Q4 2022 Amgen Inc Earnings Call
Okay. Thank you Arvind and Hello, everyone and thank you for joining our call.
The beginning of the year feeling confident about the long term growth.
Look for our business.
Offer five reasons why.
First we have a number of innovative volume driven products that still have plenty of room to run and we saw that in 2022.
For Panther, Prolia and identity, each generated double digit sales and volume growth in the fourth quarter and for the full year.
We expect continued growth from these products in 2023 and beyond.
Panther in particular helped by important new data from the <unk> Open label extension study.
And new prescribing guidelines.
Oh, Tesla delivered 7% volume growth in both the fourth quarter and the full year benefiting from a label expansion that gives us the opportunity to reach millions of new patients in the U S with mild to moderate psoriasis.
<unk> fire collectively contributed more than $450 million in full year sales and we are pursuing.
Moving additional indications for both products.
We're especially pleased to see to aspire being utilized by patients across all types of severe asthma.
Murdo will share more about the performance of our in line products and in a moment.
Second we moved six first in class molecules into phase III or potentially registration, enabling trials in 2022, including El Paso ran for LP Little a broker Timna mab.
Atopic dermatitis to aspire in eosinophilic esophagitis and of course, <unk> and <unk> and cancer.
We've also begun enrolling patients in a phase II trial for AMG 133.
Based on early data this molecule with its unique mechanism of action. It looks like it may have an attractive profile for the treatment of obesity.
And more on our pipeline from Dave Reese in a moment.
Third we have an industry, leading biosimilars business that will contribute to our growth over time.
In 2022, we delivered positive phase III data for our Biosimilar candidate.
Candidates to Eylea soliris as to Lora positioning us to be in the first wave of these launches, which we know is critical to success.
We're also less than 24 hours into the launch of <unk> Vida in the U S.
<unk> is the leading biosimilar to Humira internationally.
And with a five months lead over the next entrant, we're well positioned for success in the U S.
All told we have six more biosimilar launches planned in the U S and markets around the world between now and the end of the decade, making this another source of long term growth for us.
Fourth we've often said that we would look to licensing and acquisitions in our stated areas of strategic interest and Thats. What we have done building on our decades of experience in inflammation with two significant transactions that will strengthen our presence in this space.
Through the acquisition of Chemo Centrex, we added <unk> a first in class treatment for <unk> associated vasculitis, and we're off to a strong start there.
Our announced the acquisition of Horizon Therapeutics will add several additional first in class early and lifecycle biologic medicines, including <unk> KRYSTEXXA and <unk> that will add to our growth profile through 2030 and beyond.
We're working our way through the regulatory review processes for that deal and are confident that the deal poses no anti competitive matters and we have received a second request from the U S. FTC and we'll work with them to answer your questions.
While remaining optimistic that we can complete the deal in the first half of the year.
Finally, we stay true to our capital allocation priorities investing in our business to drive long term growth. While also returning capital to our shareholders through share repurchases and a growing dividend you'll hear more from Peter on this shortly.
And everything we achieved last year and everything we will achieve going forward is due to the hard work and commitment of our people. They are passionate about our mission to serve patients. There are clear on how their work contributes to our success and they are ready to seize the opportunities and meet the challenges that await us I'm grateful to all of them I look forward to your quest.
There is a little later on but now let me turn the call over to Murdo.
Thanks, Bob 2022 was another year of strong execution of our mission to bring innovative products to the millions of patients around the world.
Suffer from grievous illness.
<unk> of our portfolio.
By record sales for 16 friends.
We saw strong volume gains across our general medicine, and hematology oncology growth brands.
Our inflammation therapeutic area expanded with the launch of test fire and the acquisition of <unk> two first in class medicines that treat serious disease.
In addition, our announced acquisition of Horizon Therapeutics will add several important medicines to our portfolio.
In total volume growth for 2022 was 9% with 7% growth in the U S and 14% growth ex U S. As we continue to deliver on our international growth strategy.
Excluding the impact of foreign exchange full year global product sales grew 4% as our volume increases were offset by a 5% decline in net selling price.
Including the 2% negative foreign exchange impact product sales increased 2% year over year.
In the quarter. We also saw strong volume growth with a 10% increase year on year.
Starting with our general medicines business, which includes Prolia <unk> and <unk> overall revenue for these four products grew 21% year over year for the fourth quarter and 18% for the full year, driven by 19%, 21% volume growth respectively.
In bone health Prolia sales grew 14% year over year for the fourth quarter, driven primarily by 11% volume growth.
Entity, which complements prolia and our bond portfolio had record sales of $225 million for the quarter driven by strong volume growth across markets.
<unk> sales increased 22% year over year for the fourth quarter with volume growth of 31%, partially offset by lower net selling price in the U S. We generated volume growth of 32% for the fourth quarter aided by broad adoption of Rabassa by cardiologists, and increasing adoption by primary care providers.
We saw declining net selling prices in the U S. As we offered higher rebates to support broad Medicare part D and commercial patient access looking ahead to 2023, we expect less year over year U S price erosion than we saw in 2022.
Outside the U S fourth quarter sales of <unk> grew 36% year over year, driven by 31% volume growth globally <unk> has treated over one 5 million patients since launch.
Strong prescribing history in cardiology, and expanding use in the primary care setting position as well to bring with assets of more patients globally.
With the Fourier long term follow up data in addition to evolving and more aggressive treatment guidelines. There is a clear rationale that lowering LDL cholesterol as much and as early as possible with <unk>.
We'll reduce cardiovascular risk for patients around the world.
Transitioning to our inflammation portfolio, Oh, Tesla sales decreased 2% year over year for the quarter and increased 2% for the full year, we saw a 7% volume growth in both periods. This was offset.
Set by lower net selling price stemming from enhancements to our co pay and patient assistance programs to support new patients starting treatment as well as additional rebates to improve the quality of coverage.
During the fourth quarter, our U S. A tesla business was impacted by new patient demand from free drug programs by newly launched topical and systemic competition.
We expect that impact to continue in Q1 of 2023.
We also expect to see the typical pattern of lower sales in the first quarter relative to subsequent quarters due primarily to the effect of insurance re verifications copays and deductibles for patients with.
The combined effect could lead to first quarter of Tesla sales being similar to or below those from Q1 of 2022.
Longer term, we continue to see strong growth potential for us has given us establish safety profile strong payer coverage with limited.
Authorization requirements and ease of administration or Tesla remains the only approved oral systemic therapy with a broad indication and is well positioned to help the 4 million U S patients with mild to moderate psoriasis, one 5 million of whom have psoriasis that cannot be optimally addressed by a topical.
And can benefit from our first line systemic treatment like Tesla.
Enbrel sales decreased 1% year over year for the fourth quarter, driven by declines in volume and net selling price, partially offset by higher year end inventory levels.
<unk> remains an important product for patients due to its long track record of efficacy and safety.
Aspire continues its strong launch with $79 million in sales in the fourth quarter and $170 million for the full year.
Allergists and Pulmonologists have prescribed test fire across a broad range of patients with severe uncontrolled asthma.
We're also seeing initiation of <unk> in both biologic naive and previously treated patients physicians.
Physicians acknowledged test fire's unique differentiated profile and has broad potential to treat the $2 5 million patients worldwide with severe uncontrolled asthma without any phenotypic and biomarker limitations.
We are now preparing for the anticipated U S approval of the Prefilled pen in the first quarter, which will offer patients the convenient option to administer test fire at home.
Sales of <unk> were $21 million in the fourth quarter, our integration of <unk> is proceeding smoothly confirming our belief that Amgen has deep experience in inflammation and nephrology and substantial market presence will allow us to bring <unk> to more patients with <unk> associated vasculitis.
We're also excited about our announced acquisition of Horizon Therapeutics, our combined portfolio, which will include.
Please note, we will address serious inflammatory diseases and improve the lives of many patients.
Commercial capability.
Presence.
Absolutely.
Market.
19 to deliver important therapies that will make a meaningful difference for more patients globally.
Today, we announced the launch of <unk>. The first U S. Biosimilar to Humira medicine used by more than 1 million patients living with serious inflammatory diseases with.
With our track record of developing and manufacturing biologics and decades of experience in inflammation Amgen is uniquely equipped to supply patients with this biosimilar medicines.
<unk> is the first significant U S. Biosimilar in the pharmacy benefit space and we expect gradual uptake in the coming months as this market evolves.
Moving to our hematology and oncology business, which includes <unk> kyprolis, <unk>, vectibix and Nplate and blend cycle. These.
<unk> innovative products grew 14% year over year with 17% volume growth for the quarter full year sales grew 13% driven by volume gains.
<unk> sales grew 14% in the fourth quarter.
And <unk> sales in the fourth quarter included $207 million related to a onetime order from the U S government.
Given the strong performance of our heme <unk> portfolio in 2022, and the recent positive data in both <unk> and Vectibix I look forward to the future growth potential of this portfolio.
<unk> reported $71 million in sales in the fourth quarter and $285 million for the full year quarter over quarter sales declined 5% with 12% volume growth more than offset by a lower net selling price driven by a $12 million unfavorable price adjustment, resulting from a reimbursement.
Approval decision in France, and unfavorable changes to estimated sales deductions.
Outside the U S. <unk> has now been approved in over 45 countries. We've launched <unk> in 30 markets and are rapidly pursuing reimbursement in the remaining countries. As we've noted before the market for <unk> is focused on the 7000 U S and 20000 X U S patients in the second line setting.
Longer term, we expect <unk> growth to come from moving into earlier lines of therapy and expanding into additional tumor types.
Sales of our oncology Biosimilars declined 40% year over year for the fourth quarter and 30% for the full year driven by lower price, while our biosimilars for <unk>, both hold leading shares we expect continued net selling price deterioration and accelerating volume declines driven by increased.
Yes.
The most recently published average selling price in the U S declined 38% year over year for <unk> and 51% for <unk> over time, we expect long term growth in our biosimilars business to be driven by the addition of new molecules and additional launches.
And as we start the new year I'm inspired by the hard work of the thousands of Amgen employees around the world, who wake up every day to serve our patients are expanding international presence and diverse portfolio of products further strengthened by the integration of <unk> and the announced acquisition of horizon position us well to serve them.
Many more patients globally and with that I'll turn it to Dave.
Thanks, Murdo and good afternoon, everyone for research and development last year was one of high quality execution and on time delivery of results as we continued to progress our innovative pipeline.
In General Medicine, we strengthened our cardiovascular franchise and emerging portfolio of obesity assets.
Two areas of significant unmet need affecting millions of patients globally.
Our path of course is the cornerstone of these efforts and last November at IHA, We presented <unk> open label extension data.
These data were recognized by the American College of Cardiology expert consensus decision pathway, which indicated there appears to be no LDL cholesterol level below which benefits thesis. Additionally.
Additionally, LDL cholesterol recommendations are updated to reflect a reduction in target LDL levels and highest risk patients from 70 to 55 milligrams per deciliter.
This is a level that is not attainable for a large number of patients without pcf's canine inhibitor therapy.
Another molecule that we're excited about is El Paso ran at IHA, We presented phase II data were El Paso ran dose 75 milligrams or higher every 12 weeks reduced LP little a concentrations of 95% to 100% in patients with established atherosclerotic cardiovascular disease with <unk>.
Baseline <unk> levels of approximately 260 animals per leader.
I'll pass around appeared both safe and well tolerated in this study.
We are encouraged by these data, particularly our dosing frequency.
Safety and Tolerability profile and degree of LP Little a reduction.
We have initiated a phase III outcome study and 6000 subjects with Ethan risk Roddick cardiovascular disease and significantly elevated LP little a levels of at least 200 nanometers per liter.
Now turning to obesity in December we presented data from our phase one study, where AMG 133 appeared safe and well.
Tolerated and demonstrated a 14, 5% reduction in body weight at day 85, following three monthly subcutaneous injections.
The weight reductions were observed up to 150 days after the final AMG 133 administrations.
Given these favorable.
<unk>, we are now enrolling a 570 subject phase III study to explore AMG 133 in patients with obesity with or without diabetes and related co morbidities.
The study will also investigate different dosing levels and regimens.
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Slide 4% recall, our Q4 2021 results included approximately $200 million of favorable impact to other income and expense, resulting from a gain on our Beijing investment.
Full year non-GAAP EPS of $17 69 grew 27% versus a recast 2021 results.
non-GAAP Q4 operating expenses were unchanged year over year, while full year non-GAAP operating expenses declined 12%. The full year includes the impact in 2021 of the $1 5 billion five prime IP R&D charge and the $400 million licensing payment the K K.
See for <unk>.
We advanced our pipeline and invested in product launch activities in 2022, while delivering a 51% non-GAAP operating margin as a percentage of product sales.
On a non-GAAP basis.
For cost of sales as a percent of product sales decreased one two percentage points on a year over year basis down to 16, 3% for the full year cost of sales as a percentage of product sales decreased by 0.5 percentage points down to 15, 9%.
Both the quarter and full year improvements were primarily due to fewer COVID-19 antibody shipments and lower manufacturing costs, partially offset by changes in our product mix.
non-GAAP R&D spend in the fourth quarter decreased 2% year over year, primarily due to higher business development activity in 2021, including our upfront payments in connection with our generate biomedicine and Iraq as therapeutics collaborations along with lower marketed product support.
This was partially offset by higher support for key assets in early and late stage programs.
However, adjusted for 2021, BD activity Q4, 2022, R&D investment increased 7% year over year and for the full year non-GAAP R&D spend declined 8% based on the same drivers as the fourth quarter. However, adjusted for BD activity full year 2022 R&D investment.
Increased by 5%.
Q4, non-GAAP SG&A expenses increased 2% year over year, driven by higher marketed product support including investments in our priority products to inspire of entity and we're Panther for the full year SG&A expenses were unchanged year over year as increased investments for all priority brands were offset by productivity.
<unk> gains continuous improvement and reallocation from mature brands.
non-GAAP other income and expenses were about $470 million in expense in the fourth quarter of $250 million increase year over year, primarily driven by the previously mentioned gains in 2021 that we recognized from our investment in Beijing for the full year non-GAAP other income and expenses were approximately one.
$7 billion.
So now turning to the outlook for the business for 2023.
Our outlook is amgen only on a standalone basis without any adjustments for the announced horizon acquisition.
It is important to remember that it currently at current publicly available consensus estimates are derived from a combination of estimates of Amgen as a standalone company along with estimates from some analysts to have already added horizon into their estimates.
So our 2023 revenue guidance is 26.0 billion to $27 2 billion and our non-GAAP earnings per share guidance of $17 40 to $18 60 per share.
So now let me review several key points related to our guidance.
For total revenue, we expect the year over year comparison will not include about $700 million related to several items from 2022 that we do not expect benefit from in 2023.
We assume we will not generate COVID-19 antibody revenues in 2023, we also assume a lower amount of employee sales in 2023 compared to 2020 to recall 2022 included a significant purchase of N play by the United States government in the second half of the year.
Also several favorable changes to estimated sales deductions that occurred in 2022, and the sale of our generics business in Turkey, which closed late in 2022.
For product sales, we project volume growth at a portfolio level driven by strong growth in our priority products to inspire of entity <unk> Prolia and tab deals consistent with industry trends and our recent history, we expect mid single digit price declines in our portfolio in 2023.
Turning to <unk>, our oncology Biosimilars, we expect the recent trends to continue through 2023. This will likely result in full year neulasta sales less than $700 million.
Further we expect less than $750 million in combined product sales for our oncology Biosimilars can gen <unk> and <unk>.
And finally, we expect product sales of less than $300 million brief agenda as we transition through the expiry of our contract with Davita.
For the full year, we're guiding other revenues to a range of $1 2 billion to $1 5 billion.
Note that we recognized about $300 million of revenue from our Covid antibody collaboration with Lilly in 2022 that we don't anticipate repeating in 2023.
So we will continue to manage our operating expenses consistent with our historical cost discipline.
So even with increasing 2023 sales volumes declining net sale selling prices and inflationary pressures on costs, we still project full year non-GAAP operating expenses to be flat versus 2022, as we continue our focus on driving productivity and cost efficiencies across the.
Apprise.
We project non-GAAP cost of sales to be in the range of 16% to 17% as a percentage of product sales recall that we mentioned during our Q3 earnings discussion that tax law changes enacted by Puerto Rico in June 2020 to replace the Puerto Rico excise tax the prep in favor of an income tax.
This change will increase our income tax expense beginning in 2023, while reducing our cost of sales by roughly an equivalent amount.
Note. However, there will be a negative impact in 2023 of approximately $125 million related to the amount of the prep that is currently capitalized in inventory that will be charged to cost of goods sold in the first half of 2023.
With most of the charge recognized in the first quarter without a corresponding tax benefit.
We expect non-GAAP R&D expenses in 2023 to increase 3% to 4% year over year compared to our 2022 expenses as we advance a number of the programs Dr. <unk> referenced earlier.
This is consistent with our first allocate capital allocation priority to invest in the best innovation and our operating expense discipline provides us the capital to do just that.
And non-GAAP SG&A spend we expect 2023 amounts as a percentage of product sales to slightly decrease year over year driven by productivity improvements.
These all lead to a projected non-GAAP operating margin as a percent of product sales is roughly 50% on a full year basis.
We expect non-GAAP other income and expense of approximately $1 4 billion.
The expected year over year improvement is driven by a change in our accounting for our Beijing investment, we're making in 2023.
Beginning in January 2023 will no longer record our share of Beijing results in other income and expense under the equity method of accounting on our non-GAAP income statement will now mark to market our investment with the impact recorded only on our GAAP income statement.
We expect a non-GAAP tax rate of 18% to 19%.
This rate reflects the new Puerto Rico income tax, which as I explained earlier replace the prep beginning in 2023.
We expect share repurchases not to exceed $500 million in 2023, and we expect that we will continue to meaningfully increase our dividend.
We expect capital expenditures of approximately $925 million in 2023, consistent with our capital allocation priority to invest in our business, including in our new environmentally friendly facilities in Ohio, North Carolina and.
And after we complete those facilities, we expect our capital expenditures to return to their historical levels.
I'd also like to make some specific comments around the first quarter of 2023.
I am encouraged that our business is performing as expected through the first month of the year.
However, consistent with our historical revenue patterns, we expect revenue in the first quarter of the year to be the lowest revenue quarter of the year and slightly below revenue in Q1 2022.
At a portfolio level, we expect product sales to be unchanged from Q1, 2022, and other revenues to be lower on a year over year basis due to the reason set out above <unk>.
Including about $225 million related to Covid antibody sales in the first quarter of 2022.
We anticipate about $80 million of foreign exchange headwinds in Q1 2023 compared to Q1 2022. The total of all these items creates greater than $400 million of headwinds versus the first quarter of 2022.
So these revenue patterns along with the timing of his of expenses are expected to translate into our Q1, non-GAAP operating margin being below 50% as a percentage of product sales.
Although we continue to expect operating margin as a percentage of product sales to be roughly 50% for all of 2023.
Recall this is all Amgen Standalone, we will continue to focus on our legacy of execution excellence.
In summary, despite macroeconomic headwinds we delivered another strong year of financial results in 2022, keeping us on track with our long term commitments to delivered through 2030 and beyond.
Our confidence in the long term growth of Amgen is strong.
And we look forward to completing the announced acquisition of horizon. During the first half of 2023, which will only strengthen our growth prospects. We would expect to provide updated guidance as appropriate at some point after the transaction closing.
This concludes the financial update my thanks to our 25000 plus colleagues at Amgen around the world for their commitment to serving patients and their tireless efforts in 2022, I'll now turn it back over to Bob for our Q&A.
Okay, well, thank you Peter and Dave for <unk>.
Soldiering on despite the technical difficulties.
Apologies to all of you who join.
Joining us on the call.
Some disruption proceedings here.
A number of you have email your questions to our what I would like to suggestions.
You have questions directly email them now to Arlen Arlen reasonably we will try to answer them here in the room and let me just assure all of whom we will rearrange or are scheduled to be available to answer your questions. If you don't get to it on this conference call.
Arvind and his team to answer any questions you may have after.
After we wrap up so well.
Let me turn to Arvind.
The questions that you've already submitted.
Thanks, Bob and apologies to everybody for the technical difficulties that we have.
As Bob said just please.
E Mail your questions to me directly so the first question that we have is from your own werber Cowen and he has submitted two questions is first question is Amgen will move to fair value from equity method of accounting sort of be a gene as you also know only less than 19, 9% equity in Beijing with Amgen.
Stop consolidating <unk> losses and profits from now on.
And then the second question is can you discuss when you plan to file the high concentration of and Davita. Once you get the phase III interchangeable data in the first half of the screen.
Okay. Two pieces once you hit the accounting question quick question quick answer. Thank you your own for the question on Beijing equity method of accounting as I said in my remarks, we will record in our GAAP income statement of the mark to market, but that won't be recorded.
Our non-GAAP income statement. So the answer is we will not include any earnings.
Or losses are.
Our share of Beijing going forward and our non-GAAP income statement.
Okay, and then on <unk>, what do we do to partner their deliveries and then Murdo you may want to ask.
Of the filing timelines once we have the data in hand, well, you've been giving guidance as to when we expect filing and potential approval about after the appropriate regulatory interactions. It's important I think as Bob noted we put this in context. So let me ask murdo to comment here, yes. Thanks, Steve we have had some inbound questions on this.
As you can imagine during the day given.
Given that we are launching.
So far launched progressing well, we have product, making its way into the channel and were already receiving inbound interest in <unk> from.
<unk>.
Payers prescribers and patients.
One thing that's important to remember is the current.
Not that we have in the market.
Is a lower concentration of original concentration <unk>, but it is citrate free meaning that the patient experience here is still one where we minimize the injection site pain by having a citrate free formulation and patient experience here has been positive and our.
Clinical trials and we anticipate that.
Not having a high concentration we will not be a barrier in the market.
These are very low volumes that are injected through auto injectable <unk>.
And we've seen very very good reliability of patients being able to administer in addition of course, we provide.
Nurse support for patients and then well while it wasn't asked I think it's also important to note that we are providing financial assistance support and reimbursement support for both prescribers and patients as we launched the product. So really a full suite of services and support that you would expect for a branded launch being up.
<unk> to the launch of the first Biosimilar Islander, not to launch in the U S that is <unk>.
Okay. Thank you Bruno and good.
The next question. The next question is from Geoff Meacham from Bofa Merrill Lynch and his question is he said no you have average davita, but are you expecting an indirect impact in the second half of 'twenty three or the first half of 'twenty four from all the Humira Biosimilars tomorrow on AR.
And Enbrel <unk> and he is interested in the volume and price impacts.
Sure.
