Analyst Conference Summary

biotechnology

conference date: August 3, 2021 @ 2:00 PM Pacific Time
for quarter ending: June 30, 2021 (first quarter, Q2)

Forward-looking statements

Overview: Lower revenue driven by lower prices and delays in diagnoses due to pandemic.

Basic data (GAAP):

Revenue was $6.53 billion, up 11% sequentially from $5.90 billion and up 5% from $6.21 billion in the year-earlier quarter.

Net income was $464 million, down 72% sequentially from $1.65 billion, and down 74% from $1.80 billion year-earlier.

Earnings Per Share (diluted EPS) were $0.81, down 71% sequentially from $2.83, and down 73% from $3.05 year-earlier.

Guidance:

Reaffirmed 2021 full year to revenue between $25.8 and $26.6 billion. GAAP EPS $8.84 to $9.90. Non-GAAP EPS $16.00 to $17.00.

Conference Highlights:

Robert A. Bradway, CEO said "We achieved solid, volume-driven growth in the quarter as our business recovered from the effects of the pandemic. As we look to the balance of the year, we are excited to be launching Lumakras, a first-in-class lung cancer treatment, and advancing a robust pipeline of potential new medicines." Amgen will invest about $1 billion to build two new manufacturing facilities in the U.S. Amgen is investing in innovation for future growth.

Volume grew strongly, 8% y/y. Net selling prices declined. Some newer products are showing strong revenue growth, offsetting older drugs in decline. In Q2 Kyprolis was approved in China.

Patient visits are recovering from pandemic levels, but still affected sales in Q2.

Non-GAAP numbers: net income was $2.52 billion, up 17% sequentially from $2.15 billion, and up 2% from $2.48 billion year-earlier. EPS was $4.38, up 18% sequentially from $3.70 and up 4% from $4.20 year-earlier. The main difference with GAAP numbers was about $1.5 billion in acquired in process R&D expense.

Product sales were $6.11 billion, up 9% sequentially from $5.59 billion, and up 3% y/y from $5.91 billion. Non-product revenue was $412 million, up from $298 million year-earlier.

Cash and equivalents balance ended at $8.1 billion, down sequentially from $10.6 billion. Operating cash flow $1.9 billion. Free cash flow was $1.7 billion. At the end of quarter debt was $32.8 billion. Capital expenditures $0.2 billion. $1.6 million worth of shares were repurchased in the quarter. Dividend payments were $1.0 billion. In Q2 $2 billion used to acquire Five Prime.

Otezla has been given a PDUFA date of December 21, 2021 for mild to moderate plaque psoriasis patients who are candidates for phototherapy or systemic therapy.

Lumakras (AMG 510 or sotorasib) was approved in May 2021 for treating KRAS G12C-mutated NSCLC in the U.S. , following at least one prior systemic therapy. Applications made in EU, Canada, Australia, Brazil and the United Kingdom. Trials in other indications continue. Any Lumakras revenue in Q2 was included in the other category. Launch is strong, so far.

In July 2021 THE FDA accepted the BLA for tezepelumab. A Phase 3 Study evaluating the efficacy and safety of tezepelumab in adults and adolescents with severe uncontrolled asthma data was presented in February 2021. A Phase 2 study evaluating the efficacy and safety of tezepelumab in adults with moderate to very severe chronic obstructive pulmonary disease is enrolling patients. Regulatory submissions planned for 1H 2021. Was designated a Breakthrough Therapy.

In Q2 2021 began Phase 3 planning and expects to commence discussions with regulators for bemarituzumab, a first-in-class anti-fibroblast growth factor receptor 2b (FGFR2b) antibody for the treatment of patients with human epidermal growth factor receptor 2 (HER2) negative, FGFR2b-positive gastric and gastroesophageal junction cancer. This came with the Five Prime Therapeutics acquisition in April 2021.

In June, 2021, EC approved an expanded indication for the use of Blincyto to treat pediatric patients aged 1 year or older with high-risk, first relapsed Philadelphia chromosome negative, CD19 positive, B-precursor acute lymphoblastic leukemia as part of the consolidation therapy

Planning for a potentially pivotal Phase 2 study began in Q2 2021 for tarlatamab (AMB757), an HLE BiTE molecule targeting delta-like ligand 3 (DLL3), in patients with r/r small cell lung cancer. A Phase 1b study of tarlatamab has begun recruiting patients with neuroendocrine prostate cancer. A Phase 1b study of tarlatamab in combination with AMG 404 is planned to initiate in Q3 2021 for patients with small cell lung cancer.

Dose escalation for AMG 757, an HLE BiTE molecule targeting delta-like ligand 3 (DLL3), in patients with relapsed or refractory small cell lung cancer began and expected initiation of expansion phase by H2 2021. A Phase 1b study of AMG 757 has initiated for patients with neuroendocrine prostate cancer expressing DLL3. A Phase 1b study of AMG 757 in combination with AMG 404 is planned to initiate in Q3 2021 for patients with small cell lung cancer.

Several bispecifics continue dose escalation studies.

See also the Amgen pipeline.

GAAP cost of sales was $1.64 billion. Research and development expense was $1.08 billion; selling general and administrative expense $1.38 billion; acquired in-process R and D 41.51 billion, and other expense $90 million, for total operating expenses of $5.70 billion. Operating income was $0.83 billion. Interest and other expense net was $270 million, income taxes $94 million.

Q&A summary:

Lumakras updates? 1st line NSCLC will be patients PDL1 negative, who don't usually benefit from checkpoint inhibitors, so there is unmet medical need. It is too early to see if it could be registration enabling, probably not since it is not a randomized trial.

KRAS (Lumakras) data plans? Phase 3 data in first half of 2022. Lung cancer interim analyses tend not to be particularly useful.

Lumakras plus vectibix, cancer types? Most patients will be colorectal, but is open across other cancers.

Tax 2010 to 2012 notices of deficiency? Related to transfer pricing dispute, allocation of profits between U.S. and Puerto Rico, where we have our major manufacturing facilities. We have appropriate tax reserves. Could take several years to resolve.

Teneo Bio acquisition should close in second half of 2021. That and other acquisitions add to the op ex bill.

AMG592? Enhances T reg cells. Data for 1b in lupus towards end of 2021. Phase 2 lupus trial actively enrolling. Will launch trial in ulcerative colitis in 2021.

Prices longer term for biosimilar inflamation agents? Inflamation is seeing new entrants including new mechanisms. This requires entry pricing competition. Interest in biosimilars is increasing. With our own biosimlars and novel drugs we can address a broad set of patients.

ABP 983 launch timeline? [Eylea biosimilar] No announcement yet, but progressing with enrollment and hope to be early in the launch sequence for those products.

Search

More Analyst Conference Pages: