美國安進 (AMGN) 2001 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Amgen first quarter year 2001 earnings conference call. During the presentation all participants will be in a listen only mode. Afterwards you will be invited to participate in the question & answer session. At that time, if you have a question, you will need to press the 1 followed by the 4 on your telephone. As a reminder, this conference is being recorded Thursday, April 26th, 2001. I would now like to turn the conference over to Mr. Kevin Sharer, Chairman and CEO of Amgen. Please go ahead sir.

Thank you. Good afternoon. I'm Kevin Sharer, Amgen's Chairman and Chief Executive Officer. I would like to welcome you to Amgen's first quarter 2001 conference call. With me today are George Morrow, Executive Vice President Sales And Marketing; Roger Perlmutter, Executive Vice President, Research and Development; Kate Falberg, Senior Vice President and Chief Financial Officer; George Morstyn, Senior Vice President, Development and Chief Medical Officer; and Cary Rosansky, Senior Director, Investor Relations. I will provide an overview of the quarter, then George Morrow will review more specifics on the commercial aspects of our business, and Roger Perlmutter and George Morstyn will review clinical progress. Then we'll take your questions. First I need to make some cautionary statements. When we estimate revenues, operating margins, capital expenditures, cash, and other financial metrics, and discuss expected legal arbitration, political, regulatory, or clinical results, such estimates and results are forward-looking statements, and of course no assurance can be given that the estimates will be accurate, and actual results could vary. Please refer to Amgen's most recent 10K report for additional information on the uncertainties and risk factors related to our business. If you have not received our press release, please call Denise [_______________] at 805-447-3433, and she will 00:02:0 resend it. If you have further questions after the conference call, please contact our investor relations group at 805-447-4634. This conference call is being web cast via the Amgen homepage and will be archived for 72 hours following the call. I'll begin with an update on the status of our worldwide regulatory approvals for ARANESP. In the United States, we're in label discussions with the FDA, and we are confident that ARANESP is close to approval. As we reported previously, we received a positive recommendation from the European Committee on Proprietary Medicinal Products, CPMP, for the approval of ARANESP, the treatment of anemia in patients with chronic renal failure. We expect that the European Commission will ratify this approval in the second quarter. George Morrow and I just returned from Europe where we reviewed the launch plans. In Germany, which is the largest EU market with erythropoietin sales in 2000 of $240 million, and the UK where 2000 erythropoietin sales were 65 million, we're ready to launch immediately following approval. Our pipeline continues to progress, and I'm pleased to announce that the BLA for Pegfilgrastim, our sustained duration form of Neupogen, was submitted to the FDA in March. Also, during the quarter, we started Phase III studies of KGF's and mucositis associated with chemotherapy, and we submitted the supplemental data to the FDA for IL-1ra to treat rheumatoid arthritis. Roger and George will speak in greater detail about these and other pipeline advancements, later. Now let's turn to the financial results. Total products sales were 798 million, an increase of 14% over the first quarter last year, and earnings per share for the first quarter was ¢28, an increase of 12% over the same period a year

ago. Last fall, based on industry experience, our financial guidance for the year assumed that the FDA would approve ARANESP within a 15-month timeframe after filing. Today we are adjusting our financial guidance to reflect the second quarter approval, which lowers this year sales and earnings estimates, but has no effect on our long-term outlook. We now expect total product sales and earnings per share, excluding nonrecurring items, to grow at a low double-digit rate in 2001. Now George Morrow will speak about the commercial dynamics of our business and most importantly the pending ARANESP launch. George?