It's hard for me, obviously to comment on what competitors may do as other biosimilars without aluminum <unk> enter the market beyond July but what.
What we what we have seen coming into 2023 is a.
Good cycle of reimbursement negotiations and we've been able to secure very broad coverage for both Enbrel Ando Tesla, we expect that insurance coverage to continue throughout the course of 2023 and <unk>.
As is usual, we had small concessions on net price to secure that.
Reimbursement, but nothing unusual compared to prior years.
Thank you, let's go to the next question.
And the next question is from Chris Raymond from Piper Sandler and he has two questions. The first one is on our Tesla and Chris is I know there.
There are a lot of puts and takes on this market and I know you guys have highlighted a tailwind of mild to moderate psoriasis patients coming into therapy.
But our Tesla is kind of unique in that there is a sizeable discontinuation rate just with that issue probably not going away talk about why we shouldnt be more concerned about sort of ticked too and maybe just as importantly, as the next generation take two molecules that are coming behind it is.
Especially in noticing that have declined Q over Q, both in the U S and rest of the world, even with a 9% inventory build any color on how you grow through those coming competition would be very helpful. And then here's a question on <unk> okay.
Okay. So first on <unk> I would start with the fact that we are the only.
<unk> product indicated for a broad range of psoriasis patients without regard to the severity and.
And really makes us the.
The ideal first line first systemic post topical choice of therapy and that is the positioning of the brand.
The size of that market is very large there is 4 million patients with mild to moderate form of psoriasis.
One $5 million of those patients would be regarded as.
Not doing as well as they could on topical treatment by potential.
Switching to a systemic <unk> Tesla as I mentioned, just a few moments ago, which has also enjoys very broad frontline access that is it doesn't it doesn't require that you stepped through another systemic.
Therapy and it also means that prescribers can make it the first choice and these are busy dermatologists. They want something that's easy they don't want a lot of prior authorization prior off paperwork and they want to be able to provide.
The ability for patients to start quickly on their therapy only <unk> offers that in the psoriasis market.
I think what we're seeing right now.
On effect of.
A number of free goods programs that were launched at the end of last year and continue into this quarter.
When physicians have free goods programs or sometimes referred to as bridging programs usually used at the beginning of a product launch when there hasnt been an opportunity to secure access with pharmacy benefit managers physicians will sometimes use those to try novel therapy.
Coming into the market however, as as those novel therapies go through the negotiation process with Pbms and payers oftentimes it becomes more difficult to try those novel therapies because of the nature of the access that they result, with and I think that's really where the.
Stained advantage, although it has.
In that first line systemic post topical pre biologic patient population.
Really allows us a long term growth opportunity and we continue to feel confident in the long term growth of this brand and we have a very strong commercial presence in a number of markets around the world and we continue to feel good from what we're hearing from our our prescribing base of Dermatologists I will say that the.
Short term impact of these three good programs, we're watching it very closely and we're making sure that we continue to be competitive in the marketplace.
Okay, Chris the second question is the same as <unk>.
That we have from Celgene Richter of Goldman Sachs and she says on MTO Vita.
You offer more details on how the dual pricing options will work and drive uptake and how should we think about net pricing what are your expectations for the market in mid year once more biosimilars enter.
But maybe I can answer the second part first we don't comment on product specific pricing and so I really can't answer the the net price I think it's fair to say that.
As additional entrants come into the market net price is usually go down we've seen that in our other biosimilars business I would expect that to happen here with respect to the two list price approach that we've employed here at this launch this is really to address the complexity of the U S market.
Pharmacy benefit managers have a model a business model that.
Requires that they negotiate rebates with 90 factors and so they would prefer a high list price and negotiate rebates to net the price down and then pass those rebates through to their upstream.
Employer.
Clients.
There are other stakeholders and customers in the health care system that prefer a net price based model and don't care about the difference between list and net or a gross price and net price and so for those we have the lower net price product available. So just a reminder, we have a high list price at 5% below Humira.
And then we have a low list price at 55% below Humira. We also intend to ensure that <unk> is an affordable medicine for patients by providing co pay assistance.
As well as helping patients secure reimbursement through their insurer.
We are also pleased to report that we enjoy broad access out of the gate on day, one of launch with the three national pharmacy benefit manager so abroad.
Alrighty coverage.
Alongside our Humira.
Alright, let me just note that we're up to this.
But we will continue to take questions for as long as as long as necessary here to answer those questions until there is a recording of this that will be available in the form of a transcript for those of you that have conflicts in Kansas.
Sometimes so arvind once you go to the next question. The next question is from Colin Bristow of UBS and Here's a question on the obesity pipeline.
What update should we expect to get this year will we see data from the remaining three cohorts from the phase One study and then on AMG 786, when should we expect updates more disclosure on this asset and program.
Yes.
The obesity pipeline AMG 133 additions.
Additional cohorts, you're referring to I don't know that we will see data over the course of this year on that as that changes and of course I'll provide guidance.
786.
Small molecule.
And with a different mechanism of action has indicated to <unk>.
<unk>, one or <unk> receptor agonists Orient tagging this sum.
Thats going through dose escalation over the course of the year I will provide guidance in terms of when we may see data from that program, but of course at the time of data availability.
Talk about the targets as well.
Okay. Thanks, Steve.
The next question. So the next question is from Evan <unk> from BMO capital markets.
And Evan wanted to know you said the slowing Luma cross sales can you expand on Paul.
You may have revised your commercial strategy to better align with the commercial potential of the assets.
Yes, Im not sure we have a slowing overall volume growth I think what we saw and as I mentioned this that might that have come through clearly on the audio but.
In the quarter, we did see a price effect based on reaching a reimbursement decision.
Decision final Finalization in France, and so we had a $12 million.
Charge in the quarter against Kras, It grew 7% volume in the quarter.
