Amgen Inc.

I would now like to introduce Justin Clay's Vice President of Investor Relations. Mr. Clay, as you may now begin.

Thank you, Julianne. Good morning, and welcome to our third quarter 2023 earnings call. Bob Bradway will lead the call and be followed by a broader review of our performance by Myrto Gordon, Bipram Karnani, who joined Amgem from Horizon Therapeutics following the October 6th 2023 Acquisition Close, Dave Reese, and Peter Griffith. Given the timing of the Horizon Therapeutics Acquisition Close, our third quarter results do not include any contribution from Horizon. Bikram will provide select information from Horizon's third quarter product sales for future context. You should have received a link to our slides that we have posted. Through the course of our discussion today, 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. I would now like to turn the call over to Bob.

Okay. Thank you, Justin, and thank all of you for joining our call. It's an exciting time here at Amgen, and we're continuing to execute well this year, serving many more patients around the world with medicines such as Repatha, Avenity, and Tespire. advancing a number of promising first-in-class medicines rapidly through our pipeline and preparing for our next wave of biosimilar launches. However, as this is our first earnings call following the close of our acquisition of Horizon Therapeutics, I thought we might turn our attention there first. The Horizon acquisition, coupled with our purchase of Chemocentrics, which we acquired a little more than a year ago, gives Amgen a significant rare disease business, that fits squarely within our overall strategy and will be additive to the growth we expect from our base business. At the heart of our strategy, of course, is innovation. First, we're best-in-class medicines that make a big difference for patients suffering from serious diseases. The medicines in our rare disease portfolio, like Tavneos, Tepeza, Cristexa, and Uplizna, fit this description perfectly, and they'll benefit from Amgen's decades of experience in inflammatory diseases. These medicines are also early enough in their life cycles that we can positively impact their growth by leveraging Amgen's capabilities in process development, life cycle management, and manufacturing. Finally, we've spent the past decade or so building out our international footprint with Amgen medicines now available in about 100 countries. And today, our rare disease sales come almost exclusively from the U.S., so we'll be able to leverage our global presence to quickly bring these medicines to patients around the world. You'll hear more in a minute from Vikram Karnani, who joined us through the Horizon acquisition and is leading a newly created rare disease business that is now the fourth leg of Amgen's commercial stool alongside our inflammation, oncology, and general medicine businesses. Turning to our financial performance in the quarter, total revenues were up 4% and earnings per share were up 6% compared with a year ago. Volume increased 11% globally. which represents our fourth consecutive quarter of double-digit volume growth. And we achieved good balance across all of our geographic regions and therapeutic areas. Seven of our medicines generated record sales in the quarter, and I'll highlight one of these, Blinsido, which delivered 55% sales growth in the third quarter. We see continued upside potential for Blinsido as it is increasingly used in earlier lines of therapy, and as practice guidelines are updated to reflect the role this medicine can play in treating a broad range of patients with acute lymphoblastic leukemia. Turning to our pipeline, we had the opportunity to discuss six potential first-in-class oncology assets with you recently following ESMO. Three of these have earned breakthrough therapy designations from the FDA, terlatamab, blensido, and lumicras in combination with vectabix and colorectal cancer. We also continue to progress trials for bemerituzumab and gastric cancer, for xaluridamig and prostate cancer, and for AMG-193, our PRMT5 inhibitor, which has generated responses across six solid tumors. I'll just quickly note that AMG-193 was identified through our proprietary DNA-encoded library technology, which we added through the 2019 acquisition of New Evolution. and it demonstrates our leadership in the emerging field of multispecific drugs that can address pathways that have long been recognized but considered inaccessible to traditional drug discovery efforts. In other pipeline news, we've completed enrollment in our Phase II obesity study for Meridabart-Cafraglutide, which was formerly known as AMG-133. And finally, the FDA has accepted our BLA for a biosimilar to ILEA. Looking at our business, we feel we have good momentum across the board. We have everything we need with the portfolio, the pipeline, and the people to deliver attractive sales and earnings growth through the end of the decade and beyond. As always, I want to thank Amgen employees around the world, including some 2,000 new colleagues focused on rare diseases, for their commitment to strong execution on behalf of the patients we serve. With that, I'll now turn over to Murdo Gordon. Murdo?

