Analyst Conference Summary

biotechnology

conference date: November 3, 2022 @ 1:30 PM Pacific Time
for quarter ending: September 30, 2022 (third quarter, Q3)

Forward-looking statements

Overview: Hanging in as older drugs lose sales and newer drugs ramp sales. Product volume grew, but prices declined and FX was negative.

Basic data (GAAP):

Revenue was $6.65 billion, up 1% sequentially from $6.59 billion and down 1% from $6.71 billion in the year-earlier quarter.

Net income was $2.14 billion, up 62% sequentially from $1.32 billion, and up 14% from $1.88 billion year-earlier.

Earnings Per Share (diluted EPS) were $3.98, up 62% sequentially from $2.45, and up 20% from $3.31 year-earlier.

Guidance:

2022 total revenue guidance revised to $26.0 to $26.3 billion; EPS guidance revised: $11.4 to $12.17 GAAP, and $17.25 to $17.85 non-GAAP basis.

Conference Highlights:

Robert A. Bradway, CEO said "Our medicines generated 8% volume growth in the quarter globally, with 11 products achieving record quarterly sales." Tezspire and Lumakras ramps are going well. Just months away from launching Amgevita, the Humira biosimilar, in the U.S. (already on sale in Europe). FX headwinds remain a challenge; expects negative $165 million effect in Q4.

Amgen acquired Chemocentryx for $4 billion.

Expects increased competition to continue to erode results of certain established products like Neulasta and Neupogen.

In Q3 2022 a Phase 1 study of AMG 133, a multispecific that inhibits the gastric inhibitory polypeptide receptor (GIPR) and activates the glucagon-like peptide 1 (GLP-1) receptor, completed enrollment. Data from this Phase 1 study will be presented at the 20th World Congress on Insulin Resistance, Diabetes, and Cardiovascular Disease (WCIRDC) Conference in December 2022. Amgen will also provide an update as part of its November 7, 2022 webcast.

In Q3 2022 rocatinlimab (AMG 451) Phase 2 positive data was released. The Phase 3 program began in June 2022.

In Q3 2022, Amgen announced positive top-line results from the DAHLIA study, a Phase 3 study evaluating the efficacy and safety of ABP 959, a biosimilar candidate to Soliris (eculizumab), for adult patients with paroxysmal nocturnal hemoglobinuria (PNH).

In Q3 2022 the primary analysis of a Phase 3 study evaluating the efficacy and safety of ABP 938, an investigational biosimilar to Eylea (aflibercept) met its primary endpoint in subjects with neovascular age-related macular degeneration; final analysis is expected in 2023.

In Q3 2022 A Phase 3 study evaluating the efficacy and safety of ABP 654 compared to Stelara (ustekinumab) in adult patients with moderate to severe plaque psoriasis has completed. Data was submitted to the FDA to support U.S. approval.

In September 2022 Tezspire was approved in the EU and Japan for severe asthma. A Phase 3 study in adults with oral corticosteroid dependent asthma and the Phase 3 chronic rhinosinusitis with nasal polyps continue. Data from the Phase 2b chronic spontaneous urticaria data is expected 1H 2023.

Many other studies are ongoing.

Non-GAAP numbers: net income was $2.53 billion, up 1% sequentially from $2.50 billion, and up 9% from $2.32 billion year-earlier. EPS was $4.70, down 5% sequentially from $4.95 and up 10% from $4.95 year-earlier.

Product sales were $6.24 billion, down 1% sequentially from $6.28 billion, and down 1% y/y from $6.32 billion. Non-product revenue was $415 million, up from $386 million year-earlier.

Cash and equivalents balance ended at $11.5 billion, up sequentially from $7.2 billion. Operating cash flow $3.0 billion. Free cash flow was $2.8 billion. At the end of quarter long-term debt was $38.7 billion. Capital expenditures $0.2 billion. 1.5 million shares were repurchased in the quarter. Dividend payments were $1.0 billion.

In June, 2022 data from the Phase 3 PARADIGM clinical trial of Vectibix in Japanese patients with previously untreated unresectable wild-type RAS metastatic CRC was presented at the ASCO annual meeting. These data demonstrated that the mFOLFOX6 + Vectibix combination provides a statistically significant improvement in overall survival over the mFOLFOX6 + bevacizumab combination in patients with a left-sided primary tumor or regardless of tumor locations.

Rocatinlimab (AMG 451) targetting OX40 Phase 3 initiated June 2022. For atopic dermatitis.

Bemarituzumab Phase 3 study for first-line FGFR2b gastric cancer continues to enroll, as do several Phase 1b trials.

Lumakras NSCLC data was presented at ASCO in June. Several studies are underway in various indications. Top-line results from the event-driven, confirmatory Phase 3 study comparing Lumakras to docetaxel in patients with KRAS G12C-mutated advanced NSCLC are expected in Q3 2022.

Amgevita (biosimilar to Humira) should launch in the U.S. in early 2023. The U.S. label for Amgevita has been modified to include pediatric Crohn's disease (ages 6 and above) and juvenile idiopathic arthritis (ages 2-3). Already on sale in Europe. The final analysis from a Phase 3 study evaluating the efficacy and safety of ABP 654 compared to Stelara (ustekinumab) in adult patients with moderate to severe plaque psoriasis is expected in 2022.

In May reported postive top-line, Phase 2 data for Olpasiran (AMG 890) for lipoprotein(a), a siRNA molecule licensed from Arrrowhead Pharmaceuticals (ARWR). Full data will be reported later in 2022.

See also the Amgen pipeline.

GAAP cost of sales was $1.59 billion. Research and development expense was $1.11 billion; selling general and administrative expense $1.29 billion; and other income $5 million, for total operating expenses of $3.99 billion. Operating income was $2.66 billion. Interest expense was $368 million, other income $100 million, income taxes $249 million.

Q&A selective summary:

AMG 133 for obesity, criteria for further development? Full data first week of December. Tolerability, weight loss, and sustainability are important criteria.

Biosimilar Humira, effect on Enbrel pricing? We are excited about our Humira biosimilar launch, but are not seeing a lot of change regarding Enbrel pricing. We are declining in volume, could lower price to keep volume up.

AMG 133 Phase 2? We hope to start it relatively near term, will talk about design and timeline then.

Repatha China? Had been on the market about a year before getting national reimbursement. There is real demand in these ex-US markets. We continue to build out our business in Japan and China. Lumakras launch is another example, with reimbursement in roughly 30 markets and approval in 40.

Decline in biosimilar revenues, pricing? Will continue to see price decline over time. But Medicare Part D and commercial will have slower declines. Depends on number of competitors for a particular molecule. We plan to get growth by launching a series of new biosimilars. Outside the US prices tend to decline faster.

Eylea 8mg higher dose effect? We want a full complement of competitive biosimilars. We feel we will be able to bring a higher concentration to our portfolio.

We do not expect the price decline on Enbrel to stay at about the same slope next year. We do not expect a dramatic price decline.

Diabetes as AMG 133 indication? We will look at the data, but it is not essential, obesity drives many bad outcomes.

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