Thanks Kevin. One of the reasons I joined Amgen was the promise of our new products and the benefits they can provide to patients. The challenge to bring to market up to 4 new products over the next couple of years, I have to say, is a marketer's dream. I've launched a lot of products, and I think I know what it takes to get new therapeutics to market, described by physicians, and reimbursed by payers. Our sales and marketing teams around the world have been working diligently, long before Kevin ever approached me for this job. And I have to say I'm very impressed by the progress made, and I'm absolutely convinced that we're ready to meet the challenges and opportunities ahead of us. ARANESP in particular has all the markings of a blockbuster drug. We are entering a large, growing, and relatively under-penetrated anemia market with great potential to expand. I also believe this product has meaningful clinical benefits over erythropoietin. There is no question that Amgen is ready to launch ARANESP. The rate of uptake will depend on the timing of obtaining reimbursement in various segments and markets. As Kevin mentioned, we can launch in Germany and UK as soon as approval is ratified by the EC, while launch schedules in other EU markets will be staggered as reimbursement becomes available. Now I'll review our sales performance last quarter and our expectations

going forward. Epogen sales of $503 million increased by 14% in the first quarter versus the prior year. We believe that growth in demand slowed somewhat to a high single to low double-digit growth rate and that reported growth rate benefited from a year-over-year wholesaler inventory change. According to our surveys, average weekly Epogen doses in hemoglobin levels have remained relatively constant. Also, recent USRDS and Amgen market research data suggest that the growth rate of dialysis patients may be slower than we previously estimated, in the 5%-6% range, instead of 6%-7%. Longer-term, patient growth, higher hemoglobins, and inflation related price increases are the key drivers to dialysis sales growth. We continue to pursue initiatives to improve ESRD patient longevity and to explore the potential clinical benefits of higher hemoglobins. Our new guidance for the combined Epogen and ARANESP sales growth rate in 2001 is low teens. There are 3 main components to this revision. First, our forecast for non-dialysis sales in the US is reduced due to the longer than planned FDA approval timeline. We now expect sales of ARANESP in new markets to be $100-150 million this year. Our prior guidance was 150-200 million. The second component is the expected delay in the ESRD uptake and related wholesaler stocking of ARANESP as a result of the longer than planned FDA approval. When factored in with the third component of lower than expected dialysis patient growth in 2001, our US dialysis business is now expected to grow at a mid to high single-digit rate. Our previous guidance was low double-digit growth. Neupogen

sales for the first quarter were 294 million, an increase of 18% versus the prior year. We believe that demand continues to grow at a mid single-digit rate. The difference between reported sales growth and demand was primarily due to wholesaler inventory changes and to a lesser extent the negative impact of a stronger dollar on international sales. We continue to expect Neupogen sales to grow at a high single-digit rate in 2001. We are working with physicians to help them recognize patients who are at risk of febrile neutropenia to ensure that they receive Neupogen support from the first cycle of chemotherapy at the appropriate dose for their weight and until their neutrophil count has returned to normal levels. Longer term, we expect Pegfilgrastim will significantly grow the oncology franchise when approved, due to the important potential benefits of once per cycle dosing compared to daily dosing of Neupogen.

Thanks George. Now Roger will provide an update on our progress with regulatory filings. Roger?

Thanks Kevin. Let me begin by stating that the FDA review of ARANESP for nephrology indications is unquestionably on track. We've had productive discussions with senior representatives of the FDA, have a good process, and as Kevin mentioned, we're actively discussing the ARANESP label. I believe that ARANESP is close to approval in the United States for the treatment of anemia in patients with chronic renal failure. We expect to file for a label extension in the US for the use of ARANESP in oncology this year. Significant data were recently published in a supplement to the April 17 issue of the British Journal of Cancer, including a comprehensive review of the preclinical and clinical data regarding the use of ARANESP to treat anemia in the oncology setting. On March 19th, we announced that the European CPMP unanimously recommended approval of ARANESP for the treatment of anemia associated with chronic renal failure in adult and pediatric patients, 11 years old and older. The product label is expected to allow for treatment with ARANESP by subcutaneous or intravenous administration for patients in 2

circumstances, the correction of anemia and the maintenance of hemoglobin levels. Patients who ordinarily receive recombinant human erythropoietin, 2 or 3 times weekly, may change to ARANESP once weekly, and those maintained on recombinant human erythropoietin once weekly may change to ARANESP once every 2 weeks. Upon ratification of the CPMP's recommendation, the EMEA will issue a single license for marketing throughout the European Union. During the first quarter, the BLA for the use of Anakinra IL-1ra, to treat patients with rheumatoid arthritis, was supplemented with additional data, including analyses of two ongoing studies on nearly 1900 patients. As we reported last quarter, these analyses confirm the results seen in earlier studies of high level of statistical significance. We expect regulatory response from the FDA in the second half of this year. As Kevin announced earlier, the BLA for Pegfilgrastim was submitted to the FDA at the end of the first quarter. This license application included two Phase III clinical trials and was our first fully electronic submission. We expect to file in Europe in the second quarter. We believe Pegfilgrastim provides an important potential benefit of once per cycle dosing compared to daily dosing, which may improve dosing compliance by minimizing missed doses over weekend; reduce the burden on patients, care givers, and healthcare providers due to fewer clinic visits; and improve quality of life due to a major reduction in the number of injections. In addition, there may be less requirement for physician monitoring with Pegfilgrastim due to self regulation of the circulating levels of the drug. As was mentioned on the last earnings call, the NDA for abarelix, trade name Plenaxis, has been accepted for priority review by the FDA, indicating a 6-month review process through an action letter. We expect to receive FDA approval by yearend.

Now George will provide you with an update on some of Amgen's clinical development programs and data to be presented at ASCO next month. George?

Thanks Kevin. In the first quarter KGF progressed to a Phase III clinical trial following the successful completion of Phase II studies. The Phase III clinical trial will evaluate the effectiveness of

KGF to reduce oral mucositis in patients with hematological malignancies, undergoing transplantation. Mucositis is a serious side effect of cancer treatments such as high-dose chemotherapy and/or radiotherapy that patients undergoing transplantation receive. These treatments are often toxic to the mucosal cells lining the mouth and the gastrointestinal tract, resulting in ulceration of the mucosal lining. Oral mucositis results in painful sores in the mouth that may prevent patients from eating. Patients frequently require pain medication and have reduced quality of life. Also, during the quarter, data was presented at the first international workshop on lipoatrophic diabetes on the use of mainly leptin to treat patients with congenital lipodystrophy. There are several forms of lipodystrophy, including congenital and acquired forms. Lipodystrophy is characterized by generalized or partial loss of body fat. In severe cases, it is associated with metabolic disorders such as insulin resistance, hyperglycemia, hypercholesterolemia, and hypertriglyceridemia. Although the study was conducted on a small patient sample, preliminary data from the study show that leptin may be safe and effective in reversing the diabetes and elevated triglycerides observed in these patients. Early in the first quarter, it was reported that the trials of BDNF in ALS had not demonstrated any therapeutic benefit. All clinical development of BDNF has been discontinued. Now I'd like to turn to the Annual Meeting of the American Society of Clinical Oncology to be held in San Francisco in the first part of May, which will be a major meeting for Amgen. Abstracts from a number of Amgen's product candidates have been accepted for presentation. Phase III data will be presented for the first time for ARANESP in the oncology setting and for Pegfilgrastim, the sustained duration form of Neupogen. The first presentation of Phase II data for KGF will also be made. Five abstracts on ARANESP have been accepted as posters to be presented at ASCO.