Thanks, Bob. I'm pleased with our performance in the third quarter. Execution is strong across the business with record quarterly sales for seven brands and robust volume growth across our general medicine, inflammation, and hematology oncology portfolios. Product sales increased 5% year over year. Volume growth was 11% with strength across our regions. U.S. volume growth was 11% and volume growth in our Europe, Latin America, Middle East, and Canada region was 8%. Consistent with our international expansion strategy, Asia Pacific continues to be our fastest growing region, with 27% volume growth in the quarter. Starting with our general medicine business, which includes Repatha, Prolia, Avenity, and Amavac. Overall revenue for these four products grew 21% year over year in the third quarter, driven by 20% volume growth. Repatha sales increased 31% year-over-year in the third quarter, with volume growth of 44%, partially offset by a lower net selling price. In the US, volume growth of 45% was driven by a record number of new patients starting treatment, more than doubling year-over-year. We saw declining net selling prices in the US, primarily driven by new formulary coverage by CVS in July for commercial patients. Outside the US, we saw 43% volume growth with strength across our regions. There are still many more patients around the world who can benefit from Rupatha, and we're rising to meet that challenge by investing and executing to drive awareness amongst physicians and patients. In the US, we have significantly expanded our primary care sales force and activated more than 15,000 new prescribers this year. We're also increasing promotion to patients through direct-to-consumer media efforts. Transitioning to bone health, Prolia sales grew 14% year-over-year in the third quarter, primarily driven by 7% volume growth and higher net selling price. We expect volumes for Prolia to grow, supported by real-world evidence data presented earlier this year that demonstrate Prolia's superiority in reducing fracture risk when compared to alendronate in treatment-naive patients with postmenopausal osteoporosis. Avenity had record sales of $307 million for the quarter, driven by 48% volume growth. Osteoporosis disproportionately impacts postmenopausal women, and the diagnosis and treatment rates for these patients are low. In 2023, we expect approximately 3 million patients in the U.S. will be treated for postmenopausal osteoporosis. An estimated 40% of treated patients will be at very high risk of fracture, but only 6% of those high-risk patients will be treated with a bone building product. Avenity plays an important role in the bone builder market, with a 58% share in the US and a 44% share in Japan. There's much more work to be done, and we'll continue to invest to ensure Avenity reaches the patients who need it. Otesla sales declined 10% year-over-year driven by lower net selling price, unfavorable changes to estimated sales deductions, and lower inventory levels, partially offset by 1% volume growth in the US. Otesla net price declines were driven by higher rebates to support and expand access for commercial and Medicare Part D patients. Our US Otesla business has been impacted by free drug programs associated with new treatment options that have entered the psoriasis marketplace. We're beginning to see a reduced impact of these free drug programs as physicians and patients are experiencing barriers to access given prior authorization requirements for these newer therapies. We have strong conviction in the growth potential of Otezla. With its unique indication for all severities of psoriasis combined with an established clinical profile, broad pair coverage, a lack of testing required for initiation, and convenient oral administration. To realize that potential, we have increased our investment to ensure physician and patients understand both the importance of treating psoriasis systemically and the safety and efficacy profile that Otesla offers. We're already seeing positive results from that increased investment, including significant growth in the number of patients requesting educational information, and taking action on the Otesla website that generally indicate preparation for a discussion with a healthcare professional. We've also recently increased our dermatology sales force by 20% to educate physicians about the benefits of Otesla for appropriate patients. With these increased investments, we expect to drive a return to growth for Otesla. Embrel sales decreased 6% year over year, primarily driven by an 8% decline from unfavorable changes to estimated sales deductions. Year-over-year volume increased 1% in the third quarter, and the number of new patients in the U.S. starting treatment increased by 22%, driven by improved payer coverage and Enbrel's 20-plus year track record of safety and efficacy. For the remainder of 2023, we expect our improved coverage will lead to continued growth in new patients and declining net selling price. Test buyer continues to show strong growth with $161 million in sales in the third quarter. Sales increased 21% sequentially, driven by 18% volume growth that benefited from the launch of our self-administered pre-filled single-use pen, which was approved by the U.S. Food and Drug Administration in the first quarter. We've now obtained coverage of the pen with the majority of pharmacy benefit managers, enabling easy access and convenient self-administration for patients in the U.S. with severe uncontrolled asthma. As we expected, Tespire has both penetrated and helped grow the US asthma biologics market. In 2023, the number of new patients on asthma biologics has increased by over 20% year over year, and Tespire's share of this expanded market is approximately 20%. Sales of Tabneos were $37 million in the quarter, with 26% quarter-over-quarter volume growth. In the U.S., approximately 2,300 patients have now been treated with TAVNEOS by over 1,500 healthcare professionals. We continue to see an increase in awareness of TAVNEOS by rheumatologists and nephrologists. Exiting the quarter, we saw an increase in new patient start forms. Looking forward, we expect to bring TAVNEOS to even more patients with ANCA-associated vasculitis. Amgivita sales increased 30% year-over-year for the third quarter, driven by 53% volume growth, partially offset by lower net selling price. XUS sales increased 10%, driven by 22% volume growth, partially offset by lower net selling price. Moving to our hematology oncology business, which includes Lumicraz, Kyprolis, Xgeva, Vectabix, Endplate, and Blinsaito. Strong commercial execution and compelling new clinical data drove 15% volume growth year-over-year for these six innovative products. Blinsito's sales grew 55% year-over-year to a record $220 million for the third quarter. Volume growth of 56% was supported by broad prescribing to acute lymphoblastic leukemia patients following positive data from the registration-enabling E1910 study presented late 2022 and updated NCCN guidelines that were issued in May. Long-term, we see significant additional growth potential for Blincyto from earlier lines of therapy. Lumocrats reported $52 million in sales for the third quarter, a decline of 31% year-over-year. $22 million of this decline was driven by ongoing reimbursement negotiations in France. We see future growth opportunities for LumaCraz driven by launches in new markets and our comprehensive global clinical development program. Vectabix sales increased 2% year-over-year for the third quarter to a record $252 million, driven by higher net selling price and 4% volume growth, partially offset by unfavorable foreign exchange impact. Caprolis grew 10% year-over-year, primarily driven by 8% volume growth, and end-plate sales increased 45% year-over-year for the third quarter, resulting from a $142 million order from the U.S. government. In the fourth quarter, we expect to fulfill an additional $62 million order for end-plate by the U.S. government. Given the strong performance of our hematology oncology products and the exciting new positive data presented at ESMO on our oncology pipeline, we look forward to helping more patients with their cancer therapy. Overall, our execution is strong across the business, driving growth and demonstrating our dedication to serving patients. And with the expansion of our rare disease portfolio, we're excited to serve many more patients around the world who can benefit from our therapies. And with that, I'll turn it over to Vikram.

Thanks, Murda. We're excited to bring together Horizons Medicine's pipeline and rare disease expertise with Amgen's history of leadership in inflammatory diseases, global infrastructure, and world-class biologic capabilities. For those that are not as familiar with Horizon's portfolio, I will spend the next few minutes providing some background on our rare disease medicines. Horizon's business delivered 945 million of sales in the third quarter, representing 2% year-over-year sales growth with multiple positive leading indicators. Let me describe in more detail. Tepeza, the first and only medicine approved for the treatment of thyroid eye disease, regardless of disease activity or duration, generated 453 million of sales in the third quarter, representing 2% quarter-over-quarter growth. We are confident that now, as we have officially joined forces and have onboarded the full commercial team, we will make significant progress in advancing this important product over time to patients. We are driving several initiatives to continue to build the U.S. thyroid eye disease market. In the third quarter, we saw a greater than 50% year-over-year increase in the number of TPEZA prescribers, supported by the April 2023 FDA label update to treat patients with thyroid eye disease regardless of disease activity or duration. We are pleased with this progress and are continuing to educate the physician community on new clinical data and updated indication across the full spectrum of TED patients. Second, large national and regional payers are continuing to make favorable policy changes to help eligible patients access to PESA. To date, we have