But I think we anticipated the opportunity for <unk> in second line.
Being limited to the incident population, where commercially and medically sized appropriately for that opportunity.
I think as we expand into earlier lines of therapy or other tumor types, we will continue to invest behind the brand.
Okay. The next question is from Michael Yang of Jefferies.
And Michael wants to know he said on 2023 guidance can you clarify what the input is for revenue growth versus EPS growth range. Specifically is there a positive impact from Beijing accounting and does the tax rate of 18% to 19% negatively impact EPS.
Or is Cogs offset as explained last year is 2023, opex growing more than revenue.
Finally, let me start by.
We're getting away from the tax question, so on the tax side of it.
The 18% to 19%.
It increases by the credit model, although as I have highlighted both last year and this year, we have a small carryover effect of about $125 million that is currently capitalizing cost of goods sold that will be released that excuse me currently capitalizing inventory that will be released as a class of goods sold primarily during the first quarter.
Without a corresponding tax benefit.
So the answer is going forward after that $125 million works its way through cost of goods sold it'll be roughly equivalent to move from the Puerto Rico excise tax of the print which was recorded in cost of goods sold down to the actual income tax rate.
The question on guidance and I think the question was what's included from Beijing and what's not.
As I said earlier to <unk> question, what won't be included now as our share of either losses or gains in Beijing income. So we will include on a mark to mark basis, and our GAAP income statement.
The results of Beijing, and then the movements in the security, but not in our non-GAAP income statement, we will no longer record our share of their losses or their income.
Let me just say Michael.
Final question from Avenue, if you need more details on that to make sure you fully understand.
What we're seeing in our response, just let us know and we'll get back to you I think particularly even from your question if youre not familiar with that mechanism. That's common to us in France happy just provide more color for you again, Michael and a lot going on here and I apologize for the disruption don't know whether you were able to follow all the slides earlier. So if you need more color, let us know if we're going back after the conference call.
Okay go ahead.
So next question Okay.
Yeah.
Second question from Celgene, asking could you put the upcoming.
Phase four data in chronic Ted into context for us what do you need to see Howard positive data expand the opportunity for the drug.
Subject to <unk>.
Frictions that we have.
On our ability to say anything beyond what's in the guide.
Yeah.
I think we're restricted of course by Irish takeover rules here, what we can say is that it.
It's worth reminding everyone that the current label is broad.
Encompasses patients with thyroid eye disease.
Due to autoimmune thyroid items.
This is primarily a study that will generate data in a population that we believe will help with reimbursement.
Our payors.
And let me ask murdo to comment on that.
I'd point out that Mechanistically. There is no difference between chronic thyroid eye disease and the acute form of the disease. In fact, it's a semantic definition as to when the disease progresses to.
The chronic form, but the underlying pathogenic mechanism of being driven.
A large part by IGF are what are is intact and therefore, all based on prior data.
<unk>, we're optimistic about that study.
Yes look I think the horizon team is doing a very good job commercializing this product and continue to help many patients within the broad current indication as Dave mentioned and I think additional data here could be additive to the already very promising growth of the product.
Okay.
To your question is kind of the next one the next one is from Christopher Schott of Jpmorgan.
And Christopher thing can you elaborate on our <unk> 2023, Bristol, suggesting that they are seeing some strong initial uptake in the bridge program and would be interested how much of this market expansion for <unk> versus something you're seeing in our Tesla.
And you mentioned an impact from competitor free drug impact over the next few quarters do you anticipate that.
That will lessen as the year continues or an impact for much of the year.
Yes, it's a similar question to one.
Earlier.
Perhaps I can elaborate a little bit for Chris.
<unk>.
Sure.
It's fairly clear that dermatologists want to use the easiest product and safest.
And well understood product when moving to a first systemic treatment post topically. Many of these topical patients are hesitant to try a systemic agent and so I think this is where <unk> profile studied extensively with over 700000 patients.
Globally, having experienced this product.
The safety and efficacy of <unk> extremely well understood as I mentioned earlier.
Front line access coverage that we have secured in the U S with a lot of prior authorization requirement the convenience of that for dermatology practices is very clear and it makes it a really good first.
Our line treatment systemic treatment, especially for a patient with milder or more moderate disease for moderate or severe disease. It is likely that youre going to need to use something like a biologic or a second line agent.
And we think that given.
So take two has yet to go through the market access process and secure.
Payer reimbursement.
We're not really seeing how it's actually going to be used longer term in the marketplace and I think sometimes these free good programs can distort what the actual uptake curve will be for our product.
The murder Theres, a second question from Chris. He is asking how are you thinking about enbrel pricing dynamics over time, given the expected significant price declines in the MRO market.
I know you talked about price continuing to erode, but not accelerate.
Can you remind us why we shouldnt expect a bigger step down in price in 2023 or 'twenty corner as the Humira market price resets down significantly.
Well as I mentioned before we're primarily through our 2023 cycle and we secured a very good access.
We've had to concede a bit of price as I mentioned, but.
Not anything that looks precipitous compared to prior years. So we're pleased with that Enbrel is an important product for.
Many indications, we see the safety and efficacy profile of Enbrel as well understood. I think physicians also want choice and I think Thats, where pbms are also open to having more than one TNF product on their formulary and I think that's really what we've been able to secure and what we continue to think we'll be able to achieve in the future.
Okay. Thank you let's go to the next question next question is from Mohit Bansal from Wells Fargo and fifth question is could you talk a little bit more about your bias humira biosimilar negotiations, thus far seems like Abbvie has parity access with majority of them and the pricing is different for the first half versus a <unk>.
There is more competition are.
Are you a contract similar and how should we think about the cadence of launch as the year progresses.
Well I can't comment on.
<unk> contracts with Pbms and payers, what I can say is we secured broad access from Davita.
