Q1 2023 Amgen Inc Earnings Call
Patients, we serve in Japan and China.
Two of the world's most rapidly ageing nations with medicines like <unk> and Prolia.
Amgen's R&D investment was up 12% in the quarter.
That growth reflects the investments we are making in registration enabling trials for several potential new first in class medicines, including <unk> and heart disease.
Broker <unk> and inflammation and <unk> in cancer.
All four of these medicines are quint essentially amgen.
Innovative molecules that deliver large effect sizes against serious diseases for which new treatments are very much needed.
We are pursuing a number of significant new indications for test buyer, <unk> and luma crafts as well.
We look forward to several data readouts from our pipeline mainly in the second half of the year.
We continue to invest heavily in early research, where we've built a differentiated set of capabilities over the past decade.
Position us well to take advantage of the rapid convergence of biology, and technology that we see happening today.
At a time when the world Marvels that chat GPT, we've been deploying artificial intelligence and machine learning in our research labs for some time now, giving us dry lab capabilities that when applied to biologics development have already yielded proved success rates and reduced cycle times beyond our initial expectations.
And indeed, an exciting time for biologic innovation.
We remain optimistic about our announced acquisition of horizon and.
This is an exciting time for all of us at Amgen and the demand for innovative medicines is proven to be resilient and growing around the world at the same time that our ability to innovate has never been greater.
As always I'm grateful to my Amgen colleagues around the world for their commitment to patients and to our business now let me turn over Murdo.
Thanks, Bob we kicked off 2023 with strong execution of our mission to bring innovative products to millions of patients globally.
Record sales for 10 brands in the first quarter with strong volume gains across our general medicine, and hematology oncology growth spreads.
Our inflammation therapeutic.
Launch of Mgo Vita and the growth of test fire and tab news.
And our announced acquisition of Horizon Therapeutics, we will soon add several important medicines to our portfolio.
Volume growth in the first quarter was 14% with 10% growth in the U S and 22% growth outside the U S.
Asia Pacific continues to be our fastest growing region with 47% volume growth in the quarter.
Excluding the impact of foreign exchange first quarter global product sales grew 4%.
Including the 2% negative foreign exchange impact product sales increased 2% year over year.
Starting with our general medicines business, which includes <unk> prolia <unk> and <unk>.
Overall revenue for these four products grew 13% year over year in the first quarter driven by 19% volume growth.
Cardiovascular disease is a growing.
In the U S. Someone has a heart attack every 40 seconds.
For heart attack or stroke.
However, the state of care for high risk <unk> CVD patients with elevated LDL cholesterol is shockingly pillar.
However, we have recently really.
From the FH Foundation of 38 million high risk Americans showing that you're then 30% of them ever reached their recommended LDL levels.
These statistics emphasize the importance of therapies like our path to address this significant medical need.
And we're pleased that more and more patients are now benefiting from our Panther and with volume growth of 33% in the first quarter, leading to an increase in sales of 18% price erosion also slowed in the first quarter and declining less than prior year.
In the U S volume growth of 32% was driven by broad adoption of <unk> by cardiologists, and increasing adoption by primary care providers.
Outside the U S. We saw 34% volume growth with strong momentum across our international business.
There's clearly more work to be done to address this cardiovascular health crisis.
This March at the American College of Cardiology, we convened the first ever annual Ldlc action summit to address the state of cardiovascular care in the U S by identifying strategies and delivering solutions to improve lipid management, among the highest risk Aaas CBD patients.
By intensifying our focus on lowering ldlc, a coalition of leading stakeholders in cardiovascular care have come together with Amgen to unite on a bold goal.
By 2030, our ambition is to have the number of cardiovascular events in the U S.
We are confident that report that will play an important role in achieving this ambition.
Transitioning to bone health Prolia sales grew 9% year over year for the first quarter, driven by 8% volume growth as the entity, which complements prolia and our bond portfolio had record sales of $254 million for the quarter, primarily driven by strong volume growth across markets.
Now to our inflammation portfolio or Tesla volume increased 5% in the quarter sales decreased 13% year over year, driven by lower inventory levels and price declines, resulting from from patient and payer mix.
Additional rebates were also provided to improve the quality of coverage.
Growth of our U S Hotel business has been impacted by free drug programs for newly launched topical and systemic competitors and we expect new patient demand will continue to be impacted by these programs.
Out 2023.
Longer term, we see strong growth potential for Oh, Tesla given its established efficacy and safety profile strong payer coverage with limited prior authorization requirements and ease of administration.
Tesla remains the only approved oral systemic therapy with a broad indication and is well positioned to help them more than $1 5 million systemic naive U S patients with milder psoriasis that cannot be optimally addressed by our topical and can benefit from a systemic treatment like <unk>.
Enbrel volumes in the U S increased 1% in the quarter supported by improved payer coverage several important factors to consider when reflecting on enbrel performance in the quarter global sales decreased 33% year over year, driven by declines in net selling price.
Lower inventory levels compared to previous years.
And the 9% unfavorable impact of changes to estimated sales deductions related to prior periods.
Going forward, we expect low single digit volume growth throughout 2023.
Lower year over year declines in net selling price and a gradual recovery in inventory levels.
The test fire launch is progressing well with $96 million in sales in the first quarter driven by strong adoption in the U S by Allergists and Pulmonologists.
Test spires unique differentiated profile offers broad potential to treat the $2 5 million patients worldwide with severe uncontrolled asthma without any phenotypic and biomarker limitations.
During the first quarter the U S food and drug administration approved tests buyer for self administration in a pre filled single use pen which offers patients the convenient option to administer test buyer at home.
This improves accessibility and provides more flexibility in treatment options for all patients in the United States.
Sales of <unk> were $23 million in the first quarter U S volumes grew 27% quarter over quarter, driven by an increase in new patients starting treatment.
