Amgen (AMGN) Earnings Report: Q4 2015 Conference Call … · Amgen (AMGN) Earnings Report: Q4 2015 Conference Call Transcript The following Amgen conference call took place on January

CompanyName:AmgenIncCompanyTicker:AMGNSector:HealthCareIndustry:Drugs

EventDescription:Q42015EarningsCallMarketCapasofEventDate:113.50BPriceasofEventDate:148.35

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Amgen(AMGN)EarningsReport:Q42015ConferenceCallTranscriptThefollowingAmgenconferencecalltookplaceonJanuary28,2016,05:00PMET.Thisisatranscriptofthatearningscall:

CompanyPart icipants

ArvindSood;Amgen;VPofIRBobBradway;Amgen;Chairman&CEODavidMeline;Amgen;EVP&CFOTonyHooper;Amgen;EVP,GlobalCommercialOperationsSeanHarper;Amgen;EVP,Research&Development

OtherPart icipants

MatthewHarrison;MorganStanley;AnalystEricSchmidt;CowenandCompany;AnalystGeoffMeacham;Barclays;AnalystAlethiaYoung;CreditSuisse;AnalystTerenceFlynn;GoldmanSachs;AnalystMattRoden;UBS;AnalystMichaelYee;RBCCapitalMarkets;AnalystJoshuaSchimmer;PiperJaffray&Co.;AnalystMarkSchoenebaum;EvercoreISI;AnalystEunYang;JefferiesLLC;AnalystCoryKasimov;JPMorgan;AnalystYingHuang;BofAMerrillLynch;AnalystBrianSkorney;RobertW.Baird&Co.;AnalystNickAbbott;WellsFargoSecurities;Analyst

MANAGEMENTDISCUSSIONSECTION

Operator :

Mynameis[JakeLong],andI'llbeyourconferencefacilitatortodayforAmgen'sFourthQuarter2015EarningsConferenceCall.(OperatorInstructions)

IwouldnowliketointroduceArvindSood,VicePresidentofInvestorRelations.Mr.Sood,youmaynowbegin.

ArvindSood (VPofIR):

Okay.Thankyou,Jake.Goodafternoon,everybody.

I'dliketowelcomeyoutoourconferencecalltoreviewouroperatingperformanceforthefourthquarterandfullyear2015.IwouldparticularlyliketoacknowledgethosewhoarenewintheircoverageofAmgen,includingSteveChesneyofAtlanticEquitiesinLondon,RonnyGalofBernstein,AlethiaYoungofCreditSuisse,HartajSinghofBTIG,andBrianSkorneyofBaird.Welcome.EachofuslookforwardtoworkingwithyouandhelpingatyourunderstandingofourCompany.




Wehavealotofgroundtocovertodaysoletmemakesomeveryquickintroductions.LeadingthecalltodaywillbeourChairmanandCEO,BobBradway,whowillprovideastrategicreportonourperformancein2015andoutlookfor2016.FollowingBob,ourCFO,DavidMeline,willreviewourQ4andfullyearresultsandupdateyouonourpreviouspreliminaryfinancialguidancefor2016.

TonyHooper,ourHeadofGlobalCommercialOperations,willthendiscussourproductperformanceduringthequarter,withaparticularfocusonnewlylaunchedproducts.FollowingTony,ourHeadofR&D,SeanHarperwillprovideapipelineupdate.

Wewilluseslidesforourpresentationtoday.Theseslideshavebeenpostedonourwebsiteandalinkwassenttoyouseparatelybye-mail.OurcommentstodaywillbegovernedbyourSafeHarborStatement,whichinsummarysaysthatthroughthecourseofourpresentationanddiscussiontoday,wemaymakecertainforward-lookingstatementsandactualresultsmayvarymaterially.

Sowiththat,IwouldliketoturnthecallovertoBob.

BobBradway(Chairman&CEO):

Okay,thankyou,Arvind,andletmeaddmywelcometothoseofyouwhoarejoiningourcall.

Letmestartoffbysayingthat2015wasanexceptionalyearforAmgen.Itwasanotheryearofconsistentandreliableperformanceaswedeliveredforpatientsandshareholders.Ithinkyoucanseethatfirstinourfinancialresults.

8%revenuegrowthin2015reflectsthestrengthandbreadthofourproductsandour19%adjustedearningsgrowthreflectstheoperatingleveragewe'vecreatedthroughoursuccessfulandongoingtransformationefforts.Themomentumofourproductscanbeseeninthe17%growthwerecordedfromourinlinebrandsincludingEnbrel,Prolia,XGEVA,Sensipar,VectibixandNplate.Togetherthesebrandsgenerated$11billionforus.Ourlegacymedicinesalsoperformedwellandthesecontinuetobestrongcashflowgeneratorsforus,andweremainpositionedtocompeteasnewplayersenterthemarket.

Whiledeliveringthesesolidresultsfortheyear,wealsolaidimportantgroundworkforourfuturegrowthwithfourinnovativelaunchesinoncologyandtwoincardiovasculardiseaseoverthepast12months.Aswe'vesaidbefore,weexpectRepathaandKyprolistobesignificantopportunitiesforusandseetheseasgreatexamplesofinnovativemedicinesthataddressbigunmetneedsbyprovidingsignificantclinicalbenefitsanddemonstrablevaluepropositionsforpatientsandproviders.Theimportanceofhavingvaluepropositionssuchastheseisonlysettogrowfortheinnovativebiopharmaceuticalindustry,andwe'rewellpositionedtoembracethatrealityinourpipeline.

Developinginnovativemedicinestoaddressseriousillnessesisatthecoreofwhatwedo.Behindoursixnewproductlaunches,areanumberofadditionalexcitinginnovativepipelineopportunities,notably,RomosozumabinbonehealthandAMG334,whichisdirectedatmigraineandtheneurosciencearea.Alsoofnoteisournephrologyproduct,etelcalcetide,whichisunderregulatoryreviewandOmecamtivMecarbilwhichisanintriguingopportunityforusincardiovasculardisease.

InadditiontoourownpipelineofmoleculesweexpecttoremainactiveinBusinessDevelopment.Whenitcomestolaterstageopportunitieswewouldexpectthistorevolvearoundoursixcoreareas,whicharehematology/oncology,cardiovascular,inflammation,bonehealth,nephrology,andneuroscience.Focuswillremainimportanttousandyou'llseethatreflectedinourdecisionthisweektooutlicenseourrespiratorymoleculeAMG282.Whilewe'reintriguedbythegeneticsbehindthistargetandpotentialforthemoleculeinasthmaandCOPD,wefeelthecommercializationcanbebetteroptimizedbyGenentech,giventheirestablishedpresenceinthisfield.




Wecontinuetoexpandourglobalgeographicreach,nowwithfullownershipofourproductsandnewmarketsintheveryexcitingapprovalofRepathainJapanwithourpartnerAstellas,whichrepresentsourfirstproductapprovalforthisJapanesepartnership.Ourbiosimilarsprogramisalsomakingtangibleprogresswithoneunderregulatoryreview,onehavingcompletedPhaseIII,andanotherforwhichPhaseIIIresultsareexpectedlaterthisyear.

We'remakingsignificantprogresswithourtransformationeffortshereatAmgen.We'vealreadyreducedgrosscostsby$700million,enablingour2015adjustedoperatingmargintogrowbysomefourpoints.We'llmakefurtherprogressin2016andwe'reexpectinganother$400millionofgrosssavingsasweexpecttoreduceadjustedoperatingexpensesyear-over-year.Ourtransformationhasalsomadeusmoreagileandyou'llseethebenefitsofthatinourcompetitiveperformanceacrossourproducts.

Inmanufacturing,ourteamsaresignificantcontributorstoourtransformationefforts,drivingdownourcostofsalesandmakingfinalpreparationsforthelicensureofourNextGenerationbiomanufacturingfacilityinSingapore.Improveddrugdeliverysystemsareanimportantdifferentiatorofourmedicinesandwe'redeliveringsolidresultswiththem.TheNeulastaOnprokithasbeenextremelysuccessfulinthemarketplaceandwefiledourRepathaoncemonthlydosingoptionglobally.We'llcontinuetoinnovatewithpatientandprovider-friendlydeliverysystemstohelpdifferentiateourproducts.

Wealsoremainfocusedonsmartcapitalallocationthroughacombinationofsharebuybacks,dividendandvaluecreatingBusinessDevelopmentactivitiesthatarealignedwithouroverallstrategy,weexpecttodriveshareholdervalue.Weestablishedasetoftargetedfinancialcommitmentsthrough2018.Thesemetricswerechoseninparttoprovideevidencethatweweremakingclearprogressonourstrategythroughaperiodofpatentexpirationandnewproductlaunches.I'mpleasedtoreportthatasweclose2015we'vemadesignificantprogresstowardsaccomplishingtheselongertermmetrics.

Finallyasweenter2016,ourpositionisstrong,ourstrategyisclear,andwe'reexcitedabouttheyearahead.I'dliketothankmyAmgencolleagues,manyofwhomarelisteningtothiscallfortheirunwaveringcommitmenttodeliverforpatientsandforourshareholders.

David,overtoyou.

DavidMeline (EVP&CFO):

Thanks,Bob.Turningtothefourthquarteronpage5oftheslidedeck,revenuesat$5.5billiongrew4%year-over-yearwitha3%increaseinproductsales.Otherrevenuesat$207millionincreased$50millionversusthefourthquarterof2014,reflectinganincreaseinroyaltyincomeandamilestonepaymentrecognizedinthequarter.Adjustedoperatingincomeat$2.4billiongrew16%fromtheprioryear.Adjustedoperatingmarginimprovedfivepercentagepointsto44%forthequarter,reflectingthecontinuedbenefitsofourtransformationprogram.

Onanadjustedbasis,totaloperatingexpensesdecreased4%year-over-year,includingafavorableforeignexchangeimpactofapproximatelytwopercentagepoints.Costofsalesmarginat14.3%improvedby1.6percentagepoints,drivenbylowermanufacturingcosts,highernetsellingpriceandlowerroyalties.ResearchandDevelopmentexpensesat$1.1billionweredown10%year-over-year,reflectingQ42014upfrontpaymenttoKitePharmaof$60millionforourcancerimmunotherapycollaboration,aswellasthebenefitofR&Dexpensesavingsfromtransformationandprocessimprovementefforts.

SG&Aexpenseswereup3%onayear-over-yearbasis,reflectingincrementalexpensesinQ4fornewproductlaunches,partiallyoffsetbysavingsfromtransformationandprocessimprovementefforts.Otherincomeandexpensesimprovedby$53millionyear-over-yeartoanetexpenseof$120millioninthequarterprimarilyduetocashinvestmentportfolioactivities,aswellashigherinterestincomedueto




highercashbalancesthisyear.

Thetaxratewas11.6%forthequarter,a1.4percentagepointincreaseversusQ4of2014.ThisincreasewasprimarilyduetoadecreasedbenefitfromtheR&Dtaxcreditin2015versus2014duetohigherpretaxincomeandreducedR&Dexpenses.Asaresult,adjustednetincomeincreased19%andadjustedearningspershareincreased21%.

Youwillfindasummaryofourfull-year2015resultsonpage6ofthepresentation.Our2015full-yearrevenuesgrew8%to$21.7billionandadjustedearningspersharegrew19%to$10.38pershare.Forthefullyear,adjustedoperatingincomegrewto$10.1billion,a19%increasebasedonthecombinationofsolidrevenuegrowthalongwithflatoperatingexpenses.Operatingmarginimprovedbyfourpercentagepointsto48%.

Onanadjustedbasis,costofsalesmarginimprovedby1.3percentagepointsyear-over-yearto14.5%drivenbylowerroyalties,highernetsellingprice,andlowermanufacturingcosts.ResearchandDevelopmentexpensesdecreased5%,drivenbysavingsfromtransformationandprocessimprovementefforts.AndSG&Aexpenseswereup6%primarilyduetoincreasedcommercialexpensesfornewproductlaunches,partiallyoffsetbysavingsfromtransformationandprocessimprovementefforts.

Otherincomeandexpensesimprovedby$114millionyear-over-year,primarilyduetohigherinterestincomeduetohighercashbalances,partiallyoffsetbyhigherinterestexpenseduetohigherdebtbalances.Thetaxratewas16.8%forthefullyear,up1.9percentagepointsversus2014.Theyear-over-yearincreasewasprimarilyduetotheunfavorabletaximpactofchangesinthegeographicmixofearnings.

Turningnexttocashflowandthebalancesheetonpage7.Forthefullyear2015,wegenerated$8.5billioninfreecashflowversus$7.8billionlastyear.Thisincreasewasprimarilydrivenbyhighersalesandprofitability.Asaresultofthisstrongcashflowperformance,totalcashandinvestmentsincreasedto$31.4billion.Thisbalanceincludedover$2billionintheUSand$29billionoutsidetheUS.

Totaldebtoutstandingincreasedslightlyto$31.6billion.Asaresult,netdebtdecreasedby$3.5billionto$200millionatyear-end2015.Ourtotaldebtportfoliohasaweightedaverageinterestrateof3.6%andanaveragematurityof10years.Additionallyfor2015,weincreasedourdividendpershareby30%to$0.79perquarterwithpaymentstotaling$2.4billion.Wealsoannouncedthe27%increasetothedividendto$1pershareforourfirstquarter2016payment.

Finallyatour2014businessreview,weindicatedtheintenttorepurchasesharestotalingupto$2billionbytheendof2015,whichwehavenowaccomplishedwithrepurchasesofapproximately13millionsharessinceQ4of2014.Attheendof2015,wehadapproximately$4.9billionremainingunderourBoard-authorizedsharerepurchaseprogram.Weintendtorepurchaseanadditional2to3billionofsharesin2016,andareontracktodeliverourcapitalallocationcommitmentstoshareholders.

Iwillnowturntoguidancefor2016,summarizedonpage8.Asyouwillrecall,weprovidedpreliminary2016guidanceonourOctoberearningscall.Todayweareincreasingour2016guidance,whichreflectsanimprovedrevenueoutlookduetorevisedtimingofnewbiosimilarcompetition,aswellastheinclusionoftheR&Dtaxcreditwhichhasbeenpermanentlyextended.Withthisbackground,our2016revenueguidanceis$22to$22.5billionversuspriorguidanceof$21.7to$22.3billion,andouradjustedearningspershareguidanceis$10.60to$11pershare.

Inadditionwenowexpectouradjustedtaxratetoimprovebyonepercentagepointversuspriorguidance,to19.5%to20.5%.Finally,wecontinuedtoexpectcapitalexpenditurestobeapproximately$700millionthisyear.




Asaresultofourstrongprogressin2015,andthe2016outlook,weremainconfidentthatwewillmeetorexceedcommitmentsprovidedforthe2014to2018period,includingdoubledigitadjustedEPSgrowth,adjustedoperatingmarginimprovementfrom38%to52%to54%,$1.5billionoftransformationsavings,withanet$800millionreductioninoperatingexpense,andreturntoshareholdersofatleast60%ofadjustednetincomeduringtheperiod.Wealsopreviouslyguidedfortotalrestructuringexpenserelatedtothetransformationprogramof$935milliontoa$1.35billionduringtheperiodthrough2018.

Basedonbetterthananticipatedresultsfromtheexitoftwoofourclosedfacilities,wenowexpecttoincuratotalof$800millionto$900millioninrestructuringexpensethrough2018,withnearly$700millionrecognizedalreadyin2014and2015.

Insummary,wedeliveredanotheryearofstrongfinancialresultsin2015andweareincreasinglyconfidentintheoutlookforAmgen'ssuccessin2016andbeyond.Thisconcludesthefinancialupdate.

IwillnowturnthecallovertoTony.

T onyHooper (EVP,GlobalCommercialOperations):

Thanks,David.Goodafternoon,folks.

You'llfindasummaryofourglobalsalesperformanceforthefourthquarteronslide10.Globally,productsalesgrew3%year-over-yearforthefourthquarterand8%forthefullyear.OurUSbusinessdelivered5%year-over-yeargrowthinthequarterand12%forthefullyear.

Thefourthquarterincludedthenegative$100millionimpactrelatedtothelargequarter-threeendcustomerpurchasesasIdescribedinourlastearningscall.Foreignexchangenegativelyimpactedyear-over-yearsalesbytwopercentagepointsinboththefourthquarterandthefullyear.Excludingthenegativeimpactofforeignexchange,ourinternationalbusinesswasup5%year-over-yearfortheFourthQuarterandup6%forthefullyear.

Byanymeasure,2015wasasuccessforanoperating,executionstandpoint.Ourgrossproductleadthewayastheycontinuedwithmeaningfulgrowth.Wealsolaidthefoundationforfuturesuccesswithournewproductlaunches,aswellasfurtherexpansionintonewcountries,whiletransformingourcustomer-facingmodelanddeliveringsignificantcostsavings,whichwereinvestedinthelaunches.

