Amgen Inc.

My name is Julianne and I will be your conference facilitator today for Amgen's second quarter 2024 financial results conference call. All lines have been placed on mute to prevent any background noise. There will be a question and answer session at the conclusion of the last speaker's prepared remarks. In order to ensure that everyone has a chance to participate, we would like to request that you limit yourself to asking one question during the Q&A session. To ask a question, please press star then the number one on your telephone keypad. To withdraw your question, please press star 1 again. I would now like to introduce Justin Clays, Vice President of Investor Relations. Mr. Clays, you may now begin.

Thank you, Julianne. Good afternoon, everyone, and welcome to our second quarter 2024 earnings call. Bob Bradway will lead the call and be followed by a broader review of our performance by Myrtle Gordon, Vikram Karnani, Jay Bradner, and Peter Griffith. Through the course of our discussion today, we will use non-GAAP financial measures to describe our performance and have provided appropriate reconciliations within the materials that accompany this call. We will also make some forward-looking statements which are qualified by our Safe Harbor Statement. And please note that actual results can vary materially. Over to you, Bob.

Okay. Well, thank you, Justin, and let me thank all of you for joining the call today. We're especially grateful in light of all the volatility in the markets that you would carve out the time to be with us, so thank you. Through the first half of the year, our business is performing well, and we remain confident in our ability to deliver attractive long-term growth. We're achieving strong results the same way we always have, which is by providing innovative medicines to address challenging diseases. Starting with the in-market portfolio, second quarter revenues grew 20% to $8.4 billion this with numerous medicines delivering double-digit sales growth, including in general medicine, Repatha and Avenity, in oncology, of course, Blinzido, and inflammation, Tespire, and then turning to rare disease, which delivered more than a billion dollars on the quarter, I would highlight that Cristexa, Uclizna, and Tavneos each delivered at least double-digit sales growth in the quarter. And Tepeza grew 8% year-over-year and 13% quarter-over-quarter. All of these first or best-in-class medicines are still early in their life cycles and have plenty of room to run through geographic expansion, new indications, and or new formulations. You'll hear more about these brands in a moment. Turning to research and development, we believe our pipeline looks very promising as well, not just in obesity but across all of our therapeutic areas. We told you at the beginning of the year that we were anticipating more than a dozen significant pipeline milestones in 2024. Well, so far, so good. In the second quarter alone, we received accelerated approval for MDeltra, a landmark new medicine for small cell lung cancer. In fact, the physicians I've spoken to since approval are really excited about this drug as the first meaningful innovation in decades for these patients. We also received approval for BlinCyto in the frontline treatment for B-cell precursor acute lymphoblastic leukemia based on significantly improved overall survival rates. The frontline approval meaningfully expands the potential impact of BlinCyto for all patients with BALL. We announced impressive phase three data for uplizna in IgG4-related disease, which is a grievous illness for which there are no currently approved therapies of any kind. Building on our success with TESSpire in treating severe asthma, we announced exciting data from our phase two study in patients with chronic obstructive pulmonary disease that earned this molecule breakthrough therapy designation. COPD is the world's third leading cause of death, and new treatment options are very much needed. We look forward to additional data readouts later this year across therapeutic areas, highlighted, of course, by top-line data from the ongoing MERITIDE Phase II study. We're encouraged by the emerging data in this field, particularly in cardiovascular and renal disease, areas of longstanding strategic focus for us. We are laser-focused on preparing to launch a broad Phase III program for Maritide that includes obesity, obesity-related conditions, and type 2 diabetes, and we're further ramping our investment to support Maritide and the rest of the pipeline. You'll hear more about that pipeline shortly on this call. All in all, this is a very exciting time for us at Amgen, and as always, I'm grateful to my Amgen colleagues all around the world for their enduring commitment to patients. And now let me turn things over to Murdo.

Thanks, Bob. Execution was strong in the second quarter, driving 20% year-over-year sales growth, and all of our regions delivered attractive growth. Sales of 12 products grew at least double digits, including Repatha, Tispire, Avenity, Tavneos, and Blinzaito, all brands that are important to our future growth. Starting with our general medicine portfolio, sales of Repatha, Avenity, and Prolia collectively grew 20% year-over-year in the second quarter, driven by volume growth. Repatha sales increased 25% year-over-year to $532 million for the second quarter, now well on its way to becoming a multi-billion dollar business. In the quarter, we saw year-over-year volume growth of 46%, partially offset by lower net selling price. In the U.S., we see increased recognition of the importance of lowering LDL cholesterol by healthcare providers, payers, and patients, which has significantly accelerated volume growth for Repatha. Our efforts have broadened insurance coverage and removed prior authorization requirements by several payers. In a recent survey, roughly 95% of cardiologists responded that Repatha is accessible and that access has improved significantly versus two years ago. Avenity sales increased 39% year-over-year to $391 million for the second quarter. In the U.S., volume growth was supported by both increased prescription volume from existing Avenity prescribers and an expansion of new prescribers. In Japan, Avenity has been prescribed to approximately 600,000 patients to date and continues to be the segment leader with 45% of the bone builder segment. There are many women who remain at risk of a fracture due to postmenopausal osteoporosis. We're encouraged by the growth momentum we are driving and have conviction in the potential for eventity to help even more patients. Prolia sales increased 13% year-over-year to $1.2 billion for the second quarter. Volume growth continues to be supported by real-world evidence demonstrating Prolia's superiority in reducing fracture risk when compared to alendronate in treatment-naive patients with postmenopausal osteoporosis at high risk of fracture. In inflammation, Testfire continues its strong trajectory with $234 million in sales in the second quarter. Sales increased 76% year-over-year, primarily driven by uptake of the pre-filled single-use pen. We see strong growth opportunity for test buyer given its unique differentiated profile and its broad potential to treat the 2.5 million patients worldwide with severe uncontrolled asthma. Tesla sales decreased 9% year over year for the second quarter with 2% volume growth offset by lower net selling price and unfavorable changes to estimated sales deductions. In the U.S., we saw 3% year-over-year growth in new patient prescriptions in the quarter, driven by strong execution by our dermatology sales force and increased Otesla direct-to-consumer media activity. We've seen an increasingly competitive environment in dermatology with the introduction of novel topicals and new biologic treatments. Otesla retains an important role in this landscape, given its broad label, safety profile, and unique positioning as a first systemic treatment option for patients with psoriasis. Enbrel sales decreased 15% year-over-year for the second quarter, primarily driven by lower net selling price. Going forward, we expect continued declining net selling price and relatively flat volumes. Enbrel is known for its efficacy and trusted by physicians. Its substantial health benefits and cash flow generation provide a solid foundation for our business. Turning now to biosimilars, where sales of our biosimilar products were relatively stable year-over-year for the second quarter. We're positioned for future growth with upcoming launches. Wislana, a biosimilar to Stellara, and Bekembe, a biosimilar to Solaris, are both expected to launch in the U.S. in Q1 of 2025. Our vertically integrated biosimilar business model ensures efficiency and provides attractive cash flows and returns for our shareholders. In oncology, sales of our seven innovative products, Blencito, Lumicraz, Vectabix, Kyprolis, Enplate, Xgeva, and Indeltra, grew 12% year-over-year for the second quarter, driven by volume growth and higher net selling price. In total, these products contributed almost $2 billion of sales in the second quarter. Blincyto sales grew 28% year-over-year to $264 million for the second quarter, driven by broad prescribing across academic and community segments for patients with B-cell ALL. Blincyto was recently granted approval by the U.S. Food and Drug Administration as a frontline consolidation treatment for patients with Philadelphia chromosome negative B-cell ALL. Our commercial and medical teams are engaging key academic, regional, and community customers in establishing Blinsaito as a standard of care in this setting. Lumicraz sales increased 10% year-over-year to $85 million for the second quarter. We see future growth opportunities for Lumicraz coming from launches in new markets and additional indications. VectaVix sales increased 9% year-over-year to $270 million for the second quarter, now annualizing at over $1 billion. We also drove strong performance of CowProlis, which grew 9% year-over-year, and Endplate, which grew 12% year-over-year. Since our U.S. launch of Imdelta in mid-May, we generated $12 million of sales in the second quarter. IMDeltra was recently approved for the treatment of adult patients with extensive stage small cell lung cancer with disease progression on or after platinum-based chemotherapy. We're seeing strong clinical conviction in IMDeltra in both academic and community settings. And while very early in the launch, we're encouraged by the adoption of IMDeltra and look forward to its potential to bring new possibilities to patients living with this aggressive disease. I'm pleased with our execution in the quarter, driving accelerated performance for our most important growth brands. And with that, I'll turn it over to Vikram, who'll cover our rare disease portfolio.

Thank you, Murdo. I am pleased to provide an update on rare disease, which delivered product sales of over $1.1 billion in Q2. Beginning with Tepeza for the treatment of thyroid eye disease, second quarter sales were $479 million, reflecting growth of 8% year-over-year and 13% quarter-over-quarter when compared to results from the legacy Horizon business. Recall that there are roughly 100,000 TED patients in the U.S., and penetration is currently only in the single digits. The main growth opportunity is within the roughly 80% of TED patients who have a low clinical activity score, or CAS. We are expanding our reach among new prescribers, particularly ophthalmologists and endocrinologists, who manage many of the low CAS patients who can benefit from TPEZA. The impact of thyroid eye disease on quality of life is often underestimated, so our focus is on educating healthcare providers about the significant effects on patients, even those with less visible symptoms. In addition, we are increasing our strategic focus in endocrinology with a dedicated sales force to engage in this important space. We are also making significant strides in improving access, thanks to the recognition of TPEZA's efficacy by payers. To date, we have achieved favorable medical policy changes for greater than 65% of U.S. covered lives, compared to 50% last quarter and just 5% roughly one year ago. We expect to continue this momentum throughout 2024. International expansion remains a meaningful long-term growth opportunity for TAPESA, with regulatory filings complete or underway in multiple geographies, with Japan as the next significant launch expected by early 2025. We also initiated a Phase III subcutaneous study and see this as an opportunity to increase adoption and improve the patient experience with an alternative option to our current IV formulation. Quistexa for patients with chronic refractory gout delivered $294 million in sales in Q2, representing 20% year-over-year growth, driven by volume growth from strong commercial execution. Cristexa with immunomodulation continues to redefine the standard of care for uncontrolled gout. Aplysna for patients with neuromyelitis optica spectrum disorder, or NMOSD, delivered $92 million in sales in Q2, representing 35% year-over-year growth. International expansion of Aplysna is also underway. with launches in multiple ex-U.S. markets, including Canada, which launched earlier this year. In addition to NMOSD, we are excited about the impressive Phase III results with aplysna in IgG4-related disease and the potential it has to address a debilitating condition that impacts more than 20,000 patients in the U.S. We also look forward to the Phase III readout for a Plisna in Myasthenia gravis later this year. Jay will address these in more detail in a moment. Sales of tabneos were $71 million for the second quarter. Sales increased 137% year-over-year, driven by volume growth. In the U.S., more than 3,500 patients with ANCA-associated vasculitis have been treated with Tavneos. Over 2,300 healthcare professionals have now prescribed Tavneos, a roughly 35% increase in the prescriber base so far this year. The integration of the Legacy Horizon business is progressing nicely as we leverage Amgen's leadership in inflammation, world-class manufacturing and process development, and extensive global footprint. Now I will pass it over to Jay for our R&D update.

Thank you, Vikram, and good afternoon, everyone. In the second quarter, we rapidly advanced our broad clinical pipeline of potentially first-in-class or best-in-class programs. We received two approvals in the quarter, a breakthrough therapy designation, and delivered exciting clinical data for many programs, while eagerly awaiting additional data readouts later this year. Let's begin with general medicine. As previously mentioned, based on the interim analysis, we are seeing a differentiated profile with Meritide and are confident it will address important unmet medical needs in obesity, obesity-related conditions, and type 2 diabetes. We remain on track and look forward to top-line 52-week data from the ongoing Meritide Phase 2 study in late 2024. We are actively planning and expect to initiate a broad Phase 3 program in obesity, obesity-related conditions, and diabetes, along with a Phase II trial investigating Maritide for the treatment of diabetes in patients with and without obesity. Beyond Maritide, we continue to progress our early obesity programs that consist of both oral and injectable, incretin and non-incretin approaches. We expect one of these programs to enter clinical development later this year. Also in GenMed is Olpaceran, our potentially best-in-class LP little a targeting small interfering RNA medicine. The fully enrolled Phase III cardiovascular outcomes trial of Olpaceran continues to progress. To remind, LP little a is a genetically defined cardiovascular risk factor that is elevated in approximately 20% of individuals and for whom no effective or targeted therapies currently exist. In oncology, we continue to deliver on high-conviction targets with differentiated therapies capable of delivering transformative clinical benefit for patients. Let's begin with Imdeltra, a first-in-class bispecific T-cell engager, or BITE molecule, targeting DLL3 for small-cell lung cancer. We are very pleased that the FDA granted accelerated approval to IMDeltra for the treatment of adult patients with extensive stage small cell lung cancer with disease progression on or after platinum-based chemotherapy. Further, we are pleased that the NCCN guidelines have been updated to include IMDeltra as a preferred option for patients with a chemotherapy-free interval less than or equal to six months and as an other recommended treatment option for patients with a chemotherapy-free interval greater than six months. Based on the remarkable activity observed as a single agent in patients receiving second- and third-line therapy, we are rapidly advancing MDELTRA into frontline therapy, with three Phase III studies underway in both extensive and limited-stage disease. One of these studies, DELPHI-304, our confirmatory Phase III study in second-line small cell lung cancer, has completed enrollment. Notably, MDELTRA is the first bispecific T-cell engager approved to treat a common solid tumor. The present study of Tarlatimab in earlier lines and in the context of lower tumor burden draws from our experience with our first approved bispecific T-cell engager, Blinsito, in B-cell acute lymphoblastic leukemia. Here, we observed a dramatic improvement in overall survival in minimal residual disease negative patients, along with improved tolerability. These BlinCyto data provide evidence that directing the T cell in this manner is an effective means of finding and eliminating residual cancer cells that are drivers of recurrence. This June, based on the profound survival benefit observed in the treatment of frontline disease, The FDA approved an additional indication for Blin-Cyto for the treatment of adult and pediatric patients one month or older with CD19 positive, Philadelphia chromosome negative, B-cell ALL, in the consolidation phase of treatment, here regardless of minimal residual disease status. We continue to seek to expand the impact of Blin-Cyto in newly diagnosed B-ALL through ongoing studies and with the further investigation of subcutaneous administration. Our first-in-class STEEP1 CD3 bispecific molecule, xaloridamig, has also demonstrated profound clinical activity in metastatic, castrate-resistant prostate cancer, importantly demonstrating our ability to target a second common solid tumor with a bispecific T-cell engager therapy. We are rapidly advancing this program and have now fully enrolled the monotherapy phase one dose expansion as we continue to enroll patients in reduced monitoring and outpatient cohorts. Further, we are advancing the study of xaloridamig earlier in the prostate cancer treatment paradigm with combinations of xaloridamig and enzalutamide or abiraterone ongoing while we plan additional studies in earlier disease settings. In sum, we regard Indeltra, Blinsito, and Deliridimig as major advances, further establishing the broad potential of our leading bispecific T-cell engager platform. To round out oncology, we have completed enrollment of Fortitude 101, a Phase III study of Bimerituzumab, a first-in-class fibroblast growth factor receptor 2B-directed monoclonal antibody administered in combination with chemotherapy in frontline gastric cancer. We are also rapidly advancing AMG193, our oral PRMT5 inhibitor developed for mTAP null solid tumors as both a monotherapy and in combination with other therapies. Additional data from the phase one dose escalation and initial dose expansion study of AMG193 in patients with mTAP null solid tumors will be presented at ESMO in September. Lastly, we are pleased also to share that the FDA has granted an orphan drug designation to AMG-193 for the treatment of pancreatic cancer. Turning to inflammation, we are encouraged by the data arising from our Phase II study of TESPIRE in patients with moderate to very severe COPD. Together with AstraZeneca, we are actively planning for Phase III development in COPD. We are also pleased to announce that the FDA recently granted Tezfire a breakthrough therapy designation as an add-on maintenance treatment of patients with moderate to very severe COPD characterized by the eosinophilic phenotype. Beyond COPD, we continue to explore Tezfire in separate Phase III studies in eosinophilic esophagitis and in chronic rhinosinusitis with nasal polyps, where top-line data are expected later this year. turning to rocatinlamab, a first-in-class T-cell rebalancing monoclonal antibody targeting the OX40 receptor. The comprehensive rocatinlamab Phase III rocket program has successfully enrolled over 3,100 patients with moderate to severe atopic dermatitis. Five of the eight studies are now fully enrolled. The Phase III Horizon study, part of this rocket program, evaluates rocatinlamab monotherapy versus placebo in adults with moderate to severe atopic dermatitis, and it is ongoing with data readout anticipated in H2. Beyond atopic dermatitis, we continue to explore the potential of rocatinlamab and additional indications and have initiated a Phase II study in moderate to severe asthma, as well as a Phase III study in prurigo nodularis. Shifting to rare disease, we are encouraged by the advancements of our rare disease pipeline with several mid- to late-stage opportunities. Aplizna, a CD19 B-cell depleting therapy, offers a differentiated mechanism of action than other autoimmune therapies. Durable efficacy with a convenient every six-month IV dosing schedule. This could be very important for chronic inflammatory diseases. Recently, we were excited to announce positive top-line results from a Phase III clinical trial evaluating the efficacy and safety of aplizna for the treatment of immunoglobulin G4-related disease. The trial met its primary endpoint, showing an astonishing 87% reduction in the risk of IgG4-related disease flare as compared to placebo during the 52-week placebo-controlled window. All key secondary endpoints were also met, and no new safety signals were identified. This is the first randomized controlled trial to demonstrate efficacy in the IgG4-related disease patient population. Regulatory filing activities are underway, and full data from the trial will be presented at a future medical meeting. We are also studying a plisna in generalized myasthenia gravis through the ongoing Phase III MINT study. The MINT study is evaluating the efficacy and safety of a plisna in patients with generalized myasthenia gravis. who are of a comparable disease severity and a comparable treatment experience to other recently approved biologic therapies. We are investigating aplizna in the two predominant antibody stereotypes that drive this disease, acetylcholine receptor positive and, in muscle-specific, tyrosine kinase positive patients. MINT is the only trial attempting to demonstrate efficacy while removing the treatment benefit of steroids. Patients in the MINT trial who entered on steroids had a protocol-specified taper by 24 weeks. We look forward to data readout the second half of 2024. To expand the impact of our CD19-directed therapeutics to even more patients suffering from serious inflammatory diseases, compelled by both biological inferences and insights from small studies of CD19-directed therapies, we are launching a development program targeting CD19-positive B-cell-mediated autoimmune disease with aplizna and blinitumumab. This is an exciting and promising space. With Amgen's strong capabilities in inflammatory disease and two well-characterized assets, we are very well positioned to lead in this rapidly advancing field. We will have more to say about these programs in due course. Lastly, in May, the FDA approved Bekemvi as the first interchangeable biosimilar to Soliris or Ecolizumab. Also in biosimilar development, registration-enabling studies are underway for ABP234, a biosimilar candidate to Keytruda, and ABP206, a biosimilar candidate to Opdivo. In closing, I'd like to thank my MGEN colleagues for their strong sense of service to patients facing serious illness. their intense focus and spirited collaboration during this momentous year, and their commitment to growing the impact of both our research and our business through this portfolio of potential first-in-class and best-in-class medicines. I'll now turn it over to Peter.