In the U S tab Nielsen's now been prescribed to over 1700 patients.
Infirmity, our belief that Amgen has deep experience in inflammation and nephrology and substantial market presence allows us to bring <unk> to more patients with <unk> associated vasculitis.
In the first quarter <unk> retail launched as the first U S. Biosimilar to Humira, a medicine used by more than 1 million patients living with serious inflammatory diseases. We saw the first prescriptions to patients being fulfilled this quarter and we're encouraged by the high awareness of <unk>, among gastroenterologists and Rheumatologists with art.
Track record of developing and manufacturing biologics and decades of experience in inflammation.
<unk> is uniquely equipped to patients with this biosimilar medicines.
<unk> ahead, we expect Q2 <unk> sales in the U S to be lower than Q1 sales as the majority of our U S. <unk> sales in the first quarter stemmed from inventory build.
Moving to our hematology and oncology business, which includes <unk>, kyprolis, <unk>, vectibix and Nplate and insightful.
Sales and volume for the six innovative products grew 21% year over year for the quarter with Kyprolis and <unk> achieving record quarterly sales.
Growth in our hematology and oncology business was supported by important new clinical data.
<unk> sales grew 41% in the first quarter supported by strong adoption across academic and community centers bowling positive data from the registration enabling E 191 Zero study presented in December of 2022.
<unk> sales increased 16% year over year for the first quarter, driven by 15% volume growth supported by positive data from the phase III paradigm trial, demonstrating the superiority of vectibix over that <unk> in combination with chemotherapy.
Kyprolis continued its strong trajectory with 25% growth in the quarter driven by 18% volume growth.
<unk> reported $74 million in sales in the first quarter and a 19% increase year over year, driven by 40% volume growth, partially offset by lower net selling price.
Outside the U S. <unk> has been approved in 50 countries and we're actively launching in over 30 markets and pursuing reimbursement in the remaining countries.
Sales of our oncology Biosimilars declined 27% year over year in the first quarter driven by lower net selling price, while our biosimilars for Atlassian Tianjin <unk>, both hold leading shares in the U S. We expect continued net selling price deterioration and accelerating volume declines driven by increased competition.
Overtime, we expect long term growth in our biosimilars business to be driven by the addition of new molecules and additional launches.
Given the strong performance of our hematology oncology portfolio and the recent positive data on <unk> as well as ongoing clinical development of <unk> in our oncology pipeline I look forward to the future growth potential of this portfolio as.
As we close out this first quarter of 2023, I'm pleased with our strong execution across our portfolio both in the U S and internationally and with that I'll turn it to Dave.
Thanks, Murdo and good afternoon, everyone.
R&D last quarter was one of high quality execution as we progressed, our innovative pipeline with multiple registration enabling studies on track.
In General Medicine, we advanced our cardiovascular franchise, an emerging portfolio of obesity molecules with a focus on clinical execution.
Let's start with old passerine phase.
<unk> phase III outcome study, an atheist, chronic cardiovascular disease is enrolling well.
In March we presented additional data demonstrating little passerine markedly reduced LP little a concentration irrespective of baseline levels and individuals with chronic cardiovascular disease and <unk>.
<unk>.
We also initiated the African American Heart study in collaboration with the association of Black Cardiologists, and the Morehouse School of Medicine.
This study will measure the association between LP, Little a and <unk> chronic cardiovascular disease and 5000 African American individuals.
<unk> research to date has primarily been conducted in those of European descent.
We are collaborating on the African American study to bridge this gap.
Turning to obesity, we are rapidly enrolling a phase two study of AMG $1 33 in patients with obesity.
With or without diabetes and related Comorbidities. The study will investigate different dosing levels and regimens with the overall goal of generating data that will provide broad optionality to design a phase III program that will deliver strong sustainable weight loss.
Our phase one trial with AMG 786, or small molecule targeting non inputs and pathways in obesity is enrolling patients.
Multiple preclinical molecules all with different mechanisms of action and <unk>, one or <unk> based therapies are also advancing towards the clinic.
In inflammation beyond severe asthma. We are investigating multiple addition, additional indications with Ted spire, including separate phase III studies in chronic rhinosinusitis with nasal polyps and eosinophilic esophagitis.
So have two phase II studies, one in chronic spontaneous urticaria and the other in COPD.
CSU study is complete with top line data anticipated in mid 2023.
The COPD trial is fully enrolled and has recruited a broad population of COPD patients, including patients with both high and low eosinophil counts.
Emerging evidence suggests that <unk> is involved in chronic inflammatory disorders, including COPD and the <unk> may be a key driver of the severe exacerbations experienced by COPD patients.
We look forward to the readout of this study in the first half of 2024.
Roku <unk> potentially first in class anti ox 40, monoclonal antibody being investigated in patients with moderate to severe atopic dermatitis recruitment is off to a strong start on the market phase III clinical development program. This program is a sweep of seven studies.
And efficacy in a broad population of patients with atopic dermatitis, including biologic naive.
<unk>, our JAK experienced diverse ethnic groups.
We are encouraged to see horizon report on the statistically significant and clinically meaningful topline results from a phase <unk> clinical trial.
As revised FDA label States that <unk> is indicated for the treatment of thyroid eye disease, regardless of clinical activity score or disease duration.
Phase <unk> studies in systemic lupus erythematosus of Rosa Alpha and pharma Luca alpha or stopped for futility.
These studies utilize novel adaptive designs, which enabled us to generate decision, making data more quickly and cost effectively.
<unk> remains a challenging area for drug development, one that will be an area of focus for us as we further explore these datasets to advance our knowledge in the field.
In addition to our organic pipeline, we look forward to incorporating the horizon molecules upon deal close to further enhance our efforts to address inflammatory disease.
In oncology global regulatory submissions are planned in the second half of 2023 four in 1910, a phase III trial led by the E Cog acre and cooperative group demonstrating that addition of <unk> to standard of care consolidation chemotherapy significantly increased overall survival versus <unk>.
<unk> of care in <unk>.
Beyond this study we are investing to move <unk> into earlier lines of treatment and to improve patient convenience through subcutaneous administration.
Delphi three or four a phase III study comparing <unk> bite molecule targeting DLL three with standard of care chemotherapy in second line small cell lung cancer will be initiated this month.
Topline data from a potentially registrational phase II study of <unk> in heavily pretreated patients with small cell lung cancer in the second half of 2023 potential milestone for patients with small cell lung cancer.
As you are aware, we are exploring novel combinations with <unk>.
Phase III study of <unk> in combination with Vectibix in third line colorectal cancer is fully enrolled with data readout anticipated in the second half of 2023.
We plan to initiate a phase III study of <unk> in chemotherapy in first line non small cell lung cancer in PD lone negative patients.
At <unk> data will be presented from studies of <unk> in combination with standard of care chemotherapy in non small cell lung cancer and in combination with Vectibix and standard of care chemotherapy in colorectal cancer.
We also completed submission of the <unk> co break 200 data along with data from the phase II dose comparison sub study to the U S FDA and to the European Medicines agency or EMA.
For AMG 509, a steep one targeting by specific now named value rhythmic we've determined target doses and opened monotherapy expansion cohorts in patients with advanced prostate cancer.
Look forward to sharing initial data in the second half of 2023.
To add to our growing Biosimilars portfolio. We are pleased to announce that the European Commission granted marketing authorization for <unk>, our biosimilar to Soliris Mckenzie as the first biosimilar minute similar to Soliris approved by the EC and is approved only for the treatment of adults and children.
With paroxysmal nocturnal.
<unk>.
Life threatening bone marrow disorder. We have also submitted the U S biologics license application to the FDA for this product.
Additionally, phase III switching study to support an interchange ability designation in the U S. Using an investigational high concentration formulation of <unk> and Davita met its primary endpoint of similarity for the primary pharmacokinetics endpoints in conclusion I would like to thank <unk>.
And staff around the world for their relentless focus on execution as we work hard to meet the needs of the patients we serve I'll now turn things over to Peter.
Thank you Dave.
We're pleased with our execution and remain on track to deliver against our full year 2023 and longer term objective driven again by strong 14% volume growth across a number of products, including Rep Panther of entity Glenn.
<unk> to inspire and pattern yet.
While we advance our late stage pipeline and work to complete the acquisition of horizon by the end of June we.
We continue to invest for long term growth.
I'll review, our first quarter results before discussing our 2023 guidance as a reminder, these results and outlook reflect amgen on a standalone basis without any adjustments for the announced Verizon acquisition.
Turning to our first quarter financial results, which are shown on slide 38 of the slide deck total revenue at $6 $1 billion declined 2% year over year.
However, excluding the 2% negative impact of foreign currency exchange rates product sales increased 4% and total revenues were unchanged versus the first quarter of 2022.
The four percentage point difference was due to an expected decrease in other revenue due to lower profit and cost sharing from our COVID-19 collaboration with Lilly.
First quarter product sales are seasonally the lowest quarter that percentage of the full year due to the benefit plan changes insurance re verifications and increased co pay expenses.
And our first quarter product sales increased 2% year over year, driven by 14% volume growth, partially offset by 5% lower net selling price, 3% unfavorable changes to estimated sales deduction, 2% lower inventory levels in the 2% impact of FX rates previously mentioned.
First quarter total non-GAAP operating expenses increased 6% year over year, driven by investments in research and development.
non-GAAP R&D spend in the quarter increased 12% year over year with higher spending in later stage program support disc.
Discovery research and early pipeline and marketed product support.
non-GAAP cost of sales as a percent of product sales increased <unk> eight percentage points on a year over year basis to 17, 4%, primarily due to changes in product mix and higher profit share expense.
Now recall that cost of sales in the first quarter was impacted by a portion of the $125 million the Puerto Rico excise tax.
<unk> that was previously capitalized inventory.
With the residual impact expected in the second quarter.
non-GAAP SG&A expenses in the first quarter increased 1% year over year, we continue to focus on prioritizing key investments digitalization and driving productivity.
non-GAAP <unk> benefited from higher interest income and approximately $110 million of gains from deleveraging related to the repurchase of a portion of our debt portfolio.
Also recall, we now mark to market our investment in Beijing with the impact included on our GAAP income statement.
In the first quarter. This resulted in a GAAP only pre tax gain of about $1 $9 billion.
And as expected our first quarter non-GAAP tax rate increased three seven percentage points to 17, 8% primarily due to the 2022, Puerto Rico tax law change that replace the excise tax with an income tax beginning in 2023.
As well as well as increased interest expense on our existing tax reserves.
We are committed to our capital allocation priorities.
First we continue our investments in internal and external innovation that drive our long term growth.
Our increased spend non-GAAP R&D of 12% in Q1 'twenty three over Q1, 'twenty two coupled with our acquisition of <unk> and our announced acquisition of Horizon Therapeutics will further broaden and strengthen our portfolio of first in class and best in class therapeutics to delivered to more patients globally.
Second we continue investing in our business to further long term growth capital expenditures are at near peak levels driven by simultaneous construction of our state of the art manufacturing facility in Ohio, and North Carolina.
We expect our annual capital expenditures to decline starting in 2024 with the completion and licensing of our Ohio plant.
And third we continue to return capital to our shareholders as we paid dividends of $2 13 per share in the first quarter.
This represented a 10% increase over that paid in each of 2020 twos four quarters.