obtained favorable policy changes for greater than 30% of U.S. covered lives. which are expected to take effect later this year and early next year. As a reminder for TPEZA, there's a time lag between a patient being identified for TPEZA treatment and treatment being initiated. It can take up to 90 days for a patient enrollment form to move through the prior authorization process. Once that step is complete, then the patient's infusion needs to be scheduled at an appropriate site of care. This process takes time, and we have taken several important steps to minimize the time between patient identification and treatment initiation. Finally, we continue to see approximately 100,000 patients with moderate to severe disease in the US that are appropriate for TPEZA, with the majority of these patients in low clinical activity score settings. Therefore, the FDA's label update combined with favorable medical policy changes by payers, and supported by the expanding base of prescribing physicians, gives us a significant opportunity to reach more patients. These positive execution trends underpin our confidence in Tepeza's growth potential in the U.S. Moving on to markets outside the U.S., We continue to see international expansion as a meaningful long-term growth opportunity for Tepesa, which received its first ex-US approval in Brazil in the second quarter of this year. We are particularly excited about the opportunity to leverage Amgen's long-standing presence in multiple major ex-US markets, including Europe and in Japan, where we have reported positive data from the Phase III Arctic J trial. We also continue to enroll a TPEZA Phase III trial in Japanese patients with chronic or low clinical activity thyroid eye disease. Cristexa, the first and only medicine approved for uncontrolled gout, delivered a record 253 million of sales in the third quarter, representing 32% year-over-year growth. Sales are now annualizing at a $1 billion run rate. Performance in the third quarter reflected continued strong uptake in both the rheumatology and nephrology segments. Strong results were driven by execution across all phases of the patient journey, demand generation, stakeholder education, and adherence to treatment. The FDA approved Cristexa's label change for combination with methotrexate in July 2022. We have seen a steady increase in uptake since then. Immunomodulation usage remained above 70% of new patient starts in the third quarter. We see an opportunity to redefine Clostexab with methotrexate as the standard of care and reach even more of the over 100,000 uncontrolled gout patients in the U.S. Aplizna sales increased 54% year-over-year in the third quarter to 67 million. International expansion is also underway, with Aplysna now launched in multiple ex-US markets, including Germany, France, Italy, Spain, and Brazil. Additional indications in development also support Aplysna's long-term growth potential, with Phase III trials underway in both IgG4-related disease and myasthenia gravis. The rest of Horizon's portfolio generated $173 million of sales in the third quarter, primarily driven by our portfolio of ultra-rare medicines, Revicti, PresisB, and Atomule. We see an opportunity for this basket of products to continue to generate robust sales. Before I turn it over to Dave Reese, I want to take the opportunity to thank all my colleagues in the rare disease business for maintaining their focus on patients throughout a period of distraction over the last several months. Looking ahead, we are excited to work together by leveraging Amgen and Horizon's combined capabilities to ensure our medicines reach more patients even faster who are suffering from serious and rare diseases globally. I'll now turn it over to Dave.

Thank you, Vikram. Good morning, everyone. I'd like to begin by welcoming our new colleagues from Horizon. We're excited to be integrating Horizon's R&D capabilities with Amgen's to advance the promising Horizon Pipeline. For R&D, the third quarter was one of high-quality execution as we progressed our innovative pipeline with important oncology data readouts, the addition of two breakthrough therapy designations, and completion of enrollment on key studies. We also advanced our innovative pipeline through rapid enrollment on multiple registration-enabling studies. Starting with general medicine, We have completed enrollment in the Phase II study of Meridobart-cafriglutide in patients with obesity with or without diabetes. The goal of this study is to generate data that will provide optionality to design a broad Phase III program, leveraging the unique properties of Meridobart-cafriglutide that could potentially allow us to take a differentiated approach. We anticipate top-line data from this 52-week study towards the end of 2024. The Phase III outcome study of Volpaciran, our potentially best-in-class LpA-targeting small interfering RNA molecule in atherosclerotic cardiovascular disease, is enrolling very well. In inflammation, beyond severe asthma, we are investigating additional indications with TESPIRE, including fibrosis.