These abstracts demonstrate the broad program Amgen is pursuing in oncology. Data will be presented from studies in patients with solid tumors and hematologic malignancies, and the treatment of anemia of both chronic cancer without chemotherapy and in patients receiving chemotherapy. Studies include pharmacokinetic data demonstrating the predictability of ARANESP given every 3 weeks. Data will also be presented demonstrating ability of ARANESP to be dosed every 2 weeks without loss of dose efficiency compared to weekly ARANESP. The results of a pivotal Phase III clinical trial, evaluating the efficacy of ARANESP in 320 patients with lung cancer receiving chemotherapy, will also be presented. The data suggests that ARANESP may be safely and effectively administered less frequently than recombinant human erythropoietin. Data from two pivotal Phase III clinical trials that evaluated Pegfilgrastim support for chemotherapy treatment of patients with breast cancer will also be presented at ASCO. In one study, the safety and efficacy of once per cycle administration of Pegfilgrastim dosed at 100 mcg/kg of bodyweight were evaluated in one of the studies in 310 patients with stage II-IV breast cancer. A second Phase III study in 157 patients with Stage II-IV breast cancer compared a fixed dose of 6 mg of Pegfilgrastim delivered once per chemotherapy cycle with Neupogen administered daily at 5 mcg/kg of body weight. These studies demonstrated that once per cycle Pegfilgrastim was comparable to daily Neupogen in reducing the duration of severe neutropenia following myelosuppressive chemotherapy and that the tolerability of Pegfilgrastim was similar to daily Neupogen. A single fixed dose of Pegfilgrastim was comparable to a median of 10 daily injections of Neupogen. Once-per-cycle administration of Pegfilgrastim has the potential to simplify the management of chemotherapy-induced neutropenia and may improve dosing compliance and convenience for patients

and healthcare providers. These studies form the basis of that BLA submission. Results of two Phase II clinical trials evaluating KGF will also be presented. The first study was a double-blind, placebo controlled trial of 129 patients and evaluated the efficacy of KGF in reducing mucositis in patients with hematologic malignancies, undergoing Autologous Peripheral Progenitor Cell Transplantation after radiation-based conditioning and high-dose chemotherapy. KGF effectively reduced the duration of severe oral mucositis, improved patient-reported mouth and throat soreness, and reduced the amount of narcotic analgesia that was used. Results from this study support the further evaluation of KGF in a Phase III clinical trial that commenced in the first quarter, as announced earlier on this call. A second double-blind, placebo controlled study evaluated the efficacy of KGF in preventing chemotherapy-induced mucositis in 64 patients with advanced colorectal cancer. The results are consistent with previous clinical observations of the efficacy and safety profile of KGF to reduce the incidence and duration of chemotherapy-induced mucositis.

Thanks George. I'm enthusiastic about our new products, and I believe we have the right people in place to achieve our plans of generating 8-9 billion in sales in 2005 and growing our earnings per share at a low 20s compound annual growth rate. We hope you share our confidence and excitement about our future. Now we'll take your questions.

Ladies and gentlemen we will now begin the question and answer session. If you do have a question please press the 1 followed by the 4 on your pushbutton phone. You will hear a 3-tone prompt acknowledging your request. If your question has been answered and you would like to withdraw your polling request, you may do so by pressing the 1 followed by the 3. If you are using a speakerphone please pick up your handset before pressing the numbers. One moment please for the first question. Elise

Wang, with Salomon Smith Barney, please go ahead.

Thank you. I had a couple of questions. One, this is addressed to George Morrow, if you could perhaps talk about the approach to reimbursement for ARANESP with HCFA, and what you expect, and how much time do you expect to take to achieve that? Two, just a quick question on whether or not there was a price increase and if so what it was for EPO, and then three, if you could elaborate on the regulatory timeframe for abarelix? I had thought that the PDUFA action date was actually in June.

Okay. I'll take the first question. The HCFA reimbursement, I think you're talking about dialysis here, and we will initiate our formal discussions with HCFA once we get approval, and that will probably take the best of 6 months to conclude. The second question is do we have a price increase for Epogen, and yes we did last year, 3.9% in February.

George you want to talk about abarelix time frame?

Sure. Abarelix was granted priority review by the FDA, and we're projecting that it'll be approved by year-end, which takes into account what you said.

Matthew Geller with CIBC World Market. Please go ahead with your question.

Hi. Yes, a few more timing questions here too. Can you talk a little bit more about the process with abarelix? What's going on with it, also for endometriosis? Also what's going on with calcimimetics? And any more detail on the filing process for ARANESP for oncology and timing with the date, etc.?