Three national Pbms, we continue to work with other customers to provide access for <unk>.
Providers and patients alike, and we will continue to compete effectively as we have done everywhere else in the world with this product then.
Outside of the U S. We were able to establish a leadership position with them Davita and we think given the services that we provided in the commercial footprint. We have we're in very good competitive position vis vis other biosimilars.
I know a number of you.
Good question. So we're continuing to work through list anybody who hasnt yet shut off in an email.
To go through those and we've got a couple of handful is still to go so let's go over the next quarter. The next one is buy a question by Greg's rents of RBC capital markets and Dave. This is for you.
We were interested in hearing some color on the antibody drug conjugate strategy in light of the recent deals how is the team approaching that space.
Yes, Thanks, Greg.
What I would view this as another.
Modality in our toolkit.
We've been watching the antibody drug conjugate technology quite closely for the past several years.
Advance.
So.
What we feel is that we will use adcs on appropriate targets I view it as an addition and it.
An extension of our modalities.
Yes.
These collaborations bring together our experience on target identification and validation as well as of course antibody generation or with some of the newer.
Conjugation technologies, so as that progresses.
More to come but.
You should view this as additive to our military.
So who's got firm Okay. The next question is where Tim Anderson of Wolfe Research and his question is on <unk> and the U S.
And he's asking any commentary and your comfort with the sell side consensus for U S sales, which seems to be around $600 million in 2023, and anything you can say about contract specifics such as whether there's price protection if any of them going beyond 2023.
Yes.
We don't give product specific guidance.
This is a new event in the U S. Biosimilar market given this is the first big.
Pharmacy benefit product to go up so we will continue to update all of you as the launch progresses. We have said we think this will be a gradual slope on this launch and.
I'll be happy to keep you apprised as we go forward.
Okay. The next one is by Dave Risinger of SBB Securities and he has two questions.
First one is for you Dave Please discuss key novel drug candidate Readouts to watch.
In 2023.
And the second one for you Murdo do you expect formulary positioning for <unk> to potentially change in January of 2024. After <unk> is assigned an interchangeability designation.
Yes, Thanks, David.
This is a year, where certainly my focus my team's focus will be on execution, a huge amount to carry forward.
In the pipeline so things.
I would keep an eye on how well are we enrolling the phase III ill pass around trial or whether we roll enrolling the AMG 133 phase II trial in the general medicine portfolio in inflammation, our suite of broker <unk> trials enrolling how are we delivering on aspire additional.
Patients and then finally in oncology things to keep an eye on or the tornado Mount program not only the phase two potentially registrational trial readout in the second half of the year, but also initiation of a phase III trial in.
Second line disease.
These are some of the top line things that I'll be paying attention to.
Of course, a host of others earlier in the pipeline and in discovery research.
And just on the <unk> question I would say that.
We have a commitment to continuing.
To make sure that the product attributes of our biosimilars provide payers providers and patients with all of the benefits that they're looking for and we're also.
Trying to ensure that there is no reason to switch away from Amgen Vita in the long range. So we hope that interchange ability.
High concentration and the fact that we already have a citrate free.
<unk> product on the market along with the services, we provided along with the fact that this is an amgen team of people who understand.
Inflammation.
Indications of this product very well and they have relationships with the customers that prescribe humira.
We feel really good about the durability of.
<unk> long term beyond 2024.
Okay. The next question is from <unk> <unk> from Evercore, we used two questions. The first one is for you Dave on Ox 40, and the monthly dosing in phase III.
And I don't see an arm investigating extended intervals quarterly or biannual <unk> I'm, just trying to tie the phase III dosing interval versus the durable efficacy seen through six months post last dose and.
And the second question is for you Peter that the tax rate step up from 14% to 18% to 19% just wanted to get some additional color.
Yes regarding the.
Dosing of broker Tyndall about as we've indicated before we will explore different dosing paradigms here and as that suite of phase III trials are fully launches I think it will.
Become clear what we're looking for their.
Based on both the mechanism of action of the molecule as well as patient convenience Peter.
<unk>. Good question on tax again, it's just a change in what I would say the real estate on the P&L, which is the prep moves from the cost of sales line down to income tax expense in connection with the change in Puerto Rico for us from a print to the to the actual income tax in Puerto Rico, which.
We began here in 2023.
That's the nature of that change and Thats, where the 18% to 19% comes in from where we've been here historically.
Okay. The next question is from Jay Olson of Oppenheimer and she is asking can you talk about your plans for geographic diversification. It seems like ex U S revenues have become a smaller percentage of amgen's total revenues over the past few quarters and we were wondering what underlying dynamics drove that shift in geographical mix.
And if there are any future launches or other dynamics that might push the geographical mix back in favor of ex U S growth.
Yes, we are actually very pleased with the expansion internationally of the Amgen footprint being in over 100 markets. We continue to.
Launch products and secure reimbursement around the world I talked about <unk>.
Most recently in China, we've been able to secure national reimbursement drug listing for portfolio.
Our Japanese affiliate is growing well.
In the recent history I think what Youre seeing is a function of just timing of launches coming a bit earlier in the U S.
And also some of our partnering products.
I think longer term what we've got is a very interesting portfolio of products that will continue to make their way around the world.
He announced.
Horizon.
Acquisition has a very large opportunity internationally and we see our <unk> region is actually our fastest growing potential opportunity longer term. So.
I wouldn't look at short term.
Movement from quarter to quarter. The long term prevailing trend is that we will grow quickly outside the United States.
Okay. The next question is for you Murdo from Michael Schmidt of Guggenheim Partners and he is asking how confident are you in achieving low double digit or Tesla growth in 2023 and beyond given the current pattern of essentially flat sales since $2022 2 billion.
Yes, I think we remain quite confident in our long term growth although Tesla.
We are in a period where there.
A lot of new product entrants in the market.
