans to get them restarted as soon as appropriate from a patient safety and regulatory perspective. By now, it's clear that overcoming this pandemic will require innovative science. While the virus may have gotten the jump on us at the outset, the good news is that the community of innovative biopharmaceutical companies is moving at a speed and scale never seen before, and we're gaining ground on the virus with each passing day. While our research does not include antivirals, we have a role to play in this battle, leveraging our genetics, immunology, and antibody expertise to do so.

Thanks, Michael. Yeah, seriously.

Questions regarding an g510, you know, we're continuing to enroll monotherapy patience with colorectal cancer. And you know as I indicated before I'm going to look at those data, I would say over the coming few months to determine, you know, whether we feel there's an appropriate monotherapy path forward in colorectal cancer or whether a combination therapy is most appropriate, you know with respect to other non lung cancer lung colorectal cancer indications. Are we will Thursday we are there are other malignancies such as small percentage of pancreatic cancers appendiceal cancer and delete real cancer and we will be able to provide updates. I'd ask on some of those two factors and response data and then finally in terms of combination therapy trial these are some of the trials that we you know, some of them we pause because birth

Bob Bradway: As previously announced, we're harnessing the molecular epidemiology work done by our DECODE subsidiary and working with our partners at Adoptive Biotechnologies to develop an antibody to prevent or treat COVID-19. If we're successful, our industry-leading manufacturing capabilities will play an important role in helping us meet the needs of patients. In addition, based on its mechanism of action, Otesla might help prevent the respiratory distress seen in late-stage COVID patients, as Dave Reese will explain in a moment.

Or either just initiating or or had just initiated. We're getting ready to ramp back up. So, you know, I would spec First Data, you know at the earliest later this year. Perhaps the very first part of next year on those but you know, we're you know, we're we're confident that we're not experiencing significant disruptions across the program into town and we're happy. We're quite happy actually with its progress.

Bob Bradway: We'll be exploring this question in clinical trials imminently. We've long prioritized being a good citizen within the health care ecosystem and within the communities where we live and work. COVID-19 has been devastating for many. While we certainly have been impacted by the pandemic at Amgen, we recognize that we're in a fortunate position, and we're committed to doing our part to help during this time of need. Toward that end, the Amgen Foundation is supporting COVID-19 in a variety of ways with a focus on communities where we have a significant presence. To give you just one example, we've donated testing equipment in Ventura County, our home county, that has effectively doubled the testing capacity for COVID-19 here.

And our next question is line of Terrence Flynn with Goldman Sachs parrots. Your line is open. Hi, thanks for taking the question. Maybe a follow-up for me on Thursday. And I know you guys have got into the phase to lung cancer data in the middle part of this year. Just wondering now as we're closer to the data if you could share any perspective on what you view as one of the efficacy bar here is Sai Ram the right bar, or should we think about higher efficacy here given it's it's a targeted drug. Thank you.

Bob Bradway: Looking ahead, we're confident in the future. We were in a strong position heading into the COVID-19 pandemic, and we expect to stay strong as we come through the other side of it. We remain focused on delivering sustained, long-term growth, and we're confident in our outlook for that. As I've already noted, we have a number of important innovative medicines advancing in our pipeline, and the key programs remain on track from a timing perspective. Our integration of a Tesla has been seamless.

Thanks Terrance. This is Dave. Yeah, in terms of the timing the date. I'd point out that you know, what we've indicated is that we want at least six months of response out of data on all patients and given the last patients were enrolled towards the end of the last year on that it takes you know a month or two typically for responses to develop you can see that that pushes it into the second half of the year in terms of when we expect the data readout. We're absolutely on track and we're not experiencing any I would say that's stanshall hiccups in the phase two monotherapy study. We do want, you know robust.

Bob Bradway: In Japan, we have now successfully completed the integration of our Astellas partnership, and we're already well advanced and collaborating effectively with our colleagues in Beijing and China. All this gives me confidence that we're executing effectively around the world, despite the challenges of COVID-19. Finally, a fact that will enable us to continue our capital allocation principles, which, I will remind you, are to invest in innovation internally and externally while returning significant capital to our shareholders. Oh, the pandemic is still very fluid. And to be sure, the first few weeks of April have clearly shown some signs of disruption. The combination of our results from the first quarter and our expectation of an improving outlook for global health care activity gives us confidence that the guidance we provided earlier in the year still incorporates the likely range of outcomes for our business in 2020. Peter will give you more color on this shortly.

Duration of response and progression-free survival data is part of that package and I think those endpoints along with response rate to address. The second part of your question will be an important part of the package, you know in this phase two monotherapy study.

And our next question is line of yarn over with Calvin your on your line is open right? Thanks for taking my question as well. And I have a name Jesus five ten questions as well the phase 3 David the the the study obviously fairly sizable. It's a 650 patients head-to-head against docetaxel, and I think it could do some questions as to why was that those attacks were really used is the control and not surrender in combo and maybe give us a little bit of sense. Why is the study lounge? So sizeable is it should be reading to your expectation and o r or is it really about trying to power for survival? Thank you.

David M. Reese: Amgen's strength has always come from its people. Like me, they believe in the power of science to make a difference in the world. We often talk about this being the bio-century, the golden age of innovation for biology. We may have met our challenge of the century in SARS-CoV-2, but I hope, however bleak this pandemic may seem at times, that all of you share our optimism that this virus will ultimately yield to the relentless efforts of the biopharmaceutical industry to wrestle it to the ground. I'm proud of the team at Amgen for coming together to support each other and all those we serve during such a challenging time, and proud also of the work we are doing with our industry colleagues to tackle the COVID-19 challenge. With that, I will turn it over to Dave Reese, who will provide a pipeline update.

Yeah, thanks your own for the question, you know in terms of the comparator arm, you know, this was you know, this Choice was based on what remains one of the standards of care does the taxol in around the world and discussions with regulatory authorities and investigators. And we feel that that that's an appropriate comparator here off the sample size calculations were driven by you know, the desire to be able to robustly test for overall survival. And so the second part of your statement there is correct if this was powered on a real survival

David M. Reese: Thanks Bob, and good afternoon everyone. In light of the evolving COVID-19 epidemic, the structure of today's R&D update will differ from my usual approach. Some of the first quarter highlights can be found in our press release and accompanying presentation, and of course, I'll be happy to address questions on any other aspects of our pipeline following our general comments. I don't have to tell you that we are in the midst of the biggest public health crisis of our lifetimes, which presents unprecedented challenges in patient care and clinical development. Therefore, today my comments will focus primarily on our R&D operations and clinical trial execution in the current environment, where our first principle is to ensure the safety and well-being of patients and health care providers taking part in our clinical trials.

And our next question is mine of Matthew Harrison with Morgan Stanley Matthew your line is open.

Great, good evening. Thanks for taking the question. I just wanted to ask a question around the stocking Dynamics for the quarter. I know you called out a couple of one-time items and what you thought was the benefit from Ovid. Could you maybe just put that in context obviously normally in the first quarter. You see a lot of destocking across the product lines. Did you did you not see that difficulty stocking and so could that be all right. Uh-huh. Potential benefits going to come out through the year. Maybe you could just comment on that. Thanks. Yeah. Hi Matthew is Myrtle. Yeah, as I mentioned we saw a hundred million dollars of stocking um, uh inventory build I should say in the first quarter which happened across markets the only other element that I would wager, uh, maybe compare and contrast to some other companies that are reporting our business given that it's uh, predominantly specialty biologics.

David M. Reese: With respect to key late-stage trials that are scheduled to read out this year, we have been working closely with our collaborators at AstraZeneca and Cytokinetics on the execution of our pivotal studies for cozapellumab and nomocamptomacarbol, respectively, both of which have completed enrollment. We currently do not expect any significant delays and continue to expect completion of these studies this year. We believe we will have high-quality data from both of these trials. This is also the case with our potentially pivotal Phase II monotherapy study for AMG 510, now known as SitoruSib, in advanced non-small cell lung cancer, which is also fully enrolled.

I know a fair amount of physician Administration products didn't necessarily have the same extent of early prescription fills and Page 90-day fills. That would have been an additional pull forward for some other companies as they recorded. They Blended that Dynamic with and customer and wholesale inventories build. So what the hundred million refers to End customer and wholesaler inventory specifically on products like we may have had some pull forward from some early Phil's office, maybe 90-day scripts. Um, and we'll just have to wait and see how that works through and in Q2

David M. Reese: As I mentioned last quarter, we will be collecting at least six months of response data in these patients and continue to expect these results later this year. I would note that the phase 3 trial of otesla in mild to moderate psoriasis also remains on track, and we expect data from that study in the coming weeks. As previously disclosed, we have temporarily paused enrollment in clinical trials where there is uncertainty around the ability of sites to ensure subject safety or data integrity. Patients already enrolled in our studies continue to receive study drugs, and we remain focused on supporting our clinical investigators to ensure appropriate care of these patients in a safe manner, consistent with clinical site and agency guidelines. We're actively working with regulators and have implemented study procedures, as appropriate, that are consistent with recent FDA guidelines, including remote monitoring, virtual follow-up, alternative locations for assessment, and home delivery of investigational products. We continue to make decisions study-by-study and site-by-site to minimize risk to patients and facilities and to maintain trial integrity. For example, enrollment continues in certain studies where there is a potential for significant benefit in a seriously life-threatening condition and where site resources allow new patients to be safely enrolled and closely monitored.

