Analyst Conference Summary

biotechnology

conference date: August 6, 2024 @ 1:30 PM Pacific Time
for quarter ending: June 30, 2024 (second quarter, Q2)

Forward-looking statements

Overview: Revenue growing nicely, profits weaker.

Basic data (GAAP):

Revenue was $8.39 billion, up 13% sequentially from $7.45 billion and up 20% from $6.99 billion in the year-earlier quarter.

Net income was $746 million, up sequentially from negative $113 million, and down 46% from $1.38 billion year-earlier.

Earnings Per Share (diluted EPS) were $1.38, up sequentially from negative $0.21 and down 46% from $2.57 year-earlier.

Guidance:

2024 update: revenue $32.8 to $33.8 billion. GAAP EPS $6.57 to $7.62; non-GAAP EPS $19.10 to $20.10. Cap ex increased to $1.3 billion. Share repurchases under $500 million.

Conference Highlights:

Robert A. Bradway, CEO said "With a strong, balanced portfolio of in-market products and a rapidly advancing pipeline of innovative medicines, we are confident in our ability to deliver attractive long-term growth." Rare disease therapies delivered over $1 billion in revenue in the quarter and are early in their life cycles.

Excluding sales from the Horizon Therapeutics (Horizon) acquisition, product sales grew 5% y/y. Amgen is on track to reduce its debt. Expects to reduce expenses due to synergies from the Horizon acquisition.

Blincyto for CD19 positive Philadelphia chromosome negative B-ALL in the consolidation phase was granted FDA approval on June 14, 2024.

The FDA approved Imdelltra (tarlatamab) in previously treated extensive-stage small cell lung cancer in May 2024. Six other SCLC trials continue to enroll.

In June 2024 Blyncyto was approved in the U.S. for CD19-positive Philadelphia chromosome negative B -cell precursor acute lymphoblastic leukemia. Submissions underway outside the US.

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.

On June 5, 2024 Amgen announced positive Phase 3 results for Uplinza for IgG4-RD (immunoglobulin G4-related disease).

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 obesity data due in late 2024. Phase 2 diabetes trial should start in late 2024.

Xaluritamig (AMG 509) is in two Phase 1 studies for mCRPC (metastatic castrate resistant prostate cancer). Results in September 2024.

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

Lumakras for KRAS G12C mutated metastatic colorectal cancer was given a PDUFA of October 17, 2024.

Tezspire Phase 3 data for chronic rhinosinusitis with nasal polyps data expected before the end of 2024.

Many other studies are ongoing.

Non-GAAP numbers: net income was $2.69 billion, up 26% sequentially from $2.14 billion, and flat from $2.68 billion year-earlier. EPS was $4.97, up 26% sequentially from $3.96 and down 1% from $5.00 year-earlier.

Product sales were $8.04 billion, up 13% sequentially from $7.12 billion, and up 20% y/y from $6.68 billion. Non-product revenue was $347 million, up sequentially from $329 million, and up from $303 million year-earlier.

Cash and equivalents balance ended at $9.30 billion, down sequentially from $9.7 billion. Operating cash flow $2.46 billion. Capital expenditures $238 million. Free cash flow was $2.22 billion. At the end of quarter long-term debt was $57 billion. No shares were repurchased in the quarter. Dividend payments were $1.2 billion.

See also the Amgen pipeline.

GAAP cost of sales was $3.24 billion. Research and development expense was $1.45 billion; selling general and administrative expense $1.79 billion; and other operating expense $11 million, for total operating expenses of $6.48 billion. Operating income was $1.91 billion. Interest expense was $808 million, other expense $307 million, income taxes $48 million.

Q&A selective summary:

Uplizna data? CD19-B cell depleting antibody. Very stunning Phase 3 data. Another Phase 3 set of results due second half of 2024.

Enbrel price negotiations? Doing well in a competitive market, including against biosimilars. CMS process concluded, we have their price, about 25% of its revenue come from Part D. We continue to see this is not a good mechanism to reward innovation. It does not really resemble negotiating.

Obesity move to injectables and orals? Pleased with our interim MariTide results. Moving quickly to the Phase 3 program. There is broad development in this landscape, while the market is rapidly expanding. Our dosing is very convenient, just once per month. Another MariTide potential advantage is durability of effects.

Imdelltra feedback? We are looking at a good start, moving quickly, high unmet need.

Other obesity programs? Many factors, but the bar is a high degree of conviction. But should hit the clinic this year.

Timing of MariTide Phase 3? Will tell you more later in the year.

Tax case? Nothing has changed. Court November 4, 2024. Tax courts lately see the value of manufacturing in Puerto Rico.

We are increasing R&D spend 25% of so in 2024 over 2023, which we think is great. But we are doing what we can to preserve our margins while making capital investments.

Diabetes piece of MariTide? Phase 2 study will start later this year, patients with diabetes both with and without obesity. There is no high effective diabetes medicine administered monthly.

Muscle preservation with MariTide? We are following this. We are measuring this in our studies. The field is in an early stage.

Tepezza in low CDS patients? Pleased with our execution in Thyroid Eye Dissease so far. There are low clinical activity score patients, about 80,000, who are not being treated. We are expanding our prescriber base. It is a significant growth opportunity.

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