Competing for new patient starts I think the unique positioning of the product as I mentioned allows us to source a very large pool of patients.
Our coverage around the world and particularly in the U S from an insurance reimbursement perspective allows us to penetrate that market. So we feel very good about the continued prospects to grow with Tesla.
Okay. The next question is from Robin <unk> from <unk> Securities. So she's asking big picture your guidance implies potentially flat growth given biosimilar pressure some pricing pressures do you think 2023 is a trough year.
And regarding the guidance range can you give pushes and pulls on the Biosimilar range.
So Robert maybe I'll start on the last piece and then.
You can reiterate what we said about 23.
As I said in my remarks, Robin we have six.
Further.
More launches planned between now and the end of the negativity in the United States and other countries around the world.
It is the launch of those molecules through time, which will enable us to continue to grow that franchise. So.
I would reiterate what I said earlier in my prepared comments I think you've heard murdo addressed as well.
The attractive opportunities that we think we will have here, particularly with Amgen veto votes were in the first day of launch.
And with respect to 'twenty, three pizza or whether you want to say anything in addition to what you already have about the outlook for the year.
So I think we covered it earlier.
Just note a couple of items that happened in 2022 that we didn't expect benefit from in 'twenty three just to reiterate those we don't expect any and assume any COVID-19 antibody revenues in 'twenty three we're assuming a lower amount of in plate sales in 'twenty three Robyn compared to 22 recall 22 had the significant purchased by the U S government in the second half of the year.
We had several favorable changes decimated sales deductions that occurred in 'twenty, two and we sold the generics business in Turkey, which closed late 'twenty. Two so a couple of puts and takes around those and so we look forward to a year in 2023 with strong growth in our priority products to aspire event.
E are path of Prolia tab Nielsen.
And then also and that's in light of.
Consistent with industry trends, we talked about in our recent history with mid single digit price declines in our portfolio, but good volume growth.
I think maybe to go back to the question J F. Two we expect strong volume growth outside the United States in 2023 so.
Looking forward to taking on 23 with a lot of aggressiveness.
Okay. The next question is from Matt Phipps of William Blair, and Matt, saying, the oncology Biosimilar 2023 guidance suggests a year over year decline of 38% versus a 30% year over year declined from 21 to 'twenty two.
Is the rate of erosion in the oncology Biosimilar is expected to continue to get larger beyond 2023 or will this eventually hit something of a floor.
I wouldn't say, we expect it to get larger, but we will continue to see.
A decline in that business, which is a function of the average selling price decline.
We have seen thus far.
Okay.
You're wrong.
Werber of calling in Houston, I am confused by the tax rate going up to 18% to 19%, while Cogs are 16% to 17%, hence I don't see any offsets in the Cogs line, what am I missing.
I think the answer to that is.
Our volume growth.
The volume growth is quite large and that's really the offset year round. That's a good question and so we see that happening.
We are also.
In terms of the move of the pressed down there recall two and cost of sales. This year, we've got $125 million coming in off of the.
After the release out of inventory into cost of sales without any corresponding tax.
Tax provision and so the percent of sales.
Versus the percent of pre tax too you've got to be thinking about that in terms of the in terms of the income tax provision itself. So.
So that's the puts and takes on that but when you strip. It all back it's really that move with the Pratt down into the income tax expense that increases that effective rate to 18% to 19%.
Okay. The next question is from Trung Nguyen from credit Suisse, and trying us out. Thank you. So thanks for the comments on our test line umbrella. So can you add a bit more color into the dynamics in immunology are there any changes in the channel and mix of patients has there been any formula formulary disruptions.
Overall, our immunology business.
Very good I think.
We're very pleased with the tests by our launch.
We continue to see broad.
Oh types of patients regardless of biomarker status being treated.
We are seeing de novo patients, who haven't seen a biologic.
Before in their treatment of their uncontrolled asthma, and we're also seeing patients being switched from other products within the class and so we expect that area of.
Autoimmune disease growing in terms of the biologic penetration of severe uncontrolled asthma, and we're well positioned to compete for that expanded treatment pattern.
Enbrel continues to serve many patients and the trends there are fairly predictable and fairly consistent over time.
As we've mentioned is seeing some pressure from new free drug programs, both for our topical <unk> as well as new entrant oral tick too.
And then we also have just picked up Tommy Haas, which we're really excited about a product that treats a severe autoimmune disease <unk> associated vasculitis very young product very early in its lifecycle and I think a lot of growth there to be had and then of course last but certainly not least on the branded side BNS acquisition.
<unk> and Verizon So I think the.
Inflammation area.
Along with our own innovative pipeline and the pipeline of Verizon is a very good growth opportunity for us long term and last but not least here. We are on the first day of launch of our novel Biosimilar to the largest product in the U S. Humira. So I think we've got a lot of opportunities for growth ahead.
Alright, I think we're down to our last question Arvind.
Yes, let me just announced question Bob and after that you might have some concluding comments. So the last question is from Bryan Garnier Beard and Brian wants to know do you expect this to be more of a longer term tax rate assuming no major changes to corporate tax rates in the U S.
Yes, Brian I think as you know, we don't give long term guidance on on.
On tax rates and so we will go beyond this year, so 18% to 19% and go back to your own just to make sure we understand the change in the breath of credits of percentages.
Cost of sales or sales as opposed to the income tax rate, which is pretax income. So that's a little bit of a difference to that you wrote asked about so 18% to 19%. This year is where we're at and that's where it will that's what will give you for now.
Alright, well. Thank you very much again for your patience apologies.
Difficulty with our vendors connection earlier on the call. So.
If you have any further questions shoot them environment, we'll be around here.
Afternoon.
Peter Murdo, David and myself to answer any further questions you might have and we appreciate your joining the call and look forward to talking to during the course of 2023. Thank you.
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