And our next question is flying of Robyn. Karnauskas with SunTrust Robinson Robin. Your line is open. Hi guys. Thank you so much and great work on running the business in this time. So often, can I take a broader step a question? I know we've been hooked a lot of specific questions. You guys have had a lot of experience and then this financial crisis and people switching from a commercial payer to a club Medicare or government payor help us. Think about how you manage that how you get people quickly to switch and how you manage the impact of that and then second like for telemedicine how comfortable are prescriber is writing Switzer Vinci, and how do you think that telemedicine really impacts your business? I know that the new one for you, but thank you.

Alvin before Myrtle answers. Let me make sure we heard that you said how comfortable are we riding or are doctors writing did you say identity prescriptions on top of yes. Yeah, like the problem is an ass is new for all of us. We're trying to understand how that will impact businesses. And obviously you have many products that could be prescribed them telemedicine. So those are two aspects of be great.

David M. Reese: Such trials include, but are certainly not limited to, our HL Half-Life Extended Bite Program targeting BCMA, DLL-3, and PSMA, and we look forward to sharing data from these studies later this year. In other studies, such as our Satorisib Phase I combination study with Katrina and the Phase III confirmatory study, where we have paused enrollment to ensure patient safety, timelines may be impacted, and I'll provide updates as the situation develops and we gain more clarity. There is ongoing interest from investigators to provide their patients access to investigational therapies with the potential for significant benefit, and we are working to continue study startup activities for Satorisib and across our entire portfolio to allow rapid site activation. We look forward to resuming enrollment in PAWS studies and initiating subject enrollment in new studies over the coming weeks and months as soon as it is safe and feasible to do so.

Yeah rub it in if I could just clarify further on the first part of your question. This your is your question related to opening up government access like we've done over over the last little or is it the transition of people potentially from commercial to a government benefit because of covid-19. It's really a transition. So what a lot of people are asking is what if we transition be given a potential a lot of people are at work, they're going to transition to a government based plan. You've been through this before. So you're one of the few companies can that can probably tell us how you manage that and how you'll run that you think the impact might be

Okay. No that that that's helpful. Thanks for the clarification. So let's start with that on the first off our overall Medicaid Porsche car business right now is quite well, it's less than 10% of our total revenue and the majority of our products beyond that are reimbursed through Medicare Part B e d with about 50% of our total business being reimbursed through commercials. So it's that commercial piece as you rightly point out that is likely or possible a portion of that is like to transition to a government Channel though. The thing that's harder to predict is at what rate so those people will become unemployed and an important distinction is off her load. They retain benefits for a period of time if they opt into Cobra and furloughed employees are often still on their self-insured Company employee plan sponsored plan. So there's a Time

David M. Reese: As we look forward to this year's clinical study readouts, we will be working with representatives of medical conferences and journals to ensure continued dissemination of important data to the medical community in a peer-reviewed environment, as we anticipate that many Congresses will be virtual through the end of 2020. In any case, we are committed to providing data updates in a timely manner. We're also continuing to prioritize programs across our preclinical and clinical portfolios, as you might expect. For instance, based on the progress of our half-life extended BITE molecules, we have stopped development of the first-generation continuous infusion PSMA and BCMA BITE programs.

That's going to occur before people transition to either a state exchange or a Medicaid benefits. So I think the impact could be a delayed one more like five words the end of this year and into twenty Twenty-One and of course trying to pin down the actual numbers of of Americans that are going to end up on unemployment benefits just hard to to pick right now. So those are the two things. That's the total bolus and the rate of change. I've heard some commentary and read some things that that would appear to indicate people expect it earlier our perspective that some of these patients and and people will transition over time and it'll more likely be a delayed twenty effect and into twenty Twenty-One on telemedicine. I would just say that, you know, there's a there's a variety of maturity of how telemedicine is used by therapeutic area if you think about mental health and I would argue even in neurology telephone number

David M. Reese: In research, essential work is continued, and we are beginning to ramp up laboratory activities across the organization as the situation safely permits in various geographies. I'm also pleased to report that our Beijing collaboration is on track, and this quarter, we have begun to transition certain functional activities to Beijing, including non-promotional activities on the three in-line products and some local regulatory responsibilities in China. I'd like to close by saying a few words about how we are leveraging our expertise in therapeutic antibody development and immunology in the fight against COVID-19. Our recently announced collaboration with Adaptive Biotechnologies to identify and develop neutralizing antibodies to the coronavirus from recovered COVID-19 patients is now actively underway. We view Adaptive's world-class expertise in immune profiling, combined with Amgen's expertise in immunology and antibody engineering and manufacturing, as a unique opportunity to contribute to what is an unprecedented industry response to this pandemic.

Is already used quite extensively even pre covid-19.

Take for telemedicine and evaluating someone like a migraine patient. Um, it's going to be relatively straightforward as it would be perhaps for a Dermatology patients. So in the case of you know, the Naraj LG migraine would be a movie and then for Dermatology it would be otezla. Do you mentioned identity of course identity is primarily prescribed post fracture. So pages are likely to be in a clinic or hospital setting and so the ability for the physician to evaluate the patient and prescribed of entities probably pretty straightforward related to that acute event am watching it closely. We we actually because of aim of the and other brands that we're we're telemedicine was already being used fairly extensively. We've we've had some experience here off that goes back over a year and we've been scaling prior experience there now, so I think gunjan will be on the front foot when it comes to building our capabilities in that area.

David M. Reese: We are working intently to identify the highest quality therapeutic candidates as fast as we can, and we'll take advantage of frequent interactions offered by regulatory authorities. In our view, there will likely be more than one generation of antibody therapeutics, and our aim is to develop the highest possible quality candidates. In addition to our efforts to develop a therapeutic antibody, we have also been engaged in discussions with multiple groups conducting platform trials in COVID-19 and anticipate that Otesla will enter the clinic in the coming weeks to be investigated as a potential immunomodulatory treatment in adult patients with the disease. Finally, we are contributing actively to collaborative efforts to advance therapeutics for COVID-19, including an active public-private partnership with the NIH. I want to close by acknowledging our staff who are working tirelessly and selflessly under these challenging circumstances to deliver for our patients. Their commitment and performance have been exemplary, and I can't thank them enough. I'd now like to turn things over to Murdo Gordon.

And our next question is from line of Ron eagle with Bernstein Ronnie your line is open.

A good evening and let me add my thanks Jason for the all the work you're doing on covid-19 the two if I'm a first for David the TV one and he would spend all that money vehicle couple of times you started at forty patients naive about 270 patients what you know, given that you originally a little bit skeptical and am doing about pd-1, you know, is this just looking for ways to be leveraged the same protocol to do more. What does that mean about your ability to bring that product to Market and timing and then to murder? Oh you've done fabulously well with about my account using a 320 million dollars this quarter. Now you have fiber coming in the United States. They've taken a bit more extra price increase that you know, what is that? What's your expectation for the rest of the day and if you can also mention what you guys are doing with your Remicade by a similar kind of an interesting product.

Murdo Gordon: Thanks, Dave. And good afternoon, everyone. We started the year with strong volume-driven growth of 15% on a global basis, with 10% in the US and 32% ex-US. Growth was generated broadly across our portfolio of newer products, more than offsetting declines in our mature brand. Given the unprecedented nature of the COVID-19 pandemic, I want to start by sharing our views on how disruptions in the global healthcare system may impact our business, and then I'll walk through what we're seeing at the product level and what actions we are taking. Like others in our sector, we're seeing varying degrees of impact from COVID-19 across our portfolio as physician-patient interactions are interrupted. These reduced interactions have led to some delays in diagnosis and treatment.

Murdo Gordon: Which in turn reduces new patient start rates. Recent data from IQVIA suggests that patient office visits have declined by over 50%, although some of this is being offset by telemedicine and telehealth services. Data also show that some patients refilled prescriptions early and that there was a modest benefit of approximately $100 million from inventory during the course. Finally, increased utilization of patient affordability programs and changes in segment mix due to increased U.S. unemployment could negatively impact U.S. net prices. Treatments like Prolia that require in-office administration by a healthcare provider have been negatively impacted. On the other hand, a product like Otezla may benefit, given that it provides a convenient oral option for patients, compared with injectable or IV biologics, some of which require monitoring. Despite this disruption, our teams are responding to customer needs via remote interactions.

Well, thanks Ronnie. This is Dave. I'll start with the pd-1 question. First name g 404 we continue to develop a n g 404 primarily as a combination part for a pipeline agents. This is The Phase One Umbrella study and we added cohorts to study additional indications. We're back to MERS in question have well described pd-1 sensitivity that will limit the need. We hope for single our data in future trials and Thursday open at Lee. You know, we think we'll probably need on the order of two hundred give or take monotherapy patience to support the standard safety package for a n g 404 so all of that put together, you know expansion of the phase one trial allowed Us in efficient way to generate the appropriate data.

Yes, and when it comes to our biosimilar.

This business where we are pleased with Ron read over three hundred million in the court, sir. I would say I would attribute our success first and foremost engines reputation as a high-quality buying a manufacturer. I think that is something that differentiates Us in this perceived well by our customers from our experience in Europe was a very positive one. We applied those Lessons Learned not to our us launches of the to oncology biosimilars and I think it shows you that the biosimilars market is functioning. Well in the United States, I would also say that the bulb biosimilar business model for Amgen is very much integrated with our Innovative products. So the same people who are defending neulasta the same account managers office sending the last the day and they are and and making sure that the benefit of on Pro is understood by our customers are the same people who are establishing the above.

