Analyst Conference Summary

biotechnology

conference date: August 3, 2023 @ 1:30 PM Pacific Time
for quarter ending: June 30, 2023 (second quarter, Q2)

Forward-looking statements

Overview: Nice inflection to increased y/y revenue.

Basic data (GAAP):

Revenue was $6.99 billion, up 14% sequentially from $6.11 billion and up 6% from $6.59 billion in the year-earlier quarter.

Net income was $1.38 billion, down 51% sequentially from $2.84 billion, and up 5% from $1.32 billion year-earlier.

Earnings Per Share (diluted EPS) were $2.57, down 51% sequentially from $5.28, and up 5% from $2.45 year-earlier.

Guidance:

Updated 2023 guidance, excludes possible Horizon acquisition. Revenue $26.6 to $27.4 billion. GAAP EPS $14.30 to $15.41. Non-GAAP EPS $17.80 to $18.80. Cap ex $925 million. In 2024 cap ex should start to return to historic levels, after the new plant is completed.

Conference Highlights:

Robert A. Bradway, CEO said "We had a very strong quarter, serving more patients across all geographies and therapeutic categories and delivering record revenues and non-GAAP earnings per share. Positive data being shared today illustrates the rapid progress we are making in advancing our pipeline of potential first-in-class medicines." Prolia exceeded $1 billion in quarter sales for the first time. Believes will prevail in court re Horizon and close the deal by year end.

The Q3 dividend of $2.13 per share will be paid, to stockholders of record on August 18, 2023, on September 8, 2023.

Volume growth in Q2 2023 was 11%.

In Q2 2023 reported positive top-line data for tarlatamab for small cell lung cancer.

In May 2023, Amgen presented 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 Q2 2023, 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, revealed no meaningful variance from Eylea.

In Q2 2023 reported positive top-line data for Lumakras plus Vectibix in colorectal cancer.

In Q2 2023 reported positive Phase 3 switching study results for ABP 654 versus Stelara for moderate to severe plaque psoriasis.

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. This follows positive Phase 2 results. Other AMG 757 studies continue to move into earlier lines of therapy.

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. Later in Q2 the FDA accepted the BLA for 959.

Many other studies are ongoing.

Non-GAAP numbers: net income was $2.68 billion, up 25% sequentially from $2.14 billion, and up 7% from $2.50 billion year-earlier. EPS was $5.00, up 26% sequentially from $3.98 and up 8% from $4.65 year-earlier.

Product sales were $6.68 billion, up 14% sequentially from $5.85 billion, and up 6% y/y from $6.28 billion. Non-product revenue was $303 million, down from $313 million year-earlier.

Cash and equivalents balance ended at $34.2 billion, up sequentially from $31.6 billion. Operating cash flow $4.1 billion. Free cash flow was $3.8 billion. At the end of quarter long-term debt was $59 billion. Capital expenditures $0.3 billion. No shares were repurchased in the quarter. Dividend payments were $1.1 billion.

In February, 2023, 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.

See also the Amgen pipeline.

GAAP cost of sales was $1.81 billion. Research and development expense was $1.11 billion; selling general and administrative expense $1.29 billion; and other income $82 million, for total operating expenses of $4.30 billion. Operating income was $2.68 billion. Interest expense was $752 million, other expense $218 million, income taxes $235 million.

Q&A selective summary:

OX40 risk? Reocatinlimab did not observe autoimmune indicators in the Phase 2 study. We did not see interferon increased infection risks, either.

Horizon market for TED? We are watching the Tepezza marketplace. We believe the data indicates exciting opportunities. There are several catalysts for growth.

Tarlatamab? Shows what we hoped to achieve with the ByTE platorm. More data at a fall conference. Could not be more pleased with response rate, overall survival, in small cell lung cancer. We are excited about the earlier-line trials. We have learned about managing safety and side effects like cytokine release syndrome.

Lumakras for colorectal cancer? Smaller patient population with G12c mutation. Will discuss with FDA. Then will provide guidance on regulatory pathway.

Otezla v. competition? Enbrel is benefitting from improved access, seeing new patient growth, but we lowered the price to achieve that. Otezla new patient acquisition is doing well, optimistic for the future because of first line topical to systemic patients. We need very little prior payer authorization. Tik2 entry to market did put pressure on us, but that has slowed. Topicals also had free goods programs earlier this year, that added pressure, but those are tapering off.

We do not believe the FTC case is based on any established anti-trust law, so we will prevail in court.

Prostate program? Our Xaluritamig target is almost universally expressed on prostate cancer cells. There is a therapeutic window for bispecific T-cells. STEAP1 is a novel target with good clinical data, now in Phase 1.

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