Roger Perlmutter here. With respect to abarelix, I think George has indicated where we stand with respect to the review process. The issue of other potential indications for abarelix is still under review

within our organization. I think that that's, we are very interested, of course, in the product, and a lot of discussions are going on, and in addition, we are evaluating other clinical data. With respect to the calcimimetics program, the calcimimetics program continues in clinical trials, Phase II clinical study, and we're looking forward to having the opportunity to review these data in more detail. I think what's available has already been discussed in prior calls. And with respect to ARANESP oncology, I think George sort of reviewed the data, much of which is going to be presented at ASCO. We're awaiting the completion of these studies and then naturally we will pursue our regulatory filings very, very soon.

I think Matt, it's Kevin, the timing of ARANESP in dialysis, chronic renal insufficiency, we said in comments, and I think in the press release, we believe we're very close in the United States, and in Europe, we've got a recommendation, and we think things are on track, and we believe we'll get approval in the US, second quarter.

Maykin Ho with Goldman Sachs. Please go ahead with your question.

Hi, at this point, for your guidance on ARANESP, a 100-150 million, what is the assumption for US approval and also with the general delay in FDA approval of products, why are you so confident that you can have these timelines in abarelix and also IL-1ra?

Those are a series of questions. Let me try to take them Maykin one at a time. We filed for ARANESP in December of 1999. At the time, the industry norm looked like, for a product of this characteristic, about a 15-month process. We made that assumption in

our financial plans, but for regulatory guidance, we thought probably the first half of this year. We still believe that the first half of this year is what's going to happen in the United States for ARANESP, although that is turning out to be a few months later than we had thought in the financial area. I want to emphasize that none of this very slight delay has anything to do with the product's fundamental characteristics or any difficulties in the approval process, in fact we're in very serious discussions, and we think we're close to the end. You're right in pointing out the difficulty of predicting with precision on any product candidate, when the FDA is going to act. The FDA has got a large backlog. They have challenges, but our best judgment is the guidance we've given, and we think we owe investors that best judgment. We try to hedge enough that we don't expect that any one product, that we have at the FDA, is going to set a world's record for approval, but we do use our best judgment, and as related to IL-1ra, I'll ask George Morstyn to comment on how that product candidate is coming, George.

As you know, we submitted the BLA in December of '99. We had a series of questions. We've responded to those with a submission, as we mentioned today, of up to, close to 1900 patients, and what we foreshadowed here is an action letter. Obviously an action letter could be, the data is adequate, and we're into label discussions, or the action letter could be a series of greater questions, but I am confident that the data that we submitted is of high quality, shows a very significant effect of our IL-1ra, confirms the data we had previously, confirms the previous safety profile, and so I think what we are foreshadowing in this call is very achievable.

Caroline

Copithorne with Morgan Stanley. Please go ahead with your question.

Hi. My question was on the EPO numbers, actually EPO and Neupogen. In both cases, while there are a few explanations that you've already given in terms of slower dialysis patient population growth, I just wanted to know, it still looks like, obviously, seasonally 1Q is usually weaker than 4Q, but we saw a pretty significant decline sequentially, and in the case of Neupogen, down from the second quarter and third quarter of last year. So just trying to figure out if there is something else that went on. If there was inventory beyond last year's Y2K portfolio or what affected that still more?

This is Kevin. Let me try to give a little color on the Epogen, and I'll ask George to talk about the fundamentals of the Neupogen business. He's a little bit more up-to-date, and he's been out in the field. He's been looking at that. It's really difficult, as you point out, to predict with precision Epogen each quarter. There's lots of moving parts. There is inventory as you point out. We've also had Y2K, and it's difficult to judge exactly what's going to happen. In inventory, we've got price discounts, spillover adjustments, just a whole variety of factors, and you're right that seasonally the first quarter's been a little bit weaker. The only thing we can see in the dialysis business that is perhaps different than the past, as we pointed out, is that the patient growth rate we're now projecting is at about the 5%-6% range instead of our historical guidance in the 6%-7% range, but we don't see any other dynamics in that business that are of concern than that. And also, going forward, we're going to report ARANESP and Epogen together so that we don't cause even more problems in trying to understand what's going on. So bottom line on Epogen, so far so good. Looks like maybe patient growth rate is a tiny bit lower than we might have thought in the past, but that's it. Now

I'll let George talk about Neupogen. From a CEO's perspective, we're doing well on Neupogen, and George, what's it look like to you?