Murdo Gordon: We're identifying innovative solutions to help patients, and we're supplying products reliably and consistently. Now, let me review some product details, beginning with Polia on slide 12. Prolia grew 10% year over year from higher volume. Additionally, strong demand growth in January and February was consistent with prior years. In March, we began to see a negative impact on prolia in office injections, and we've since observed a substantial step down in utilization versus prior years. In more recent weeks, we're beginning to see signs of stabilization, and we'll be able to provide more clarity on this when we report our Q2 results in July. The importance of treating osteoporosis in patients who are at high risk of fractures.

Curve for embassy and Kenjon T. So those account relationships that we've cultivated over many many years in oncology have been extremely valuable and our relationships with the payer provider level. I think of helped us, uh extend that that trajectory nicely. I would also say that our patient services are exemplary and we have the very same patient services that we have for a product like Coppola's or each Diva. We apply to our biosimilars business as well. And then you mentioned I think our solar which is our remedy biosimilar. We do intend to launch that this year and that that product will help strengthen what is already a strong immunotherapy for portfolio for us and will help us broaden out that that customer perspective and again that product will be in place.

Murdo Gordon: Our teams are working to address continuity of care issues and exploring novel solutions such as alternate sites of care, mobile nurse-administered injections, Prescription Phil's Specialty and Retail Pharmacy. We're also working with policymakers and advocacy organizations to address treatment challenges in this environment. Moving to Avenity, which launched in Japan and the U.S. in the first half of 2019, Avenity posted $100 million in sales during the first quarter, driven by continued uptake. In Japan, which represents roughly two-thirds of Avenity sales, we've attained shares similar to those of established anabolic therapies. In the U.S., we saw an acceleration in demand trends with improvements in persistence in Q1 as clinics gained more experience. As patients complete their one-year cycle of therapy with Evenity, we will work with health care providers to help transition these patients to Prolea. Evenity and Prolia are a complementary set of options to address the 9 million fractures that occur worldwide in postmenopausal osteoporosis patients, and our teams are focused on ensuring these patients are not compromised during this pandemic. Moving to Repatha, we're off to a strong start in 2020.

created with our uh, Innovative autoimmune portfolio

And let's take the next question, and it's getting as it's getting late on the East Coast if I can just ask everybody to please limit yourself to one question in. Let's go on with the next one off. Our next one is from line of Evans e Germann with Credit Suisse Evan your line is open. Hi guys. Thank you so much for taking the question and kind of a follow-up from what you were just talking about murder. So how is the page impacted the uptake of biosimilars? Have you seen an acceleration adopt into an adoption to save costs or if Senators really delayed uptake given potentially overwhelm systems. Thank you.

Murdo Gordon: Our efforts over the past 18 months to improve access and affordability have yielded strong results as Q1 sales grew by 62% year over year, driven by 98% volume growth versus the same period last year. New-to-brand prescriptions in the U.S. steadily improved in Q1, growing 51% year-over-year, and we held 80% market share exiting the quarter. As we predicted on our last earnings call, Part D contracting to improve access and affordability resulted in a step down in Repata's net selling price in Q1. We expect net selling prices to be relatively stable for the remainder of the year.

So it's a bit early to tell so take my comments with very few weeks of experience here. I would say so far. We have not seen a negative effect on our update. If anything we're seeing is keeping of our optic nerve. The one thing I will say that we haven't yet assessed that could happen is the total cycles of every month or the total cycles of trastuzumab could be impacted. So from a share of molecule perspective. We're we're very pleased what we're watching is the total number of infusions of each of the the molecules going forward.

Murdo Gordon: [inaudible] On a year-over-year basis, net sales grew 20% with underlying volume growth of 46%. Amovig remains the market leader with 48% total prescription share. To date, almost 330,000 patients have been prescribed Imavig by more than 33,000 prescribers. With the recent addition to CVS National Preferred Formulary, we now have access to 93% of covered lives, which led to a 19% growth quarter over quarter in new-to-brand prescriptions. The net price was sequentially lower due to expanded access with CVS and higher copay utilization that occurs each year in the first quarter.

And our next question, it's line of Dane Leone with Raymond James Dean.

Hi, thank you for taking the questions in the update. I just want to ask a Business Development question and just keep the one here when you're thinking about ramping up your efforts of Care at uh, obviously the initial data set is great for how you're thinking about the target oncology space, um thinking about that and then I'm thinking about the Bulldog was the title of that you did to start broadening out how you think about Immunology. Um, where do you want to go in in those respective areas from a business perspective? I mean, there's a lot of room you guys still have to work with especially in Target oncology. Should we be expecting more bolt-on Acquisitions Within These two areas of the course of twenty twenty

Murdo Gordon: These factors were partially offset by the proportion of paid prescriptions increasing to almost 90%, up from 81% in Q4 of 2019. Next to our inflammation portfolio, starting with Otesla, integration has been seamless, evidenced by 23% year-over-year growth driven by volume.

I don't know about the course is twenty-twenty saying we're those are two areas of keen interest for us for sure oncology and and inflammation and you know, we will continue to look out for attractive Innovative access that we think we can add value to, you know, the trick is always to be able to license or acquire molecules that are price that leaves return for our shareholders and you know, we offer comprehensive of the way we assess the market place and will continue to to keep an active watch and see whether there's some things. That might be a good fit.

Murdo Gordon: These results, coupled with planned label expansion, give us confidence in our ability to realize the full global potential of Tesla as an affordable option with a very well-defined efficacy and safety profile. In the current COVID environment, Lutezla provides a convenient oral option for patients. It's conducive to telemedicine and does not require lab monitoring. Moving to Enbro, sales were $1.2 billion in Q1 and included a $70 million year-over-year benefit from favorable changes in accounting estimates related to sales deductions. Consistent with prior trends, prescription volumes declined 5% year over year.

Great.

And our next question is from of umarov on with evercore is I who are here line is open.

Number you may have a son mute.

Murdo Gordon: We continue to expect a limited benefit from net selling price in 2020 versus 2019. In this environment, we're supporting Embril's strong continuing base of patients in maintaining their course of therapy through disruptions and out-of-pocket cost barriers. As you know, EMBREL has been on the market for over 20 years and does not require routine lab monitoring. That's slide 18.

Just come back to him.

And moving on to the next question is from alethea a young with Cantor Fitzgerald Alicia your line is open.

Hey guys. Thanks for taking my question congrats on all the progress. I guess. I just wanted to know when you think about the hotels on some of the benefit you're seeing with the Orioles maybe in light of covid. Do you think that might be a sustainable Trend thing?

Murdo Gordon: Another contributor to our inflammation franchise is Amgivita, which for three consecutive quarters is the number one adalimumab biosimilar in Europe, recording $86 million of sales in Q1. Switching to our hematology and oncology business, our innovative portfolio of six brands collectively totaled $1.3 billion in the quarter, growing by 11% year-over-year. Certain products, like Xgeva, may be impacted in the current environment due to disruptions in physician-patient interaction, while others, including Neulastus Onpro and our oncology biosimilars, M. vasi, and Kenjinti, provide greater value. Let me highlight some of our larger products. Kyprolis grew 14% year over year, led by a 21% increase in U.S. sales, which was driven by expanded use in second and third line multiple myeloma. Nalasta declined by 40% year over year.

Yeah, it's at least I just want to clarify is Myrtle here you're talking about the the natural demand. You're not talking about clinical trial activity with otezla. Correct? No, not, for all commercial activities, please. Yeah. Okay. Yeah, we're like we we continue to watch the weekly Trends we're listening to what our customers are telling us and we definitely think that we've we've got a little bit of buffer supporting otezla right now because it is a convenient oral option. It's got great Market access coverage. It's affordable. We're you know, obviously also we mentioned the end of last year that we were putting in additional Primary Care Effort to broaden the promotion behind otezla. And I think that's also helping so, you know, we're we're feeling good about it. And I think just you know, it's it's the ideal kind of product for time like this. Where a lot of place

Murdo Gordon: Recall that Q1 of 2019 benefited from a $98 million BARDA order which did not repeat this quarter. Bonpro continues to be the preferred choice and has held quarter over quarter share at 54% despite facing an additional competitor. The revised NCCN guidelines recommend increased use of GCSS to minimize the risk of febrile neutropenia in cancer patients.

Students are concerned about visiting a health care profession.

And our next question is from line of Jeffrey porches with s v b. Lyric Jeffrey your line is open. Thank you very much for another question you highlighted some of the subjects that you were saying in March and then continuing to April for some of the office administered injectables. Could you give us a sense of which products you think most likely would be most significantly affected. I think you particularly highlighted would be probably visits that that might be down as much as 50% of those relevant Specialties is that the sort of effect that we should be expecting. Earlier in to to yeah, I think what thank you Jeff. I think what I mentioned was that patient visits were done 50% off and we're maybe not as impacted yet on Identity or definitely the products that will that we're seeing most impact in our portfolio if you think about the physician wage

Murdo Gordon: On Pro provides a unique value proposition, particularly now, as patients can receive their GCSF treatment without having to return to their site of care. Our two oncology biosimilars, Mvasi and Khinjinti, generated $234 million in sales globally in the first quarter. In the U.S., they sold $108 million and $96 million, respectively, with market shares exiting Q1 at or above 27%.

Murdo Gordon: We continue to see encouraging adoption rates in clinics, with hospital adoption accelerating. These biosimilars are increasingly valuable given the cost savings they provide. Switching to nephrology, starting on slide 24. Given the serious nature of end-stage renal disease, patients require dialysis treatments three days per week. Therefore, we're not seeing a meaningful impact on the use of Amgen medications in these patients that would be attributable to COVID-19. In Q1, Epigen sales declined 29% primarily due to a lower net selling price from our contractual commitment with DeVita and approximately $20 million of unfavorable changes in accounting. Sons of Power Sales declined 42% year-over-year due to the impact of generic competition. As a reminder, Supplemental Patent Protection Certificates for SINICALCET have now expired in major EU markets, which could result in a significant decline in ex-US sales in 2020.