Thank you, Jay. We're pleased with our strong second quarter performance and are on track with our 2024 full-year goals and long-term objectives. We have a strong long-term growth outlook across our four therapeutic areas, driven by the breadth and depth of our innovative pipeline and in-market products, serving patients with serious illnesses around the globe. Starting with our second quarter results, as shown on slide 27 of the slide deck, we delivered $8.4 billion in total revenue, a 20% increase year over year. It's the highest quarterly revenue in Amgen history, achieved with 26% volume growth. This means more patients than ever are receiving Amgen medicines. Excluding the addition of Horizon, product sales increased 5% year-over-year, driven by 10% volume growth. In the second quarter, we delivered a non-GAAP operating margin of 48.2% as a percentage of product sales, with total non-GAAP operating expenses increasing 30% year-over-year. Non-GAAP cost of sales as a percent of product sales increased 0.4 percentage points on a year-over-year basis, primarily driven by higher royalties and profit share due to changes in sales mix. Non-GAAP R&D spending in the second quarter increased 30% year-over-year as we strategically invested in the late-stage pipeline, including Meritide, Roca-Tinlamab, and Beamer-Rituzumab, as well as Horizon acquired programs. Non-GAAP SG&A expenses increased 36% year-over-year, primarily driven by the addition of Horizon. Excluding the addition of Horizon, non-GAAP SG&A expenses increased 14% year-over-year, driven by investment in Rapasa, Otesla, and Avenity. Our non-GAAP OINE resulted in a $700 million expense, up $400 million year-over-year, almost entirely due to increased interest expenses from the Horizon acquisition. We remain on track to deleverage, with line of sight to retiring greater than $10 billion of debt by the end of 2025. This includes $1.4 billion of debt retired in the second quarter and $2.0 billion year-to-date. Our non-GAAP tax rate decreased 1.5 percentage points year over year to 14.9%, primarily due to the change in sales mix from the inclusion of Horizon. In the second quarter of 2024, the company generated $2.2 billion of free cash flow, a decrease of $3.8 billion, a decrease from $3.8 billion in the previous year, driven by the timing of tax payments. In 2023, Federal tax payments, including our repatriation tax, were made in the fourth quarter, whereas in 2024, these payments were made in the second quarter. The Horizon integration is progressing well, and we expect to reach $500 million in pre-tax synergies by year three post-acquisition, with roughly 50% to be realized by the end of this year. We expect accretion to non-GAAP earnings per share in 2024. we continue to execute on our capital allocation priorities. We're investing in the best innovation, both internally and externally, to rapidly advance an innovative pipeline with multiple potentially first-in-class and or best-in-class medicines across the four therapeutic areas. As I said earlier, this is reflected in our second quarter non-GAAP R&D spend of $1.4 billion, an increase of 30% year-over-year. Second, we continue investing in our business for long-term growth. We are expanding capacity in our state-of-the-art manufacturing facilities, including investments to support Meritide. Beyond manufacturing, we are opening a new global technology and innovation center in Hyderabad, India, which will attract talent at scale and accelerate digital capabilities across the organization, including artificial intelligence, data science, life science, and medical. And third, we returned capital to shareholders as we paid competitive dividends of $2.25 per share in the second quarter. This represented a 6% increase compared to 2023. Turning to the outlook for the business for 2024 on slide 29, we expect our 2024 total revenues in the range of $32.8 to $33.8 billion in non-GAAP earnings per share between $19.10 and $20.10. I will mention a few considerations as you model the remainder of 2024. On revenues, we expect mid-single-digit growth quarter-over-quarter in the fourth quarter compared to Q3. Our full-year non-GAAP R&D expenses are now expected to increase more than 25% year-over-year as we further invest in our late-stage pipeline to support multiple late-stage studies underway across all therapeutic areas. As a result, we now project the full-year non-GAAP operating margin as a percentage of product sales to be roughly 47%, with Q3 operating margin lower than Q2. Total non-GAAP operating expenses for the third quarter are expected to grow at a similar rate to the first two quarters of this year. We expect OINE to be approximately $2.5 billion, which includes the interest expense related to the $28 billion of debt raised for the Horizon acquisition. We continue to expect the non-GAAP tax rate to be in the 15% to 16% range, including the full-year benefits associated with the inclusion of the Horizon business. As we have previously indicated, we have initiated activities to further expand Meritide manufacturing capacity. To support these initial efforts, we now expect capital expenditures of $1.3 billion in 2024 versus our most recent guidance of $1.1 to $1.2 billion. Our long-term outlook remains robust, and I am grateful to our 27,000-plus colleagues worldwide for their dedication to serving patients. This concludes our financial update. We will now begin our Q&A session. Julianne, please remind our participants of the process. Thank you.