Free cash flow for the quarter was driven lower by the timing of sales rebates and incentives lower operating income and higher capital expenditures from the building out of the state of the art facilities in North Carolina and Ohio.
We expect strong cash flow for the remainder of the year consistent with our full year 2023 financial outlook that includes a non-GAAP operating margin of roughly 50%.
We expect sequential growth in our free cash flow in the second quarter.
Although there may be an impact to Q2 and free cash flow from the expected closing of the horizon acquisition due to the accounting treatment of certain items that were all expected in our horizon acquisition financing and estimated deal cost as well as our previously announced restructuring in the first quarter.
Turning to the outlook for the business for 2023 on slide 40.
Our guidance is currently provided on the Amgen Standalone business and does not include any horizon projections we.
We are raising our 2023 guidance, we're raising our 2023 revenue guidance to $26 2 million to $27 3 billion versus previous guidance of 26.0 to $27 2 billion.
This reflects our confidence in the underlying business and the improving overall market conditions for our patients to access their medicine that Bob and Murdo mentioned.
We are also raising our 2023, non-GAAP EPS guidance to $17.60 to $18 70.
Versus previous guidance at $17 40 to $18 60 per share.
Let me mention a few more important considerations as you model the remainder of 'twenty three for.
For product sale, we project solid volume growth at a portfolio level and consistent with the first quarter, we expected mid single digit price decline for our portfolio in 2023.
We now project full year Neulasta sales of approximately $700 million in full year, combined <unk> and <unk> sales of approximately $850 million.
We anticipate full year non-GAAP operating expenses to increase by about 1% over last year.
We expect the 2023 operating margin as a percent of product sales to be roughly 50%.
And expect our second quarter operating margin to also be roughly 50%.
And we also expect cost of sales as a percentage of product sales.
Between 16 and 17% non.
non-GAAP R&D expenses in 2023 to remain unchanged and estimated to increase 3% to 4% year over year.
non-GAAP SG&A spend as a percentage of product sales to slightly decrease year over year, driven by our ongoing digitalization continuous improvement in productivity imperative.
We anticipate non-GAAP Hawaiian <unk> to be in the range of one two to $1 3 billion, reflecting the first quarter deleveraging related to the debt repurchases I mentioned with the remainder of the year <unk> expense to be evenly split over the remaining three quarters.
We expect the non-GAAP tax rate of 18% to 19% we plan to continue to meaningfully increase our dividend. We continue to expect share repurchases not to exceed $500 million in 2023.
Our capital expenditure guidance remains unchanged at approximately $925 million in 2023.
Our confidence is strong in the long term outlook for Amgen and our long term growth. We look forward to completing the announced acquisition of horizon.
We expect to provide updated guidance as appropriate after the transaction closes.
Thanks, as always to our 2004 thousand plus dedicated colleagues all over the world executing each day on behalf of our patients.
And our future patients.
That concludes the financial update I'll turn it over to Bob for Q&A.
Okay. Thank you Peter.
Alright, Julian if you could remind our callers of the process for asking a question.
We've had a long day already some asked them to hold their questions.
One each and do our best to get to everybody who.
One for us.
Thank you if you would like to ask a question. Please press star followed by one on your telephone keypad. If for any reason you would like to remove that question. Please press star followed by one.
To ask a question please press star one.
Our first question comes from Salvino Victor from Goldman Sachs. Please go ahead. Your line is open.
Good afternoon. Thanks for taking my question for test Pyro, you've highlighted the broad clinical program and given the phase two data sets. We're expecting this year and next year could you just comment on the indications where you have the most confidence in thank you.
Yes, Thanks Alvin.
All of the indications that we're pursuing have some mechanistic basis.
Chronic spontaneous urticaria.
<unk> driven disease in part as it is in fill like esophagitis and given the mechanism of TSM Pn inhibition.
That unrelated thinking behind pursuing those indications as I've mentioned briefly in COPD.
Another example.
There is accumulating evidence that <unk>.
Triggers such as viral infection smoke particles from pollutants.
Can trigger <unk>.
Relief from bronchial epithelium. These are consistent with data showing that in patients with COPD <unk> levels are elevated in sputum Bronchoalveolar lavage fluid.
And bronchial mucosa.
As I mentioned that trial is fully enrolled we expect a data readout.
The duration of therapy.
These patients in the first half of next year. So I think there's good mechanistic basis.
In clinical trial execution mode, now and really waiting data readouts.
Thank you. Our next question comes from Michael Yee from Jefferies. Please go ahead. Your line is open.
Thank you following on the pipeline maybe for David.
What's interesting is that you.
Obviously at AMG 130, <unk> data and now you are emphasizing AMG 786 and <unk>.
I think it's enrolling and treating people now can you just talk a little bit about why you would be excited about that is that synergistic and Sharon angle with that to be excited about given all of the things going on at obesity. Thank you. Yes, I think what you said at the end there is very important in terms of everything thats going on in obesity. If we just step back for a second.
And think about what the magnitude of the problem is here there are hundreds of millions of patients now globally. We are doing an experiment in the 20 <unk> century that the world has never done by creating.
And obesity crisis, now recall obesity, a single disease, but it is clearly a complex heterogeneous disorder.
There are undoubtedly patient subsets buried within that and different patients may well.
Benefit from different therapies this isn't.
The disorder, that's rooted in human evolution, and now as a function of our environment and so our development program for both <unk> three.
And for the molecules that will follow behind.
Really intends to capitalize on the fact that it is a very large volume of patients.
So heterogeneous disorder.
This is a field that is in its infancy, and we have a chance to help define what those patient subsets are and who will benefit from specific therapies. Using for example, our industry, leading database of multi ohmic profiling, which we.
Intend to employ.
Aggressively and these development programs you mentioned AMG 786, and I will just conclude with a comment on that that is a non <unk> based mechanism of action.