This third products for Amgen and three buckets. We have Arbonne business. We have our Nephrology business. We have our own College of Business bone is by far the business that is is being impacted the most wage. Obviously, it's partly to do with the the age and vulnerability of patience and we're spending a lot of time working on Alternate sites of care improving continuity of care off setting up mobile programs where nurses can visit patients homes and administer and we're working to see to work with Administration CMS policy wage rates to try and improve the buy and Bill access to that home injection Channel as well. Nephrology is holding up. Well, obviously in uh, and state renal disease patients have to have their dialysis is life-sustaining. So those volumes are holding up well and the the providers they're have a game.

Murdo Gordon: Parsibu grew by 39% year-over-year in the first quarter. Independent and mid-sized dialysis providers already utilize Parsibu for a majority of their calci-mimetic patients, while FMC and Avita continue to increase adoption. In summary, I'm truly inspired by the entrepreneurial spirit of our employees who are helping patients and healthcare providers in this unprecedented time. And with that, I'd like to turn over to

And very good at collaborating and providing safe isolated sites of care for patients and then oncology, it's down but not nearly as much as the bone. So that gives you a relative order of understanding of how we're seeing it.

And our next question is from line of Cory kasimov with JPMorgan. Corey hairline is open you guys. Thanks for taking my question given the importance of this growth portfolio to the overall wage this one or two better understanding of the underlying Dynamics for a man big we look at me despite the the leading share position and an increase in paid prescription sales and seemingly fall short of expectations to the last few quarters. Is this just a function of lower net price with the broader access or is there something else going on the wrong missing?

Peter H. Griffith: Thank you, Murdo. Good afternoon, everyone.

Peter H. Griffith: Before reviewing our results and guidance, I would like to take a moment to build on Bob's comments regarding the unprecedented COVID-19 pandemic and provide additional insights into how we are responding to and navigating through the associated macroeconomic challenges. First, we confront these challenges from a position of strength.

Yeah, thanks Cory. Look we're very pleased with our performance. And you know, we did have to do quite a bit of work over the course of the year to get to be 90% paid, um level and now we have 93% of covered lives. So we're pretty pleased about that basis. I think what we're counting on for growth going forward because we expect price to stabilize throughout the course of the balance of the year is we're counting on unlocking additional patient volume, you know, we've got over four million potential cgrp patient candidates out there Physicians tend to persist with older oral products and aren't yet adopting cgrp products at the rate that we think that they they they could and should be to help ease the suffering of chronic migraine sufferers. So so that's where we're focused. We're focused on unlocking dead.

Peter H. Griffith: Our fundamentals are strong. With over $8 billion of cash in investments, And a business that generated $2 billion of free cash flow in the first quarter, we are in a strong financial position to remain committed to our capital allocation principle, shown on slide 28, which starts with investing in internal innovation. We will patiently evaluate external business development opportunities that clear our hurdle rate and are consistent with our areas of therapeutic focus.

Peter H. Griffith: Our capital expenditures remain a high priority, including our industry-leading, environmentally-friendly, next-generation biomanufacturing facility in Rhode Island. We will continue to return capital to our shareholders. Our capital allocation principles will continue to build on our efficient capital structure, which results in an optimal weighted average cost of capital.

the future potential volume

know that these products are particularly a movie has a very affordable access coverage in the market

Peter H. Griffith: Now I will briefly walk through our first quarter financial results before discussing our 2020 guidance. The financial results are shown on slide 29 of the slide deck. The first quarter marked another period of solid performance as we grew volumes 15%.

and it appears that we have a more of a font from evercore is I am back on Boomer your line is open hi I just learned how to unmute myself so thank you so much. David one question for you if I may I think it would be very helpful for investors to understand if you're optimistic on the durability of bonds with carafe monotherapy and if you're starting to develop a few whether a Mac or a pd-1 is a better combination partner thank you so much for the question yeah I mean I think duration of response is one of the critical questions and that's why I indicated that the you know the phase two trial I think is going to give us the definitive answer there that will end the we wish to have enough follow-up to very robustly address both duration of response and progression-free survival in terms of the combinations I think it's perhaps a little too early to pick favor

Peter H. Griffith: We increased investments in the business and delivered 17% year-over-year non-GAAP EPS growth. Q1 revenues at $6.2 billion increased 11% year over year. In the quarter, we saw worldwide product sales increase 12% to $5.9 billion as our portfolio transitioned with strong growth from our newer products, outpacing declines in our mature products. Now on to the rest of the P&L.

Peter H. Griffith: Total operating expense for the quarter increased 7% year over year. For the full year, we now expect total operating expenses to grow in the high single-digit percentage range year-over-year on an absolute basis. On a non-GAAP basis, cost of sales as a percent of product sales decreased by 1.6 percentage points to 13.1%.

We are looking at a number of combinations, which is typical for oncology programs. All of those are based on an underlying biologic rationale and you know is a indicator may be generating data in that program in combinations over the course of this year.

Peter H. Griffith: This was driven primarily by lower manufacturing costs, partially offset by an increase in milestone expenses. For the full year, we continue to expect cost of sales as a percent of product sales to be generally consistent with 2019. Research and development expenses of $927 million were 8% higher due to higher spending on Otesla and AMG 510.

And next we have a question line of Michael Schmidt with Guggenheim Michael your line is open. Hey guys, good evening. And thanks for taking my question. I had a high-level questions about the biosimilar business which has been going really well for for Amgen. Um, I'm just wondering as we see through the biosimilar market amateur longer-term. And as long as we see potentially more product launch Within These markets, I guess what is your view on on the long-term price erosion relative to brand and off. How much do you think about, you know, a potential of floor relative to the manufacturing development costs in in the biosimilar area. Thank you.

Peter H. Griffith: Partially offset by cost recoveries from our collaboration with Beijing. For the full year, we also expect R&D spend on an absolute basis to increase as we invest in our innovative pipeline and new OTESLA indications, with these increases partially offset by R&D recoveries received from our Beijing collaboration. SG&A expenses increased 12 percent. And for the full year, we continue to expect SG&A spend to increase primarily due to OTESLA spend.

Yeah, thanks Michael. You know the one the one thing I mentioned earlier in response to the question about similar was the the engine experience in knowing how to make biologics at scale in a very efficient way. So we we have some really good margins on this business and I think you know going by our experience in your life where I I would argue that the price degradation has probably been faster than it will be in the US even with multiple competitors. We've been able to compete effectively for volume and we've been able to retain our very profitable business there. We obviously don't have a lot of analogues in the US to understand the rate of change. So I'm going to hold back from speculating on what the the future will hold but there are clear things here that that the more competitors you have compressed in the early phase of a game.

Peter H. Griffith: Our Q1 non-GAAP operating income, at $3.2 billion, increased 15% for the prior year. Non-GAAP Operating Margin was 53.9% for the quarter, compared to 52.4% in Q1 of 2019. Other income and expenses were a net $335 million expense in Q1. This was unfavorable by $177 million on a year-over-year basis. This year-over-year change was due to lower interest income on cash balance

Peter H. Griffith: As well as market fluctuations of publicly traded securities held in our venture portfolio, we anticipate non-GAAP other income and expense to be a net expense. Toward the upper end of the $1.2 billion to $1.4 billion range we previously provided. Recall that we will begin recording using the equity method of accounting our share of Beijing's profit or loss beginning in Q2. The non-GAAP tax rate decreased 1.8 percentage points versus Q1 2019, to 12.8 percent.

I was similar LaunchPad.

Turn the more likely there is to be some precipitous price erosion. We're fortunate that we were early in the US with both in classy and can gin and juice to establish a very strong foothold in the market. I also repeated it. I said it earlier, but I I do think that the biosimilar market is Alive and Well in the US and functioning as you would hope free markets would

Peter H. Griffith: Non-GAAP Net Income of 2.5, 17% year-over-year for the first quarter, supported by a 5% reduction in share count versus Q1 2019. Turning next to cash flow and the balance sheet on slide 30. During Q1 2020, we generated strong cash flow reflecting a diversified portfolio of products, coupled with an industry-leading cost structure.

And our next question is from line of carter gold with Barclays Airlines open. Thanks for putting me in. I I guess we just a bigger picture question around sort of the lasting impact of covid-19. You guys think around either shifts to manufacturing strategy location bigger picture questions on on footprint, and I guess as well as commercialization models, I guess. It's just a really nice bigger picture question when we return to normal with that look different to sort of the sort of your infrastructure in business model is how you have set it up historically. Thank you.

Peter H. Griffith: Free cash flow was $2.0 billion in Q1 2020 versus $1.7 billion in Q1 2019. In Q1 2020, we returned a total of $1.9 billion to shareholders through dividend payments totaling over $900 million and over $900 million to repurchase 4.3 million shares at an average price of $219 per share. For the remainder of the year, we plan to maintain our quarterly dividend of $1.50 per share and will execute opportunistic share repurchases that will result in an amount at the lower end of our previous guidance of $3 to $5 billion for 2020. Cash and Investments totaled $8 billion at the end of Q1. A decrease of $18.3 billion from the end of Q1 2019. This decrease was primarily driven by the Oteslo and Beijing transactions.