Yeah, just to reiterate. First quarter sales were negatively impacted by wholesaler inventory drawdowns and foreign exchange. Inventory had a positive year-on-year impact of growth rate due to the Y2K buildup late in 1999. So the quarter that we compared to this first quarter was a light one for us. In terms of demand, we're growing in mid single-digits, and the product's performing, I think, very well given it's been on the market for 10 years.

Errol Rudman with Rudman Capital Management. Please go ahead with your question.

Question was asked. Thank you.

Eric Schmidt with SG Cowen Securities. Please go ahead with your question.

Thanks for taking my question. Let's see, first a question for George on the KGF data coming up at ASCO, whether he could direct us at the competitive advantage for your growth factor versus that of other companies in development, and then a second question, a pipeline question on ARANESP. We've seen in the past some data from Amgen suggesting that the longer effect of the products may actually translate into an efficacy advantage, at least in oncology patients, and I'm wondering whether that's a viable label advantage for you going forward?

Thanks. In terms of the KGF, I think you're alluding to Human Genome Sciences as KGF-2 in development. I think our program is obviously very advanced. We've just started Phase III clinical trials. I think we spent a fair bit of time validating the way to measure the endpoints in the mouth, the ulcers, the endpoints to do with mucositis, and I think you'll see, when you go to ASCO, both the study that we've done in the hematologic malignancies and in the colorectal settings, that the data looks impressive, and there is no really effective treatment at the moment to prevent

mucositis. And if you talk to nurses in centers like transplant centers of chemotherapy wards, you'll see the main complaints that patients have today is to do with mucositis. So I think we're dealing with an important side effect, and we're moving very quickly. On the other issue to do with ARANESP, you will see data, I think particularly from John Glaspy, on giving ARANESP once a week, once every 2 weeks, and at different doses. And I think one important thing to pay attention to is not just the ultimate response rate, when do patients get to a normal hematocrit, but how quickly they get there, and I think the data with ARANESP particularly at the high doses is very impressive in terms of rate of response. I think when you're sick and you're anemic, you've got cancer, it's very important to have a drug that can give you a response quickly. We have, as was mentioned, one Phase III trial that's completed. I think that gives us a quick way of getting a label in the setting faster, I think, than people were expecting. We're certainly going to do other phase III trials and exploit some of these other advantages of ARANESP so that we can bring the ultimate advantage to patients who have cancer.

Dennis Harp with Deutsche Banc. Please go ahead with your question.

Yes, a couple of questions on ARANESP and then on the pipeline. On ARANESP, of the 100-150 million, how of that would you estimate would be pipeline versus end market sales, pipeline spill versus end market sales? And then in Europe, you mentioned you're ready to go in Germany and the UK, do you have reimbursement there, and if not when do you expect to get reimbursement there? With regard to the pipeline, there was no mention of LymphoCide, which I think is in phase III trials. What are your expectations for LymphoCide, and will we hear about it at the ASCO meeting? And

then finally on leptin, the lipodystrophy study that was done, how big of an indication is that?

I'll let the two Georges handle this. George Morstyn, why don't you take the clinical ones, and then George Morrow could take the market ones, okay?