And I think that is also an area.
That will be very fertile for drug development and it's a focus of us pre clinically as well all right now so thanks for the question it's early days.
But we think that this is one of the big public health challenges of the current century.
Thank you Michael our next question comes from Omar <unk> from Evercore ISI. Please go ahead. Your line is open hi, guys.
Thanks for taking my question.
I'm a little confused today about some of the numbers I'm looking at so for example, I mean, you know well.
Abbvie Humira Biosimilar you guys are the ones that have launched it and Abbvie reported theyre down 26% year over year. So I guess, what I don't understand is how come enbrel is down 33% year over year more so than the company that did go Biosimilar and I think some of that speaks to a little bit the inventory issues that are happening and they seem quite significant the more I think about the magnitude.
Ported for example, 21% drop on umbrella and 28% drop on the Tesla, which almost sounds like three weeks' worth of work down I, usually think of total inventory in the channel being about three weeks, so would love to get any clarity there. Thank you.
Yes, thanks, Jim or youre onto some of the fact pattern. Let me just go through kind of the elements of Enbrel, specifically first off we were up 1% in volume in the quarter. So the leading indicators of Enbrel volume performance.
I'll look quite good.
And that's a function of strong demand for the product in the market good quality execution and an additional pharmacy benefit formulary win.
Starting in January of the year. So we would expect continued low single digit volume growth throughout the course of 2023.
So that's the that's the.
The kind of high quality, leading indicators of the volume performance of the product.
The.
Inventory component is pretty substantial as you highlight it as a function of both wholesaler inventory levels being down as well as specialty pharmacy.
And I think it's partly a function of the fact that we did have volume increase and there is also a pretty significant work down through the quarter. We would expect those inventory levels to return to normal inventory levels throughout the course of the year.
And then the last piece of Enbrel.
And out of period adjustment, an unfavorable adjustment of about 9% related to prior period.
And that's a function of.
Things like state Medicaid true ups coming in as well as some other price adjustments from prior period.
So overall again, the leading indicators for Enbrel are good.
Low single digit volume anticipated for the year, a little bit of price concession to get that formulary win but then the other two events in the quarter are likely to improve over the course of the year as well being inventory and prior period adjustment.
And maybe Murdo just jumping quickly that prior period adjustment, where that's an estimated sales tax sales.
Production adjustment. Thank you Peter Yeah, So just to clarify that and as Murdo said, we're looking for a slowing year over year price erosion on that too. So we think we've got some.
Trends in our favor here, yes, there is a big piece of that prior period that social Phs and given the program that we're running for Phs patients, we expect that to be a lower impact throughout the course of the year as well.
Yeah.
Thank you Omar our next question comes from Chris Raymond from Piper Sandler. Please go ahead. Your line is open.
Hey, Thanks, I have a question on the Biosimilar business I'm not sure I heard this correctly or not but for murdo comment it sounds like <unk> revenue might be fairly front loaded.
Given the inventory build that I think you guys described it I know you guys don't give quarterly granularity, but maybe talk about the outlook for the rest of the year, especially given that you have a bunch of other launches.
Biosimilar launches happening.
And Thats specific space and then and then maybe just more strategically just given the expectations have been kind of tempered here with them Davita.
You guys still seem pretty committed to this business with Soliris Eylea Laura launches just maybe talk about why these won't.
Maybe you see a similar tempering.
<unk> of expectations.
<unk>.
Yes, thanks for the question Chris.
<unk> the specifics.
A lot of that Q1 revenue was what we would call a buy in from.
Primarily.
And so it's hard for us to see how much of that buy in has been used up in <unk>.
Actual prescription fill.
So our conservative estimate is that the majority of that is buy in and that Q2 could be lower than Q1 revenues based on that.
So that's our estimate for <unk>, obviously, we're very early in the launch here we're building demand.
Physician by physician and patient by patient and some of that IBM pull through is is not visible to us because data they don't share data necessarily with the IQ visa as the world.
So that same davita, but overall I guess, we have been extremely.
Successful in developing Biosimilars at Amgen, we are very pleased with what we've been able to do so far by developing successful molecules that are either.
First our first wave launches, we continue to plan on being first or first wave in the fall.
Biosimilar products that we're targeting we have been able to continuously supply. Thanks to the hard work of our manufacturing and supply chain colleagues around the world.
When we approach both institutional customers payers and providers I think theres a lot of trust in the Amgen brand when it comes to the Biosimilars that we manufacture.
Certainly last but not least we do feel strongly that we will continue to be able to deliver on our two X 21 sales by the end of the decade, and our biosimilars business or more than double our 2021 revenues and we think we will do that by continuing to launch both <unk>.
Pharmacy benefit and medical benefit Biosimilars, but the majority of that growth is going to be driven by medical benefit biosimilar. So.
Still a very important part of our business and the people that work on it.
Continue to deliver value to the healthcare system as we move forward.
The only thing I'd add to that Chris is that.
We're running this business very efficiently, we think when we look at the cash that we're generating in this business, we're earning an attractive return for our shareholders. So.
Again.
In order for us to continue to succeed in Biosimilars, we need to execute.
Actively and as you can see in the quarter with can be progress and with the launch of M. Davita.
We continue to do what we plan to do in Biosimilars.
I would reiterate we think were earning an attractive return for our shareholders from those commitments.
Thank you Chris Our next question comes from Mohit Bansal from Wells Fargo. Please go ahead. Your line is open.
Great. Thank you very much for taking my question.
My question is also related to buy similar given that the demand so far it doesn't look to be ticking up for humira.
Your comments about next quarter do not.
It also suggests that it may be a slow launch here do you think this would mean that you are losing the first mover advantage here.
Zero.
Next year it could be more davita could be more on a preferred side of home Lila attitude, because it seems like <unk> not cutting it just yet.
Yeah. Thanks for the question Mohit I think we've definitely taken advantage of first mover.
Particularly with the.
The <unk> channel.
That's really where a lot of the initial uptake will be.
Think we're also differentiated versus the other biosimilar manufacturers that have a biosimilar to humira in that we do cover the customer base here quite effectively both in rheumatology and gastroenterology, having deployed medical and sales teams that are out there right now bill.
Building awareness and demand for Mgo Vita.
Lastly, I would say that given that we've got.
Parity.
Access across the large three pbms, we are in very good position to be able to pull through a lot of that <unk>. I think we were clear in saying this would be a gradual uptake.
For this product and we think that we still have been able to use the time that we have ahead of the competition wisely to build that demand.
Thank you Mohit <unk>. Our next question comes from Jay Olson from Oppenheimer. Please go ahead. Your line is open.
Oh, Hey, thanks for taking the question I'm curious about Tesla.
You expect some net pricing dynamics to evolve over the course of the year.
Especially in the context.
So that in.
Mostly three drugs right now and how do you expect the price.
<unk> for tenants like to Eagle following the transition.
Two two paid customers. Thank you.
Yes, Thank you Jay.
I think what we're pleased with is the broad access coverage, we have on our Tesla we have.
Very good coverage, we did actually add additional coverage at the beginning of the year with.
With United Optum part D plan coming online and so there's a little bit of price concession to do that in the year, but beyond that we've got good stable access for 2023, and we look forward to being able to maintain that in 2024, So I don't see.
More decrement in price in fact, we think price will the negative price effects you saw in Q1 should abate a little bit in Q2 and beyond so overall very stable. The one thing that you mentioned that's interesting is the free the free goods program that competitors have out there I do think that that's.
A little bit of a disruption in the market right now, that's probably causing a bit of softness in our new patient demand, we get about 80% of our new patient growth coming from.
Systemic naive.
Topical patients.
Receiving oh Tesla as their first systemic agent I think when you have free good programs in the market, sometimes that free goods is a very easy way for our prescriber to try a novel agent and I think that that's that's taking away some of that new patient growth that where we're used to seeing I do think that that will be different.
Once those competitors contract for their market access and that's likely to be at 24 impact.
Thank you J. Our next question comes from Colin Bristow from UBS. Please go ahead. Your line is open.
Hey, good afternoon, and congrats on the quarter.
One of them.
We now have the chronic to present data I just wanted to could you give us your thoughts on that.
And does this in any way change your view on the size of the commercial opportunity and then a quick housekeeping one on <unk> how much of the weakness this quarter was sort of net pricing competition for Marathi. Thank you.
Thanks, Colin maybe I could take a minute just on.
Because there are quite a few analysts on the call that would be on familiar with that.
The patient journey for thyroid eye disease actually works in it it's important because that has a bearing on the demand pattern for.
<unk>.
The way in which the horizon team actually track the performance as they look at something called patient enrollment forms which is the initial request. If you will to start a fibroid disease patient on <unk>.
Then takes quite a while for that patient.
Patient enrollment form to move its way through the prior authorization process against medical policies that payers have in place that can take up to 90 days, then you need to schedule that patients first infusion and in thyroid eye disease, it's not like an oncology, where there is a clinical oncology.
Just relatively evenly distributed throughout the country that can do infused drug administration. This is a lot more concentrated and so it takes a while for the patient to be referred to the right site of care to receive their first infusion of <unk>. So that also adds time, so while tracking the early leading indicators.
With that we look at which is patient enrollment form theres quite a lag between that patient enrollment forms starting and when that first infusion will occur and that's really important to keep in mind. When you see either flat or in this case I think strengthening demand for.
As a patient enrollment forms that will take a while to flow through into net sales that would be my my preface any comments now.
Besides that I think we're really excited as Dave said about.
The chronic data that were recently announced and my congratulations to the entire horizon team for executing a high quality trial in and showing how <unk> can benefit a broader cross section of patients with lower clinical activity score and truly highlighting the need for chronic care in this category. So I think thats.
A fantastic accomplishment.
I think the simultaneous label change is just a nod to the conviction that even the regulator has about the utility of this product in this disease and then I think the horizon team has spent a lot of time over the last few months expanding their commercial capabilities and our medical capabilities and they are in really good shape to take.
This this and this great new data, which is on label.
Two providers and to payers and to help expand the use of that product in the U S. So where we're quite optimistic about the future growth of <unk>.
And then of course from our side. We're also excited about being able to launch <unk> in other markets around the world. Once we close this transaction.
We have the capabilities and the structure and the scale given that we've been expanding amgen's footprint globally over the last several years and so we're ready to go and we will work closely with horizon to do that so that the peso has multiple opportunities to grow over time.
On <unk> just real quick we did see a little bit of increased inventory in the fourth quarter of last year. So the year on year compare quarter on quarter compare I should say is really more about that inventory coming through the actual demand is pretty flat from Q4 to Q1, and so we've been able to hold.
On quite quite nicely despite competitors in the market.
Yes.
Thank you Colin our next question comes from your own Weber from TD Cowen. Please go ahead. Your line is open.
Hi, guys. This is Brendan on for you Ron and thank you very much for taking the question just another quick one follow up on inspire made specifically in <unk> can you give us a little bit of a sense of where you maybe see the bar for this midyear readout here are our understanding is that the math those are really wanted to keep players in CSU in TLLP, maybe a bit of a broader target how do you see an impact.
In the disease course, just trying to kind of understand relative positioning here and maybe gauge expectations for the phase two data.
Thank you very much.
Thanks.
Trials fully enrolled.
We're bringing in data.
I think within a few months, we're going to have the dataset in hand.
I think I've outlined mechanistically why.
TLLP being upstream.
Could be one of the triggers that.
