Amgen : Q4 2022 Earnings Conference Call Transcript

AMGEN TRANSCRIPT OF FOURTH QUARTER AND FULL YEAR 2022

EARNINGS WEBCAST

January 31, 2023

Operator

My name is Jason, and I will be the conference facilitator today for Amgen's Fourth Quarter / Full Year 2022 Financial Results Conference Call. I would now like to introduce Mr. Arvind Sood, Vice President of Investor Relations. Mr. Sood, you may now begin.

Arvind Sood

Vice President, Investor Relations

Okay. Thank you, Jason. Good afternoon, everyone, and welcome to our call to discuss the results for Q4 and full-year 2022. 2022 was once again a year exemplified by great execution despite some of the macro challenges. Our Chairman and CEO, Bob Bradway, will make some opening comments, followed by prepared comments from other members of our senior leadership team.

You should have received a link to our slides that we have posted. Through the course of our discussion, we will make some forward-looking statements and use non-GAAP financial measures to describe our performance, and just a reminder that actual results can vary materially. So, with that, I would like to turn the call over to Bob.

Robert Bradway

Chairman and Chief Executive Officer

Okay. Thank you, Arvind, and hello, everyone, and thank you for joining our call. So, beginning the year feeling confident about the long-term growth outlook for our business, and let me offer 5 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. Repatha, Prolia and EVENITY 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 in 2023 and beyond with Repatha, in particular, helped by important new data from the FOURIER open-label extension study and new prescribing guidelines.

OTEZLA 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. LUMAKRAS and TEZSPIRE collectively contributed more than $450 million in full year sales, and we're pursuing additional indications for both products. We're especially pleased to see

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TEZSPIRE being utilized by patients across all types of severe asthma. Murdo will share more about the performance of our in-line products in a moment.

Second, we moved 6 first-in-class molecules into Phase 3 or potentially registration-enabling trials in 2022, including Olpasiran for LP(a), rocatinlimab for atopic dermatitis, TEZSPIRE in eosinophilic esophagitis, and of course, bemarituzimab, tarlatamab and BLINCYTO for cancer. We've also begun enrolling patients in a Phase 2 trial for AMG 133. Based on early data, this molecule, with its unique mechanism of action, 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 3 data for our biosimilar candidates to EYLEA, SOLIRIS and STELARA, 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 AMJEVITA in the U.S., and AMGEVITA is the leading biosimilar to HUMIRA internationally. And with a 5-month 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 that's what we've done, building on our decades of experience in inflammation with 2 significant transactions that will strengthen our presence in this space. Through the acquisition of ChemoCentryx, we added TAVNEOS, a first-in-class treatment for ANCA-associated vasculitis, and we're off to a strong start there. Our announced acquisition of Horizon Therapeutics will add several additional first-in-class early in life cycle biologic medicines, including TEPEZZA, KRYSTEXXA and UPLIZNA 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 anticompetitive matters. And we have received a second request from the U.S. FTC, and we'll work with them to answer their questions while remaining optimistic that we can complete the deal in the first half of year.

Finally, we've stayed 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're passionate about our mission to serve patients. They're clear on how their work contributes to our success, and they're ready to seize the opportunities and meet the challenges that await us. I'm grateful to all of them. I look forward to your questions a little later on, but now let me turn the call over to Murdo.