Yeah, that's a really interesting question. And one that I think will get a lot of attention once things have settled down a little bit. It's still awfully fluid to be trying to predict how the whole experience of covid-19 will affect our industry or our business model. But we'd be happy to engage with you on that topic at greater length, you know again when the dust is settling down but you know fundamentally for us our supply chain is in great shape. We we unlike some of our peers in the industry predominantly manufacture in the us obviously.

Or even you know, the people who work force are US citizens and so we have the benefit that the vast majority of nearly all of our manufacturing is done in the US Bank questions a little bit. Um that's relevant for us in some of our industry peers. But but I do think that you know, this isn't going to be the last viral challenge that we took the society and I think we'll all be trying to improve our business continuity planning and thinking when we come out of this to make sure that we're in a stronger position as possible to avoid interruptions with some events like this. But um, you know, I think they'll be a lot of learning across the whole economy including the biotech economy. So it look forward to talking about that at the right time.

Peter H. Griffith: Cash returned to shareholders in the form of share repurchases and withdrawals, as well as net debt repayments, partially offset by free cash flow generated during the period. Additionally, I note in Q2 2020, we plan to make $1.75 billion in debt payment, a debt maturity payment. We issued $5 billion of long-term debt in February in order to take advantage of market conditions for refinancing our long-term debt maturities in 2020 and partially those in 2021. We will continue to be opportunistic with strong access to capital markets. That outstanding at the end of the quarter totaled $31.8 billion and carries a weighted average interest rate of $3.7 billion a year.

And next we have a question from line of Mohit Bonsall with City your line is open great. Thanks for taking my question and who got some other progress. I have a quick question regarding your IL to routine program. What is your level level of excitement around this program seems like you have to fully enrolled trials at this point. Should we expect to see any data from this this program later this year? Thank you Dave here. Yes. We remain keenly interested in June 9th to the aisle to new team were enrolling child's going forward and and would expect data over the course of the year or perhaps early next year off some of those trials. We did temporarily pause because of the reluctance of investigators to start patients on new immunomodulatory agents dead.

Peter H. Griffith: Turning to the outlook for the business for 2020, starting on slide 31. Our guidance provided in January contemplated a broad range of outcomes. Due to the uncertainty related to the COVID-19 impact, we expect some degree of uncertainty in quarterly revenue and earnings over the year. We currently expect that we will see the greatest impact later in Q2, with stabilization and then partial recovery occurring during the second half of the year. And now, turning to slide 32.

Peter H. Griffith: We are reaffirming our guidance with a revenue range of $25.0 billion to $25.6 billion and a 9-gap EPS range of $14.85 to $15.60. We will be monitoring the business as the dynamics underlying these assumptions evolve across Q2, and we'll review our latest perspectives with you at our next earnings call. We are now guiding to capital expenditures of $600 million versus our prior guidance of $700 million, reflecting a change in the timing of spend. Rather than a change to our investment plan, Additionally, we are reaffirming our non-GAAP tax rate guidance of 13.5% to 14.5% for the full year. This concludes the financial update. I've been with Amgen for a little over six months, and it is a privilege to serve patients every day here by supporting and enabling the Amgen difference. And each day during this COVID-19 disruption, I'm reminded that innovation is the miracle drug. With that, I'll turn it back over to Bob for some closing remarks.

in the course of the Epic

Hammock, but you know, we remain into quite interested in that program and will provide guidance as to when we're going to get data readouts as we move forward.

And next we have a question from line of Canon Mackay with RBC Capital markets cannonier line is open. All right. Thanks for taking the question maybe for a computer or Bob or actually I even love to hear. Recent perspective was wondering where are you seeing the most opportunity for m&a right now and and really where your focus there and I had hoped to include you in that question really just to get your perspective on where the the most interesting biology and chemistry is taking place now and what Bob has referred to so eloquently is the Golden Age of biotechnology. Thanks so much.

Well there since I talked a little bit about it and and Business Development already on the call. Why don't we let you take a crack at this. So what what areas What mechanisms are most intriguing to you in your R&D khong?

Yeah, you know I think it is a golden age and I would approach it from two perspectives. There are new platforms and you know our head of research rate to Shea's published very odd a great article in nature a week or two ago. I'd encourage all of you to read about what we call an induced proximity platform. This is a, you know, a new suite of technologies that we think could open up much of the uncomfortable space. So that sort of Business Development remains of great interest to us. And then as we said before, you know, I think that's a ferment of activity across the therapeutic areas of great interest to us and that will continue to be a focus going forward.

Ian: Well, before my closing remarks, we'll go to Q&A. So let's have Ian, let's open it up to Q&A and remind our callers of the process that will follow. Thanks.

Ian: Certainly. As a reminder, ladies and gentlemen, if you'd like to queue up for a question, simply press star followed by the number one on your telephone keypad. Again, that is star number one.

Jay Olson: In the interest of time, we ask that you please limit yourself to asking one question during this Q&A session. Our first question is the flight of Jay Olson with Oppenheimer. Jay, your line is open. Oh, hi, thanks for taking the question and thank you for the work that you're doing to fight the COVID-19 pandemic. I wanted to ask you about the non-GAAP operating margin. It ticked up nicely in the first quarter, and I noticed that you lowered the OPEX expected growth rate slightly. So I was wondering, how do you expect the operating margin to evolve over the course of 2020? And do you expect that higher operating margin to be sustainable in a post-COVID-19 world? Jay, thank you for the question. It's a good one.

And next we have a question from line of sight with mizuho, so let me your light is open great. Thanks so much for that question guys Bob. Maybe this one for you. She has a high level one given your discussions with folks in Washington, obviously the rhetoric in biotech and Pharma as well has been pretty negative or the last name is especially around drug pricing Etc, and I'm wondering with giving this covid-19 has that changed the rhetoric at all in your in your view and is there anything in sustainably positive that can carry me in terms of rhetoric coming out of Washington near? Thank you.

Peter H. Griffith: As I indicated, we do project that for the full year, our total OPEX will grow in the high single-digit percentage range. We are confident in our cost structure and our productivity work here at Amgen, so I think our operating margin speaks for itself, and we expect it to be an industry-leading cost margin going forward in 2020. Of course, we don't give any guidance beyond 2020 on the margins.

Well, I think everybody recognizes that we're going to need science and Innovation to lead us out of this challenge that we find ourselves in globally so, you know.

Importance of innovation a little bit of humility perhaps in all camps about how hard it is to have the right Innovation available for the world at the right time. So, you know, the good news is off that the government innovators Academia everybody working together at a speed and a scale that I've never seen in my career. So, you know, I think that's a good sign and and hopefully, you know what to look back on this one day and say that it worked, you know, we've got a special ecosystem in particular in this country and hopefully, you know, we'll be able to look back and say when you know, when we Face the biggest challenge of our lifetimes the industry came through what we needed and if we're able to do that, I think inevitably will help remind everybody that we haven't generated all the Innovation. We need as a society. There are still lots of areas of medical need and and again the more we can do to address it the better, but the question of drug pricing is not going to go away but hopefully it'll be some respect for how profoundly important innovation is dead.

Bob Bradway: We, just to state the obvious, Jay, we would have liked to have spent more in Q1, but, you know, we were getting a little bit disrupted there, as you know, at the end of the quarter. So, we'll see what it's like for the remaining three quarters.

Timothy Minton Anderson: And our next question is from the line of Tim Anderson with Wolf Research. Tim, your line is open.

Bob Bradway: Thank you very much. My question is...

Christopher Joseph Raymond: Thorn on your side, which is the ongoing Enbrawl Patent Challenge. And that's one of the bigger events for the company in 2020, the appeals court ruling. And I'm sure you're confident in your position on how that will play out. But these things are never certain. So I'm wondering if you can just help us describe what plan B would be in the event that Sandoz actually prevails. As your largest product, I'm guessing you have some sort of contingency plan in place. I know it's a low probability event, but any perspective?

And let's take one last question of there's a quick one after which is Bob to make some concluding comments.

Our final question is from line of Jim birchenough with Wells Fargo Securities. Your line is open.

David M. Reese: Well, we're not going to go into details on that. Obviously, we continue to feel confident in the intellectual property around Enbro. So, let's leave it at that for now. Thanks.

Good afternoon snack on for jamming. Thanks so very much for squeezing. I said you had mentioned earlier in your prepared comments about otezla control of my temper in covid-19. Can you just click on that? And it said in the acute setting or perhaps is there an opportunity for patients around ongoing organ dysfunction after you leave a hospital may be due to inflammation. Thanks.

Bob Bradway: And our next question is from the line of Chris Raymond with Piper Sandler. Chris, your line is open.

Geoff Meacham: Thanks. So I know you guys have talked about the collaboration with Adaptive and your antibody program, but there are a lot of folks, I think, that are working on similar sorts of purpose-built products, Regeneron, Vir, and others. I wonder if you could give a little bit more color on what differentiates what you guys are doing and maybe also a little more color on timelines in terms of being in the clinic, et cetera.

Okay, James is the Dave. Yeah, we think it's actually there will be utility in studying new Tesla in a variety of settings ranging from for example hospitalized patients. But those that are not yet the ICU to attempt to prevent progression to more serious disease as well as those in you know with more serious disease off and so, you know again, we're in active discussions or have committed to platform trials. The one real guiding principle we have here is that we want this to these to be rigorous Studies Office to provide, you know, the highest quality answers.

David M. Reese: Thanks, Chris. Dave Reese here.

