Analyst Conference Summary

biotechnology

conference date: April 27, 2023 @ 1:30 PM Pacific Time
for quarter ending: March 31, 2023 (first quarter, Q1)

Forward-looking statements

Overview: Good profit growth on slight revenue decline y/y.

Basic data (GAAP):

Revenue was $6.11 billion, down 11% sequentially from $6.84 billion and down 2% from $6.24 billion in the year-earlier quarter.

Net income was $2.84 billion, up 76% sequentially from $1.61 billion, and up 92% from $1.48 billion year-earlier. But non-GAAP net income decreased; see below.

Earnings Per Share (diluted EPS) were $5.28, up 76% sequentially from $3.00, and up 97% from $2.68 year-earlier.

Guidance:

Updated for full year 2023: Revenue $26.2 to $27.3 billion. GAAP EPS $15.38 to $16.59. Non-GAAP EPS $17.60 to $18.70. Cap ex about $925 million. Share repurchases not to exceed $500 million. Excludes potential contributions from Horizon Therapeutics.

Conference Highlights:

Robert A. Bradway, CEO said "We delivered 14% volume growth driven by the breadth of our portfolio and strong demand for our products globally. We look forward to closing the acquisition of Horizon Therapeutics and joining forces to reach more patients around the world with their innovative medicines." GAAP profits were inflated by other income of $2.06 billion from marking to market the gain on Amgen's Beigene investment.. Patients are returning to pre-pandemic office visit intervals, which helps drive prescriptions.

Amjevita, biosimilar to Humira, became available in the U.S. on January 31, 2023. It has long been available in Europe.

In May 2023, Amgen will present results of the largest head-to-head, real-world study in postmenopausal osteoporosis, comparing fracture risk reduction of Prolia with bisphosphonates at the European Society for Clinical and Economic Aspects of Osteoporosis meeting.

In January 2023 the CHMP issued a positive opinion on Tezspire pens for sever asthma. Studies continue in asthma, chronic thinosinusitis with nasal polyps, eosinophilic esophagitis, urticaria and chronic obstructive pulmonary disease. In February, the FDA approved Tezspire pens for patients aged 12 years and older with severe asthma. A Phase 3 study of Tezspire in chronic rhinosinusitis with nasal polyps continues to enroll patients. A Phase 3 study of Tezspire in eosinophilic esophagitis has begun enrolling patients.

The final analysis from a Phase 3 study evaluating the efficacy and safety of ABP 938, biosimilar to Eylea (aflibercept), in patients with neovascular age-related macular degeneration, is expected this H1 2023.

In Q1 2023 A Phase 2 trial of AMG 133 for overweight adults was initiated. 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 was presented at the 20th World Congress on Insulin Resistance, Diabetes, and Cardiovascular Disease (WCIRDC) Conference in December 2022.

In Q1 2023 a randomized, double-blind, placebo-controlled Phase 4 trial investigating the efficacy and safety of Aimovig in patients with chronic migraine and medication overuse headache met its primary endpoint in the 140 mg dose group.

In Q2 2023 the Rozibafusp alfa (AMG 570), Phase 2b study of an antibody-peptide conjugate that simultaneously blocks inducible T-cell costimulatory ligand (ICOSL) and B-cell activating factor (BAFF) activity, in systemic lupus erythematosus (SLE), was stopped for futility.

In Q2 2023 a Phase 2b study of efavaleukin alfa (AMG 592), an interleukin-2 (IL-2) mutein Fc fusion protein, in SLE was stopped for futility. But a Phase 2b study of efavaleukin alfa in ulcerative colitis continues to enroll patients.

In April 2023 DeLLphi-304, a Phase 3 study comparing tarlatamab (AMG 757), a half-life extended BiTE molecule targeting delta-like ligand 3, with standard of care chemotherapy in second-line small-cell lung cancer (SCLC), will be initiated. Other AMG 757 studies continue.

In April 2023, the European Commission granted marketing authorization for Bekemv (eculizumab, formerly ABP 959), a biosimilar to Soliris (eculizumab). Bekemv is the first biosimilar to Soliris approved by the EC.

Many other studies are ongoing.

Non-GAAP numbers: net income was $2.14 billion, down 3% sequentially from $2.20 billion, and down 9% from $2.34 billion year-earlier. EPS was $3.98, down 3% sequentially from $4.09 and down 6% from $4.25 year-earlier.

Product sales were $5.85 billion, down 11% sequentially from $6.55 billion, and up 2% y/y from $5.73 billion. Non-product revenue was $259 million, down from $507 million year-earlier.

Cash and equivalents balance ended at $31.6 billion, up sequentially from $9.3 billion. Operating cash flow $1.1 billion. Free cash flow was $0.7 billion. At the end of quarter long-term debt was $61.6 billion. Capital expenditures $0.3 billion. No shares were repurchased in the quarter. Dividend payments were $1.1 billion.

See also the Amgen pipeline.

GAAP cost of sales was $1.72 billion. Research and development expense was $1.06 billion; selling general and administrative expense $1.26 billion; and other income $148 million, for total operating expenses of $4.18 billion. Operating income was $1.92 billion. Interest expense was $543 million, other income $2.06 billion, income taxes $601 million.

Q&A selective summary:

Tezspire indications you have most confidence in? COPD, chronic spontaneous uticaria, eosinophilic esophagatis. COPD readout expected 1H 2023.

AMG 786 for obesity? Look at the magnitude of the problem. It is a complex disorder with subsets of patients that would benefit from different therapies. Our program seeks to address specific patient subsets. We are looking at several mechanisms, including the one in 786.

Enbrel sales decrease? We were up 1% in volume in the quarter on strong demand. We had a formulary win in January. Expecting continuing slow volume growth in 2023. Inventory issues have been complex. Expect inventories to return to normal as year progresses. Also hit by state Medicaid true ups. There was some price concession.

Amgevita outlook? A lot of Q1 revenue was buy-ins for IDNs, we don't know how much actually was used in prescriptions. So Q2 revenue could be down from Q1. Overall we are pleased with our biosimilar programs. We plan to be first wave in programs we do. We are a trusted brand. We plan to double 2021 revenues by the end of the decade.

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