With regard to epratuzumab, as you say it is in the clinic. It's an antibody against CD22. We are working in patients who have failed with Rituxan. We haven't really projected yet the relative pathway, as we've just licensed the product and we're doing the studies, and we're certainly proceeding with it, and we're really happy this is Amgen's first direct anticancer drug as distinct from a [_______________] care drug. With regard to leptin, the reason that we mentioned this was because it's a very clear-cut result. It was presented at a public meeting at NIH branch, NIDDK sponsored the meeting; small number of patients were treated, and however, the results were incredibly clear cut in terms of, as I mentioned, the effects on glucose tolerance, insulin insensitivity, fat storage in the liver, and while the group of congenital patients with lipodystrophy is quite small, there're probably less than 500 patients, we feel the very clear-cut demonstration of an effect in these patients who have extremely low leptin levels, and where leptin is really returning the patients back to normal, is a good proof of concept and gives us a good scientific path to follow with the further development of leptin. For example, in settings, such as where lipodystrophy associated with AIDS patients who are on protease inhibitors, and in other settings, with patients who may have lower leptin levels. So we think while the initial opportunity is small, there may be as a proof of concept indicated that the drug

will work in other settings that we haven't yet explored.

Terrence Norchi with Citibank Global Asset. . .

We had a, there were a couple of other questions there?

I'm sorry.

Okay. How much inventory for ARANESP? We don't break that number out. I can tell you though that the wholesalers are anticipating huge demand. This is a very, very big market, and as demand ramps up, they will build inventories to make sure they have enough supply. The second question was about Germany and UK reimbursement, and that will be available at launch once we get the EMEA approval.

Are you ready to take the next question sir?

Yes, we are.

Terrence Norchi with Citibank Global Asset Management. Please go ahead.

Hi, thanks. This is Terry Norchi here. What's the outlook for continued trend of less chemotherapy on the underlying Neupogen sales, first? And then secondly, I'm wondering if you could characterize the share count expectations moving forward? And finally, if you could characterize some moving parts for the corporate revenue line? Thanks.

We think that the basic effect of the shift to less myelosuppressive chemotherapy has basically happened.

George, I don't know if you've got any more color than that.

Our feeling is that weekly chemo is beginning to flatten out, so we probably have the full brunt of that.

Okay.

And Kate why don't you take the other questions?

The corporate part of revenue for the year, we expect to be pretty similar to last year's amount which was 246 million. The first quarter 51 million is lower than last year, and that's because last year we had a milestone payment from Kineret Amgen related to the NESP development program. The share count, we don't expect to see a lot of change, but there are various factors that affect that share count. One them is the stock price, and so it's difficult to predict with any precision.

Rachel Leheny with Lehman Brothers. Please go ahead with your question.

Thanks. Two questions, one, with regards to the guidance of 100-150 million, can you give us a sense of what the split there will be between the US and Europe, and what you anticipate the split to be between US and Europe? And then following on, can you, with regards to the ARANESP clinical program in cancer, can you give us a sense, do you have, what your ongoing Phase III trials are? Obviously you're going to have one that you're going to discuss next week at ASCO. But what your filing plans would be in cancer, particularly in terms of the dosing schedule you would look for? Would you file on a once a week and then try to expand it later? How do you think that will, sort of, unfold?

Let me take Rachel the ARANESP question. The 3 basic markets, maybe 4, for ARANESP, one is Europe dialysis, the other is the US chronic renal insufficiency, then ultimately oncology, and then finally all other anemia related. The size of the market is overwhelmingly in the US, although Europe is pretty large at $800 million or so. We don't break out this 100-150 million in Europe or US or even indication, but I think by the magnitude of these markets, over time you can see where the opportunity is going to really lie, and Europe, although significant, will not be as large as the US, and George if you want to talk about the Phase III in oncology?

Yeah, as I said, that at ASCO we'll be presenting the phase III trail which has once a week NESP dosing, shows it to be very effective compared to erythropoietin used in the same study. We will in addition to that, be obviously filing all of the data, other data, that we have in terms of use of NESP in patients who have cancer, and that will include the data that's being presented at this meeting by John

Glaspy in over 80 patients who've received NESP once every 2 weeks, in them it would also seem to be very effective, and also the data we presented previously at the American Society of Hematology where NESP was used once every 3 weeks at higher doses than the doses obviously used once a week and once every 2 weeks. In terms of what sort of label we'll get and how broad it will be based on all that data, I don't want to speculate at this stage, but clearly I think we have proof of concept for the use of NESP once a week, once every 2 weeks, and once every 3 weeks.