Okay, let me just wrap up recognizing those pushing on 7:00 on the East Coast again. Let me reiterate our appreciation for you joining the call. I hope what you take away from the call is that we we do offer a solid order one. We feel R executing the business. Well, our objective will be to remain an effective Steward of the business through the short-term. We want to be a leading corporate office through this challenging. As well, and we will remain focused on delivering long-term growth by advancing innovation in those areas that you're familiar with it at Amgen. So, thank you all keep safe for washing up with you on the next quarterly call. Thanks. Everybody finds out from the IR team will be around for some time. So feel free to reach out to us. Thanks again.

David M. Reese: I'll take that question. Yeah, so as you know, there are a number of efforts going forward to develop therapeutic antibodies. What we're trying to do, I think, that is potentially unique here is, number one, combine adaptive capabilities in immunoprofiling with our immunology and, particularly our genetics work based out of DECODE. Our goal also is to really identify a very high-quality therapeutic candidate. And, you know, it's my belief that there may well be more than one generation of antibody therapeutics entering the clinic. So as we think about this, we want to balance. Speed of development, which of course is important in generating the highest quality candidate. And as work progresses, we are up and running in the laboratory, but, you know, we will provide guidance in terms of clinical timelines as that work unfolds. But that collaboration is actively proceeding right now.

Ladies and gentlemen, we thank you greatly for joining us for amgen's first quarter 2020 Financial results conference call. This does conclude the call. You may now disconnect.

Christopher Joseph Raymond: Chris, maybe I could just add a comment about manufacturing, obviously, a lot of protein. We have great expertise in manufacturing at scale, and we think that one of the things we can bring to the party here is our ability to supply a vast number of patients with our antibodies.

Bob Bradway: And our next question is from the line of Geoff Meacham with Bank of America. Geoff, your line is open. Good afternoon, guys. Thanks for the questions.

Michael J. Yee: I guess one for Bob, when you have the first...

David M. Reese: [inaudible]

David M. Reese: Does either the growth acceleration or the volatility from COVID affect your attitude towards BD? I'm just thinking about maybe a step up in the number of deals or maybe an increasing appetite for larger ones in this environment. Thank you.

Bob Bradway: I think the environment's pretty fluid still, Geoff, so I wouldn't try to, I'm not sure I'd like to declare an answer to your question at the moment, but other than to reiterate that we think we're in a strong position, we talked about our balance sheet, we talked about our desire to allocate capital to our internal innovation as well as the external innovation, and as you know, we're pretty focused on our strategy, and we'll look to see whether there are things externally that can help us strengthen our chosen areas, but maybe the other thing, you know, I would add just as a way to reiterate my appreciation to my Amgen colleagues is we had three very significant and successful integrations in the first quarter, so it was a priority for us as a company to get off to a good start with Tesla and with Beijing and with our Japan transaction, and we really feel we've done that over the, you know, the first four months of the year, so I feel good about that.

Very well.

Thursday

Michael J. Yee: And our next question is from Michael Yee with Jeffreys. Michael, your line is open. Thank you for the question and congratulations on all the progress and appreciate the color during this tough time.

David M. Reese: My question was for David. On AMG 510, of course, you didn't mention you have an update at ASCO. Can you just remind us what to think about?

David M. Reese: [inaudible]

David M. Reese: And then the timing on the combos, which are not at ASCO, what you think about them there and the timing.

David M. Reese: Theron, Timing.

David M. Reese: Thanks, Michael. Yeah, a series of questions regarding the AMG 510. You know, we're continuing to enroll monotherapy patients with colorectal cancer. And, you know, as I indicated before, we're going to look at those data, I would say over the coming few months to determine whether we feel there's an appropriate monotherapy path forward in colorectal cancer, or whether [inaudible] These are some of the trials that we paused because they were either just initiating or had just initiated. We're getting ready to ramp back up. So, you know, I would expect first data at the RDS later this year, perhaps the very first part of next year on those. But, you know, we're confident that we're not experiencing significant disruptions across the program in totality, and we're quite happy, actually, with its progress.

Unknown Executive: And our next question is from the line of Terrence Flynn with Goldman Sachs. Terrence, your line is open. Hi.

David M. Reese: Thanks for taking the question. Maybe a follow-up from me on the AMG 510. I know you guys are getting closer to the Phase II lung cancer data in the middle part of this year. Just wondering, now that we're closer to the data, if you could share any perspective on what you view as kind of the efficacy bar here. Is Cyramza the right bar, or should we think about higher efficacy here, given it's a targeted drug? Thank you.

David M. Reese: Thanks, Terence. This is Dave.

David M. Reese: Yeah, in terms of the timing of the data, I'd point out that, you know, what we've indicated is that we want at least six months of response data on all patients. And given that the last patients were enrolled towards the end of the last year and that it takes, you know, a month or two typically for responses to develop, you can see that that pushes it into the second half of the year in terms of when we expect the data readout. We're absolutely on track, and we're not experiencing any, I would say, substantial hiccups in the phase two monotherapy study. We do want, you know, robust Duration of Response and Progression-Free Survival data as part of that package. And I think those endpoints, along with response rate, to address the second part of your question, will be an important part of the package, you know, in this Phase II monotherapy study.

Yaron Werber: And our next question is from Yaron Werber with Cowan. Yaron, your line is open.

David M. Reese: Great, thanks for taking my question as well.

David M. Reese: M.G., 510 questions as well. The phase 3, David, the study obviously is fairly sizable. It's 650 patients head to head against dosotaxel, and I think it kind of raised some questions as to why that dose of dosotaxel was released.

David M. Reese: and maybe give us a little bit of sense; why is the study so sizable?

David M. Reese: [inaudible]

David M. Reese: Yeah, thanks Yaron for the question. You know, in terms of the comparator arm, you know, this choice was based on what remains one of the standards of care doses of taxol around the world and discussions with regulatory authorities and investigators. And we feel that that's an appropriate comparator here. The sample size calculations were driven by, you know, the desire to be able to robustly test for overall survival. And so the second part of your statement there is correct that this was powered by overall survival.

Matthew Harrison: And our next question is from the line of Matthew Harrison with Morgan Stanley. Matthew, your line is open. Good. Good evening.

Murdo Gordon: Thanks for taking the question. I just wanted to ask a question around stocking dynamics for the quarter. I know you called out a couple of one-time items and what you thought was the benefit of COVID. Could you maybe just put that in context? Obviously, normally in the first quarter, you see a lot of de-stocking across the product lines. Did you not see that typical de-stocking, and so could that be also a potential benefit that's going to come out through the year? Maybe you could just comment on that? Thanks.

Murdo Gordon: Yeah, hi Matthew. It's Murdo.

Murdo Gordon: Um, yeah, as I mentioned, we saw about $100 million of stocking inventory a build, I should say, in the first quarter, which happened across March. The only other element that I would maybe compare and contrast to some other companies that are reporting, our business, given that it's predominantly specialty biologics and a fair amount of physician administration products, didn't necessarily have the same extent of early prescription fills and patient 90-day fills that would have been an additional pull forward for some other companies. As they reported, they blended that dynamic with end-customer and wholesale inventory builds. The $100 million refers to end-customer and wholesaler inventory. Specifically, on products like Otesla, we may have had some pull forward from some early fills and maybe 90-day scripts. We'll just have to wait and see how that works out in Q2.

Robyn Kay Shelton Karnauskas: And our next question is from the line of Robyn Karnauskas with SunTrust Robinson. Robyn, your line is open.

Murdo Gordon: Hi guys, thank you so much and great work on running the business during this time. So can I take a broader step back? I know we've been focused on a lot of specific questions. You guys have had a lot of experience; you've seen the financial crisis and people switching from a commercial payer to a Medicare or government payer. Help us think about how you manage that, how you get people to switch quickly, and how you manage the impact of that. And then, like for telemedicine, how comfortable are prescribers writing scripts for a venti? And how do you think that telemedicine really impacts your business? I know that's a new one for you.

Murdo Gordon: Before Murdo answers, let me make sure we've heard what you said: how comfortable are we writing, or are doctors writing? Did you say amenity prescriptions on television?

Murdo Gordon: Yeah, the telemedicine aspect is new for all of us. We're trying to understand how that will impact businesses, and obviously, you have many projects.

Unknown Executive: Bansal, Transcripts provided by Transcription Outsourcing, LLC. Transcription Outsourcing, LLC.

Murdo Gordon: [inaudible]

Unknown Attendee: Great. Thanks.

David M. Reese: Yeah, Robyn, and if I could just clarify further on the first part of your question, is your question related to opening up government access like we've done over the last little while? Or is it the transition of people potentially from commercial to a government benefit because of COVID-19?

Murdo Gordon: It's really a transition. So what a lot of people are asking is what if we transition, given the potential that a lot of people are at work, they're going to transition to a government-based plan. Yeah, you

Murdo Gordon: [inaudible]

Unknown Executive: For more information, please visit www.globalonenessproject.org.

Murdo Gordon: So let's start with that topic. First off, our overall Medicaid portion of our business right now is quite low. It's less than 10% of our total revenue, and the majority of our products beyond that are reimbursed through Medicare Part B and D, with about 50% of our total business being reimbursed through commercial insurance. So it's that commercial piece, as you rightly point out, that is likely, or a portion of that is likely to transition to a government channel. Now, the thing that's harder to predict is at what rate. So as people become unemployed, and an important distinction is that furloughed, they retain benefits for a period of time if they opt into COBRA. And furloughed employees are often still on their self-insured company employee plan, or sponsor plan.

Murdo Gordon: So there's a time lag that's going to occur before people transition to either a state exchange or a Medicaid benefit. So I think the impact could be delayed, more like towards the end of this year and into 2021. And, of course, trying to pin down the actual numbers of Americans that are going to end up on unemployment benefits is hard to do right now. So those are the two things. It's the total bolus and the rate of change.