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Murdo Gordon

Executive Vice President, Global Commercial Operations

Thanks, Bob. 2022 was another year of strong execution of our mission to bring innovative products to the millions of patients in the world who suffer from grievous illness. The evolution of our portfolio continued, driven by record sales for 16 brands. We saw strong volume gains across our general medicine and hematology-oncology growth brands. Our inflammation therapeutic area expanded with the launch of TEZSPIRE and the acquisition of TAVNEOS, 2 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 medicine business, which includes Prolia, EVENITY, Repatha and Aimovig, overall revenue for these four products grew 21% year-over-year for the fourth quarter and 18% for the full year, driven by 19% and 21% volume growth, respectively. In bone health, Prolia sales grew 14% year-over-year for the fourth quarter, driven primarily by 11% volume growth. EVENITY, which complements Prolia in our bone portfolio, had record sales of $225 million for the quarter, driven by strong volume growth across markets. Repatha 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 Repatha 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 Repatha grew 36% year-over-year, driven by 31% volume growth. Globally, Repatha has treated over 1.5 million patients since launch. Repatha's strong prescribing history in cardiology and expanding use in the primary care setting position us well to bring Repatha to more patients globally. With the FOURIER long-termfollow-up data, in addition to evolving and more aggressive treatment guidelines, there's a clear rationale that lowering LDL cholesterol as much and as early as possible with Repatha will reduce cardiovascular risk for patients around the world.

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Transitioning to our inflammation portfolio. Otezla sales decreased 2% year-over-year for the quarter and increased 2% for the full year. We saw 7% volume growth in both periods. This was offset 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. Otezla 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 reverifications, co-pays and deductibles for patients. The combined effect could lead to first quarter Otezla sales being similar to or below those from Q1 of 2022. Longer term, we continue to see strong growth potential for Otezla, given its established safety profile, strong payer coverage with limited prior authorization requirements and ease of administration. Otezla 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, 1.5 million of whom have psoriasis that cannot be optimally addressed by a topical and can benefit from a first-line systemic treatment like Otezla.

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. ENBREL remains an important product for patients due to its long track record of efficacy and safety. TEZSPIRE 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 TEZSPIRE across a broad range of patients with severe uncontrolled asthma. We're also seeing initiation of TEZSPIRE in both biologic-naive and previously treated patients. Physicians acknowledge TEZSPIRE 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're 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 TEZSPIRE at home.

Sales of TAVNEOS were $21 million in the fourth quarter. Our integration of ChemoCentryx is proceeding smoothly, confirming our belief that Amgen's deep experience in inflammation and nephrology and substantial market presence will allow us to bring TAVNEOS to more patients with ANCA-associated vasculitis.

We're also excited about our announced acquisition of Horizon Therapeutics. Our combined portfolio, which will include TEPEZZA, KRYSTEXXA and UPLIZNA will address serious inflammatory diseases and improve the lives of many patients. Amgen's commercial capabilities and global presence in approximately 100 markets will allow our combined team to deliver important therapies that will make a meaningful difference for more patients globally.

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Today, we announced the launch of AMJEVITA, the first U.S. biosimilar to HUMIRA, a medicine used by more than 1 million patients living with serious inflammatory diseases. 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 medicine. AMJEVITA is the first significant U.S. biosimilar in 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 LUMAKRAS, KYPROLIS, XGEVA, Vectibix, Nplate and BLINCYTO. These six innovative products grew 14% year-over-year with 17% volume growth for the quarter. Full year sales grew 13%, driven by volume gains. KYPROLIS sales grew 14% in the fourth quarter. Nplate sales in the fourth quarter included $207 million related to a onetime order from the U.S. government. Given the strong performance of our hem/onc portfolio in 2022 and the recent positive data on both BLINCYTO and Vectibix, I look forward to the future growth potential of this portfolio.

LUMAKRAS 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., LUMAKRAS has now been approved in over 45 countries. We've launched LUMAKRAS in 30 markets and are rapidly pursuing reimbursement in the remaining countries. As we've noted before, the market for LUMAKRAS focused on the 7,000 U.S. and 20,000 ex U.S. patients in the second-line setting. Longer-term, we expect LUMAKRAS 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 for the fourth quarter and 30% full year, driven by lower price. While our biosimilars for MVASI and KANJINTI both hold leading shares, we expect continued net selling price deterioration and accelerating volume declines, driven by increased competition. The most recently published average selling price in the U.S. declined 38% year- over-year for MVASI and 51% for KANJINTI. 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. Our expanding international presence and diverse portfolio of products, further strengthened by the integration of ChemoCentryx and the announced acquisition of Horizon, position us well to serve many more patients globally. And with that, I'll turn it to Dave.

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