If inhibited conservative too.
As a therapy for the disease.
At this point I think it's really just getting the dataset.
Yeah.
Okay.
Thank you your own our next question comes from Evan <unk> from BMO capital markets. Please go ahead. Your line is open.
Hi, guys. Thank you so much for taking my question.
On <unk>.
Noted over several quarters, we know the demand kind of issues that are playing out and anything you can do from a commercial perspective that could help accelerate growth even in light of the free drug programs, we're seeing or do we really have to wait until that kind of tapers off come next year that maybe you see some more growth from the brand. Thank you.
Yes, Thanks, Kevin, we're obviously doing quite a bit in the market from a commercial perspective.
We've actually increased the breadth of our promotion to include.
Much more of a primary care targets given that the milder patient who's on topical therapy today.
That $1 5 million patient pool is a large addressable pool of patients are currently under the care of primary care physicians and tend.
<unk> tend not to be referred us frequently to dermatologists as a moderate to severe patients. So we've increased our.
Primary care footprint, and we're actually seeing growth in our primary care targets.
Where we're seeing a little bit of pressure a little bit of a quarter on quarter pressure is in the in the higher end dermatology practices that treat more complex patients.
Thats kind of where you would expect to see some of the novel agents being tried so.
I do think that will stabilize over time, but that's going to take most of the year.
Take place, we will continue to expand our primary care presence and we're also working to expand our direct to consumer efforts.
Two are mild to moderate patient population that might be on a topical but still seeing unresolved symptoms due to their psoriasis, whether it be hands face scalp or other areas, where the patient really wants to resolve those symptoms. So overall there is quite a bit that we're putting into the market too.
Increase our growth in that bio naive or systemic naive milder patients and we would expect that that will strengthen our new patient capture.
Over the course of the year and we expect to see good growth for <unk> for many years to come.
Thank you Evan our next question comes from Robyn <unk> from <unk> Securities. Please go ahead. Your line is open.
Thanks for taking the question and this is Nicole on for Robyn can.
Can you help us think through that.
Franchise.
How amgen print on maintaining share given that there is a competitor or that competitor.
Thanks, Amit.
Thanks, Dave and other devices in the market how much pressure should we see going forward.
Okay.
Thank you Nicole for the question.
We're really pleased with what we've been able to do with the Neulasta franchise to date, we've been able to defend our volume successfully obviously, we've had to concede some price to do that.
And the volume on the pre filled syringe site has been.
Under some pressure I am very pleased with what we've done with the Neulasta on pro device and we've.
Held onto substantial share there we think we've established good contractual commitments for this year.
And we will continue to battle with competitors, if they come to market with.
With a different device than is currently available, but we expect some continued pricing pressure there.
As we've indicated and overall I think the team that's working on Alaska has done very well.
Thank you Nichol. Our next question comes from Gregory <unk> from RBC Capital markets. Please go ahead. Your line is open.
Hey, guys congrats on the quarter and thanks for taking my question.
That's at the top of the call you spoke about your R&D and identified four medicines that you described it quite essentially Amgen and my question is for you and the team as you look across your portfolio, but also externally in other areas are there specific areas of opportunity that you think could benefit from from the Amgen.
<unk> that perhaps are not represented or underrepresented portfolio today. Thanks, so much.
Dave and I can kind of call that together.
I think.
We've been very clear about what we look for me outside which are molecules.
The good in our areas of strategic interest, where we think we have strength.
And in particular.
We're looking for opportunities in inflammation and oncology in general Medicine, and we look for medicines that can be first in class.
Best in class and have a big effect size in the patient populations that we're going to work.
We think we can add value. So we're constantly looking I don't think we feel like we're particularly exposed really we need to emphasize business development at any one of those three particular areas, but we're always looking for attractive opportunities early and late.
Yes.
I would add the other component is technology platforms and Bob mentioned briefly in his opening remarks on the use of artificial intelligence and machine learning I think we've quietly become.
A leader in this area, we are using artificial intelligence and machine learning across the R&D spectrum now from molecular engineering, where we've been extraordinarily pleased with it.
The effect of dry labs or in silicon.
Design on the engineering of new protein molecules in <unk>.
Time frames that are much much shorter than were previously achievable with a higher success rate success here being defined as a candidate going forward that has the molecular attributes that you want we are using it extensively in clinical trials arena for site selection for example, and other aspects of trial design.
So this is something that I'll talk about more as we go through the course of the year.
It's a technology platforms lead us to what I think is an absolute hinge moment in this industry, where the union of Tech and biotech will move us forward to qualitatively different time in drug discovery and drug development.
I think we're going to be very well positioned to take advantage of this union.
Thank you Gregory our next question comes from Tim Anderson from Wolfe Research. Please go ahead. Your line is open.
Thank you very much on our Tesla Im wondering if you have any market share or performance metrics and the mild psoriasis segment specific we had approval for coming up on a year and a half I'm guessing you have some idea.
The penetration you're making in that very different segment.
Yes, Tim Thanks for the question Unfortunately, the differentiation between mild and moderate it's difficult because there isn't really good coding.
We can use as a surrogate for determining which is which so what we look at is what percentage of our business is being sourced from systemic naive patients, which we infer that they are milder and that their last treatment that they've been on prior to us as low as a topical.
And 80% of our new patient growth right now is coming from the post topical pre systemic patient types. So we are definitely making progress.
What we're doing right now as I mentioned earlier as we're scaling our promotional effort that targets, where these patients are being treated and we expect to be able to grow the volume of patients.
That we're securing.
You'll note we grew the volume of Tesla in the quarter by 5% and we expect to be able to improve on that.
Julien I know, we're already at half past the hour or so.
At the time that we announced.
So set aside for the call, but we have a couple of more questions in the queue, we'll try to get through those and then.