Murdo Gordon: I've heard some commentary and read some things that would appear to indicate people expect it earlier. Our perspective is that some of these patients and people will transition over time, and it'll more likely be a delayed 20 effect into 2021. On telemedicine, I would just say that there is a variety of maturity in how telemedicine is used by therapeutic areas. If you think about mental health, and I would argue even in neurology, telemedicine is already used quite extensively, even pre-COVID. And I would say that the uptake for telemedicine and evaluating someone like a migraine patient is going to be relatively straightforward, as it would be perhaps for a dermatology patient. So in the case of neurology, for migraines, it would be Imavig, and then for dermatology, it would be Otesla. You mentioned Avenity.

Murdo Gordon: Of course, Avenity is primarily prescribed post-fracture, so patients are likely to be in a clinic or hospital setting. And so the ability for the physician to evaluate the patient and prescribe Avenity is probably pretty straightforward related to that acute event, but we're watching it closely. We actually, because of Imavig and other brands where telemedicine was already being used fairly extensively, we've had some experience here that goes back over a year, and we've been scalating our experience there now. So I think GanGen will be on the front foot when it comes to building our capabilities in that area.

Murdo Gordon: And our next question is from the line of Ronnie Gall with Bernstein. Ronnie, your line is open.

Unknown Attendee: Good evening, and let me add my

David M. Reese: Thanks to Jay for all the work you're doing.

David M. Reese: [inaudible]

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Unknown Executive: Medical Group, Dr. Amjad A. Ghamidi, Dr. Amjad A. Ghamidi, Dr. Amjad A. Ghamidi, Dr.

David M. Reese: Well, thanks, Ronnie. This is Dave.

David M. Reese: I'll start with the PD-1 question first, AMG-404. We continue to develop AMG-404 primarily as a combination partner for our pipeline agents. This is a Phase I umbrella study, and we added cohorts to study additional indications where the tumors in question have well-described PD-1 sensitivity. That will limit the need, we hope, for single arm data in future trials, and ultimately, we think we'll probably need on the order of 200, give or take, monotherapy patients to support the standard safety package for AMG-404. So all of that put together, the expansion of the Phase I trial allowed us an efficient way to generate appropriate data.

Bob Bradway: Yes, and when it comes to our biosimilars business, we are pleased with the run rate of over $300 million in the quarter. I would attribute our success, first and foremost, to Amgen's reputation as a high-quality biologics manufacturer. I think that is something that differentiates us and is perceived well by our customers. Our experience in Europe was a very positive one.

Bob Bradway: We applied those lessons learned to our U.S. launches of the two oncology biosimilars, and I think it shows you that the biosimilars market is functioning well in the United States. I would also say that the biosimilar business model for Amgen is very much integrated with our innovative products, so the same people who are defending NuLasta, the same account managers who are defending NuLasta day in, day out and making sure that the benefit of OnPro is understood by our customers are the same people who are establishing the uptake curve for MVASI and CanGenti. Those account relationships that we've cultivated over many, many years in oncology have been extremely valuable, and our relationships at the payer-provider level, I think, have helped us extend that trajectory nicely.

Bob Bradway: I would also say that our patient services are exemplary, and we apply the very same patient services that we have for a product like Kyprolis or Hgiva to our biosimilars business as well. You mentioned Avsola, which is our Remicade biosimilar. We do intend to launch that this year, and that product will help strengthen what is already a strong immunotherapy portfolio for us and will help us broaden out that customer perspective. Again, that product will be integrated with our innovative autoimmune portfolio.

Bob Bradway: And let's take the next question, and as it's getting late on the East Coast, if I can just ask everybody to please limit themselves to one question and let's go on with the next one. Sure. Our next one is from the line of Evan Seigerman with Credit Suisse. Evan, your line is open.

Murdo Gordon: Hi guys, thank you so much for taking the question and for being kind of a follow-up from what you were just talking about, Murdo. So how has the pandemic impacted the uptake of biosimilars? Have you seen an acceleration in adoption to save costs, or have centers really delayed uptake given potentially overwhelmed systems?

Murdo Gordon: Thank you.

Murdo Gordon: So, it's a bit early to tell, so take my comments with a very few weeks of experience here. I would say so far, we have not seen a negative effect on our uptake. If anything, we're seeing a steepening of our uptake curve. The one thing I will say that we haven't yet assessed that could happen is that the total cycles of Bevacizumab or the total cycles of Trastuzumab could be impacted. So from a share of molecule perspective, we're very pleased. What we're watching is the total number of infusions of each of the molecules going forward.

Dane Vincent Leone: And our next question, it's from the line of Dane Leone with Raymond James. Dane?

Bob Bradway: Hi, thank you for taking the questions and the update. I just want to ask a business development question, and I'll keep that one here. When you're thinking about ramping up your efforts with KRS, obviously, the initial data set is great for how you're thinking about the target oncology space, and then also think about the bolt-on with the Tesla that you did to start broadening out how you think about immunology. Where do you want to go in those respective areas from a BizDev perspective? I mean, there's a lot of room you guys still have to work with, especially in targeted oncology.

David M. Reese: Should we be expecting more...

David M. Reese: Should we be expecting more bolt-on acquisitions within these two areas over the course of 2020?

Bob Bradway: I don't know about the course of 2020, Dane, but those are two areas of keen interest for us for sure, oncology and inflammation. And we'll continue to look for attractive, innovative assets that we think we can add value to. You know, the trick is always to be able to license or acquire molecules at a price that leaves a return for our shareholders. And we were pretty comprehensive in the way we assessed the marketplace, and we'll continue to keep an active watch and see whether there are some things that might be a good fit.

David M. Reese: Great, thanks guys. And our next question is from the line of Umer Raffat with Evercore ISI. Umer, your line is open. You may have us on mute.

Umer Raffat: Let's come back to him.

Unknown Attendee: And moving on to the next question, it's from Alethea Young with Cantor Fitzgerald. Alethea, your line is open.

Murdo Gordon: Hey guys, thanks for taking my question. Congratulations on all the progress. I guess I just wanted to know, when you think about the hotels and some of the benefits you're seeing with the orals, maybe in the light of COVID, do you think that might be a sustainable trend? Thanks.

Geoffrey Christopher Meacham: Yeah, it's, Alicia, I just want to clarify, it's Murdo here. You're talking about natural demand; you're not talking about clinical trial activity with OTESLA, correct? No, not at all.

Murdo Gordon: [inaudible]

Murdo Gordon: We continue to watch the weekly trends, we're listening to what our customers are telling us, and we definitely think that we've got a little bit of buffer supporting Tesla right now because it is a convenient oral option, it's got great market access coverage, and it's affordable. We're, you know, obviously also We mentioned at the end of last year that we were putting in additional primary care efforts to broaden the promotional effort behind Otesla, and I think that's also helping. So, you know, we're feeling good about it, and I think it's just the ideal kind of product for a time like this where a lot of patients are concerned about visiting a healthcare professional.

Corey Kazimov: And our next question is from the line of Geoffrey Porges with SVB Lear Inc. Geoffrey, your line is open. Thank you very much.

Murdo Gordon: Hello Murdo, another question. You highlighted some of

Geoffrey Christopher Meacham: Continuing to wait for some of the office of minister.

Unknown Executive: Srinivasan, Aniruddha Mukherjee, Aniruddha Mukherjee, Aniruddha Mukherjee

Murdo Gordon: [inaudible]

Murdo Gordon: For ProLeo NQ2.

Murdo Gordon: Yeah, I think what, thank you, Geoff, I think what I mentioned was the patient visits were down 50%. So Prolia and we're maybe not as impacted yet on Avenity are definitely the products that we're seeing the most impact on our portfolio. If you think about the physician-administered products for Amgen in three buckets, we have our bone business, we have our nephrology business, and we have our oncology business. Bone is, by far, the business that is being impacted the most.

Murdo Gordon: Obviously, it's partly to do with the age and vulnerability of patients. And we're spending a lot of time working on alternate sites of care, improving continuity of care, setting up mobile programs where nurses can visit patients' homes and administer medication. And we're working, and we continue to work with administration, CMS, policy advocates, to try and improve the buy-and-bill access to that home injection channel as well. Nephrology is holding up well. Obviously, in end-stage renal disease, these patients have to have their dialysis treatment be life-sustaining. So those volumes are holding up well enough. The providers there have been very good at collaborating and providing safe, isolated sites of care for patients. And then oncology, it's down, but not nearly as much as the bone. So that gives you a relative order of understanding of how we're seeing it.

Murdo Gordon: And our next question is from the line of Corey Kazimov with JP Morgan. Corey, your line is open.

Geoffrey Christopher Meacham: Great. Good evening, guys.

Bob Bradway: Thanks for taking my question. Given the importance of this growth portfolio to the overall business, I wanted to better understand the underlying dynamics for Amavig. We look at me, and despite the leading share position and an increase in paid prescription sales, have seemingly fallen short of expectations for the last few quarters. Is this just a function of a lower net price with the broader accessors or something?

Murdo Gordon: Water access, or is there something else going on that we're all missing?

Murdo Gordon: Yeah, thanks, Corey. Look, we're very pleased with Amovig's year performance. And, you know, we did have to do quite a bit of work over the course of the year to get to that 90% paid level. And now we have 93% of covered lives, so we're pretty pleased about that basis.