Thank you. If you would like to ask a question, please press star followed by 1 on your telephone keypad. If for any reason you would like to remove that question, please press star followed by 1. Again, to ask a question, press star 1. Our first question comes from Yaron Werber from TD Cowan. Please go ahead. Your line is open.

Great. Thank you, and a very nice result. Thanks so much. Jay, maybe a question for you, actually. I want to start with the Flinza, and we noticed a few things. The Mint study was supposed to have complete completion around mid-May, and Amgen just posted a whole bunch of new job postings for GMG, and you have a slot on October 15th at the MGFA to present the data there. As you noted, you're doing steroid tapering, so it's a different trial design, but you also did steroid tapering in the other two indications, NMO and IgG4. Can you talk a little bit sort of what are you hoping to see and what are you expecting to see from the data? Thank you.

Thank you, Jeroen, for the question and for following the program so closely. We're very excited about APLISNA. This CD19 B-cell depleting monoclonal antibody is showing really remarkable activity. The results in IgG4-related disease as a bellwether is quite dramatic, with a hazard ratio of 0.13, a p-value of, what, 5 to the minus 7. This was a stunning result, and the first positive phase 3 for patients with IgG4-related diseases. As you nicely picked up in your question, one of the opportunities of a plesna is to get patients off steroids, and this is therefore a a predefined ambition of Oclizna in both IgG4-related disease setting in that study, as well as in the generalized myasthenia gravis setting. Now, these results won't be available until the second half of this year, and so I have no further update on that timing. But do stay tuned. We're so hopeful that this, you know, once every six months, G19 B-cell depleting therapy can differentiate substantially from available treatments like steroids and other B-cell targeting therapies and make a big difference for these patients.

Great, Julianne. Let's go to the next question.

Thank you, Yaron. Our next question comes from Salvine Richter from Goldman Sachs. Please go ahead. Your line is open.

Good afternoon. Thanks for taking my question. Just following up here on Yaron's, could you speak to the clinical bar for polenza and myasthenia gravis, both on a placebo-adjusted basis and also an absolute basis, given the notable steroid taper, which I believe the other therapies did not have included in their design. And with regard to this MGFA scientific session meeting, should we expect top-line results before that presentation? Thank you.

Thanks, Sophie. And as I just mentioned to Jerome, be providing further guidance on the timing of the results from the APLISNA study, the MIDS study in myasthenia gravis, but do stay tuned. And as also I shared, knowing that patients with myasthenia gravis are repeatedly and over many, many months of treatment challenged by the requirement for persistent steroids, we built in a taper on steroids onto this study. And these results, to read out in the second half of this year, will bring to light exactly how successful we are at liberating patients from steroids with every six months of Plisma. Julian, go to the next question, please.

Thank you, Salveen. Our next question comes from Evan Siegerman from BMO Capital Markets. Please go ahead. Your line is open.

All right. Thank you so much for taking my question. While not a huge growth driver, I'd love it if you could characterize some of your negotiations with CMS on Enbrel. Many of your peers are pleased with kind of the fair price that they negotiated with CMS. Do you feel the same way? I'd also love to know how you're seeing the impact of Part B redesign. Thank you so much.

Thanks, Evan, for the question. It's Murdo here. Overall, Enbrel continues to do well in the market despite a very competitive market in psoriatic arthritis and in rheumatoid arthritis. We also continue to have relatively stable volume despite all of the conversion that's going on in adalimumab with biosimilars. So we're quite pleased with prescribers' adoption and continued value of Enbrel's safety and tolerability, which is well established over a long period of time now, many, many years of experience. The process with CMS has concluded. We do have our price. I would just remind you that roughly 25% of Enbrel revenues come from Medicare Part D. So that will, in part, mitigate the impact of the CMS price reduction. And we continue to see that this is not a good mechanism to incentivize and reward innovation, and that it does not resemble what one would commonly describe as a negotiation. So we've concluded that process, and we continue to look to help patients and support them with Enbrel in the market, and we will watch the Part D redesign closely. We will look to see how PBMs redesign their formularies, and we will look to see how patients are impacted by the new model. While the cap may help, the out-of-pocket for many patients may actually rise. So, we're watching it closely. So, Ian, next question, please.

Thank you, Evan. Our next question comes from Mike Yee from Jefferies. Please go ahead. Your line is open.

Thank you for the question. Pivoting to obesity, I know that you are on track for data later this year for the injectable product, which you claim is differentiated. As other competitors have moved quickly, both with their programs with injectables, but also orals, multiple companies are putting orals. Can you just comment about how you feel about your positioning in this space, given others have multiple products moving to late stage, and how you feel you can position yourself here, given just 133? Thank you.

Thanks, Mike. Why don't I get started, and Myrtle, perhaps you could add on at the end. You know, we are very pleased with the results that we've seen at the interim with the overall conduct of the Phase II study. Though there's been no further analysis since the interim, as of the interim, all the arms were active, dropout had not been an issue, and we saw a differentiated profile with Meritide and remain confident that this medicine can address significant, important medical need and obesity, obesity-related conditions, and in particular, type 2 diabetes, as shared earlier in the call. There's no question that there is quite a democratized and broad base of innovation in this space, and potentially oral medicines could serve to address some of that still vast and remaining unmet need, and we follow these programs very closely. Still, the development of Meritide is advancing very briskly as we now moved to rapidly initiate a broad Phase III program, and we remain confident in what Meritide can offer for patients with obesity-related conditions as well as diabetes. Murdo? Yeah, thanks, Jay.

I think the data continues to emerge in the obesity and obesity-related conditions landscape. and show, you know, clear benefit that reducing weight will indeed, with GLP-1 based mechanisms, will indeed improve outcomes in many disease settings. So, you know, that continues to expand the market and grow it. I do agree with Jay that there will be patients who may seek oral options, but I continue to believe that we have a very good differentiated product here and that monthly dosing or even less frequently will continue to help patients persist on their weight loss medication and achieve hopefully some of those hard endpoint risk reductions that we're seeing in clinical trial presentations. I would say that we would purport that we have a really good convenient dosing here with a single use pen that we're working on. And that weekly injectable products are probably more vulnerable to orals than a convenient monthly dosing.

Next question, please, Julianne.

Thank you, Mike. Our next question comes from Umar Rafat from Evercore ISI. Please go ahead. Your line is open.

Hi, guys. Thanks for taking my question. I wanted to focus on Meritide, if I may. A two-part question. First, it looks like your competitors are moving forward to Phase 3 on either smaller data sets or further along from a phase two, phase three perspective. Just curious why you thought you definitely needed 52-week data. Was that mostly conservatism, or was that some FDA feedback as well? And then also on CapEx, I feel like the $150 million guidance increase seems relatively trivial, but it does imply CapEx being up 80% over first half. Could you please expand on whether it's API-related or something else you have in mind? Thank you very much.

Yes, thanks, Pete. Why don't I start on the overall development plan for Meritide and the value of the Phase II data that we'll have at the end of this year. Umar, as you know, this medicine coming out of Phase I showed a quite remarkable impact on obesity with a dramatic reduction in BMI. It actually proved quite durable after just three doses of Meritide in that Phase I study. We saw persistent weight loss really out 150 days or more at some doses. The Phase II study is a much larger concern. This is a 592-patient study. It has 11 arms. It tests monthly or, as Murdo said, even less frequent dosing. It has a Part II that allows us to really follow up on this durability signal, and it will allow the precision selection of dose or doses that patients and their practitioners really desire. This also conforms to regulatory requirements entering into Phase 3.

Homer's Peter on CapEx. As we previously indicated, we have initiated activities to further expand maritime manufacturing capacity to support those efforts. I said we now expect CapEx of $1.3 billion in 2024 versus the most recent guidance. which was 1.1 to 1.2 billion.

Julianne, next question, please.

Thank you, Umar. Our next question comes from Jay Olson from Oppenheimer. Please go ahead. Your line is open.

Oh, hey, thanks for taking the question, and congrats on all the progress, especially in your BITE platform. Can you talk about any feedback you're getting from clinicians on the MDeltra launch and potential lessons learned from BlinCyto that you can leverage for MDeltra, especially since you're launching BlinCyto now and BALL and developing a sub-Q formulation? Thank you.

It would take us in a couple parts here. Murdo, do you want to share what we're learning from the launch?

Yeah, thanks for the question, Jay. Obviously, it's very early given that this was a mid-May approval, but I have to say we are extremely pleased with how both thought leaders and community oncologists are receiving MDeltra in the market. Their clinical conviction is very high. They are moving quickly to establish care pathways for these patients given the monitoring requirement for MDeltra. And this disease setting, as you know, is a really difficult disease setting. Patients can progress relatively rapidly after platinum-based chemotherapy in the front line. And so we're obviously moving very quickly with our medical teams, our account management teams, and our sales organization to build rapid awareness and to help both academic and community oncology accounts be able to treat patients easily and safely and have the appropriate settings for care follow-up. So very early, but this product is seen as a major transformation in this disease setting.

Jay? Thanks for the question, Jay. You picked up on something really interesting, and that's, you know, leveraging the learnings of BlinCyto. I mean, this really is a platform capability that we enjoy with bispecific T-cell engagers. And already in the development of Imdeltra after its first approval, we are seeing significant read-through of the BlinCyto lessons, moving from later lines of therapy to earlier lines of therapy to drive efficacy in the setting of reduced tumor burden. the utility of these medicines in combination, which is so much easier to access and assess than other complex modalities, say like CAR-T, and moving these medicines to the point of therapy where they can have the greatest impact, namely frontline, also pathways to reduce monitoring. Jay, we are leveraging all the learnings of Lensido to drive and expedite the development of Imdeltra to be a component of frontline small cell lung cancer therapy, both with extensive-stage and limited-stage disease. And as Myrtle shared, we do this work really quite inspired by the impact of the medicine, even so early in its launch. Significant demand to learn and access and offer this medicine.

And Jay, I might just add that when it comes to xyluridomega, I think your question applies well there, too. So stay tuned. We'll talk more about xyluridomega as data emerge, but we're optimistic about how we can apply the lessons of Blinn and Indelcher to that as well. Let's go to the next question.

Thank you, Jay. 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. I have a question for Jay, again, on Maritide. Is there any reason to think that Maritide may or may not exhibit a different profile versus Pigovizabone on parameters such as lipid, blood pressure, or C-reactive protein? And how important is benefit on those parameters while you design your phase three trial, something like outcomes trial or not? Thank you.

Yeah, thank you, Mohit. I can surely understand the interest and, indeed, We are making all these measurements and more. We won't dimensionalize what we mean when we say differentiated profile at this time. We're still focused on completing this ongoing and well-conducted Maritide Phase II study, but do expect to learn this and more when ultimately we're able to be in a position to share the outcomes of Part A of the Phase II study. We are taking a comprehensive assessment to optimize dose and schedule and impact this medicine. Julianne, next question, please.

Thank you, Mohit. Our next question comes from Gregory Renza from RBC Capital Markets. Please go ahead. Your line is open.

Great. Thanks. Congratulations on the quarter, and thanks for taking my question. My question is just on the obesity franchise. As you and the team had mentioned, to expect one of the early obesity programs to enter clinical development later this year, Just curious if you could elaborate on what lens you're using to nominate that first or that next program. I'd imagine it's rather complex in the assessment and any color you have on determining that choice and how to take that forward would be great. Thank you.

Gregory, thank you. This is Jay. And thanks for following the early pipeline and its development. It's developing very nicely. As we've shared our strategy in the development of obesity medicines and medicines for obesity-related conditions, we're interested in really harvesting the insights of the incretin pathway, but also moving beyond this pathway to other novel targets, some supported by genetic inferences, but all of them supported by strong preclinical development packages. And so, it is a multifactorial assessment that leads to the decision to resource the medicine in human clinical investigation. but it's a high degree of conviction that's required as the bar is ever rising within our portfolio for that resource as well as in the field. So more to follow on the mechanism and characteristics of this new medicine that we're intending to advance into clinical investigation in the second half of this year. All right, next question, please.

Thank you, Gregory. Our next question comes from Chris Raymond from Piper Sandler. Please go ahead. Your line is open.

Thanks, and if I may, another obesity question. Just on Maritide, and I've heard you guys now talk for a long time about planning for a broad phase three program, but I don't think you guys have ever talked, even in generalities, when exactly this will happen. Can you maybe give a range here for when you anticipate kicking off enrollment in that program?

Chris, as you can expect, we're focused now on completing the Phase 2 trial and moving as swiftly as appropriate into Phase 3. So we'll have more to say to that over the course of the coming year. You can appreciate it's a competitively intense field, so we're not giving dates at this point.

Next question, please.

Our next question comes from Carter Gold from Barclays. Please go ahead. Your line is open.

Good afternoon. Thank you for taking the question. For Peter, on August 2nd, the U.S. Tax Court entered a decision against Koch. Their litigation was often referenced as sort of the best benchmark for sort of what you're facing. I'm appreciating that you took the deposit earlier this year, but why shouldn't there be read-through from that case? And maybe you could speak to your overall confidence on the outcome. Thank you.

Yeah. No, thank you very much for the question, Carter. Nothing has changed in our evaluation of the case. Court date set for November 4th. We're confident in our position, right where we've always been. We're confident our reserves are at an appropriate level. And what I would say is, first of all, I don't see, and Coke hasn't been as much a reference, and I won't get into making comparisons. We refer once in a while to the Medtronic situation. But in general, what we've seen is that the tax court in the last several years has reinforced the value of manufacturing down in Puerto Rico. And so we look forward to stating our case. We're very confident where we're at. And that's all we've got to say at this time. No change. We're at where we were in terms of confidence, which is in the same place for the last two and a half or three years now.

Julian, next question, please.

Thank you, Carter. Our next question comes from Terrence Flynn from Morgan Stanley. Please go ahead. Your line is open.

Great. Thanks for taking the question. Peter, another one for you here. I appreciate the incremental guidance on CapEx, but just was wondering if you could speak directionally about margins in 2025, given the likely scope of the Meritide Obesity Program. Thank you.

Terrence, we don't, as you know, We don't guide long-term margins. But let me just comment on what you're seeing this year. I'm happy to speak to that. I think it's important. You know, at Amgen, we're committed to a capital allocation hierarchy where we first invest in innovation and first internal innovation. And so with that in mind, Terrence, you know, we've consistently said that we would flex out margin, which, remember, with us, it's a percentage of product sales. not revenue, if there were opportunities to achieve strong after-tax cash returns on our investment in excess of our hurdle rate, and that we would communicate that ahead of time. So this year we shared with you at the beginning of the year we felt operating margin would be about 48%. We see an opportunity here during the year to make some investments in the research and development activities with an emphasis, I would say, on development. That's up 30% year-over-year in the quarter, non-GAAP R&D. We now see non-GAAP R&D spend up over 25% year-over-year for 24, which we think is great because you've heard about the deep, mid, and late-stage pipeline we have, driving Maritide and that deep, mid, and late-stage pipeline. We're always focused, Terrence, whether it's this year or next year, on productivity and prioritization, always looking for opportunities to generate capital, to allocate to innovation. We've got a new program called Technology and Workforce Strategy that we're moving along at speed and scale. I spoke about opening a new talent innovation center in Hyderabad, India. So we're doing everything we can to preserve that margin, reallocate capital innovation, and be the disciplined spenders of capital that Amgen always has been. All right, next question, please.

Thank you, Terrence. Our next question comes from Chris Schott from J.P. Morgan. Please go ahead. Your line is open.

Great. Thanks very much. Just had a question on Meritide and your plans in that Phase 2 diabetes study. The company is obviously very excited about the broader opportunity for the drug, but it does seem like diabetes is a more established market with maybe less of the capacity constraints than we see in obesity. So can you just talk a little bit about what you think you need to see to be able to compete here and dislodge incumbents? And can you also confirm this study is not needed to move forward in the Phase 3 obesity studies and it's just a completely separate program related to the diabetes piece of things? Thank you.

Let me take this in two pieces again. Jay, why don't you address the first piece and then Murdo, feel free to jump in.

Yes, absolutely. As you nicely identified, later this year we will initiate an additional dedicated Phase 2 study that will characterized Maritide for the treatment of diabetes in patients with and without obesity. And this new study is not a gating step at all for the Phase III program for patients with obesity, but conforms to regulatory guidance and, importantly, allows us to optimize dosing for the diabetic patient. where medically I can say, and Myrtle, I invite your considerable perspective, I'm unaware of a highly efficacious monthly or less frequently administered medicine for the treatment of diabetes. Myrtle.

Yeah, thanks, Jay. I would agree with you that the differentiation that we've talked about for chronic weight management would hold in a robust way in type 2 diabetes. And while there are lots of products that can control diabetes, hyperglycemia and provide HbA1c control, there is a significant benefit if you can improve adherence and persistence, and we do believe that our monthly dosing could do that. Next question, please, Julianne.

Thank you, Chris. Our next question comes from Kripa Devarakonda from Truist Securities. Please go ahead. Your line is open.

Hey guys, thank you so much for taking my question. Another obesity question, but slightly tangential. I'm not sure if you've talked about this before, but there's been conversation about muscle preservation in people who are losing weight on glyphs. Have you evaluated this aspect with Maritide? Do you see this being a problem broadly in the space? And if so, where do you think Maritide would fit into that landscape? Thank you.

Sure. Jay, why don't you jump in there?

Sure. No, thank you for your question. We, as you apparently do as well, are following this class, banded class, of medicines that provoke remarkable weight loss for the impact on healthy tissues, including but not limited to muscle. And the associated muscle loss that has been reported in the literature may relate mechanistically. It may also relate to the quite dramatic cadence of weight loss of patients treated with these medicines. And in the fullness of time, we and others will have that answer. As you can imagine, we're making many of these measurements on our own study and don't have any report Any data to report to you here today, but we too are following this and also the progress of some organizations that are seeking to administer medicines to support muscle loss with obesity medicines. That is quite interesting to us given our legacy of muscle biology. But I would say these are early insights from the field. To my knowledge, they have not proven as yet to be debilitating to the patient, but we, like you, follow its interests.

Julian, seeing we're getting to the top half of the hour here, maybe we'll just take two more questions.

Certainly. Thank you, Kripa. Our next question comes from James Shin from Deutsche Bank. Please go ahead. Your line is open.

Hi, guys. Thanks for taking my question. For the next obesity asset that's entering clinics later this year, can you specify whether this asset is aimed to fill in for 786 and whether this next obesity asset will work in tandem with 133? Thank you.

Thanks, James. We won't today provide any further insight into this medicine. It's just too early, and as Bob shared, this is nicely for patients, a very competitive space. But as I shared earlier, in our deeper pipeline in obesity, we remain interested in the incretin pathway. We remain interested in injectable. We're also pursuing oral medicines, and so in the fullness of time, we'll have a chance to share more, we're really playing the long game to drive a true differentiation benefit to the patient and to access segments of the market that are not well addressed even by the current medicines.

And Julian, let's take our last question, please.

Thank you, James. Our last question will come from Gary Nachman from Raymond James. Please go ahead. Your line is open.

Okay, thanks. Good afternoon. So shifting to Tepeza, when do you think we'll see more of an acceleration in the low CAF patients? How has reimbursement been improving for those patients? And describe how much the Japanese opportunity could help next year. And then just talk about the overall resources you're putting behind TPEZA and the rest of the rare disease portfolio that's obviously a much bigger focus for you now, if that continues to ramp up, at what pace, and when you might get more operating leverage from that rare disease business. Thank you.

A lot of questions there, Gary, but I want to take it in a couple pieces. Go ahead, Vikram.

Yeah, so thanks for the question, Gary. Look, we're pretty pleased with how we've been executing on Tepesa this year and driving it towards growth. As you rightly observed, there are a significant number of low-caste patients or low-clinical activity sport patients that are suffering from this disease who are not being appropriately treated. And specifically, that's about 80,000 out of the 100,000 addressable patients in the U.S., What we have been doing is seeing significant momentum on expanding our prescriber base, which now, in addition to oculoplastic surgeons, also includes ophthalmologists and endocrinologists. And this is a really important element here. The strategic focus in endocrinology is really important so that we can serve those low CAS patients favorably. You asked about improving access To date, we have achieved favorable medical policy changes for greater than 65% of U.S. covered lives. And if you compare that to 50% last quarter and just over 5% about a year ago, I think we've made pretty good progress in enabling patient access using our Phase 4 data that had become available last year. So we continue to see a significant growth opportunity for TPEZA in the U.S., while also recognizing that as we make progress with a lot of our execution efforts, there continues to be a time lag between when we knock down barriers for access, expand our prescriber base, and see patients get on therapy.

In Japan, Gary, we expect that there will be, again, an attractive market and that this will be well-received in that country, and we'll talk about that once we've launched there during the course of next year. With respect to leverage, I think I would just offer that we're on track with respect to our synergy targets there, and we'll begin to get even more leverage as we're able to take full control of the supply chain for the rare disease products. And then I would just further observe, as we've said many times, that we feel fortunate that there's a good overlap between some of our existing capabilities in sales and marketing and the needs of those rare disease products. So all in all, remain really excited about what we're able to do for rare disease patients, the position we have, and the likelihood of that just improving over time. So with that, let me thank all of you. I know we've gone a few minutes over the set time, but thank you all for participating in the call, and we'll look forward to regrouping with you after the third quarter. Thanks.

This concludes our 2024 Q2 earnings call. You may now disconnect.