As our customer would be available if anybody has any questions for later this evening, but let's go to the next question.
Certainly thank you Tim our next question comes from Geoff Meacham from Bank of America. Please go ahead. Your line is open.
Great afternoon, guys. Thanks for the question.
Murdo of your new launched products in the past few years <unk> stands out as one that had a really good.
Progression each quarter whats the long term opportunity here look like and then how do you think about lifecycle management of the bone franchise. Overall later on as you get closer to the low thank you.
<unk>.
Yes, Thanks, Jeff for the question and for noting the performance of any of the the bone team have done an exceptional job with this product and I think.
The Amgen legacy in building the Prolia franchise is clearly helping.
That along with our partnership with UCB I was just recently in Japan and.
As Bob mentioned in his opening remarks, we have an ultra aging society, there and have entity is doing extremely well and I would say, it's a really good leading indicator of what we can do in the U S with that product. So I think where we're really early in our ability to penetrate that millions of patients that would benefit from a bone builder Leica.
Entity, we also see a very nice continuum of care for these patients where let's say you are on a bisphosphonate or prolia and you have a fracture you go on of entity for 12 months and then you return to a product like <unk> Prolia.
For your continued care. So there really is a nice franchise opportunity here with both Prolia and <unk> entity and we see the addressable population is being extremely large and we are still very early.
And growing that product, obviously now annualizing at over $1 billion is an exciting growth opportunity for us going forward and whereas <unk>.
Louisiana stick as as.
As we possibly could be.
Julien, let's take one last question after which Bob will make some closing comments.
Certainly.
Next question comes from Dane Leone from Raymond James. Please go ahead. Your line is open.
Alright, Thank you as we contemplate the updated guidance for the year probably.
Two competitive questions are are still curious to me on the call.
Firstly, you've had great momentum with Repap.
Earlier in the week, Novartis really highlighted IPO or in closer in.
Finally, gaining some traction in the U S, but love to hear your thoughts around how you view competitive dynamics in the PCF canine class for the remainder of the year and then secondly kind of on a similar note I didn't notice bloom across declined Q on Q in the first quarter.
In the U S and was just curious if you saw any impact of casady.
The competitive agent from Marathi. Thank you.
Yeah. Thanks, maybe I'll flip the answer around it's really too early to tell with morality. In fact, I think what I've mentioned to in.
In response to an earlier question.
The actual demand volume Q on Q is pretty flat what were actually seeing in the sales as a work down of some.
Inventory end user inventory from Q4 to Q1 of this year for <unk>, but actual patients treated pretty flat quarter on quarter. So we're not seeing.
A big impact yet from Marathi and of course for <unk>, We're really focused on growing <unk> through additional indications and additional.
Data to move into earlier lines of therapy, which Dave covered in his remarks.
As we look at <unk>.
We really are excited about what we're seeing now we see more and more enthusiasm.
From cardiologists in a broad way and in a deep way I E using <unk> more frequently in their prescribing practices.
For CVD patients what we've been doing over the course of the last call. It 18 months is increasing our <unk> commercial presence at primary care and this year, we're actually making another step change in primary care promotional effort by increasing the size of our primary care sales force here. So <unk> is very much moving.
In the right direction patients are benefiting from it we maintained more than a 70% share of the <unk> canine class, but quite frankly, that's not what my my team looks that they look at trying to penetrate the millions of <unk> patients the tens of millions of <unk> patients that need to lower their LDL C logo.
And as I mentioned in my opening remarks, less than 30% of patients and that is not our data is data from the family heart organization at less than 30% of patients that are at their LDL C. Goal. So we feel like this is important work we feel like we've got a best in class medicine in <unk>, We've got great coverage and we expect to <unk>.
To grow this product globally to serve many millions of patients over the years to come.
Okay. Thank you Murdo for your response to the question and let me again. Thank all of you for joining us on the call just a couple of quick thoughts.
Obviously were.
To a good start here in the year as you see from the results in the first quarter and as I said in my opening remarks are more important than the quarter itself is the way its setting us up for the long term. So if you think back to the things that we've talked about as being important for us being able to deliver on our long term strategy growth strategy starts with our growth products having to perform.
So in the quarter, we had 10 brands achieving record performance and performance means growing share growing penetration.
Murdo said thats, what we see happening, though with our important growth driving brand.
Other thing, we said is for us to be successful over the long term, we've got to perform in the international markets.
I think the volume trends that you see here early in the year are really good indicators.
Building the kinds of platforms, we need to have in order to deliver long term growth for our medicines outside the United States. We've talked a lot about biosimilars on this call. We said that we think is an important contributor to our growth long term as we bring new products to market and launch them in new countries.
In order for us to do that we need to be the leading competitor and that means we need to execute on time and be in the first wave of launches. Once again. This quarter you see further proof points of our being able to do that consistently with the launch of <unk>. The approval of <unk> et cetera. So we think competitively we're well positioned there in our Biosimilar <unk>.
To capitalize on the opportunities and then of course the pipeline is always critical and we're excited about how our pipeline is very rapidly advancing particularly on the registration enabling trials, whether you look at <unk> or bema or <unk>.
We have a lot of important registration, enabling work underway and we're excited to start generating results from those portfolios over that portfolio of products as well as some of the products that are now attracting quite a bit of attention like 133, and our mid stage pipeline. So all in all we're off to a good start in quarter and we remain very enthusiastic about the long term.
In the Meanwhile, we're looking forward to having an opportunity to close on the horizon transaction. Once regulators have completed their work. So thank you for tuning in and we'll look forward to being back with all of you in August great. Thanks, everybody and we'll be around for a while so feel free to reach out to me if you have any questions.
Thanks again.
This concludes our first quarter full year 2020 financial results Conference call you may now disconnect.
Please wait the conference will begin shortly.
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