Murdo Gordon: I think what we're counting on for growth going forward, because we expect price to stabilize throughout the course of the balance of the year, is that we're counting on unlocking additional patient volume. You know, we've got over 4 million potential CGRP patient candidates out there. Physicians tend to persist with older oral products and aren't yet adopting CGRP products at the rate that we think they could and should be to help ease the suffering of chronic migraine sufferers. So that's where we're focused. We're focused on unlocking future potential volume now that these products, and particularly Amovig, have very affordable access coverage in the market.

Umer Raffat: And it appears that we have Umer Raffat from Evercore ISI back on. Umer, your line is open. Hi, I just learned how to unmute myself, so thank you so much.

David M. Reese: One question for you, if I may. I think it would be very helpful for investors to understand if you're optimistic about the durability of bonds with KRAS monotherapy.

Umer Raffat: And if you're starting to develop a view about whether a MEC or a PD-1 is a better combination partner.

David M. Reese: Thank you so much.

David M. Reese: Thanks, Umer, for the question. Yeah, I mean, duration of response is one of the critical questions. And that's why I indicated that, you know, the phase two trial is going to give us the definitive answer there. That will, and we wish to have enough follow-up to very robustly address both duration of response and progression-free survival.

David M. Reese: In terms of the combinations, I think it's perhaps a little too early to pick favorites. We are looking at a number of combinations, which is typical for oncology programs. All of those are based on an underlying biological rationale. And, you know, as I indicated, we'll be generating data in that program for combinations over the course of this year.

Michael Schmidt: And next we have a question from the line of Michael Schmidt with Guggenheim. Michael, your line is open. Hey, guys. Good evening. And thanks for taking my question. I

Murdo Gordon: I had a high-level question on the biosimilar business, which has been going really well for Amgen. I'm just wondering, as we see the biosimilar market mature over time and as we see potentially more products launch within these markets,

Michael Schmidt: What's your view on...

Michael Schmidt: On long-term price erosion relative to brand name, and how should we think about, you know, a potential floor relative to the manufacturing and development costs in the biosimilar area? Yeah, thanks, Michael.

Murdo Gordon: You know, the one thing I mentioned earlier in response to the question about similars was the Amgen experience and knowing how to make biologics at scale in a very efficient way. So we have really good margins on this business. And I think, you know, going by our experience in Europe, where I would argue that the price degradation has probably been faster than it will be in the US, even with multiple competitors, we've been able to compete effectively for volume, and we've been able to retain a very profitable business there. We obviously don't have a lot of analogs in the US to understand the rate of change.

Carter Gould: So I'm going to hold back from speculating on what the future will hold. But there are clear things here that the more competitors you have in the early phase of the business, the more you're going to be able to compete effectively. And the more you have a biosimilar launch pattern, the more likely there is to be some precipitous price erosion. We're fortunate that we were early in the US with both Envasi and Cangenti and were able to establish a very strong foothold in the market. I also repeated, I said it earlier, but I do think that the biosimilar market is alive and well in the US and functioning as you would hope free markets would.

Bob Bradway: And our next question is from the line of Carter Gould with Barclays. All right, you're live.

Mohit Bansal: [inaudible]

David M. Reese: Thanks for fitting me in. I guess just a bigger picture question around sort of the lasting impact of COVID when you guys think about either shifts to manufacturing strategy, location, bigger picture questions on footprint, and I guess as well as commercialization models. I guess it's just a really kind of a bigger picture question when we return to normal, will that look different from sort of the way you have set it up historically. Thank you.

David M. Reese: Yeah, that's a really interesting question, Carter, and one that I think will get a lot of attention once things have settled down a little bit. It's still awfully fluid to be trying to predict how the experience of COVID-19 will affect our industry or our business model. But we'd be happy to engage with you on that topic at greater length, you know, again, when the dust has settled a little bit. But, you know, fundamentally, for us, our supply chain is in great shape. We, unlike some of our peers in the industry, predominantly manufacture in the US. Obviously, the people who work for us there are U.S. citizens, and so we have the benefit that the vast majority, nearly all of our manufacturing is done in the U.S.

David M. Reese: So that supply chain question is a little bit less relevant for us than for some of our industry peers. But I do think that this isn't going to be the last viral challenge that we face as a society, and I think we'll all be trying to improve our business continuity planning and thinking when we come out of this to make sure that we're in as strong a position as possible to avoid interruptions from events like this. But I think there'll be a lot of learning across the whole economy, including the biotech economy. So I look forward to talking to you about that as well.

Bob Bradway: And next, we have a question from the line of Mohit Bansal with Citi. Mohit, your line is open.

Mohit Bansal: Great. Thanks for taking my question and congratulations on all the progress. I have a quick question regarding your IL-2 routine program. What is your level of excitement around this program? Seems like you have two fully enrolled trials at this point. Should we expect to see any data from this program later this year? Thank you. Dave here.

David M. Reese: Yeah, so we remain keenly interested in AIM-B592, the IL-2 Mu team. We're enrolling trials going forward, and we would expect data over the course of the year or perhaps early next year. Some of those trials we did temporarily pause because of the reluctance of investigators to start patients on new immunomodulatory agents during the course of the epidemic, but we remain quite interested in that program and will provide guidance as to when we're going to get data readouts as we move forward.

David M. Reese: And next, we have a question from the line of Kenan McKay with RBC Capital Markets. Kenan, your line is open.

Geoffrey Christopher Meacham: Hi, thanks for taking the question. Maybe it's for Peter or Bob, or actually,

David M. Reese: Sheth, from Dr. Reese's perspective, where are you seeing the most opportunity for M&A right now and really where is your focus there? And Dave, I had hoped to include you in that question.

Unknown Executive: Srinivas Jyothibodi, Siddhartha Mukherjee, Siddhartha Mukherjee,

David M. Reese: [inaudible]

Bob Bradway: Well, Dave, since I've talked a little bit about M&A and business development already on the call, why don't we let you take a crack at this? So what areas and what mechanisms are most intriguing to you and your R&D colleagues at the moment?

David M. Reese: Yeah, you know, I think this is a golden age, and I would approach it from two perspectives. There are new platforms.

David M. Reese: You know, our head of research, Ray Deshaies.

David M. Reese: A great article in Nature a week or so ago, I'd encourage all of you to read about what we call an Induced Proximity Platform. This is a new suite of technologies that we think can open up much of the undrinkable space, so that sort of business development remains of great interest to us. And then, as we've said before, I think there's a ferment of activity across the therapeutic areas of great interest to us, and that will continue to be a focus going forward.

David M. Reese: And next, we have a question from the line of Salim Saeed with Mizzou. Salim, your line is open. Great. Thanks so much for that question, guys. Bob, maybe just one for you, just a high-level one.

Salveen Richter: Given your discussions with folks in Washington, obviously, the rhetoric in biotech and pharma has been pretty negative over the last few years, especially around drug pricing, etc. And I'm wondering, given COVID-19, has that changed the rhetoric at all in your view? And is there anything sustainably positive that can carry on post-COVID in terms of rhetoric coming out of Washington, in your view? Thank you.

Bob Bradway: Well, I think everybody recognizes that we're going to need science and innovation to lead us out of this challenge that we find ourselves in globally. So, you know, the importance of innovation, a little bit of humility, perhaps, in all camps about how hard it is to have the right innovation available for the world at the right time. So, you know, the good news is that the government, innovators, academia, everybody is working together at a speed and a scale that I've never seen in my career. So, you know, I think that's a good sign.

Bob Bradway: And hopefully, you know, we'll be able to look back on this one day and say that it worked. We have a special ecosystem, in particular, in this country. And I hope, you know, we'll be able to look back and say when, you know, we face the biggest challenge of our lifetimes, the industry came through and delivered what we needed. And if we're able to do that, I think it inevitably will help remind everybody that we haven't generated all the innovation we need as a society; there are still lots of areas of unmet medical need. And again, the more we can do to address it, the better. But the question of drug pricing is not going away, but hopefully, there'll be some respect for how profoundly important innovation is.

Bob Bradway: Hey Ann, let's take one last question if there's a quick one, after which I'll ask Bob to make some concluding comments. Very well. Our final question is from the line of Jim Birchnoff with Wells Fargo Securities. Jim, your line is open.

Unknown Attendee: Good afternoon, it's Nick on for Jim. And thanks so much for squeezing us in.

David M. Reese: You mentioned earlier in your prepared comments about Otezla the trial of Otezla in COVID. Can you just elaborate on that? And is this in the acute setting? Or perhaps there is an opportunity for patients who have ongoing organ dysfunction after they leave the hospital, maybe due to inflammation? Thanks, James. This is Dave. Yeah, we think there will actually be utility in studying your Tesla in a variety of settings, ranging from, for example, hospitalized patients but those that are not yet in the ICU, to attempt to prevent progression to more serious disease, as well as those, you know, with more serious disease. And so, you know, again, we're in active discussions or have committed to platform trials. The one real guiding principle we have here is that we want these to be rigorous studies to provide, you know, the highest quality answers.

David M. Reese: Okay, let me just wrap up, recognizing that it's pushing on seven o'clock on the East Coast. Again, let me reiterate our appreciation for you joining the call. I hope what you take away from the call is that we delivered a solid quarter one; we feel we're executing the business well. Our objective will be to remain an effective steward of the business in the short term. We want to be a leading corporate citizen through this challenging period as well, and we will remain focused on delivering long-term growth by advancing innovation in the areas that you're familiar with at Amgen. So, thank you all. Keep safe. I look forward to catching up with you on the next quarterly call.

Thanks everybody, myself and the IR team will be around for some time, so feel free to reach out to us. Thanks again. Ladies and gentlemen, we thank you greatly for joining us for Amgen's first quarter 2020 financial results conference call. This does conclude the call. You may now disconnect.