Letmenowstartwithanupdateonournewcardiovascularfranchise,wherewehadtwolaunchesin2015,Repatha,ofcoursebeingthebiggestopportunity.Repatha,isofftoastrongcompetitivestart.IntheUS,Repatha'srelativeshareofthesegmentisreflectiveinmymindofourlaunchpreparationsandexecutioninthefield.BrandrecognitionamongstcardiologistsandprimarycarephysiciansisstrongandRepatha'ssingledose,deliveringintensiveandpredictableLDL-Clevelproductionisresonatingwellwithprescribers.

We'vemadegoodprogresswithourpayernegotiations.Morethan80%ofcommerciallivescurrentlyhaveaccesstoRepatha.Thestrictpayerutilizationmanagementcriteriaarelimitingtheuptakeasyou'llseeintheIMSscripts.WecontinuetoworkwithpayersonevaluatingtheutilizationmanagementcriteriatoinsurethatappropriatepatientsareabletoreceiveRepathathroughtheirplans.

InEurope,reimbursementnegotiationisongoingandweexpecttoaddreimbursementinmanycountriesoverthecourseoftheyear.I'mpleasedtoreportthatearlierthismonthwesecurednationalreimbursementinSpain,wellaheadofexpectations.InJapan,Repathawasapprovedlastweek.AlongwithourpartnerAstellas,wearelookingforwardtolaunchingtheproductinthenextfewmonthsaftersecuringreimbursement.

Seanwilldiscussourcoronaryimagingandcardiovascularoutcomestudyshortlyandwelookforwardto




datafromthesetwotrialsstrengtheningRepatha'sprofile.AlsoincardiovasculardiseaseourinnovativeheartfailuremedicineCorlanor,ismakingsteadyprogresswithprescribersafteritslaunchearlyin2015.

Letmenowmovetooncology,startingwithourotherlargenewopportunity,Kyprolis.Kyprolisgrew63%year-over-yearand8%sequentially.OurchartordersindicatethatwemorethandoubledKRdpatientshareinnewtotreatmentsecondlinepatientssinceourlabelexpansioninJuly,basedontheAspiredata.Weareveryexcitedtoo,abouttherecentFDAapprovaltoaddEndeavordatatoourUSlabel,demonstratingthatKyprolisdoubledprogressionfreesurvivalversusVelcade.

OurteamsaretrainedandinthemarketplacethedayaftertheEndeavorapproval.WithboththeAspireandEndeavordatanowinourUSlabel,wehavestrengthenedKyprolis'profileasabackboneofmultiplemyelomatherapy.Kyprolisisnowtheonlyapprovedtherapyforrelapsedmultiplemyeloma,withprovenefficacyasasingleagent,doublet,ortripletcombinationwithdifferentdosestomeetindividualpatientneeds.

Saleswillcontinuetogrowaswetreatmoresecondlinepatientsandtheystayontherapylonger,drivenbythedeep,durableresponsestoKyprolis.InEurope,KyproliswasapprovedinNovemberforsecondlinetherapybasedontheAspiredata.WearelaunchingacrossEuropeonacountrybycountrybasisasreimbursementissecured.ItisalreadyreimbursedinGermanyandthelaunchthereisunderway.

Continuingnowwithoncology,XGEVAgrew10%year-over-yearinthefourthquarteranddelivered$1.4billioninsalesfortheyear,drivenbyunitsharegainsinboththeUSandEurope.Thefourthquarterwasnegativelyimpactedbysomelargepurchasesinthethirdquarter.WecontinuetofocusonXGEVA'ssuperiorclinicalprofileversusthecompetition.

Vectibixgrew2%year-over-year,buthada10%unitgrowth.Withover60%ofVectibixsalesoutsideoftheUS,foreignexchangenegativelyimpactedVectibixgrowthbyaboutsevenpercentagepoints.Nplatecontinuedsolidgrowthofabout15%year-over-year,drivenby17%unitgrowth.

Turningnowtothefilgrastimfranchise,thelaunchoftheNeulastaOnprokitcontinueditsstrongmomentumachieving24%shareofallNeulastasalesinthefourthquarter.Thisinnovativedeliverysystemisappliedduringapatient'schemotherapyvisitsotheycanavoidreturningtothedoctorthenextday,asthisisthenormalrequirementforNeulastainjections.Thiswillalsobeanimportantdifferentiatorversusfuturelongactingfilgrastimbiosimilarcompetition.

Quarter-over-quarter,NeulastawasnegativelyimpactedbytheburnoffofsomelargerUScustomerpurchasesinthethirdquarterthatweredescribedinourlastcall.WeexpectNeulastatogrowmodestlyin2016aswedon'texpectabiosimilarlaunchintheUSuntiltheendoftheyearattheearliest.

Neupogendeclined4%year-over-year.Sequentiallyitlost3pointsofmarketshareintheUS,splitbetweenthebiosimilarandthebrandedcompetitors,butstillretains76%share.SharelossofNeulastaresultin11%unitdeclineintheUS,buttheUSsalesalsobenefitedfromarevisiontoaccountingestimatesinquarterfour.AndasIsaidpreviously,wewillcompeteaccountbyaccount,usingourmanyyearsofexperiencecompetingagainstbiosimilarsinEuropeandbrandedcompetitorsglobally,butdoexpectsomeshareloss.

Welaunchedtwoothermedicinesinoncology,BlincytowhichcontinuestomakeinroadswithALpatients.AndImlygic,wherewearepleasedwithinitialresponseofkeyinstitutionswithnextindication,aswellasitsfuturepotentialincombinationwithotherimmunotherapies.

LetmenowturntoinflammationwithEnbrel.Onslidenumber19,you'llseethatEnbrelgrew8%year-over-yeardrivenbynetsettingprice.You'llrecallnetsettingpriceincludestheimpactfromlistpricechanges,aswellascontractingandaccesschangesthathaveoccurredoverthepast12months.Year-




over-yearsegmentgrowthremainsstrongasrheumatologygrew27%anddermatologygrew46%onavaluebasis.

Quarter-on-quarter,ourrheumatologyvaluesharewasstableat28%,whileourshareindermatologydeclinedtwopercentagepointsto22%,duetointensifyingcompetitionfromnewtherapies.I'llremindyouthatrheumatologyaccountsfor80%ofEnbrelsales.GivenEnbrel'sexclusivitythrough2029,wecontinuetoinvestinthebrandanditsoutlookforfurthergrowthremainsstrong.

I'llnowmovetobonehealthandProlia.Proliagrew21%year-over-yearinthefourthquarterwithabout20%unitgrowthinboththeUSandEurope,delivering$1.3billionofsalesfortheyear.GrowthisdrivenbycontinuedsharegainsinboththeUSandEuropeandweexpectthismomentumtocontinuein2016.WithourrecentagreementwithGSK,welookforwardtotransitioningProlia,aswellasXGEVAandVectibix,backontoAmgen'scontrolin48countriesandcontinuingtodrivegrowth.Thisisanotherimportantstepindeliveringourinternationalexpansionstrategy.We'realsolookingforwardtoapotentialimportantadditiontoourbonehealthfranchisewithRomosozumab,whichwillsoonhaveit'sPhaseIIIdataandSeanwillbediscussingitinamoment.

Turningnowtoournephrologyfranchise,startingwithEpogen.Epogendeclined37%year-over-yeardrivenbyashiftinESAuse.Thisdeclinewasthreeprimarycomponents.First,around30%ofthedeclineisduetotheshiftfromEpogentoAranespinthedialysissetting.WecontinuetoseeuptakeofAranespwithmediumsizeandindependentdialysiscenters.Second,roughly20%isaresultoftheburnofffromthelargecustomerpurchaseinquarterthreethatwediscussedinourlastcall.Theremaining50%ofthedeclinecomesfromtheshiftfromMiceraatFresenius.

FreseniusrepresentsaboutathirdoftheUSdialysisbusiness.InOctober,theydiscloseditjustoverhalfofthedialysispatienceutilizingESA'shadswitchedtoMicera.EPOGENsalesin2016arelikelytobeimpactedbyfurthersharedeclinesofFreseniusandthepotentialforadditionalswitchingtoAranesp.Justareminder,wehaveaverygoodbusinesspartnershipwithDaVita,andouragreementwiththemextendsthrough2018topurchaseatleast90%oftheESAsfromAmgen.

Aranespsalesincreased4%year-over-yearwitha25%unitgrowthintheUS,drivenbythecontinuedshiftindialysisbusinessfromEPOGENtoAranesp.Internationalsaleswerenegativelyimpactedbyforeignexchangerates.

Sensipargrew21%year-over-yearforthefourthquarteranddelivered$1.4billioninsalesfortheyear,drivenbynetsellingpriceandunitgrowthinboththeUSandEuropewithgoodgrowthprospectsfor2016.OurnephrologyfranchisehasanotherexcitingopportunitywithParsabiv,thenewtradenameforetelcalcetide,ourIntravenouscalcimimetic,currentlyunderregulatoryreviewinboththeUSandEurope.

I'dliketoclosebyoutliningourexpectationsfor2016.WedonotexpectNeulastaorEPOGENbiosimilarsintheUSuntiltheendof2016attheearliest.Assumingpotentialcompetitorsprovideus180daysnoticebetweenapprovalandlaunch.EPOGENislikelytofacecontinuedcompetitionwithFreseniusandtheconversiontoAranesp.Neupogencontinuestofaceheadwindswithnewcompetition,whileweexpectNeulastasalestocontinuetogrowgiventheassumeddelayofUSbiosimilarcompetition.

WeexpectEnbrel,Prolia,XGEVA,Sensipar,Vectibix,andNplatewillallseecontinuedgrowthin2016,andourrecentlylaunchedproductsnotablyRepathaandKyproliswillcontributemeaningfulgrowthin2016.Kyprolis'improvedlabelintheUScoupledwithourlaunchesaroundtheworldwillcontinuetodrivesolidgrowth.Repathagrowthisexpectedtobesteadyintheneartermwithbreakawaypotentialoncewehavetheoutcomesdataonourlabel.ThissurehasbeenabusyandveryexcitingtimeforourteamsacrosstheworldandI'dliketothankthemfortheirhardworkanddedicationtodeliveringforpatients.LetmenowpassittoSean.




SeanHarper (EVP,Research&Development):

Thanks,Tonyandgoodafternoon.2015wasanunprecedentedyearforAmgenwitharecordnumberofregulatorysubmissionsandapprovalsand2016promisestobeanotherverybusyyear.We'vealreadyannouncedtworegulatoryapprovalsandtherearealotmoreR&Deventstocome.

BeginningwithourcardiovascularfranchiselastweekRepathawasapprovedinJapanforthetreatmentofpatientswithfamilialhypercholesterolemiaandpatientswhoareathighriskofcardiovasculareventswhoarenotadequatelyrespondingtostatins.ThisisthefirstapprovalofPCSK-9inhibitorinJapanandtheveryfirstapprovalbyourjointventureAmgenAstellasBioPharma.I'malsohappytoreportouroutcomestudyremainsontrackaswecontinuetoexpectthedatainthesecondhalfofthisyear,alongwiththeresultsofourcoronaryimagingstudywe'reconductingwiththeClevelandClinic.WebelievethatdemonstratingareductioninplaqueburdenwithRepathawillresonatewithcardiologistsandcomplementtheoutcomesdata.

We'vealsobeenreviewingindetailalongwithourpartnersatCytokineticsandServier,thePhase2datafromOmecamtivMecarbil,ournovelmyosinactivatorforheartfailure.We'vebeenextremelyencouragedbythefeedbackwe'vereceivedfromourdiscussionswithexpertsinthefieldaswepreparetomeetwithregulatorstodiscussapotentialpathforward.

Turningtooncology,lastweekintheUS,wealsoreceivedanewindicationforKyprolisincombinationwithdexamethasoneintherelaxedmultiplemyelomasetting.ThiswasbasedontheEndeavordata,whichdemonstratedclearsuperiorityoverVelcade,asKyprolisdoubledtheamountofprogressionfreesurvivaltime.

ThisFDAdecisionalsoconvertedtheinitialacceleratedapprovaltofullapprovalandaddedimportantdosingflexibility.TheKyprolis,EndeavordataarecurrentlyunderreviewintheEU.Sub-groupanalysisofAspireandEndeavorwerepresentedattheAmericanSocietyofHematologymeetinglastmonthandtheresponsefromphysiciansreinforcedourviewthatKyproliswillbeabackboneofmultiplemyelomatherapy,asphysicianspursuedeeper,moredurableresponsesfortheirpatientsinsearchofcure.Insupportofthiswe'reexploringtheuseofKyprolisincombinationwithnewertherapiesformultiplemyelomaandannouncedaninitialagreementlatelastyearinwhichweareprovidingdrugstoJanssenforcombinationstudywithdaratumumab.

Inthefourthquarter,wealsoreceivedthreemarketingauthorizationsinEurope,includingKyprolisincombinationwithRevlimidplusDexamethasoneforrelapsedmultiplemyeloma,basedontheAspiredata.Imlygicwasapprovedforthetreatmentofadultswithunrespectablemelanomathatisregionallyordistallymetastaticwithnobone,brain,lung,orothervisceraldisease.AndBlincytowasapprovedforthetreatmentofPhiladelphiachromosome-negative,relapsedorrefractoryBcellprecursoracutelymphoblasticleukemia.

WerecentlyconductedananalysisoftheeventsoccurringinourlargeongoingPhase3trialofXGEVAinthesettingofskeletalrelatedeventspreventioninmultiplemyelomapatients.Andwiththeusualcaveatthatthisisaneventdriventrial,wecurrentlyestimatewe'llseethedatatowardstheendofthisyear.WealsocontinuetoexpandourimmunooncologyplatformandannouncednewcollaborationswithMerckcombiningtheirPD1inhibitorwithBlincytointhesettingofdiffusedlargeBcelllymphomaandAMG820,ouranticolony-stimulatingfactor1receptorantibodyinadvancedsolidtumors.Finallyinoncology,ourPhaseIStudyofAMG330,ouranti-CD33bitecontinuestoenrollacutemyeloidleukemiapatients.

Intheareaofbonehealth,wealongwithourpartnersatUCBareawaitingtheresultsfromourregistrationalPhase3studyforsclerostinantibodyRomosozumabforpostmenopausalosteoporosis.Weexpectthesedatathisquarter.InthisstudyweareassessingtheeffectofRomosozumabdosedmonthly




for12months,comparedtoplacebodosefor12months,afterwhichbothcohortsaretreatedwithProliafor12months.Theco-primaryendpointsaretheincidentsofvertebralfractureat12and24months.Andimportantsecondaryendpointsincludeclinicalandnon-vertebralfractures.

We'realsoconductingaPhase3studyofsimilardesigncomparingRomosozumabtoalendronateinyearonefollowedbybothcohortsbeingtreatedwithalendronateinyeartwo.WeexpectRomosozumabtobeusedinhighriskosteoporosispatientsandwithatotalof12monthlydoses,webelievethemosteffectivewaytoinsureproperdosingandmaximumbenefitinthispatientpopulation,atleastinitially,isthroughadministrationbyahealthcareprovider.We'llcontinuetoevaluatethedevelopmentofpotentialindications,formulations,anddeliveryoptionsthatcouldbeattractiveforcertainpatientpopulations.InfactwewillbeseeingdatafromaPhase3studyassessingtheimprovementinbonemineraldensityinmenwithosteoporosisinthefirsthalfofthisyear.

Whileosteoporosisandosteoporosis-relatedfracturesaremorecommonlyassociatedwithpost-menopausalwomen,asmanyasoneinfourmenovertheageof50willsufferafragilityfractureintheirremaininglifetimes.BeforeIleaveourbonefranchise,I'dpointoutwe'realsobereceivingdatafromaPhase3Proliastudy,inglucacorticoid-inducedosteoporosis.Millionsofpatientsareonglucocorticoidtherapyaroundtheworld,whichcanresultinsignificantbonelossandfracture.

Inneuroscience,ourPhase3studyinepisodicmigraines,withourCGRPreceptorantibodyAMG334,continuestoenrollextremelywellacrosstwostudies.Thetestamenttotheunmetneedanddesirebypatientsforaneffectiveprophylactictherapy.Inthechronicmigrainesetting,ourPhase2bstudyisexpectedtoreadoutonthesecondhalfofthisyear.Meanwhile,thePhase1studyofouranti-PAC1antibodyformigraineAMG301iscurrentlyenrollingpatients.

AndfinallywereceivedatargetactiondatefromtheFDAonABP501,ourbiosimilarHumiraofSeptember25,ofthisyear.AsIsaidattheoutset,2015wasaveryproductiveyearandwehavealotinstorefor2016.IwouldliketothankallofmycolleaguesatAmgenforcontinuingtodeliverforpatients.

Bob?


Okay.Thankyou,Sean.Operator,we'rereadynowforquestions,soifyoucouldjustremindourcallersoftheprocedures,we'llopenthelines.

QUESTIONS&ANSWERS

Operator :

(OperatorInstructions)MatthewHarrisonofMorganStanley.

MatthewHarrison (Analyst-MorganStanley):

Great,goodafternoon.Thanksfortakingthequestion.MaybeifIcouldjuststartwithoneforSean.

OnRomo,peopleareobviouslyfocusedonthisdataandfocusedonthepotentialsafetyofthatmolecule.Couldyoujustaddressforushowyouthinkaboutthepotentialforsomeimbalancesinfallsorhearinglossorsomeofthebrainvolumegrowththatmakepeopleworriedaboutneurologicalsymptoms?Andinadditiontothat,justtalkaboutwhat,totheextentyoucan,whattheDSMBhaslookedfor,whatsortofmonitoringyouhaveinthestudyaroundthoseissues?Thanks.


Yes,soIthink,obviously,whenonelooks,thisisageneticallyvalidatedtarget,andwhenonelooksat




therarefamilialformsofabsenceofsclerostin,orpartialabsenceofsclerostin,activitysuchasVanBuchemdiseaseandsclerosteosis.Theseindividualsfromconceptionaredeficientinsclerostin,andsoasaconsequenceofcourse,overtime,oftenintheirthirdorfourthdecade,theybegintohavesomeuntowardeffectsfromthis,suchasverythickskullplatesandtheforaminainwhichcranialnervesexitfromtheskull,canimpingeonthenervesduetoovergrowthofbone.

Ithinkthatthisissomethingthatisn'taneffectofdevelopingfromconceptionwiththeabsenceofsclerostin,andIwouldjustcontrastitsharplywithgivingaoneyearoftherapytogenerallyquiteelderly,atleastmiddleagedatminimum,osteoporoticpatients.SoIthinkthat,ofcourse,inanabundanceofcautionwearedoingtestingonhearingandsomeotherthingsthataredesignedtoassessthesekindoftheoreticalrisks.

ButIwouldcertainlybeverysurprisedtoseeapharmacodynamicresponsefromthedrugthatwouldresultinthosekindofcomplications.TheDSMB,ofcourse,isfullyaware,asallofourinvestigatorsareoutdoingthetrialsandpatientsthroughinformedconsent.Allthetheoreticalandestablishedpotentialrisksofthesekindofinvestigativeproducts.

Operator :

YournextquestioncomesfromthelineofEricSchmidtfromCowenandCompany.

EricSchmidt (Analyst-CowenandCompany):

MaybeforTonyonRepatha'suptake,younotedthehappinessonyourpartwiththesharegains,butareyoudisappointedoverallwiththesizeofthepieatthisstage?Iknowyou'reseeingreimbursementheadwinds,butnonetheless,Iguessisthisonamoreshallowtrajectorythanyouthought?

And,assumingwedogetthepositiveoutcomesdatatowardthesecondhalfoftheyear,shouldweseeanimmediatebenefitfromthatorwouldyouthinkitwouldstilltaketimetoworkwithpayerstoworkthroughtheseheadwinds?


Thanks,Eric.SoI'mgladyouseetheperformanceinthemarketplace.Thehubweputtogetherwasclearlydonebecauseweunderstoodtherewasgoingtobealittlebitoftimebeforethepayersmadeadecisionaroundformularyapproval.Andtome,thehubhasthereforebeenasurrogatetothelevelofprescriptionsthatcardiologistsandprimarycarephysiciansarepreparedtoprescribe.

Weareseeingareallyrobustlevelofprescriptionscomingthroughthehub.Sotomethatcontinuestogivemegreatconfidenceintermsofphysicianwillingnesstoprescribethisdrugforpatientswhofitinsidethelabel.TheprescriptionsthemselvesintermsoftheNBRxsandTRxsarecontinuing.It'sclearthattheutilizationmanagementcriteriainplaceisrestrictingthenumberofprescriptionsthatgetdispensedandweareworkingwithpayersatthemomenttomakesurethatpatientswhoareeligibleactuallygetaccesstothesedrugs.


Andontheoutcome?


Oh,sotheoutcomestudy,clearly,Ithinkonceitisclearwhatthevalueofthisdrugis,physicians,patientsandpayerswillrealizeatremendousamountofvalue.NowIthinktherewillbeatimebetweenthedatabecomingpresentandthedatamovingintothelabelthatwillbenegotiatingwithpayerby




payer,butonceit'sinthelabelit'sclearthatweshouldseesomedramaticuptake.Then,yes.

Operator :

YournextquestioncomesfromthelineofGeoffMeachamfromBarclays.

Geof f Meacham(Analyst-Barclays):

Afternoon,guys,thanksfortakingthequestion.AcoupleonRepathaaswell.Sowhenyoulookatthesubtleties,eitherreimbursementorpopulationsorclinicalpractice,canyoucompare,kindoftheEUandJapanesemarketstotheUS,assumingyou'ddoitinoutcomesdatathisyear?

Thenjustafollow-uptoEric'squestionontheUSmarket.Whatcanyoutellusintermsofleadingindicatorsofdemand,inotherwordslikephysicianprescribersorvisitstoyourhuborthingslikethat?IwanttogetsomedemandmetricsbeyondTRx.Thanks.


IthinkIunderstandyourquestionaboutaccessoutsidetheUS.SoonehastorememberthatoutsidetheUnitedStates,onceaccessisgranted,physiciansarenotmakingadecisiononanythingotherthanaclinicaldecisionaroundthevalueforpatients.Sothere'snoeconomicdecisiononceyouhaveaccessinEuropeandinJapan.Sothenegotiationthereistogetaccessasquicklyaspossibleandthentomovepatientsontothedrugasphysiciansprescribe.

Fromaninside-the-USperspective,yes,thenumberofprescriptionswehaveseenacrosstherangeofphysicianswhohavebeenprescribingisencouraging.I'mnotquitesurewhatmoreyouwanttohearabout,Geoff,sorry.DidIansweryourquestion?OrdidImissaquestionthere?

Operator :

YournextquestioncomesAlethiaYoungfromCreditSuisse.


Hangon,Jake,beforeyoumoveontoAlethia.TonywasaskingifhehadaddressedGeoff'squestion.Geoff,wasthatokay?Wasthereanythingelse?Okay,itlookslikewemighthavelosthim.

Okay,let'sgoonwiththenextquestionfromAlethia.Alethia,goahead.


Alethia,wecanhearyou,goahead.

AlethiaYoung (Analyst-CreditSuisse):

OnNEUPOGEN,Iknowyousaidyouweregoingtocompeteaccountbyaccount,andsofaryouhavesharestillhave76%share,butcanyougiveusalittleflavoronliketheprogressthatyou'vedonethere?Haveyouspokentothemajorityofaccounts?Justhelpusthinkabouthowmuchdefenseyou'replayingandhowmuchsuccessyou'rehaving.

AndthenonNeulasta,IguessIwantedtothinkaboutwiththeOnprodevice,doyouthinkthatkindofbusinessisnowstickyandweshouldthinkaboutthatassharethat'snowprotected,iftherewereabiosimilartoemergein2017?





Okay,NEUPOGEN,toughtoansweryourquestion.WeclearlysegmenttheNEUPOGENaccountsbetweenlarge,mediumandsmall,andwedecidewhichoneswearegoingtodefendandwhichoneswearegoingtobelettinggo.Asyouknow,we'vehadcompetitiononthemarketforoverayearnow,plusabiosimilarcompetitorforclosetosixmonthsandwestillhold76%ofthemarketshare.

AsregardtotheOn-BodyInjectorforNeulasta,themainreasonwebroughttomarketistheuniquedistinctivevaluethisdrugorthisdevicebringstopatientsandtothephysiciansandclinicsandinstitutions.MostpatientstrytogetthechemoonFriday,thentheycanspendtheweekendrecoveringbeforetheygobacktowork.

NeulastarequiresthemtocomebackonaSaturdaymorningtogettheirlastinjection,sosometimeswhatwashappeningispatientsweregettinganinjectiontooearly,whichisactuallynotgood.Itactuallyreducestheeffectsofthedrugquitedramatically.Ortwo,theywerenotcomingbackfortheinjectionatall,soexposingthemselvestopotentialfebrileneutropenia.

Sotherealvaluewepickedupfrompatients,fromnurses,physiciansandfrominstitutionshasbeen,weareincreasingtheopportunitytogivepatientstherightnumberofcyclesattherighttimeandreallyreducethepossibilityoffebrileneutropeniadramatically.Thisisthebenefitwesellthedeviceconsistently,whichI'msurewillcontinueandstick.

AlethiaYoung (Analyst-CreditSuisse):

Great,thanks.

Operator :

YournextquestioncomesfromthelineofTerenceFlynnfromGoldmanSachs.

T erenceFlynn (Analyst-GoldmanSachs):

Iwaswonderingyoutalkedaboutthelabelexpansionsandsomeofthebenefitthere,butIwasjustwonderingifyoucouldcommentonthepotentialfuturecontributionfromonce-weeklydosing?Isthatreallyoneofthekeydriversofaninflectionhere?Andthen,anycommentaryyoucanprovideonaveragetreatmentdurationtrendsforKyprolis?Thanks.


SoIthinkwithKyproliswehavetostartwithourtruebeliefthatdrivingdeepremissioniswhereclinicalpracticeisgoingtogo.AndthecombinationisusingKyprolisasoneoftheproductsinthebackboneisclearlyshowingusthesehugeextendedperiodsofPFS,whichbydefinitionishelpingusdrivedeepremission.Patientconveniencedownthelinewillbecomeimportant,andIthinktheonce-a-weekdosewillcertainlyhelpwithpatientconveniencetoensurethatpatientsstayonthedrugforaslongaswecan.

Withregardstoduration,whenwelookatthechartauditsweseethatproductsinthiscategoryinsecondlineareprobablybeingusedbetweenaboutseventoeightmonthsatthemoment.It'sdifficulttoquoteKyprolisdatayetbecauseweonlygotapprovalforthesecondlineinJuly,sowearehopingtoseesomeextendeddataintothenextcoupleofquarters.

Operator :

YournextquestioncomesfromthelineofMattRodenfromUBS.

MattRoden (Analyst-UBS):




Great,thanksverymuchfortakingmyquestion.LetmegobacktoRomosozumab.Thisonealittlebitmorefromthecommercialside,becauseifthetrialworks,we'reallgoingtobeinterestedtheopportunityfortheproduct.Sotothatend,Iwaswonderingifyoucouldelaboratealittlebitmoreonthestrategyto,atleastinitially,administerthedruginthedocofficesbyahealthcareprovider.

Canyoujusttalkaboutwhyyouthinkthat'sbeneficialforthepatientandwhetherornotyouthinkthat'sthebestwaytomaximizethepotentialtoimpactpatients?Andthen,Iguesstherelatedfollowontothatwouldbe,canyoutalkaboutwhatworkyou'redoingtomaybeprovideaself-injectionoptiondowntheline?Thanks.


Let'sstartwithProliabecausewespentthelastfourorfiveyearsnowbuildingalevelofexpertiseonProlia,andwewerethefirstinjectablebiologictolaunchintoaGP-typemarket.Acomplexprocess,whichIthinktheteamgottheirhandsaround,andasyou'llseethedataintheUS,Proliacontinuestogrowinleapsandboundsaswegetbothbreadthanddepthofprescribinghappening.

It'scleartousthatalotofthesepatientsareelderlyandcomingbacktothedoctorisimportanttoensuretheygettheinjections.WhenIthinkaboutanyotherpotentialcompetitiontoRomo,thebiggestcomplainttheyhaveisthedifficultyofdailyinjectionsofcourse.

SowedoseethesametargetsthatareprescribingProliawouldbetargetedtogoto,totalkaboutRomo.Andwethinkwiththelargeunmetopportunityinthemarketplace,thisisquitealargeopportunityforustogotomarketwith.


Doyouwanttosayanythingaboutfutureplansonadministration?


Wearealwayslookingtoadvanceandimproveinthewaywebringtomarketacombinationdeviceproduct,andwewillcontinuetolookateffectiveandefficientwaysforthosepatientswhodecidethatself-injectioncouldbeanoption.

Operator :

AndyournextquestioncomesfromthelineofMichaelYeefromRBCCapitalMarkets.

MichaelYee (Analyst-RBCCapitalMarkets):

Thanks.IhadaquestionforSeanregardingRomo.Ithinkcertainlywethinkthatshouldwork.Butactuallywantedtoaskscientifically,youremindushowconfidentyouareintranslatingthatsuperiorBMDdatatosuperiorfracturedata,particularlyagainstahigh-efficacydruglikeForteo,issimilarortowhatmagnitudeitcouldbemuchbetternumerically?

Andtheninyeartwo,Iknowyou'retestingthehypothesisofthatdesigninyourstudy,butwhatwouldyouexpectinyeartwoandisthereanyreasonthatitwouldnotbemaintainedacrossyeartwo?Thanks.


Yes,wellwhatIwouldsayisthattheconfidencelevelwehaveabouttheBMD,whichasyouknowisthemostimpressivesortofBMDincreasethat'sbeenseeninhumanswithanytreatment,translatingintofractureresistance,thatconfidenceishigh.Ithinkthatthegeneticvalidationthatexistsforthepathwayisveryconvincingtopeopleinthefield.




Also,wesaw,andthisisoneofthefewareaswherethepre-clinicalmodels,particularlythoseperformedinnon-humanprimates,arereallyquitepredictiveofwhatyou'llseeinhumans.Andthen,inthenon-humanprimate,wewereabletodobiomechanicaltestingofbone,ofcourse,afteranimalsaresacrificed.SoweknowthatweachievedextremelyhighbonestrengthintheseanimalscommensuratewithBMDincreases.

Andfinally,we'vedoneveryadvancedimagingofhumansthathavebeentreatedwithRomosozumabandcomparedhead-to-headtowhatweseewithForteo.Andasyouprobablyknow,Forteohasitsmajorimpactontrabecularboneandhasarelativelylimitedimpactoncorticalbone.Andcorticalbonereallywhatmattersforthemajorityoflongbonefracturerisk,whichisreallywheretheclinicalneedis.

Andsowehavemultiplereasonstobelievethegenetics,thepre-clinicalinformationandtheimagingthatwe'vedoneinhumansthatweshouldhavenotonlyagreaterBMDincrease,butthatthequalityofbonethatwe'reproducingisofahigherqualitythanwhatonegetsusingPTHanalogues.

OnewayofthinkingaboutthisistherereallyaretwomasterregulatoryswitchesforcontrollingBMD.OneofthemisRANK-ligand,whichcontrolsosteoclastfunctionthatwedirectdenosumabthere,andtheotherissclerostin,whichcontrolsosteoblastfunction,andthere,sclerostinisthekeymediator.

Sowhatyou'redoinghere,likewithdenosumab,isthrowingamasterofphysiologicregulatoryswitches.Sowhatyou'reexpectingtogetandwhatweseeineverythingthatwe'veobservedisphysiologichigh-qualityboneformation.


Youweretalkingaboutyeartwo,Sean?


Yes,yeartwo.Ithinkthatthethingthatisinterestinghereinthisparadigmisthatthisisaone-yeartreatmentandsothefirstyearofthestudyveryimportantbecauseit'saplacebo-controlledperiod.Weknowfromourexperiencewithhumansthatwecan'tjustwithdrawtheproductandleavepatientsonnotherapy,sothegainsthataresoimpressivewillmeltawayrelativelyquickly.Andsoitisnecessarytolockinthesegainswithantiresorptiveagents.

Sowhatweexpecttoseeis,weobviouslyknowalotaboutProlia.WeexpecttheplacebogrouptorespondwelltoProliainthesecondyear,butthepatientsonRomosozumabwillalsogetsubstantialbenefit.Soifthere'sameaningfuldifferenceinfractureriskattheendofyearone,thatshouldpersistmoreorlessouttothesecondyear,andevenintheory,wellbeyondthat.

Butthisisanewparadigminosteoporosis,thisrelativelyshortperiod,andstudydesignsarequitedifferentthanwhatpeopleareusedtobeseeinginthefield.Sowe'llallbefascinatedtoseetheresults.


Jake,beforeyougoontothenextquestion,TonyhadanadditionalcommentonGeoffMeacham'squestionabouttheRepathademandindicators.Tony?


Sure,so,Geoff,IthinkIbetterunderstandyourquestionnowwithmorearoundinadditiontoTRxs,whatelsewouldwebelookingattoseeforfuturegrowthinthemarketplace.Likealways,tomeTRxsandNBRxsintermsofnewnaivepatientsarethemostimportantthingtomeasureintermsofthegrowth.

Butwithanewlaunchlikethiswheretheplansareputintoplace,whatonehastorememberisthatIMS




onlyreportsdispenseprescriptions,i.e.,prescriptionsthatcometoapharmacyorspecialtypharmacyandthepatientactuallywalksawaywithadrug.

Whatyouhavetobeabletolookatinsidethatdata,ishowmanyprescriptionsgettothepharmacyandhowmanyarerejectedversushowmanyareabandoned.Soweareseeingthemajorityofprescriptionsgettingtothepharmacyatthemoment,arebeingrejected.Rejected,becauseofthepriorauthorizationprocesshadnotbeenproperlycompletedorthere'ssomeoutstandinginformationandpatientshavetogobackandgetsomemoredata.

