Analyst Conference Summary

biotechnology

conference date: February 6, 2024 @ 5:00 AM Pacific Time
for quarter ending: December 31, 2023 (fourth quarter, Q4)

Forward-looking statements

Overview: Return to strong y/y revenue growth, boosted by Horizon acquisition.

Basic data (GAAP):

Revenue was $8.20 billion, up 19% sequentially from $6.90 billion and up 20% from $6.84 billion in the year-earlier quarter.

Net income was $767 million, down 56% sequentially from $1.73 billion, and down 53% from $1.62 billion year-earlier.

Earnings Per Share (diluted EPS) were $1.42, down 56% sequentially from $3.22 and down 53% from $3.00 year-earlier.

Guidance:

2024 revenue expected between $32.4 and $33.8 billion. Non-GAAP EPS $18.90 to $20.30. Non-GAAP tax rate 16% to 17%. Cap ex $1.1 billion. Expects mid-single digit price declines. Q1 revenue the lowest for the year, but up 20% y/y.

Conference Highlights:

Robert A. Bradway, CEO said "Our marketed products are reaching many more patients around the world, and we anticipate more than a dozen significant pipeline milestones in 2024." 18 of Amgen's therapies reported record annual sales. Hopes to deverage debt to return to normal levels in 2025. Horizon synergies are just beginning.

In early Q4 2023, on October 6, completed acquisition of Horizon Thereapeutics, for $28 billion. That added $954 million in sales in Q4. Amgen now has this signicant rare disease business that will add to growth. Current rare diseases sales are almost exclusively in the U.S., but will be expanded globally. Believes pieces are in place to increase revenue and earnings through the end of the decade.

Blincyto for CD19 positive B-ALL has been granted to PDUFA date of June 21, 2024

Tarlatamab (AMG 757), a bi-specific antibody, reported positive Phase 2 data for advanced small cell lung cancer (SCLC), third line, with a 40% objective response rate. The Phase 3 study is enrolling patients. Combination studies are also underway. Has received Breakthrough Therapy designation from FDA.

Seeing some price erosion in the U.S., but believe this will lead to substantially larger prescription volumes.

In Q4 2023 Phase 3 positive data was released for Lumakras with Vectibix for KRAS metastatic colorectal cancer. Studies continue.

Maridebart cafraglutide (AMG 133) – multispecific GIPR inhibitor and GLP-1 receptor agonist, reported positive Phas1 1 results in February 2024. The Phase 2 study has completed enrollment. Topline data due in late 2024.

The AMG 786 Phase 1 trial, with undisclosed target, should read out initial data in Q2 2024.

In Q4 Otezla reported positive Phase 3 results for genital psoriasis and itch, and in a separate Japanese study for palmoplantar pustulosis. Then in November reported positive Phase 4 data in psoriatic arthritis.

The Olpasiran (AMG 890) Phase 3 study of ASCVD with elevated Lp(a) should complete enrollment in Q2 2024.

Under priority review, the FDA set a PDUFA date for Tarlatamab (AMG 757) in previously treaed small cell lung cancer of June 12, 2024. Other SCLC trials continue to enroll.

The Uplizna Phase 3 study of flare in IgG4 disease data is expected in Q2 2024.

Many other studies are ongoing.

Non-GAAP numbers: net income was $2.54 billion, down 5% sequentially from $2.67 billion, and up 15% from $2.20 billion year-earlier. EPS was $4.71, down 5% sequentially from $4.96 and up 15% from $4.09 year-earlier.

Product sales were $7.83 billion, up 20% sequentially from $6.55 billion, and up 20% y/y from $6.55 billion. Non-product revenue was $363 million, up sequentially from $355 million, and up from $287 million year-earlier.

Cash and equivalents balance ended at $10.9 billion, down sequentially from $34.7 billion due to Horizon acquisition. Operating cash flow $0.5 billion. Capital expenditures $0.2 billion. Free cash flow was $0.3 billion. At the end of quarter debt was $64.6 billion. No shares were repurchased in the quarter. Dividend payments were $1.1 billion.

See also the Amgen pipeline.

GAAP cost of sales was $3.11 billion. Research and development expense was $1.53 billion; selling general and administrative expense $2.27 billion; and other operating expense $5 million, for total operating expenses of $6.93 billion. Operating income was $1.27 billion. Interest expense was $821 million, other income $402 million, income taxes $85 million.

Full year 2023: revenue $ billion; GAAP net income $ billion; non-GAAP net income $ billion; GAAP EPS $; non-GAAP EPS $.; $7.4 billion free cash flow.

Q&A selective summary:

AMG 133 profile v. competition? Phase 1 data is exciting. Durable weight loss. But number of patients in the trial was small. All parameters were directionally favorable. Did see some GI side effects in the first dose, but may be able to improved tolerability as doses are adjusted. Has not established rate of patients rolling over to Phase 2.

Tepezza dynamics? We are seeing more unique prescribers, more patient enrollment forms, more patient starts, and expanded insurance access. There can be a 90 day lag between patient identification and getting them on therapy.

Tezspire in COPD v. Dupixent? Phase 2 data in COPD expected first half of this year. Current therapies are inadequate. We are studying a broader class of patients than were used in Dupixent trials. Tezpire works more upstream, which we hope will generate better results. We know some patients are refractory to other COPD therapies.

AMG 133 discontinuations? 420 mg dose drop outs did experience real, durable weight loss. 4 decliners were for logistical reasons. Others were from adverse events.

Upliza expansion? Growing nicely in NMOSD, despite competition. CD19 is a terrific target, so could be expanded to a large number of diseases. We are presently looking at priorities for expansion.

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