Analyst Conference Summary

biotechnology

conference date: July 26, 2018 @ 2:00 PM Pacific Time
for quarter ending: June 30, 2018 (second quarter, Q2)

Forward-looking statements

Overview: Solid quarter, Aimovig launch should help going forward. Increased full year revenue and non-GAAP EPS guidance.

Basic data (GAAP):

Revenue was $6.06 billion, up 9% sequentially from $5.55 billion and up 4% from $5.81 billion in the year-earlier quarter.

Net income was $2.30 billion, up sequentially from negative $2.31 billion, and up 7% from $2.15 billion year-earlier.

Earnings Per Share (diluted EPS) were $3.48, up sequentially from negative $3.25, and up 7% from $2.91 year-earlier.

Guidance:

"2018 EPS guidance revised to $11.83-$12.62 on a GAAP basis and $13.30-$14.00 on a non-GAAP basis; total revenues guidance revised to $22.5-$23.2 billion."

Conference Highlights:

Robert A. Bradway, CEO said "Our two most recently launched products, Aimovig and Parsabiv, are off to a strong start... We also experienced volume-driven growth outside the U.S. We decided not to change the prices of any of our medicines at midyear."

Aimovig was approved by the FDA late in the quarter; revenue listed with other (see table below). Reception has been enthusiastic. Started patients on bridging programs prior to payer approval.

New products are rapidly approaching the market: Xgeva for multiple myeloma, Amgevita biosimilar to Humira, Evenity for osteoporosis.

Parsabiv for hyperthyroidism secondary to chronic kidney disease is having a good launch.

Whether Sensipar sees generic competition in 2018 depends on litigation and FDA outcomes. Guidance includes a variety of possible competitive scenarios.

Non-GAAP numbers: net income was $2.53 billion, up 2% sequentially from $2.47 billion, and up 5% from $2.41 billion year-earlier. EPS was $3.83, up 10% sequentially from $3.47 and up 17% from $3.27 year-earlier.

Product sales were $5.68 billion, up 6% sequentially from $5.34 billion, and up 2% y/y from $5.57 billion, with $4.37 billion in the U.S. and $1.31 billion international. Non-product revenue was $380 million, up sequentially from $211 million and up from $236 million year-earlier, up because of a milestone payment from Novartis for Aimovig.

Cash and equivalents balance ended at $29.4 billion, down sequentially from $32.2 billion. Operating cash flow $2.1 billion. Free cash flow was $1.9 billion. At the end of quarter debt was $34.5 billion. Capital expenditures $0.2 billion. $3.2 billion worth of shares were repurchased in the quarter; plans more repurchases in second half of 2018. Dividend payments were $0.9 billion.

Blincyto was approved by the FDA in March for B-cell precursor acute lymphoblastic leukemia in remission.

Enrollment in a Phase 3 study to evaluate the efficacy and safety of tezepelumab in adults and adolescents with severe uncontrolled asthma began in December. Partnered with AstraZeneca.

Aimovig (Erenumab) for migraines was approved for sale by the FDA in June.

Kanjinti, formerly ABP 980 (biosimilar trastuzumab or Herceptin) was issued a complete response letter by the FDA in late May, resulting in a delay before possible approval. It received an approval in Europe for marketing authorization in March.

Mvasi (biosimilar bevacizumab, or Avastin) was approved in Europe in January.

CNP520 is in a Phase 3 study for Alzheimer's disease for patients with a strong genetic predisposition to it. Partnered with Novartis.

ABP 710, biosimilar to infliximab, in June showed Phase 3 data matching Remicade.

Amgen has 13 Bite programs in progress, including AMG 562, AMB 427, AMG 420, AMG 673, AMG 701, AMG 757, and AMG 330.

See also the Amgen pipeline.

Cost of sales was $1.02 billion. Research and development expense was $0.87 billion; selling general and administrative expense $1.35 billion; and other benefit $19 million, for total operating expenses of $3.23 billion. Operating income was $2.83 billion. Interest and other expense net was $162 million, income taxes $351 million.

Q&A:

$3.2 billion stock buyback in Q2, is that prefered to use for acquisitions? We create value by investing in innovative medicines, both internally and externally. We also have strong cash generation and are committed to returning excess cash, over time, to shareholders.

Neulasta biosimilar competition? We are ready to compete. We have converted the market to using it with a device, and we have a record of being able to supply customers reliably. All Neulasta is in Part B, none is in Part D for Medicare.

APOE debate in Alzheimer's? We have researched the rate of cognitive decline based on APOE types. That is why we are doing a genetic stratification for our trials on cognitively normal patients, trying to prevent the disease, not fix it once the damage is done. 60% of Alheimer's patients have some form of APOE risk.

Aimovig revenue outlook? Annecdotal response is beyond our expectations. Right now the majority of our business is in free drugs, but we have begun to convert them to paying patients. The drug is second line for patients who have failed on generic therapy, but just requires a physician to state that.

Alzheimer's combinations? There should be combination studies, based on the genetics, but first we need to see individual components validated first.

Search

More Analyst Conference Pages: