Amgen (AMGN) Earnings Report: Q4 2015 Conference Call … · Amgen (AMGN) Earnings Report: Q4 2015...
Transcript of Amgen (AMGN) Earnings Report: Q4 2015 Conference Call … · Amgen (AMGN) Earnings Report: Q4 2015...
CompanyName:AmgenIncCompanyTicker:AMGNSector:HealthCareIndustry:Drugs
EventDescription:Q42015EarningsCallMarketCapasofEventDate:113.50BPriceasofEventDate:148.35
©2014TheStreet,Inc.Al l R ightsReserved Page1of21
Amgen(AMGN)EarningsReport:Q42015ConferenceCallTranscriptThefollowingAmgenconferencecalltookplaceonJanuary28,2016,05:00PMET.Thisisatranscriptofthatearningscall:
CompanyPart icipants
ArvindSood;Amgen;VPofIRBobBradway;Amgen;Chairman&CEODavidMeline;Amgen;EVP&CFOTonyHooper;Amgen;EVP,GlobalCommercialOperationsSeanHarper;Amgen;EVP,Research&Development
OtherPart icipants
MatthewHarrison;MorganStanley;AnalystEricSchmidt;CowenandCompany;AnalystGeoffMeacham;Barclays;AnalystAlethiaYoung;CreditSuisse;AnalystTerenceFlynn;GoldmanSachs;AnalystMattRoden;UBS;AnalystMichaelYee;RBCCapitalMarkets;AnalystJoshuaSchimmer;PiperJaffray&Co.;AnalystMarkSchoenebaum;EvercoreISI;AnalystEunYang;JefferiesLLC;AnalystCoryKasimov;JPMorgan;AnalystYingHuang;BofAMerrillLynch;AnalystBrianSkorney;RobertW.Baird&Co.;AnalystNickAbbott;WellsFargoSecurities;Analyst
MANAGEMENTDISCUSSIONSECTION
Operator :
Mynameis[JakeLong],andI'llbeyourconferencefacilitatortodayforAmgen'sFourthQuarter2015EarningsConferenceCall.(OperatorInstructions)
IwouldnowliketointroduceArvindSood,VicePresidentofInvestorRelations.Mr.Sood,youmaynowbegin.
ArvindSood (VPofIR):
Okay.Thankyou,Jake.Goodafternoon,everybody.
I'dliketowelcomeyoutoourconferencecalltoreviewouroperatingperformanceforthefourthquarterandfullyear2015.IwouldparticularlyliketoacknowledgethosewhoarenewintheircoverageofAmgen,includingSteveChesneyofAtlanticEquitiesinLondon,RonnyGalofBernstein,AlethiaYoungofCreditSuisse,HartajSinghofBTIG,andBrianSkorneyofBaird.Welcome.EachofuslookforwardtoworkingwithyouandhelpingatyourunderstandingofourCompany.
CompanyName:AmgenIncCompanyTicker:AMGNSector:HealthCareIndustry:Drugs
EventDescription:Q42015EarningsCallMarketCapasofEventDate:113.50BPriceasofEventDate:148.35
©2014TheStreet,Inc.Al l R ightsReserved Page2of21
Wehavealotofgroundtocovertodaysoletmemakesomeveryquickintroductions.LeadingthecalltodaywillbeourChairmanandCEO,BobBradway,whowillprovideastrategicreportonourperformancein2015andoutlookfor2016.FollowingBob,ourCFO,DavidMeline,willreviewourQ4andfullyearresultsandupdateyouonourpreviouspreliminaryfinancialguidancefor2016.
TonyHooper,ourHeadofGlobalCommercialOperations,willthendiscussourproductperformanceduringthequarter,withaparticularfocusonnewlylaunchedproducts.FollowingTony,ourHeadofR&D,SeanHarperwillprovideapipelineupdate.
Wewilluseslidesforourpresentationtoday.Theseslideshavebeenpostedonourwebsiteandalinkwassenttoyouseparatelybye-mail.OurcommentstodaywillbegovernedbyourSafeHarborStatement,whichinsummarysaysthatthroughthecourseofourpresentationanddiscussiontoday,wemaymakecertainforward-lookingstatementsandactualresultsmayvarymaterially.
Sowiththat,IwouldliketoturnthecallovertoBob.
BobBradway(Chairman&CEO):
Okay,thankyou,Arvind,andletmeaddmywelcometothoseofyouwhoarejoiningourcall.
Letmestartoffbysayingthat2015wasanexceptionalyearforAmgen.Itwasanotheryearofconsistentandreliableperformanceaswedeliveredforpatientsandshareholders.Ithinkyoucanseethatfirstinourfinancialresults.
8%revenuegrowthin2015reflectsthestrengthandbreadthofourproductsandour19%adjustedearningsgrowthreflectstheoperatingleveragewe'vecreatedthroughoursuccessfulandongoingtransformationefforts.Themomentumofourproductscanbeseeninthe17%growthwerecordedfromourinlinebrandsincludingEnbrel,Prolia,XGEVA,Sensipar,VectibixandNplate.Togetherthesebrandsgenerated$11billionforus.Ourlegacymedicinesalsoperformedwellandthesecontinuetobestrongcashflowgeneratorsforus,andweremainpositionedtocompeteasnewplayersenterthemarket.
Whiledeliveringthesesolidresultsfortheyear,wealsolaidimportantgroundworkforourfuturegrowthwithfourinnovativelaunchesinoncologyandtwoincardiovasculardiseaseoverthepast12months.Aswe'vesaidbefore,weexpectRepathaandKyprolistobesignificantopportunitiesforusandseetheseasgreatexamplesofinnovativemedicinesthataddressbigunmetneedsbyprovidingsignificantclinicalbenefitsanddemonstrablevaluepropositionsforpatientsandproviders.Theimportanceofhavingvaluepropositionssuchastheseisonlysettogrowfortheinnovativebiopharmaceuticalindustry,andwe'rewellpositionedtoembracethatrealityinourpipeline.
Developinginnovativemedicinestoaddressseriousillnessesisatthecoreofwhatwedo.Behindoursixnewproductlaunches,areanumberofadditionalexcitinginnovativepipelineopportunities,notably,RomosozumabinbonehealthandAMG334,whichisdirectedatmigraineandtheneurosciencearea.Alsoofnoteisournephrologyproduct,etelcalcetide,whichisunderregulatoryreviewandOmecamtivMecarbilwhichisanintriguingopportunityforusincardiovasculardisease.
InadditiontoourownpipelineofmoleculesweexpecttoremainactiveinBusinessDevelopment.Whenitcomestolaterstageopportunitieswewouldexpectthistorevolvearoundoursixcoreareas,whicharehematology/oncology,cardiovascular,inflammation,bonehealth,nephrology,andneuroscience.Focuswillremainimportanttousandyou'llseethatreflectedinourdecisionthisweektooutlicenseourrespiratorymoleculeAMG282.Whilewe'reintriguedbythegeneticsbehindthistargetandpotentialforthemoleculeinasthmaandCOPD,wefeelthecommercializationcanbebetteroptimizedbyGenentech,giventheirestablishedpresenceinthisfield.
CompanyName:AmgenIncCompanyTicker:AMGNSector:HealthCareIndustry:Drugs
EventDescription:Q42015EarningsCallMarketCapasofEventDate:113.50BPriceasofEventDate:148.35
©2014TheStreet,Inc.Al l R ightsReserved Page3of21
Wecontinuetoexpandourglobalgeographicreach,nowwithfullownershipofourproductsandnewmarketsintheveryexcitingapprovalofRepathainJapanwithourpartnerAstellas,whichrepresentsourfirstproductapprovalforthisJapanesepartnership.Ourbiosimilarsprogramisalsomakingtangibleprogresswithoneunderregulatoryreview,onehavingcompletedPhaseIII,andanotherforwhichPhaseIIIresultsareexpectedlaterthisyear.
We'remakingsignificantprogresswithourtransformationeffortshereatAmgen.We'vealreadyreducedgrosscostsby$700million,enablingour2015adjustedoperatingmargintogrowbysomefourpoints.We'llmakefurtherprogressin2016andwe'reexpectinganother$400millionofgrosssavingsasweexpecttoreduceadjustedoperatingexpensesyear-over-year.Ourtransformationhasalsomadeusmoreagileandyou'llseethebenefitsofthatinourcompetitiveperformanceacrossourproducts.
Inmanufacturing,ourteamsaresignificantcontributorstoourtransformationefforts,drivingdownourcostofsalesandmakingfinalpreparationsforthelicensureofourNextGenerationbiomanufacturingfacilityinSingapore.Improveddrugdeliverysystemsareanimportantdifferentiatorofourmedicinesandwe'redeliveringsolidresultswiththem.TheNeulastaOnprokithasbeenextremelysuccessfulinthemarketplaceandwefiledourRepathaoncemonthlydosingoptionglobally.We'llcontinuetoinnovatewithpatientandprovider-friendlydeliverysystemstohelpdifferentiateourproducts.
Wealsoremainfocusedonsmartcapitalallocationthroughacombinationofsharebuybacks,dividendandvaluecreatingBusinessDevelopmentactivitiesthatarealignedwithouroverallstrategy,weexpecttodriveshareholdervalue.Weestablishedasetoftargetedfinancialcommitmentsthrough2018.Thesemetricswerechoseninparttoprovideevidencethatweweremakingclearprogressonourstrategythroughaperiodofpatentexpirationandnewproductlaunches.I'mpleasedtoreportthatasweclose2015we'vemadesignificantprogresstowardsaccomplishingtheselongertermmetrics.
Finallyasweenter2016,ourpositionisstrong,ourstrategyisclear,andwe'reexcitedabouttheyearahead.I'dliketothankmyAmgencolleagues,manyofwhomarelisteningtothiscallfortheirunwaveringcommitmenttodeliverforpatientsandforourshareholders.
David,overtoyou.
DavidMeline (EVP&CFO):
Thanks,Bob.Turningtothefourthquarteronpage5oftheslidedeck,revenuesat$5.5billiongrew4%year-over-yearwitha3%increaseinproductsales.Otherrevenuesat$207millionincreased$50millionversusthefourthquarterof2014,reflectinganincreaseinroyaltyincomeandamilestonepaymentrecognizedinthequarter.Adjustedoperatingincomeat$2.4billiongrew16%fromtheprioryear.Adjustedoperatingmarginimprovedfivepercentagepointsto44%forthequarter,reflectingthecontinuedbenefitsofourtransformationprogram.
Onanadjustedbasis,totaloperatingexpensesdecreased4%year-over-year,includingafavorableforeignexchangeimpactofapproximatelytwopercentagepoints.Costofsalesmarginat14.3%improvedby1.6percentagepoints,drivenbylowermanufacturingcosts,highernetsellingpriceandlowerroyalties.ResearchandDevelopmentexpensesat$1.1billionweredown10%year-over-year,reflectingQ42014upfrontpaymenttoKitePharmaof$60millionforourcancerimmunotherapycollaboration,aswellasthebenefitofR&Dexpensesavingsfromtransformationandprocessimprovementefforts.
SG&Aexpenseswereup3%onayear-over-yearbasis,reflectingincrementalexpensesinQ4fornewproductlaunches,partiallyoffsetbysavingsfromtransformationandprocessimprovementefforts.Otherincomeandexpensesimprovedby$53millionyear-over-yeartoanetexpenseof$120millioninthequarterprimarilyduetocashinvestmentportfolioactivities,aswellashigherinterestincomedueto
CompanyName:AmgenIncCompanyTicker:AMGNSector:HealthCareIndustry:Drugs
EventDescription:Q42015EarningsCallMarketCapasofEventDate:113.50BPriceasofEventDate:148.35
©2014TheStreet,Inc.Al l R ightsReserved Page4of21
highercashbalancesthisyear.
Thetaxratewas11.6%forthequarter,a1.4percentagepointincreaseversusQ4of2014.ThisincreasewasprimarilyduetoadecreasedbenefitfromtheR&Dtaxcreditin2015versus2014duetohigherpretaxincomeandreducedR&Dexpenses.Asaresult,adjustednetincomeincreased19%andadjustedearningspershareincreased21%.
Youwillfindasummaryofourfull-year2015resultsonpage6ofthepresentation.Our2015full-yearrevenuesgrew8%to$21.7billionandadjustedearningspersharegrew19%to$10.38pershare.Forthefullyear,adjustedoperatingincomegrewto$10.1billion,a19%increasebasedonthecombinationofsolidrevenuegrowthalongwithflatoperatingexpenses.Operatingmarginimprovedbyfourpercentagepointsto48%.
Onanadjustedbasis,costofsalesmarginimprovedby1.3percentagepointsyear-over-yearto14.5%drivenbylowerroyalties,highernetsellingprice,andlowermanufacturingcosts.ResearchandDevelopmentexpensesdecreased5%,drivenbysavingsfromtransformationandprocessimprovementefforts.AndSG&Aexpenseswereup6%primarilyduetoincreasedcommercialexpensesfornewproductlaunches,partiallyoffsetbysavingsfromtransformationandprocessimprovementefforts.
Otherincomeandexpensesimprovedby$114millionyear-over-year,primarilyduetohigherinterestincomeduetohighercashbalances,partiallyoffsetbyhigherinterestexpenseduetohigherdebtbalances.Thetaxratewas16.8%forthefullyear,up1.9percentagepointsversus2014.Theyear-over-yearincreasewasprimarilyduetotheunfavorabletaximpactofchangesinthegeographicmixofearnings.
Turningnexttocashflowandthebalancesheetonpage7.Forthefullyear2015,wegenerated$8.5billioninfreecashflowversus$7.8billionlastyear.Thisincreasewasprimarilydrivenbyhighersalesandprofitability.Asaresultofthisstrongcashflowperformance,totalcashandinvestmentsincreasedto$31.4billion.Thisbalanceincludedover$2billionintheUSand$29billionoutsidetheUS.
Totaldebtoutstandingincreasedslightlyto$31.6billion.Asaresult,netdebtdecreasedby$3.5billionto$200millionatyear-end2015.Ourtotaldebtportfoliohasaweightedaverageinterestrateof3.6%andanaveragematurityof10years.Additionallyfor2015,weincreasedourdividendpershareby30%to$0.79perquarterwithpaymentstotaling$2.4billion.Wealsoannouncedthe27%increasetothedividendto$1pershareforourfirstquarter2016payment.
Finallyatour2014businessreview,weindicatedtheintenttorepurchasesharestotalingupto$2billionbytheendof2015,whichwehavenowaccomplishedwithrepurchasesofapproximately13millionsharessinceQ4of2014.Attheendof2015,wehadapproximately$4.9billionremainingunderourBoard-authorizedsharerepurchaseprogram.Weintendtorepurchaseanadditional2to3billionofsharesin2016,andareontracktodeliverourcapitalallocationcommitmentstoshareholders.
Iwillnowturntoguidancefor2016,summarizedonpage8.Asyouwillrecall,weprovidedpreliminary2016guidanceonourOctoberearningscall.Todayweareincreasingour2016guidance,whichreflectsanimprovedrevenueoutlookduetorevisedtimingofnewbiosimilarcompetition,aswellastheinclusionoftheR&Dtaxcreditwhichhasbeenpermanentlyextended.Withthisbackground,our2016revenueguidanceis$22to$22.5billionversuspriorguidanceof$21.7to$22.3billion,andouradjustedearningspershareguidanceis$10.60to$11pershare.
Inadditionwenowexpectouradjustedtaxratetoimprovebyonepercentagepointversuspriorguidance,to19.5%to20.5%.Finally,wecontinuedtoexpectcapitalexpenditurestobeapproximately$700millionthisyear.
CompanyName:AmgenIncCompanyTicker:AMGNSector:HealthCareIndustry:Drugs
EventDescription:Q42015EarningsCallMarketCapasofEventDate:113.50BPriceasofEventDate:148.35
©2014TheStreet,Inc.Al l R ightsReserved Page5of21
Asaresultofourstrongprogressin2015,andthe2016outlook,weremainconfidentthatwewillmeetorexceedcommitmentsprovidedforthe2014to2018period,includingdoubledigitadjustedEPSgrowth,adjustedoperatingmarginimprovementfrom38%to52%to54%,$1.5billionoftransformationsavings,withanet$800millionreductioninoperatingexpense,andreturntoshareholdersofatleast60%ofadjustednetincomeduringtheperiod.Wealsopreviouslyguidedfortotalrestructuringexpenserelatedtothetransformationprogramof$935milliontoa$1.35billionduringtheperiodthrough2018.
Basedonbetterthananticipatedresultsfromtheexitoftwoofourclosedfacilities,wenowexpecttoincuratotalof$800millionto$900millioninrestructuringexpensethrough2018,withnearly$700millionrecognizedalreadyin2014and2015.
Insummary,wedeliveredanotheryearofstrongfinancialresultsin2015andweareincreasinglyconfidentintheoutlookforAmgen'ssuccessin2016andbeyond.Thisconcludesthefinancialupdate.
IwillnowturnthecallovertoTony.
T onyHooper (EVP,GlobalCommercialOperations):
Thanks,David.Goodafternoon,folks.
You'llfindasummaryofourglobalsalesperformanceforthefourthquarteronslide10.Globally,productsalesgrew3%year-over-yearforthefourthquarterand8%forthefullyear.OurUSbusinessdelivered5%year-over-yeargrowthinthequarterand12%forthefullyear.
Thefourthquarterincludedthenegative$100millionimpactrelatedtothelargequarter-threeendcustomerpurchasesasIdescribedinourlastearningscall.Foreignexchangenegativelyimpactedyear-over-yearsalesbytwopercentagepointsinboththefourthquarterandthefullyear.Excludingthenegativeimpactofforeignexchange,ourinternationalbusinesswasup5%year-over-yearfortheFourthQuarterandup6%forthefullyear.
Byanymeasure,2015wasasuccessforanoperating,executionstandpoint.Ourgrossproductleadthewayastheycontinuedwithmeaningfulgrowth.Wealsolaidthefoundationforfuturesuccesswithournewproductlaunches,aswellasfurtherexpansionintonewcountries,whiletransformingourcustomer-facingmodelanddeliveringsignificantcostsavings,whichwereinvestedinthelaunches.
Letmenowstartwithanupdateonournewcardiovascularfranchise,wherewehadtwolaunchesin2015,Repatha,ofcoursebeingthebiggestopportunity.Repatha,isofftoastrongcompetitivestart.IntheUS,Repatha'srelativeshareofthesegmentisreflectiveinmymindofourlaunchpreparationsandexecutioninthefield.BrandrecognitionamongstcardiologistsandprimarycarephysiciansisstrongandRepatha'ssingledose,deliveringintensiveandpredictableLDL-Clevelproductionisresonatingwellwithprescribers.
We'vemadegoodprogresswithourpayernegotiations.Morethan80%ofcommerciallivescurrentlyhaveaccesstoRepatha.Thestrictpayerutilizationmanagementcriteriaarelimitingtheuptakeasyou'llseeintheIMSscripts.WecontinuetoworkwithpayersonevaluatingtheutilizationmanagementcriteriatoinsurethatappropriatepatientsareabletoreceiveRepathathroughtheirplans.
InEurope,reimbursementnegotiationisongoingandweexpecttoaddreimbursementinmanycountriesoverthecourseoftheyear.I'mpleasedtoreportthatearlierthismonthwesecurednationalreimbursementinSpain,wellaheadofexpectations.InJapan,Repathawasapprovedlastweek.AlongwithourpartnerAstellas,wearelookingforwardtolaunchingtheproductinthenextfewmonthsaftersecuringreimbursement.
Seanwilldiscussourcoronaryimagingandcardiovascularoutcomestudyshortlyandwelookforwardto
CompanyName:AmgenIncCompanyTicker:AMGNSector:HealthCareIndustry:Drugs
EventDescription:Q42015EarningsCallMarketCapasofEventDate:113.50BPriceasofEventDate:148.35
©2014TheStreet,Inc.Al l R ightsReserved Page6of21
datafromthesetwotrialsstrengtheningRepatha'sprofile.AlsoincardiovasculardiseaseourinnovativeheartfailuremedicineCorlanor,ismakingsteadyprogresswithprescribersafteritslaunchearlyin2015.
Letmenowmovetooncology,startingwithourotherlargenewopportunity,Kyprolis.Kyprolisgrew63%year-over-yearand8%sequentially.OurchartordersindicatethatwemorethandoubledKRdpatientshareinnewtotreatmentsecondlinepatientssinceourlabelexpansioninJuly,basedontheAspiredata.Weareveryexcitedtoo,abouttherecentFDAapprovaltoaddEndeavordatatoourUSlabel,demonstratingthatKyprolisdoubledprogressionfreesurvivalversusVelcade.
OurteamsaretrainedandinthemarketplacethedayaftertheEndeavorapproval.WithboththeAspireandEndeavordatanowinourUSlabel,wehavestrengthenedKyprolis'profileasabackboneofmultiplemyelomatherapy.Kyprolisisnowtheonlyapprovedtherapyforrelapsedmultiplemyeloma,withprovenefficacyasasingleagent,doublet,ortripletcombinationwithdifferentdosestomeetindividualpatientneeds.
Saleswillcontinuetogrowaswetreatmoresecondlinepatientsandtheystayontherapylonger,drivenbythedeep,durableresponsestoKyprolis.InEurope,KyproliswasapprovedinNovemberforsecondlinetherapybasedontheAspiredata.WearelaunchingacrossEuropeonacountrybycountrybasisasreimbursementissecured.ItisalreadyreimbursedinGermanyandthelaunchthereisunderway.
Continuingnowwithoncology,XGEVAgrew10%year-over-yearinthefourthquarteranddelivered$1.4billioninsalesfortheyear,drivenbyunitsharegainsinboththeUSandEurope.Thefourthquarterwasnegativelyimpactedbysomelargepurchasesinthethirdquarter.WecontinuetofocusonXGEVA'ssuperiorclinicalprofileversusthecompetition.
Vectibixgrew2%year-over-year,buthada10%unitgrowth.Withover60%ofVectibixsalesoutsideoftheUS,foreignexchangenegativelyimpactedVectibixgrowthbyaboutsevenpercentagepoints.Nplatecontinuedsolidgrowthofabout15%year-over-year,drivenby17%unitgrowth.
Turningnowtothefilgrastimfranchise,thelaunchoftheNeulastaOnprokitcontinueditsstrongmomentumachieving24%shareofallNeulastasalesinthefourthquarter.Thisinnovativedeliverysystemisappliedduringapatient'schemotherapyvisitsotheycanavoidreturningtothedoctorthenextday,asthisisthenormalrequirementforNeulastainjections.Thiswillalsobeanimportantdifferentiatorversusfuturelongactingfilgrastimbiosimilarcompetition.
Quarter-over-quarter,NeulastawasnegativelyimpactedbytheburnoffofsomelargerUScustomerpurchasesinthethirdquarterthatweredescribedinourlastcall.WeexpectNeulastatogrowmodestlyin2016aswedon'texpectabiosimilarlaunchintheUSuntiltheendoftheyearattheearliest.
Neupogendeclined4%year-over-year.Sequentiallyitlost3pointsofmarketshareintheUS,splitbetweenthebiosimilarandthebrandedcompetitors,butstillretains76%share.SharelossofNeulastaresultin11%unitdeclineintheUS,buttheUSsalesalsobenefitedfromarevisiontoaccountingestimatesinquarterfour.AndasIsaidpreviously,wewillcompeteaccountbyaccount,usingourmanyyearsofexperiencecompetingagainstbiosimilarsinEuropeandbrandedcompetitorsglobally,butdoexpectsomeshareloss.
Welaunchedtwoothermedicinesinoncology,BlincytowhichcontinuestomakeinroadswithALpatients.AndImlygic,wherewearepleasedwithinitialresponseofkeyinstitutionswithnextindication,aswellasitsfuturepotentialincombinationwithotherimmunotherapies.
LetmenowturntoinflammationwithEnbrel.Onslidenumber19,you'llseethatEnbrelgrew8%year-over-yeardrivenbynetsettingprice.You'llrecallnetsettingpriceincludestheimpactfromlistpricechanges,aswellascontractingandaccesschangesthathaveoccurredoverthepast12months.Year-
CompanyName:AmgenIncCompanyTicker:AMGNSector:HealthCareIndustry:Drugs
EventDescription:Q42015EarningsCallMarketCapasofEventDate:113.50BPriceasofEventDate:148.35
©2014TheStreet,Inc.Al l R ightsReserved Page7of21
over-yearsegmentgrowthremainsstrongasrheumatologygrew27%anddermatologygrew46%onavaluebasis.
Quarter-on-quarter,ourrheumatologyvaluesharewasstableat28%,whileourshareindermatologydeclinedtwopercentagepointsto22%,duetointensifyingcompetitionfromnewtherapies.I'llremindyouthatrheumatologyaccountsfor80%ofEnbrelsales.GivenEnbrel'sexclusivitythrough2029,wecontinuetoinvestinthebrandanditsoutlookforfurthergrowthremainsstrong.
I'llnowmovetobonehealthandProlia.Proliagrew21%year-over-yearinthefourthquarterwithabout20%unitgrowthinboththeUSandEurope,delivering$1.3billionofsalesfortheyear.GrowthisdrivenbycontinuedsharegainsinboththeUSandEuropeandweexpectthismomentumtocontinuein2016.WithourrecentagreementwithGSK,welookforwardtotransitioningProlia,aswellasXGEVAandVectibix,backontoAmgen'scontrolin48countriesandcontinuingtodrivegrowth.Thisisanotherimportantstepindeliveringourinternationalexpansionstrategy.We'realsolookingforwardtoapotentialimportantadditiontoourbonehealthfranchisewithRomosozumab,whichwillsoonhaveit'sPhaseIIIdataandSeanwillbediscussingitinamoment.
Turningnowtoournephrologyfranchise,startingwithEpogen.Epogendeclined37%year-over-yeardrivenbyashiftinESAuse.Thisdeclinewasthreeprimarycomponents.First,around30%ofthedeclineisduetotheshiftfromEpogentoAranespinthedialysissetting.WecontinuetoseeuptakeofAranespwithmediumsizeandindependentdialysiscenters.Second,roughly20%isaresultoftheburnofffromthelargecustomerpurchaseinquarterthreethatwediscussedinourlastcall.Theremaining50%ofthedeclinecomesfromtheshiftfromMiceraatFresenius.
FreseniusrepresentsaboutathirdoftheUSdialysisbusiness.InOctober,theydiscloseditjustoverhalfofthedialysispatienceutilizingESA'shadswitchedtoMicera.EPOGENsalesin2016arelikelytobeimpactedbyfurthersharedeclinesofFreseniusandthepotentialforadditionalswitchingtoAranesp.Justareminder,wehaveaverygoodbusinesspartnershipwithDaVita,andouragreementwiththemextendsthrough2018topurchaseatleast90%oftheESAsfromAmgen.
Aranespsalesincreased4%year-over-yearwitha25%unitgrowthintheUS,drivenbythecontinuedshiftindialysisbusinessfromEPOGENtoAranesp.Internationalsaleswerenegativelyimpactedbyforeignexchangerates.
Sensipargrew21%year-over-yearforthefourthquarteranddelivered$1.4billioninsalesfortheyear,drivenbynetsellingpriceandunitgrowthinboththeUSandEuropewithgoodgrowthprospectsfor2016.OurnephrologyfranchisehasanotherexcitingopportunitywithParsabiv,thenewtradenameforetelcalcetide,ourIntravenouscalcimimetic,currentlyunderregulatoryreviewinboththeUSandEurope.
I'dliketoclosebyoutliningourexpectationsfor2016.WedonotexpectNeulastaorEPOGENbiosimilarsintheUSuntiltheendof2016attheearliest.Assumingpotentialcompetitorsprovideus180daysnoticebetweenapprovalandlaunch.EPOGENislikelytofacecontinuedcompetitionwithFreseniusandtheconversiontoAranesp.Neupogencontinuestofaceheadwindswithnewcompetition,whileweexpectNeulastasalestocontinuetogrowgiventheassumeddelayofUSbiosimilarcompetition.
WeexpectEnbrel,Prolia,XGEVA,Sensipar,Vectibix,andNplatewillallseecontinuedgrowthin2016,andourrecentlylaunchedproductsnotablyRepathaandKyproliswillcontributemeaningfulgrowthin2016.Kyprolis'improvedlabelintheUScoupledwithourlaunchesaroundtheworldwillcontinuetodrivesolidgrowth.Repathagrowthisexpectedtobesteadyintheneartermwithbreakawaypotentialoncewehavetheoutcomesdataonourlabel.ThissurehasbeenabusyandveryexcitingtimeforourteamsacrosstheworldandI'dliketothankthemfortheirhardworkanddedicationtodeliveringforpatients.LetmenowpassittoSean.
CompanyName:AmgenIncCompanyTicker:AMGNSector:HealthCareIndustry:Drugs
EventDescription:Q42015EarningsCallMarketCapasofEventDate:113.50BPriceasofEventDate:148.35
©2014TheStreet,Inc.Al l R ightsReserved Page8of21
SeanHarper (EVP,Research&Development):
Thanks,Tonyandgoodafternoon.2015wasanunprecedentedyearforAmgenwitharecordnumberofregulatorysubmissionsandapprovalsand2016promisestobeanotherverybusyyear.We'vealreadyannouncedtworegulatoryapprovalsandtherearealotmoreR&Deventstocome.
BeginningwithourcardiovascularfranchiselastweekRepathawasapprovedinJapanforthetreatmentofpatientswithfamilialhypercholesterolemiaandpatientswhoareathighriskofcardiovasculareventswhoarenotadequatelyrespondingtostatins.ThisisthefirstapprovalofPCSK-9inhibitorinJapanandtheveryfirstapprovalbyourjointventureAmgenAstellasBioPharma.I'malsohappytoreportouroutcomestudyremainsontrackaswecontinuetoexpectthedatainthesecondhalfofthisyear,alongwiththeresultsofourcoronaryimagingstudywe'reconductingwiththeClevelandClinic.WebelievethatdemonstratingareductioninplaqueburdenwithRepathawillresonatewithcardiologistsandcomplementtheoutcomesdata.
We'vealsobeenreviewingindetailalongwithourpartnersatCytokineticsandServier,thePhase2datafromOmecamtivMecarbil,ournovelmyosinactivatorforheartfailure.We'vebeenextremelyencouragedbythefeedbackwe'vereceivedfromourdiscussionswithexpertsinthefieldaswepreparetomeetwithregulatorstodiscussapotentialpathforward.
Turningtooncology,lastweekintheUS,wealsoreceivedanewindicationforKyprolisincombinationwithdexamethasoneintherelaxedmultiplemyelomasetting.ThiswasbasedontheEndeavordata,whichdemonstratedclearsuperiorityoverVelcade,asKyprolisdoubledtheamountofprogressionfreesurvivaltime.
ThisFDAdecisionalsoconvertedtheinitialacceleratedapprovaltofullapprovalandaddedimportantdosingflexibility.TheKyprolis,EndeavordataarecurrentlyunderreviewintheEU.Sub-groupanalysisofAspireandEndeavorwerepresentedattheAmericanSocietyofHematologymeetinglastmonthandtheresponsefromphysiciansreinforcedourviewthatKyproliswillbeabackboneofmultiplemyelomatherapy,asphysicianspursuedeeper,moredurableresponsesfortheirpatientsinsearchofcure.Insupportofthiswe'reexploringtheuseofKyprolisincombinationwithnewertherapiesformultiplemyelomaandannouncedaninitialagreementlatelastyearinwhichweareprovidingdrugstoJanssenforcombinationstudywithdaratumumab.
Inthefourthquarter,wealsoreceivedthreemarketingauthorizationsinEurope,includingKyprolisincombinationwithRevlimidplusDexamethasoneforrelapsedmultiplemyeloma,basedontheAspiredata.Imlygicwasapprovedforthetreatmentofadultswithunrespectablemelanomathatisregionallyordistallymetastaticwithnobone,brain,lung,orothervisceraldisease.AndBlincytowasapprovedforthetreatmentofPhiladelphiachromosome-negative,relapsedorrefractoryBcellprecursoracutelymphoblasticleukemia.
WerecentlyconductedananalysisoftheeventsoccurringinourlargeongoingPhase3trialofXGEVAinthesettingofskeletalrelatedeventspreventioninmultiplemyelomapatients.Andwiththeusualcaveatthatthisisaneventdriventrial,wecurrentlyestimatewe'llseethedatatowardstheendofthisyear.WealsocontinuetoexpandourimmunooncologyplatformandannouncednewcollaborationswithMerckcombiningtheirPD1inhibitorwithBlincytointhesettingofdiffusedlargeBcelllymphomaandAMG820,ouranticolony-stimulatingfactor1receptorantibodyinadvancedsolidtumors.Finallyinoncology,ourPhaseIStudyofAMG330,ouranti-CD33bitecontinuestoenrollacutemyeloidleukemiapatients.
Intheareaofbonehealth,wealongwithourpartnersatUCBareawaitingtheresultsfromourregistrationalPhase3studyforsclerostinantibodyRomosozumabforpostmenopausalosteoporosis.Weexpectthesedatathisquarter.InthisstudyweareassessingtheeffectofRomosozumabdosedmonthly
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for12months,comparedtoplacebodosefor12months,afterwhichbothcohortsaretreatedwithProliafor12months.Theco-primaryendpointsaretheincidentsofvertebralfractureat12and24months.Andimportantsecondaryendpointsincludeclinicalandnon-vertebralfractures.
We'realsoconductingaPhase3studyofsimilardesigncomparingRomosozumabtoalendronateinyearonefollowedbybothcohortsbeingtreatedwithalendronateinyeartwo.WeexpectRomosozumabtobeusedinhighriskosteoporosispatientsandwithatotalof12monthlydoses,webelievethemosteffectivewaytoinsureproperdosingandmaximumbenefitinthispatientpopulation,atleastinitially,isthroughadministrationbyahealthcareprovider.We'llcontinuetoevaluatethedevelopmentofpotentialindications,formulations,anddeliveryoptionsthatcouldbeattractiveforcertainpatientpopulations.InfactwewillbeseeingdatafromaPhase3studyassessingtheimprovementinbonemineraldensityinmenwithosteoporosisinthefirsthalfofthisyear.
Whileosteoporosisandosteoporosis-relatedfracturesaremorecommonlyassociatedwithpost-menopausalwomen,asmanyasoneinfourmenovertheageof50willsufferafragilityfractureintheirremaininglifetimes.BeforeIleaveourbonefranchise,I'dpointoutwe'realsobereceivingdatafromaPhase3Proliastudy,inglucacorticoid-inducedosteoporosis.Millionsofpatientsareonglucocorticoidtherapyaroundtheworld,whichcanresultinsignificantbonelossandfracture.
Inneuroscience,ourPhase3studyinepisodicmigraines,withourCGRPreceptorantibodyAMG334,continuestoenrollextremelywellacrosstwostudies.Thetestamenttotheunmetneedanddesirebypatientsforaneffectiveprophylactictherapy.Inthechronicmigrainesetting,ourPhase2bstudyisexpectedtoreadoutonthesecondhalfofthisyear.Meanwhile,thePhase1studyofouranti-PAC1antibodyformigraineAMG301iscurrentlyenrollingpatients.
AndfinallywereceivedatargetactiondatefromtheFDAonABP501,ourbiosimilarHumiraofSeptember25,ofthisyear.AsIsaidattheoutset,2015wasaveryproductiveyearandwehavealotinstorefor2016.IwouldliketothankallofmycolleaguesatAmgenforcontinuingtodeliverforpatients.
Bob?
BobBradway(Chairman&CEO):
Okay.Thankyou,Sean.Operator,we'rereadynowforquestions,soifyoucouldjustremindourcallersoftheprocedures,we'llopenthelines.
QUESTIONS&ANSWERS
Operator :
(OperatorInstructions)MatthewHarrisonofMorganStanley.
MatthewHarrison (Analyst-MorganStanley):
Great,goodafternoon.Thanksfortakingthequestion.MaybeifIcouldjuststartwithoneforSean.
OnRomo,peopleareobviouslyfocusedonthisdataandfocusedonthepotentialsafetyofthatmolecule.Couldyoujustaddressforushowyouthinkaboutthepotentialforsomeimbalancesinfallsorhearinglossorsomeofthebrainvolumegrowththatmakepeopleworriedaboutneurologicalsymptoms?Andinadditiontothat,justtalkaboutwhat,totheextentyoucan,whattheDSMBhaslookedfor,whatsortofmonitoringyouhaveinthestudyaroundthoseissues?Thanks.
SeanHarper (EVP,Research&Development):
Yes,soIthink,obviously,whenonelooks,thisisageneticallyvalidatedtarget,andwhenonelooksat
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therarefamilialformsofabsenceofsclerostin,orpartialabsenceofsclerostin,activitysuchasVanBuchemdiseaseandsclerosteosis.Theseindividualsfromconceptionaredeficientinsclerostin,andsoasaconsequenceofcourse,overtime,oftenintheirthirdorfourthdecade,theybegintohavesomeuntowardeffectsfromthis,suchasverythickskullplatesandtheforaminainwhichcranialnervesexitfromtheskull,canimpingeonthenervesduetoovergrowthofbone.
Ithinkthatthisissomethingthatisn'taneffectofdevelopingfromconceptionwiththeabsenceofsclerostin,andIwouldjustcontrastitsharplywithgivingaoneyearoftherapytogenerallyquiteelderly,atleastmiddleagedatminimum,osteoporoticpatients.SoIthinkthat,ofcourse,inanabundanceofcautionwearedoingtestingonhearingandsomeotherthingsthataredesignedtoassessthesekindoftheoreticalrisks.
ButIwouldcertainlybeverysurprisedtoseeapharmacodynamicresponsefromthedrugthatwouldresultinthosekindofcomplications.TheDSMB,ofcourse,isfullyaware,asallofourinvestigatorsareoutdoingthetrialsandpatientsthroughinformedconsent.Allthetheoreticalandestablishedpotentialrisksofthesekindofinvestigativeproducts.
Operator :
YournextquestioncomesfromthelineofEricSchmidtfromCowenandCompany.
EricSchmidt (Analyst-CowenandCompany):
MaybeforTonyonRepatha'suptake,younotedthehappinessonyourpartwiththesharegains,butareyoudisappointedoverallwiththesizeofthepieatthisstage?Iknowyou'reseeingreimbursementheadwinds,butnonetheless,Iguessisthisonamoreshallowtrajectorythanyouthought?
And,assumingwedogetthepositiveoutcomesdatatowardthesecondhalfoftheyear,shouldweseeanimmediatebenefitfromthatorwouldyouthinkitwouldstilltaketimetoworkwithpayerstoworkthroughtheseheadwinds?
T onyHooper (EVP,GlobalCommercialOperations):
Thanks,Eric.SoI'mgladyouseetheperformanceinthemarketplace.Thehubweputtogetherwasclearlydonebecauseweunderstoodtherewasgoingtobealittlebitoftimebeforethepayersmadeadecisionaroundformularyapproval.Andtome,thehubhasthereforebeenasurrogatetothelevelofprescriptionsthatcardiologistsandprimarycarephysiciansarepreparedtoprescribe.
Weareseeingareallyrobustlevelofprescriptionscomingthroughthehub.Sotomethatcontinuestogivemegreatconfidenceintermsofphysicianwillingnesstoprescribethisdrugforpatientswhofitinsidethelabel.TheprescriptionsthemselvesintermsoftheNBRxsandTRxsarecontinuing.It'sclearthattheutilizationmanagementcriteriainplaceisrestrictingthenumberofprescriptionsthatgetdispensedandweareworkingwithpayersatthemomenttomakesurethatpatientswhoareeligibleactuallygetaccesstothesedrugs.
SeanHarper (EVP,Research&Development):
Andontheoutcome?
T onyHooper (EVP,GlobalCommercialOperations):
Oh,sotheoutcomestudy,clearly,Ithinkonceitisclearwhatthevalueofthisdrugis,physicians,patientsandpayerswillrealizeatremendousamountofvalue.NowIthinktherewillbeatimebetweenthedatabecomingpresentandthedatamovingintothelabelthatwillbenegotiatingwithpayerby
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payer,butonceit'sinthelabelit'sclearthatweshouldseesomedramaticuptake.Then,yes.
Operator :
YournextquestioncomesfromthelineofGeoffMeachamfromBarclays.
Geof f Meacham(Analyst-Barclays):
Afternoon,guys,thanksfortakingthequestion.AcoupleonRepathaaswell.Sowhenyoulookatthesubtleties,eitherreimbursementorpopulationsorclinicalpractice,canyoucompare,kindoftheEUandJapanesemarketstotheUS,assumingyou'ddoitinoutcomesdatathisyear?
Thenjustafollow-uptoEric'squestionontheUSmarket.Whatcanyoutellusintermsofleadingindicatorsofdemand,inotherwordslikephysicianprescribersorvisitstoyourhuborthingslikethat?IwanttogetsomedemandmetricsbeyondTRx.Thanks.
T onyHooper (EVP,GlobalCommercialOperations):
IthinkIunderstandyourquestionaboutaccessoutsidetheUS.SoonehastorememberthatoutsidetheUnitedStates,onceaccessisgranted,physiciansarenotmakingadecisiononanythingotherthanaclinicaldecisionaroundthevalueforpatients.Sothere'snoeconomicdecisiononceyouhaveaccessinEuropeandinJapan.Sothenegotiationthereistogetaccessasquicklyaspossibleandthentomovepatientsontothedrugasphysiciansprescribe.
Fromaninside-the-USperspective,yes,thenumberofprescriptionswehaveseenacrosstherangeofphysicianswhohavebeenprescribingisencouraging.I'mnotquitesurewhatmoreyouwanttohearabout,Geoff,sorry.DidIansweryourquestion?OrdidImissaquestionthere?
Operator :
YournextquestioncomesAlethiaYoungfromCreditSuisse.
ArvindSood (VPofIR):
Hangon,Jake,beforeyoumoveontoAlethia.TonywasaskingifhehadaddressedGeoff'squestion.Geoff,wasthatokay?Wasthereanythingelse?Okay,itlookslikewemighthavelosthim.
Okay,let'sgoonwiththenextquestionfromAlethia.Alethia,goahead.
BobBradway(Chairman&CEO):
Alethia,wecanhearyou,goahead.
AlethiaYoung (Analyst-CreditSuisse):
OnNEUPOGEN,Iknowyousaidyouweregoingtocompeteaccountbyaccount,andsofaryouhavesharestillhave76%share,butcanyougiveusalittleflavoronliketheprogressthatyou'vedonethere?Haveyouspokentothemajorityofaccounts?Justhelpusthinkabouthowmuchdefenseyou'replayingandhowmuchsuccessyou'rehaving.
AndthenonNeulasta,IguessIwantedtothinkaboutwiththeOnprodevice,doyouthinkthatkindofbusinessisnowstickyandweshouldthinkaboutthatassharethat'snowprotected,iftherewereabiosimilartoemergein2017?
T onyHooper (EVP,GlobalCommercialOperations):
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Okay,NEUPOGEN,toughtoansweryourquestion.WeclearlysegmenttheNEUPOGENaccountsbetweenlarge,mediumandsmall,andwedecidewhichoneswearegoingtodefendandwhichoneswearegoingtobelettinggo.Asyouknow,we'vehadcompetitiononthemarketforoverayearnow,plusabiosimilarcompetitorforclosetosixmonthsandwestillhold76%ofthemarketshare.
AsregardtotheOn-BodyInjectorforNeulasta,themainreasonwebroughttomarketistheuniquedistinctivevaluethisdrugorthisdevicebringstopatientsandtothephysiciansandclinicsandinstitutions.MostpatientstrytogetthechemoonFriday,thentheycanspendtheweekendrecoveringbeforetheygobacktowork.
NeulastarequiresthemtocomebackonaSaturdaymorningtogettheirlastinjection,sosometimeswhatwashappeningispatientsweregettinganinjectiontooearly,whichisactuallynotgood.Itactuallyreducestheeffectsofthedrugquitedramatically.Ortwo,theywerenotcomingbackfortheinjectionatall,soexposingthemselvestopotentialfebrileneutropenia.
Sotherealvaluewepickedupfrompatients,fromnurses,physiciansandfrominstitutionshasbeen,weareincreasingtheopportunitytogivepatientstherightnumberofcyclesattherighttimeandreallyreducethepossibilityoffebrileneutropeniadramatically.Thisisthebenefitwesellthedeviceconsistently,whichI'msurewillcontinueandstick.
AlethiaYoung (Analyst-CreditSuisse):
Great,thanks.
Operator :
YournextquestioncomesfromthelineofTerenceFlynnfromGoldmanSachs.
T erenceFlynn (Analyst-GoldmanSachs):
Iwaswonderingyoutalkedaboutthelabelexpansionsandsomeofthebenefitthere,butIwasjustwonderingifyoucouldcommentonthepotentialfuturecontributionfromonce-weeklydosing?Isthatreallyoneofthekeydriversofaninflectionhere?Andthen,anycommentaryyoucanprovideonaveragetreatmentdurationtrendsforKyprolis?Thanks.
T onyHooper (EVP,GlobalCommercialOperations):
SoIthinkwithKyproliswehavetostartwithourtruebeliefthatdrivingdeepremissioniswhereclinicalpracticeisgoingtogo.AndthecombinationisusingKyprolisasoneoftheproductsinthebackboneisclearlyshowingusthesehugeextendedperiodsofPFS,whichbydefinitionishelpingusdrivedeepremission.Patientconveniencedownthelinewillbecomeimportant,andIthinktheonce-a-weekdosewillcertainlyhelpwithpatientconveniencetoensurethatpatientsstayonthedrugforaslongaswecan.
Withregardstoduration,whenwelookatthechartauditsweseethatproductsinthiscategoryinsecondlineareprobablybeingusedbetweenaboutseventoeightmonthsatthemoment.It'sdifficulttoquoteKyprolisdatayetbecauseweonlygotapprovalforthesecondlineinJuly,sowearehopingtoseesomeextendeddataintothenextcoupleofquarters.
Operator :
YournextquestioncomesfromthelineofMattRodenfromUBS.
MattRoden (Analyst-UBS):
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Great,thanksverymuchfortakingmyquestion.LetmegobacktoRomosozumab.Thisonealittlebitmorefromthecommercialside,becauseifthetrialworks,we'reallgoingtobeinterestedtheopportunityfortheproduct.Sotothatend,Iwaswonderingifyoucouldelaboratealittlebitmoreonthestrategyto,atleastinitially,administerthedruginthedocofficesbyahealthcareprovider.
Canyoujusttalkaboutwhyyouthinkthat'sbeneficialforthepatientandwhetherornotyouthinkthat'sthebestwaytomaximizethepotentialtoimpactpatients?Andthen,Iguesstherelatedfollowontothatwouldbe,canyoutalkaboutwhatworkyou'redoingtomaybeprovideaself-injectionoptiondowntheline?Thanks.
T onyHooper (EVP,GlobalCommercialOperations):
Let'sstartwithProliabecausewespentthelastfourorfiveyearsnowbuildingalevelofexpertiseonProlia,andwewerethefirstinjectablebiologictolaunchintoaGP-typemarket.Acomplexprocess,whichIthinktheteamgottheirhandsaround,andasyou'llseethedataintheUS,Proliacontinuestogrowinleapsandboundsaswegetbothbreadthanddepthofprescribinghappening.
It'scleartousthatalotofthesepatientsareelderlyandcomingbacktothedoctorisimportanttoensuretheygettheinjections.WhenIthinkaboutanyotherpotentialcompetitiontoRomo,thebiggestcomplainttheyhaveisthedifficultyofdailyinjectionsofcourse.
SowedoseethesametargetsthatareprescribingProliawouldbetargetedtogoto,totalkaboutRomo.Andwethinkwiththelargeunmetopportunityinthemarketplace,thisisquitealargeopportunityforustogotomarketwith.
BobBradway(Chairman&CEO):
Doyouwanttosayanythingaboutfutureplansonadministration?
T onyHooper (EVP,GlobalCommercialOperations):
Wearealwayslookingtoadvanceandimproveinthewaywebringtomarketacombinationdeviceproduct,andwewillcontinuetolookateffectiveandefficientwaysforthosepatientswhodecidethatself-injectioncouldbeanoption.
Operator :
AndyournextquestioncomesfromthelineofMichaelYeefromRBCCapitalMarkets.
MichaelYee (Analyst-RBCCapitalMarkets):
Thanks.IhadaquestionforSeanregardingRomo.Ithinkcertainlywethinkthatshouldwork.Butactuallywantedtoaskscientifically,youremindushowconfidentyouareintranslatingthatsuperiorBMDdatatosuperiorfracturedata,particularlyagainstahigh-efficacydruglikeForteo,issimilarortowhatmagnitudeitcouldbemuchbetternumerically?
Andtheninyeartwo,Iknowyou'retestingthehypothesisofthatdesigninyourstudy,butwhatwouldyouexpectinyeartwoandisthereanyreasonthatitwouldnotbemaintainedacrossyeartwo?Thanks.
SeanHarper (EVP,Research&Development):
Yes,wellwhatIwouldsayisthattheconfidencelevelwehaveabouttheBMD,whichasyouknowisthemostimpressivesortofBMDincreasethat'sbeenseeninhumanswithanytreatment,translatingintofractureresistance,thatconfidenceishigh.Ithinkthatthegeneticvalidationthatexistsforthepathwayisveryconvincingtopeopleinthefield.
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Also,wesaw,andthisisoneofthefewareaswherethepre-clinicalmodels,particularlythoseperformedinnon-humanprimates,arereallyquitepredictiveofwhatyou'llseeinhumans.Andthen,inthenon-humanprimate,wewereabletodobiomechanicaltestingofbone,ofcourse,afteranimalsaresacrificed.SoweknowthatweachievedextremelyhighbonestrengthintheseanimalscommensuratewithBMDincreases.
Andfinally,we'vedoneveryadvancedimagingofhumansthathavebeentreatedwithRomosozumabandcomparedhead-to-headtowhatweseewithForteo.Andasyouprobablyknow,Forteohasitsmajorimpactontrabecularboneandhasarelativelylimitedimpactoncorticalbone.Andcorticalbonereallywhatmattersforthemajorityoflongbonefracturerisk,whichisreallywheretheclinicalneedis.
Andsowehavemultiplereasonstobelievethegenetics,thepre-clinicalinformationandtheimagingthatwe'vedoneinhumansthatweshouldhavenotonlyagreaterBMDincrease,butthatthequalityofbonethatwe'reproducingisofahigherqualitythanwhatonegetsusingPTHanalogues.
OnewayofthinkingaboutthisistherereallyaretwomasterregulatoryswitchesforcontrollingBMD.OneofthemisRANK-ligand,whichcontrolsosteoclastfunctionthatwedirectdenosumabthere,andtheotherissclerostin,whichcontrolsosteoblastfunction,andthere,sclerostinisthekeymediator.
Sowhatyou'redoinghere,likewithdenosumab,isthrowingamasterofphysiologicregulatoryswitches.Sowhatyou'reexpectingtogetandwhatweseeineverythingthatwe'veobservedisphysiologichigh-qualityboneformation.
BobBradway(Chairman&CEO):
Youweretalkingaboutyeartwo,Sean?
SeanHarper (EVP,Research&Development):
Yes,yeartwo.Ithinkthatthethingthatisinterestinghereinthisparadigmisthatthisisaone-yeartreatmentandsothefirstyearofthestudyveryimportantbecauseit'saplacebo-controlledperiod.Weknowfromourexperiencewithhumansthatwecan'tjustwithdrawtheproductandleavepatientsonnotherapy,sothegainsthataresoimpressivewillmeltawayrelativelyquickly.Andsoitisnecessarytolockinthesegainswithantiresorptiveagents.
Sowhatweexpecttoseeis,weobviouslyknowalotaboutProlia.WeexpecttheplacebogrouptorespondwelltoProliainthesecondyear,butthepatientsonRomosozumabwillalsogetsubstantialbenefit.Soifthere'sameaningfuldifferenceinfractureriskattheendofyearone,thatshouldpersistmoreorlessouttothesecondyear,andevenintheory,wellbeyondthat.
Butthisisanewparadigminosteoporosis,thisrelativelyshortperiod,andstudydesignsarequitedifferentthanwhatpeopleareusedtobeseeinginthefield.Sowe'llallbefascinatedtoseetheresults.
ArvindSood (VPofIR):
Jake,beforeyougoontothenextquestion,TonyhadanadditionalcommentonGeoffMeacham'squestionabouttheRepathademandindicators.Tony?
T onyHooper (EVP,GlobalCommercialOperations):
Sure,so,Geoff,IthinkIbetterunderstandyourquestionnowwithmorearoundinadditiontoTRxs,whatelsewouldwebelookingattoseeforfuturegrowthinthemarketplace.Likealways,tomeTRxsandNBRxsintermsofnewnaivepatientsarethemostimportantthingtomeasureintermsofthegrowth.
Butwithanewlaunchlikethiswheretheplansareputintoplace,whatonehastorememberisthatIMS
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onlyreportsdispenseprescriptions,i.e.,prescriptionsthatcometoapharmacyorspecialtypharmacyandthepatientactuallywalksawaywithadrug.
Whatyouhavetobeabletolookatinsidethatdata,ishowmanyprescriptionsgettothepharmacyandhowmanyarerejectedversushowmanyareabandoned.Soweareseeingthemajorityofprescriptionsgettingtothepharmacyatthemoment,arebeingrejected.Rejected,becauseofthepriorauthorizationprocesshadnotbeenproperlycompletedorthere'ssomeoutstandinginformationandpatientshavetogobackandgetsomemoredata.
Allpatientsareseeingco-payatthisparticularstagebecausetheproductisnotproperlyonformularyyet,asbeingtoohighaco-payandtheyabandontheprescriptionandtheywalkaway.Thedatayou'reseeingit'sreallyimportant,butyouhavetounderstandthemajorityofprescriptionsgettingtothepharmacyarebeingrejectedorabandonedatthemomentwhiletheplanscompletetheirprocess.
Whichiswhywespentsomuchtimewiththeplansatthemomentshowingthemthenumberofeligiblepatientswhoareunlabeledgettingtopharmacyandnotgettingproduct.ItreallyisaconcernthatwhenyouthinkaboutthepotentialRepathapatient,thesearepatientsthatareatriskrightnowforacardiacevent,andtherefore,earlyinterventionisessential,sowearespendingquiteabitoftimewiththepayers.
ArvindSood (VPofIR):
Great,thanks,Tony.Jake,let'stakethenextquestionplease?
Operator :
YournextquestioncomesfromthelineofJoshuaSchimmerfromPiperJaffray.
JoshuaSchimmer (Analyst-PiperJaffray&Co.):
Hi,thanksfortakingthequestions.JustwantedtocomebacktotheRepathamanagementcriteriathatarelimitinguptake.Canyouelaboratealittlebitonwhattheprimarycausesforrejectionare?Giveusanysenseastotheevidenceyouaremakingprogressinaddressingsomeoftheseissues?
Andthen,givenwhatthoseissuesare,whatgivesyoutheconfidencethatcardiovasculartrialdatamayultimatelyresolvethatasabarrier?Thanks.
T onyHooper (EVP,GlobalCommercialOperations):
It'sTonyhere,Josh.Theutilizationmanagementcriteriaobviouslydifferplanbyplan,buttheyincludethingssuchaspatientmusthavereachedtheirmaximallytoleratedstatindoseorsomerequireyoutobeononeortwostatins.SomeofthemrequireyoutohavedonestatinsplusastepthroughtoZetia.There'sclearlyarequirementaroundyourLDL-Clevelsthathavetobeacertainlevel.
Butprobablythemorecomplexthingisthepriorauthorizationdocuments,fivepagesofhandwrittenstuffthatphysicianshavetofindoutabout,andmostoftherejectionsarebecausetheformisnotproperlycompletedandthere'sjustthetimetocollectthedata.
Soaswegettheprocessrunningabitmoreefficientlyandhopefullymovingfrompapertoanelectronicprocess,thepriorauthorizationscouldgofaster.Andthenasweshowthepayerstheimpactoftodraconian,autilizationmanagementcriteria,notgettingtotherightpatients,wewillseesomechangesthere.Theoutcomesdata,ofcourse,willdramaticallychangethevalueofthisparticulardrug,andwedoexpecttoseesomechangesintheutilizationcriteriaoncewehavethatterm.
Operator :
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YournextquestioncomesfromthelineofMarkSchoenebaumfromEvercoreISI.
MarkSchoenebaum(Analyst-EvercoreISI):
Hi,guys.Thanksfortakingthequestion.Threequestions.First,I'dliketoknowwhereArvindbuyshisties?
Secondquestion,isPfizer'smadethedecisiontoenrollprimarypreventionpatients,Ibelieve,intotheirPhase3PCSK9outcomestrial,SeanandTony.AndIwaswondering,andtheyexpecttohavealabeledindicationforthat,andtheybelievethat'sveryimportantforthepayers.Whydidyoumakethedecisionnottodesignyourtrialthatway,maybethat'saSeanquestion?AndforTony,whatcommercialimplications,ifany,isthisgoingtohaveinyourmind?
Andthen,third,justtofollow-uponsomeoneelse'squestionjusttobemoredirect.Ithinkwhat'sgoingonintheStreetrightnowispeopleareconcernedthattheRomofracturereductionmagnitudemaylookopticallylessthanwhatiscontained,forexample,intheForteolabelorsomeofthedatathatRadiushasproducedfortheirPTHanalog.
Primarilybecauseattwoyears,you'recomparing,obviously,sclerostinantibodytoanactivecomparatorversustheseotheragentswhichwerecomparedtoplaceboIbelieve.Sothequestionisshouldwebeexpecting,Sean,canyoujusttalkaboutit,isthisanapples-to-applescomparisonorapples-to-orangescomparisonwhenweactuallyseethatnumber?Thankyou.
BobBradway(Chairman&CEO):
Sean,whydon'tyoudoRomoandthenthePfizerPCSK9question,andthen,Tony,youcantalkabout--
SeanHarper (EVP,Research&Development):
WerespecttoRomo,whatI'dsayisthatyou'reright,thatthiswillnotbesostraightforwardastomakecrosscomparisonsofthosesorts.Theyarefrothwithdifficultyalways,thesekindofcrosstrialcomparisons,butinosteoporosisbecausethetrialsareverylargeandaverysimilardesign,ingeneral,peoplehavefeltprettyconformabledoingthat.
Andyou'veseenthat,forexample,whenwehadourthree-yearfracturedataforProlia,peoplecomparedittothree-yearfracturedatawithbisphosphonates,eitheroralorIV,etcetera.AndIthinkinthiscase,it'sgoingtobemuchmoredifficulttomakethosekindofsimplecomparisons.
Ithinkwhatwillhappenhereisthatthedatawillbeinterpretedbytheexpertsinthefield.Andasalwaysisthecasewiththespecialtyproductlikethisthat'stargetedataveryspecificpatientpopulation,theexpertsinthefieldwillmakethedeterminationwhethertheythinkthatthedataareimpressiveandwhooughttobegettingtheproductandthatwillinfluenceprescribingoutsidetheexpertcommunity.
Withrespecttotheprimaryversussecondarypreventionstrategies,IthinkthatthecompaniesthatwereintheleadonPCSK9wantedtogetoutcomesdatafortheseproductsasfastaswaspossible.Andthefastestwaytogettheoutcomesdataistostudyapatientpopulationthathasafairlyhigheventrate.
Andthatgenerallyisachieved,oroneofthemainleversyoucanpullistohavepatientswhohavesufferedapriorevent.That'soneofthestrongestpredictorsofasubsequentevent.Andasyouknow,therehavebeenslightlydifferentflavorvarianceonthat,thathavebeenpursuedbyusandbyRegeneron,butthat'sbeenthebasicapproach.
Moreover,it'sneverbeennecessaryinthisfieldtodooutcomestrialsinvariousdifferentpopulationsinordertohavealabelthatcoversbroadpatientpopulations.SowhatyoureallyneedtodoisdemonstrateconvincinglytheLDLlevelreductionsthatyou'reachievingwithyouragenttranslate
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unequivocallyintoreductionsincardiovascularoutcomerisk.That'sallyouneedtodo,andwefeelthatthesestudieswilldothat.Obviouslyacompanycomingbehind,ithastothinkaboutwhatthey'regoingtodototrytodifferentiatetheirposition.
T onyHooper (EVP,GlobalCommercialOperations):
SoIthinkthatthepayerswillbelookingathigh-riskpatients,physicianswillbemakingdecisionsaroundpatientsprescribedthathaveahighrisk.AndIthinktheclinicaltrialswehavewilltakeintoaccountallpatientswithhighrisk,andthosewhohaveaneventorwhohaveconcomitantmorbiditieswillbeahigherchanceofgettingadrugandgettingprescribed.
ArvindSood (VPofIR):
Jake,let'stakethenextquestion.
Operator :
YournextquestioncomesfromthelineofEunYangfromJefferies.
EunYang (Analyst-JefferiesLLC):
Thankyou.SowhenyoulookatForteosales,ex-USsalesarehigherthanUSsalesdespitelimitedaggressivepriceincreases,butwhenyoulookatProlia,USsalesaccountfor64%oftotalsales.Whydoyouthinkthereisadifferenceinusagebetweenanabolicandantiresorptiveagents?Ordoyouthinkit'sduetoseveraladministrationversusefficientofficeadministration?
Andfollowonthatis,Romosozumabisgoingtobeusedone-yeartreatment,whereasthePTHanaloguesaregoingtobeusedtothreeyear--twoyears,sohowdoyouthinkaboutthepricingofRomosozumab?Thankyou.
T onyHooper (EVP,GlobalCommercialOperations):
Letmetryandanswerthefirstpieceaboutthedifferenceinthesalesglobally.IthinkProliawassimplyatimingaroundcomingtomarket.WecametomarketduringafiscalcrisisandtheimpliedreimbursementprocessoutsidetheUnitedStatestookanumberofyears.
Infact,inFrance,ittookus41/2yearsfromapprovaltogettothefinaldecisionmadeonpricing.SooutsidetheUS,theyarerunningtocatchupintermsofthepatientusage.Andthenwearesurethateventuallyweshouldgettoadecentbalance.Sean?
SeanHarper (EVP,Research&Development):
Ithinktheotherquestion--
BobBradway(Chairman&CEO):
Theotherquestionhadtodowithpricing.Iwouldimagineit'spremature.
T onyHooper (EVP,GlobalCommercialOperations):
Ithinkthepricewewillbeablechargewillbeclearlylinkedaroundthevaluepropositionweseecomingoutoftheclinicaltrials.
BobBradway(Chairman&CEO):
Okay,Jake,let'stakethenextquestionplease?
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Operator :
YournextquestioncomesfromthelineofCoryKasimovfromJPMorgan.
CoryKasimov(Analyst-JPMorgan):
Hey,goodafternoon,guys.Thanksfortakingmyquestion.IwantedtogobacktoKyprolisforaminute,andjustwonderingifyouhaveanefficacyinterimlookbuiltintoClarion,similartowhatyouhadforEndeavor?Andifyoudo,whattriggersitandwhatkindofactioncanbetaken?Couldwestopforeitherfutilityoroverwhelmingefficacy?Thanks.
SeanHarper (EVP,Research&Development):
Yes,sothesetrialswerealldesignedmoreorlessatthesametimebythesamegroupofpeople,andtheyallhavegenerallysimilardesignandtheyhaveinterimanalyses.Obviouslythatinterimanalysishasinit,theabilitytostopthetrialforclearfutilityandtostopthetrialforoverwhelmingefficacy.
Andifyou,I'msurewillrecall,bothAspireandEndeavorwerestoppedforoverwhelmingefficacy.Ithinkthisisareasonabledesign,butIdon'tthinkthatweareinanywayplanningonseeingafirst-linestudystoppedforoverwhelmingefficacyattheinterim,butitisapossibility.
BobBradway(Chairman&CEO):
Aswesay,Cory,we'reexpectingthisin2017.
Operator :
YournextquestioncomesfromthelineofYingHuangfromBofAMerrillLynch.
YingHuang (Analyst-BofAMerrillLynch):
Hi,goodafternoon,guys.Thanksfortakingmyquestion.Ifyoudon'tmind,canyouspelloutthesalesofRepathalastquarter?Iknowit'ssmallnumber,butjustahousekeepingquestionthere.
Andsecondly,onRomosozumabregulatorypath,doyoubelievefirmlythatthefirstPhase3trialthatwouldreadoutin1QthisyearshouldbesufficientforFDAapproval?Thanks.
BobBradway(Chairman&CEO):
Sodidyougetthesecondquestion?Whydon'tyougoaheadonthesecondquestion.
SeanHarper (EVP,Research&Development):
Yes,ontheRomostudy,yes.Webelieve,basedonthepublishedguidancesbyregulatorsaroundtheworldandourinteractionswiththeregulatorsaroundtheworld,thatifsuccessful,theplacebo-controlledstudywewerejusttalkingaboutearlier,thatthefirstofthesestudiesreadsout,willbesufficientforglobalregistration.
BobBradway(Chairman&CEO):
Okay,andastotheRepatha,you'reright,wearen'tbreakingthoseoutbylineitematthistime.
Operator :
YournextquestioncomesfromthelineofBrianSkorneyfromRobertW.Baird.
BrianSkorney(Analyst-RobertW.Baird&Co.):
CompanyName:AmgenIncCompanyTicker:AMGNSector:HealthCareIndustry:Drugs
EventDescription:Q42015EarningsCallMarketCapasofEventDate:113.50BPriceasofEventDate:148.35
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Goodafternoon,guys,thanksfortakingthequestion.JustthinkingalittlebitmoreabouttheoutcomesdataforRepathaexpectedlaterthisyear.WheredoyouthinktherangeofoutcomescanfallintermsofhowweextrapolatethereductioninLDLcapabilityofthedrugtowhatwe'veclassicallyseenintermsofCVreduction,andmaybethinkaboutwhattherangeshouldbebasedonthat?Andhowitcoulddeviatefromthatclassicalextrapolation,whetherit'sduetodifferenttypesofpatientsorjustthetrialdesign,howwecanthinkaboutthat,thanks.
SeanHarper (EVP,Research&Development):
Yes,thisisthekindofsubjectthatonecansitaroundandtalkaboutformanyhourswithexperts,whichI'vedone.AndIthinkthebestthingIcansayisthatwehavearemarkablylinearrelationshipthatwe'veestablished,mostrecentlywithIMPROVE-IT,extendingthatlineinjustaremarkablylinearfashion,extendingthelinethatwascreatedbystatinsandbyotherinterventions,suchasillegalbypasssurgeryandsoon,andthegeneticsofcourse.
Andsowhenyouputitalltogether,whatyouhavetobelievescientifically,isthatwhattruthisthatyou'regoingtofallrightonthatlineinthesamewayasifyouachievedthatadditionalLDLloweringwiththestatinorwithezetimibe,werethatpossible.Obviouslyit'snot.
Coulditdeviatefromtheline?Sure,youknow,it'salwayspossiblethatsomeofthefoiblesofthewaythattheclinicaltrialsaredesignedandconducted,thereis,ofcourse,forexample,atreatmentlagofsomesortthatoccurswhenyoustarttherapies.Andsowhenthestudyreadsoutveryquickly,insteadofoveralongerperiodoftimethathasabiggerinfluence,etcetera.Thatcouldmakeitcomeoffthelineslightlyinonedirection.
Wealsoknowthattheagentdoeshavesomeactivitiesthatstatinsdon'thave,forexample,thereisaneffectonLp(a),whichispresentinsomeindividuals,andseemstobeastrongprognosticfactorthatcouldmakethedotcomeoffthelinealittlebittheotherdirection.There'ssomevariabilitythatyoucouldexpect,butfromascientificperspective,basedonthehumangeneticsandeverythingweknow,onewouldexpectthatyou'regoingtoseeareductionthatwouldbeproportionalandsimilar.
Andthatwouldberoughlyballparkaround1/3levelreductionoftherisk.That'sthekindofnumberthatmanypeople--keepinmind,Ithinkthat50%reductioninrisk,thatwassuggestedbytheanalysesthatwerepublishedintheNewEnglandJournal,thatthere'saverywideconfidenceintervalaroundthose.
Andwhileyoucan'truleoutthepossibilitythatyou'llseethatbigofareduction,that'sabiggerreductionthanyouwouldexpecttogetifyouwereachievingtheLDLloweringthatwe'reachievingwiththestatin.SoitrequiressomeotherbiologylikeLp(a)orsomethingtobegoingon,andIcan'ttellyouthat'snothappening,butitsurewouldn'tbemybasecase.
T onyHooper (EVP,GlobalCommercialOperations):
We'llknowinafewmonths.
ArvindSood (VPofIR):
Lotstotalkabouttoday,sowehaveexceededourprescribedhour.Whydon'twetaketwolastquestions.
Operator :
YournextquestioncomesfromJimBirchenoughfromWellsFargo.
NickAbbott (Analyst-WellsFargoSecurities):
CompanyName:AmgenIncCompanyTicker:AMGNSector:HealthCareIndustry:Drugs
EventDescription:Q42015EarningsCallMarketCapasofEventDate:113.50BPriceasofEventDate:148.35
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It'sNickinforJimthisafternoon.Wespentalotoftimetalkingaboutverylate-stagepipelineandclearlyhavedoneaprettyimpressivejobdevelopingthosemolecules,butwhatareyoupointinginvestorstointermsoftheearlystage?
IfIlookatthePhase2pipeline,halfofthoseAMGsarewithAstra.There'stheCTEPHinhibitorthatyou'rewonderingwhattodoandmanyofthosePhase1moleculeshavebeenaroundforalongtime.So,Phase3looksreallygood,butwhataboutPhase2andPhase1,whatshouldwebefocusedon?
SeanHarper (EVP,Research&Development):
Yes,youknow,we'reactuallyreallyexcited.Ithinkit'sfairthatwehadsomuchgoingoninthelaterstagesthatwehaven'tspentasmuchtimefocusingontalkingaboutwhat'sgoingonintheearlierpipeline,butwe'rereallyexcitedaboutquiteanumberofthingsintheearlierpipeline.Obviously,OmecamtivMecarbilisveryexciting.Wehavethemigraine,newmigraineantibodyType1thatImentioned.Wehaveanovelheartfailuremoleculewhichwillbeenteringtheclinicthisyear.That'ssomethingwe'vedevelopedinhouse.WehaveacompletelynovelinflammationmechanismthatnooneelseispursuingthatIthinkthatisextremelyinterestingthat'senteringPhase1now.AndwehavequitearangeofBiTEtargetsthataremovingforwardintotheclinic,eithernoworintherelativelynearfuture.
SoIthinkthere'splentytolookforwardtointhatspace.Andyouknow,wealsohave,earlierthanthat,reallythemostexcitingstuffwhichissomeofthetargetsthatwebelieveweareuniquelyworkingonbecausethey'vearisenfromouradvancedpopulation-basedhumangeneticsefforts,liketheGeneXexamplethatsomeofyoumayrecallfromourbusinessreview,whichismovingalongverynicely.
SoIthinkatafuture,business-reviewtypesettingwewillprobablytalkalittlebitmore.It'sbeenhardtodothatwitheverythingthat'sbeengoingoninthelate-stagework.
BobBradway(Chairman&CEO):
Jake,let'stakeonelastquestion,please.
Operator :
Therearenofurtherquestionsatthistime,sir.
ArvindSood (VPofIR):
Okay,great.Inthatcase,letmethankeverybodyforyourparticipationinourcall.Betweenmyselfandmyteam,we'llbearoundforawhile,soifthereareanyotherquestions,feelfreetocallus.Haveagoodday.
Operator :
Ladiesandgentlemen,thisconcludesAmgen'sFourthQuarterandFinancialResultsconferencecall.Youmaynowdisconnect.
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