Analyst Conference Summary

biotechnology

conference date: May 2, 2024 @ 1:30 PM Pacific Time
for quarter ending: March 31, 2024 (first quarter, Q1)

Forward-looking statements

Overview: Return to strong y/y revenue growth, first time in years. But bad GAAP results due to higher expenses and $2 billion in other income in Q1 2023.

Basic data (GAAP):

Revenue was $7.45 billion, down 9% sequentially from $8.20 billion and up 22% from $6.11 billion in the year-earlier quarter.

Net income was negative $113 million, down sequentially from $767 million, and down from $2.84 billion year-earlier.

Earnings Per Share (diluted EPS) were negative $0.21, down sequentially from $1.42 and down from $5.28 year-earlier.

Guidance:

Full year 2024 updated guidance: Revenue $32.5 to $33.8 billion. GAAP EPS $7.15 to $8.40. Non-GAAP EPS $19.00 to $20.20. Cap ex $1.1 billion. Not more than $500 million for share repurchases.

Conference Highlights:

Robert A. Bradway, CEO said "With many of our innovative products delivering strong growth and promising new medicines advancing through our pipeline, we are excited about delivering attractive long-term growth." We have a number of products that still have room to grow. Tezspire for COPD has a great deal of potential.

GAAP loss was from mark-to-market loss on the BeiGene equity investment and higher operating expenses, including higher amortization expense from Horizon-acquired assets and incremental expenses from Horizon. Revenue also higher largely from Horizon Therapeutics acquisition, those products totaling $914 million is sales.

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

Xaluritamig (AMG 509) for metastatic castrate resistant prostate cancer Phase 1 completed enrollment. A combination trial continues enrollment. Two other Phase 1 trials planned.

Lumakras continues Phase 3 enrollment, combined with Vectibix and Folfiri, for CRC patients with KRAS G12C mutations. A regulatory submission is on track for Lumakras with Vectibix. Other combination trials are underway.

Bemarituzumab is in Phase 3 trials for first line gastic cancer. Also in three Phase 1b trials.

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

In Q1 2024 the AMG 786 Phase 1 trial, for obesity, completed enrollment and should read out initial data in Q2 2024.

The Olpasiran (AMG 890) Phase 3 study of ASCVD with elevated Lp(a) completed 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. Six 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 $2.14 billion, down 16% sequentially from $2.54 billion, and flat from $2.14 billion year-earlier. EPS was $3.96, down 16% sequentially from $4.71 and down 1% from $3.98 year-earlier.

Product sales were $7.12 billion, down 9% sequentially from $7.83 billion, and up 22% y/y from $5.85 billion. Non-product revenue was $329 million, down sequentially from $363 million, and up from $259 million year-earlier.

Cash and equivalents balance ended at $9.7 billion, down sequentially from $10.9 billion. Operating cash flow $0.7 billion. Capital expenditures $0.2 billion. Free cash flow was $0.5 billion. At the end of quarter debt was $64.0 billion. No shares were repurchased in the quarter. Dividend payments were $1.2 billion.

See also the Amgen pipeline.

GAAP cost of sales was $3.20 billion. Research and development expense was $1.34 billion; selling general and administrative expense $1.81 billion; and other operating expense $105 million, for total operating expenses of $6.47 billion. Operating income was $991 million. Interest expense was $824 million, other expense $235 million, income taxes $45 million.

Q&A selective summary:

MariTide, what are you looking to learn in the Phase 2 trial? Benefitting from a well designed Phase 2 study. Seeing a broad and differentiated profile that will guide the Phase 3 trial.

Interim MariTide, doses looked at? Replete with measurements, very pleased with results to date, do not want to introduce bias. Diabetes would go to Phase 2. All the arms remain active, no issue with patient drop outs.

Differentiated profile statement of MariTide? We are watching both in-market and developing product. We are confident we have a differentiated, broad profile.

Tarlatamab launch? Should deliver a lot of benefit for small cell lung cancer. Our field team is prepared. We are ready to provide broad access. Current SCLC survival in late stage setting is very poor. We want to get it into earlier lines of therapy, including front line, as soon as possible.

MariTide dosing is likely to be monthly, we are very good at manufacturing administration devices, but may not need to dose as often as competition.

We have obesity potential therapies earlier in the pipeline that are oral.

Rocatinlimab place in market? Studying broad population of patients enrolled in Phase 3 atopic dermatitis trial. Highly differentiated mechanism, physicians are looking for something for non-responders for current therapies.

Tepezza subq program? It is a priority. We started a Phase 3 study for it. Hearing function was tested very carefully. Patients using Tepezza should be monitored for it. Risk benefit profile remains favorable, physicians understand that.

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