Allpatientsareseeingco-payatthisparticularstagebecausetheproductisnotproperlyonformularyyet,asbeingtoohighaco-payandtheyabandontheprescriptionandtheywalkaway.Thedatayou'reseeingit'sreallyimportant,butyouhavetounderstandthemajorityofprescriptionsgettingtothepharmacyarebeingrejectedorabandonedatthemomentwhiletheplanscompletetheirprocess.

Whichiswhywespentsomuchtimewiththeplansatthemomentshowingthemthenumberofeligiblepatientswhoareunlabeledgettingtopharmacyandnotgettingproduct.ItreallyisaconcernthatwhenyouthinkaboutthepotentialRepathapatient,thesearepatientsthatareatriskrightnowforacardiacevent,andtherefore,earlyinterventionisessential,sowearespendingquiteabitoftimewiththepayers.


Great,thanks,Tony.Jake,let'stakethenextquestionplease?

Operator :

YournextquestioncomesfromthelineofJoshuaSchimmerfromPiperJaffray.

JoshuaSchimmer (Analyst-PiperJaffray&Co.):

Hi,thanksfortakingthequestions.JustwantedtocomebacktotheRepathamanagementcriteriathatarelimitinguptake.Canyouelaboratealittlebitonwhattheprimarycausesforrejectionare?Giveusanysenseastotheevidenceyouaremakingprogressinaddressingsomeoftheseissues?

Andthen,givenwhatthoseissuesare,whatgivesyoutheconfidencethatcardiovasculartrialdatamayultimatelyresolvethatasabarrier?Thanks.


It'sTonyhere,Josh.Theutilizationmanagementcriteriaobviouslydifferplanbyplan,buttheyincludethingssuchaspatientmusthavereachedtheirmaximallytoleratedstatindoseorsomerequireyoutobeononeortwostatins.SomeofthemrequireyoutohavedonestatinsplusastepthroughtoZetia.There'sclearlyarequirementaroundyourLDL-Clevelsthathavetobeacertainlevel.

Butprobablythemorecomplexthingisthepriorauthorizationdocuments,fivepagesofhandwrittenstuffthatphysicianshavetofindoutabout,andmostoftherejectionsarebecausetheformisnotproperlycompletedandthere'sjustthetimetocollectthedata.

Soaswegettheprocessrunningabitmoreefficientlyandhopefullymovingfrompapertoanelectronicprocess,thepriorauthorizationscouldgofaster.Andthenasweshowthepayerstheimpactoftodraconian,autilizationmanagementcriteria,notgettingtotherightpatients,wewillseesomechangesthere.Theoutcomesdata,ofcourse,willdramaticallychangethevalueofthisparticulardrug,andwedoexpecttoseesomechangesintheutilizationcriteriaoncewehavethatterm.

Operator :




YournextquestioncomesfromthelineofMarkSchoenebaumfromEvercoreISI.

MarkSchoenebaum(Analyst-EvercoreISI):

Hi,guys.Thanksfortakingthequestion.Threequestions.First,I'dliketoknowwhereArvindbuyshisties?

Secondquestion,isPfizer'smadethedecisiontoenrollprimarypreventionpatients,Ibelieve,intotheirPhase3PCSK9outcomestrial,SeanandTony.AndIwaswondering,andtheyexpecttohavealabeledindicationforthat,andtheybelievethat'sveryimportantforthepayers.Whydidyoumakethedecisionnottodesignyourtrialthatway,maybethat'saSeanquestion?AndforTony,whatcommercialimplications,ifany,isthisgoingtohaveinyourmind?

Andthen,third,justtofollow-uponsomeoneelse'squestionjusttobemoredirect.Ithinkwhat'sgoingonintheStreetrightnowispeopleareconcernedthattheRomofracturereductionmagnitudemaylookopticallylessthanwhatiscontained,forexample,intheForteolabelorsomeofthedatathatRadiushasproducedfortheirPTHanalog.

Primarilybecauseattwoyears,you'recomparing,obviously,sclerostinantibodytoanactivecomparatorversustheseotheragentswhichwerecomparedtoplaceboIbelieve.Sothequestionisshouldwebeexpecting,Sean,canyoujusttalkaboutit,isthisanapples-to-applescomparisonorapples-to-orangescomparisonwhenweactuallyseethatnumber?Thankyou.


Sean,whydon'tyoudoRomoandthenthePfizerPCSK9question,andthen,Tony,youcantalkabout--


WerespecttoRomo,whatI'dsayisthatyou'reright,thatthiswillnotbesostraightforwardastomakecrosscomparisonsofthosesorts.Theyarefrothwithdifficultyalways,thesekindofcrosstrialcomparisons,butinosteoporosisbecausethetrialsareverylargeandaverysimilardesign,ingeneral,peoplehavefeltprettyconformabledoingthat.

Andyou'veseenthat,forexample,whenwehadourthree-yearfracturedataforProlia,peoplecomparedittothree-yearfracturedatawithbisphosphonates,eitheroralorIV,etcetera.AndIthinkinthiscase,it'sgoingtobemuchmoredifficulttomakethosekindofsimplecomparisons.

Ithinkwhatwillhappenhereisthatthedatawillbeinterpretedbytheexpertsinthefield.Andasalwaysisthecasewiththespecialtyproductlikethisthat'stargetedataveryspecificpatientpopulation,theexpertsinthefieldwillmakethedeterminationwhethertheythinkthatthedataareimpressiveandwhooughttobegettingtheproductandthatwillinfluenceprescribingoutsidetheexpertcommunity.

Withrespecttotheprimaryversussecondarypreventionstrategies,IthinkthatthecompaniesthatwereintheleadonPCSK9wantedtogetoutcomesdatafortheseproductsasfastaswaspossible.Andthefastestwaytogettheoutcomesdataistostudyapatientpopulationthathasafairlyhigheventrate.

Andthatgenerallyisachieved,oroneofthemainleversyoucanpullistohavepatientswhohavesufferedapriorevent.That'soneofthestrongestpredictorsofasubsequentevent.Andasyouknow,therehavebeenslightlydifferentflavorvarianceonthat,thathavebeenpursuedbyusandbyRegeneron,butthat'sbeenthebasicapproach.

Moreover,it'sneverbeennecessaryinthisfieldtodooutcomestrialsinvariousdifferentpopulationsinordertohavealabelthatcoversbroadpatientpopulations.SowhatyoureallyneedtodoisdemonstrateconvincinglytheLDLlevelreductionsthatyou'reachievingwithyouragenttranslate




unequivocallyintoreductionsincardiovascularoutcomerisk.That'sallyouneedtodo,andwefeelthatthesestudieswilldothat.Obviouslyacompanycomingbehind,ithastothinkaboutwhatthey'regoingtodototrytodifferentiatetheirposition.


SoIthinkthatthepayerswillbelookingathigh-riskpatients,physicianswillbemakingdecisionsaroundpatientsprescribedthathaveahighrisk.AndIthinktheclinicaltrialswehavewilltakeintoaccountallpatientswithhighrisk,andthosewhohaveaneventorwhohaveconcomitantmorbiditieswillbeahigherchanceofgettingadrugandgettingprescribed.


Jake,let'stakethenextquestion.

Operator :

YournextquestioncomesfromthelineofEunYangfromJefferies.

EunYang (Analyst-JefferiesLLC):

Thankyou.SowhenyoulookatForteosales,ex-USsalesarehigherthanUSsalesdespitelimitedaggressivepriceincreases,butwhenyoulookatProlia,USsalesaccountfor64%oftotalsales.Whydoyouthinkthereisadifferenceinusagebetweenanabolicandantiresorptiveagents?Ordoyouthinkit'sduetoseveraladministrationversusefficientofficeadministration?

Andfollowonthatis,Romosozumabisgoingtobeusedone-yeartreatment,whereasthePTHanaloguesaregoingtobeusedtothreeyear--twoyears,sohowdoyouthinkaboutthepricingofRomosozumab?Thankyou.


Letmetryandanswerthefirstpieceaboutthedifferenceinthesalesglobally.IthinkProliawassimplyatimingaroundcomingtomarket.WecametomarketduringafiscalcrisisandtheimpliedreimbursementprocessoutsidetheUnitedStatestookanumberofyears.

Infact,inFrance,ittookus41/2yearsfromapprovaltogettothefinaldecisionmadeonpricing.SooutsidetheUS,theyarerunningtocatchupintermsofthepatientusage.Andthenwearesurethateventuallyweshouldgettoadecentbalance.Sean?


Ithinktheotherquestion--


Theotherquestionhadtodowithpricing.Iwouldimagineit'spremature.


Ithinkthepricewewillbeablechargewillbeclearlylinkedaroundthevaluepropositionweseecomingoutoftheclinicaltrials.


Okay,Jake,let'stakethenextquestionplease?




Operator :

YournextquestioncomesfromthelineofCoryKasimovfromJPMorgan.

CoryKasimov(Analyst-JPMorgan):

Hey,goodafternoon,guys.Thanksfortakingmyquestion.IwantedtogobacktoKyprolisforaminute,andjustwonderingifyouhaveanefficacyinterimlookbuiltintoClarion,similartowhatyouhadforEndeavor?Andifyoudo,whattriggersitandwhatkindofactioncanbetaken?Couldwestopforeitherfutilityoroverwhelmingefficacy?Thanks.


Yes,sothesetrialswerealldesignedmoreorlessatthesametimebythesamegroupofpeople,andtheyallhavegenerallysimilardesignandtheyhaveinterimanalyses.Obviouslythatinterimanalysishasinit,theabilitytostopthetrialforclearfutilityandtostopthetrialforoverwhelmingefficacy.

Andifyou,I'msurewillrecall,bothAspireandEndeavorwerestoppedforoverwhelmingefficacy.Ithinkthisisareasonabledesign,butIdon'tthinkthatweareinanywayplanningonseeingafirst-linestudystoppedforoverwhelmingefficacyattheinterim,butitisapossibility.


Aswesay,Cory,we'reexpectingthisin2017.

Operator :

YournextquestioncomesfromthelineofYingHuangfromBofAMerrillLynch.

YingHuang (Analyst-BofAMerrillLynch):

Hi,goodafternoon,guys.Thanksfortakingmyquestion.Ifyoudon'tmind,canyouspelloutthesalesofRepathalastquarter?Iknowit'ssmallnumber,butjustahousekeepingquestionthere.

Andsecondly,onRomosozumabregulatorypath,doyoubelievefirmlythatthefirstPhase3trialthatwouldreadoutin1QthisyearshouldbesufficientforFDAapproval?Thanks.


Sodidyougetthesecondquestion?Whydon'tyougoaheadonthesecondquestion.


Yes,ontheRomostudy,yes.Webelieve,basedonthepublishedguidancesbyregulatorsaroundtheworldandourinteractionswiththeregulatorsaroundtheworld,thatifsuccessful,theplacebo-controlledstudywewerejusttalkingaboutearlier,thatthefirstofthesestudiesreadsout,willbesufficientforglobalregistration.


Okay,andastotheRepatha,you'reright,wearen'tbreakingthoseoutbylineitematthistime.

Operator :

YournextquestioncomesfromthelineofBrianSkorneyfromRobertW.Baird.

BrianSkorney(Analyst-RobertW.Baird&Co.):




Goodafternoon,guys,thanksfortakingthequestion.JustthinkingalittlebitmoreabouttheoutcomesdataforRepathaexpectedlaterthisyear.WheredoyouthinktherangeofoutcomescanfallintermsofhowweextrapolatethereductioninLDLcapabilityofthedrugtowhatwe'veclassicallyseenintermsofCVreduction,andmaybethinkaboutwhattherangeshouldbebasedonthat?Andhowitcoulddeviatefromthatclassicalextrapolation,whetherit'sduetodifferenttypesofpatientsorjustthetrialdesign,howwecanthinkaboutthat,thanks.


Yes,thisisthekindofsubjectthatonecansitaroundandtalkaboutformanyhourswithexperts,whichI'vedone.AndIthinkthebestthingIcansayisthatwehavearemarkablylinearrelationshipthatwe'veestablished,mostrecentlywithIMPROVE-IT,extendingthatlineinjustaremarkablylinearfashion,extendingthelinethatwascreatedbystatinsandbyotherinterventions,suchasillegalbypasssurgeryandsoon,andthegeneticsofcourse.

Andsowhenyouputitalltogether,whatyouhavetobelievescientifically,isthatwhattruthisthatyou'regoingtofallrightonthatlineinthesamewayasifyouachievedthatadditionalLDLloweringwiththestatinorwithezetimibe,werethatpossible.Obviouslyit'snot.

Coulditdeviatefromtheline?Sure,youknow,it'salwayspossiblethatsomeofthefoiblesofthewaythattheclinicaltrialsaredesignedandconducted,thereis,ofcourse,forexample,atreatmentlagofsomesortthatoccurswhenyoustarttherapies.Andsowhenthestudyreadsoutveryquickly,insteadofoveralongerperiodoftimethathasabiggerinfluence,etcetera.Thatcouldmakeitcomeoffthelineslightlyinonedirection.

Wealsoknowthattheagentdoeshavesomeactivitiesthatstatinsdon'thave,forexample,thereisaneffectonLp(a),whichispresentinsomeindividuals,andseemstobeastrongprognosticfactorthatcouldmakethedotcomeoffthelinealittlebittheotherdirection.There'ssomevariabilitythatyoucouldexpect,butfromascientificperspective,basedonthehumangeneticsandeverythingweknow,onewouldexpectthatyou'regoingtoseeareductionthatwouldbeproportionalandsimilar.

Andthatwouldberoughlyballparkaround1/3levelreductionoftherisk.That'sthekindofnumberthatmanypeople--keepinmind,Ithinkthat50%reductioninrisk,thatwassuggestedbytheanalysesthatwerepublishedintheNewEnglandJournal,thatthere'saverywideconfidenceintervalaroundthose.

Andwhileyoucan'truleoutthepossibilitythatyou'llseethatbigofareduction,that'sabiggerreductionthanyouwouldexpecttogetifyouwereachievingtheLDLloweringthatwe'reachievingwiththestatin.SoitrequiressomeotherbiologylikeLp(a)orsomethingtobegoingon,andIcan'ttellyouthat'snothappening,butitsurewouldn'tbemybasecase.


We'llknowinafewmonths.


Lotstotalkabouttoday,sowehaveexceededourprescribedhour.Whydon'twetaketwolastquestions.

Operator :

YournextquestioncomesfromJimBirchenoughfromWellsFargo.

NickAbbott (Analyst-WellsFargoSecurities):




It'sNickinforJimthisafternoon.Wespentalotoftimetalkingaboutverylate-stagepipelineandclearlyhavedoneaprettyimpressivejobdevelopingthosemolecules,butwhatareyoupointinginvestorstointermsoftheearlystage?

IfIlookatthePhase2pipeline,halfofthoseAMGsarewithAstra.There'stheCTEPHinhibitorthatyou'rewonderingwhattodoandmanyofthosePhase1moleculeshavebeenaroundforalongtime.So,Phase3looksreallygood,butwhataboutPhase2andPhase1,whatshouldwebefocusedon?


Yes,youknow,we'reactuallyreallyexcited.Ithinkit'sfairthatwehadsomuchgoingoninthelaterstagesthatwehaven'tspentasmuchtimefocusingontalkingaboutwhat'sgoingonintheearlierpipeline,butwe'rereallyexcitedaboutquiteanumberofthingsintheearlierpipeline.Obviously,OmecamtivMecarbilisveryexciting.Wehavethemigraine,newmigraineantibodyType1thatImentioned.Wehaveanovelheartfailuremoleculewhichwillbeenteringtheclinicthisyear.That'ssomethingwe'vedevelopedinhouse.WehaveacompletelynovelinflammationmechanismthatnooneelseispursuingthatIthinkthatisextremelyinterestingthat'senteringPhase1now.AndwehavequitearangeofBiTEtargetsthataremovingforwardintotheclinic,eithernoworintherelativelynearfuture.

SoIthinkthere'splentytolookforwardtointhatspace.Andyouknow,wealsohave,earlierthanthat,reallythemostexcitingstuffwhichissomeofthetargetsthatwebelieveweareuniquelyworkingonbecausethey'vearisenfromouradvancedpopulation-basedhumangeneticsefforts,liketheGeneXexamplethatsomeofyoumayrecallfromourbusinessreview,whichismovingalongverynicely.

SoIthinkatafuture,business-reviewtypesettingwewillprobablytalkalittlebitmore.It'sbeenhardtodothatwitheverythingthat'sbeengoingoninthelate-stagework.


Jake,let'stakeonelastquestion,please.

Operator :

Therearenofurtherquestionsatthistime,sir.


Okay,great.Inthatcase,letmethankeverybodyforyourparticipationinourcall.Betweenmyselfandmyteam,we'llbearoundforawhile,soifthereareanyotherquestions,feelfreetocallus.Haveagoodday.

Operator :

Ladiesandgentlemen,thisconcludesAmgen'sFourthQuarterandFinancialResultsconferencecall.Youmaynowdisconnect.

Allrightsreserved(c)2014TheStreet,Inc.

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Amgen (AMGN) Earnings Report: Q4 2015 Conference Call … · Amgen (AMGN) Earnings Report: Q4 2015 Conference Call Transcript The following Amgen conference call took place on January