[_______________] with Scudder Kemper Investments. Please go ahead.

It's been asked and answered. Thank you.

Thank you. Wendy Lou with Arnhold & S. Bleichroder. Please go ahead with your question.

Good afternoon, one question relative to ARANESP. Do you know whether or not the drug crosses the blood-brain barrier?

There has been some sort of preclinical studies around the effect a drug that this might have, but we don't really know whether those apply or not. We haven't done studies like that.

Okay, thank you.

David Gruber with Lehman Brothers. Please go ahead with your question.

Yeah, two questions. One is, is HCFA reimbursement essential for ARANESP use in dialysis and eventually oncology? And the second question is, in your opinion, is the very strong growth exhibited by Procrit in oncology more a reflection of higher dosing than it is of market penetration? And what is your estimate regarding the oncology patient penetration to be at the moment?

We'd probably, rather not comment on a market we're not in, other than to say we believe that anemia in oncology is a very large market. It has a lot of growth yet to go, and we're anxious to participate.

In terms of HCFA

reimbursement, for CRI, Medicare is about half of the market, little less than half of the market, and we should get coverage righted approval. The question will be claims processing, and that's really up to the carriers and in the physicians' offices and the fiscal intermediaries and possible outpatient. So it'll be there, the coverage will be there. The claims processing will be slow, but by creating enough demand, we'll work our way through that.

Stu Weisbrod with Merlin BioMed Group. Please go ahead.

Hi, just a few questions left, all on the pipeline. First, when will we see the bone metastasis data for Osteoprotegerin? And, can you also give us an update on the immunophilin program? And what's left to do in the calcimimetic program before you start Phase III?

In terms of OPG, we are in a Phase I type II study in oncology, as I've mentioned before, because of the [_______________] the hurdle here is pretty high in terms of getting a drug that's more convenient, has clear clinical benefit, and so we haven't foreshadowed yet, moving into Phase II, exactly how we will do that. We're trying to make sure that we have the right molecule to take forward successfully. With regard to neuroimmunophilins, we're in the middle of a Phase II program in Parkinson's disease. And, third program on, the calcimimetic program, we've mentioned that we had to work on, sort of, the formulation and manufacturing program for the tablets, and that's going really well. So that we took into Phase III tablets that we could actually then be confident that we could manufacture when the drug was approved. We also are in phase II doing a dose-finding study to make sure that we've really optimized the dose we

take into phase III. So the program is moving, as Roger said previously, really well. One of the interesting things I think is that, I was at the National Kidney Foundation last week and calcimimetics really is a major advance for patients with renal osteodystrophy. Dr. [_______________] presented the impact of hyperparathyroidism, hypercalcemia, the effect on coronary artery disease, and I think the most promising drug in development at the moment is at calcimimetic program. So we're certainly trying to move it as fast as we can.

Eric Ende with Banc of America Securities. Please go ahead with your question.

Thanks for taking my call, my question. I have a few questions, first on ARANESP and then a quick one on Neupogen. Can you talk a little bit about the process of getting NESP on the formulas at the hospitals, and also the timing associated with that? And then if you can kind of, take a shot at this one, off-label versus on-label use of ARANESP. And the third thing, do you yet have the data to determine what the once every 3-week dosing will be for ARANESP? And then I'll ask you the Neupogen question in a minute.

Why not just ask it now so we'll get them all.

Okay. When I look at the numbers just over time, Neupogen sales have been declining since the third quarter, and I think you guys are saying that there is still an inventory drawdown, is that correct?

Yeah, I'll let George Morrow take all these and. . .

Wait, wait, and let me actually continue the thought. You did 294 million this quarter, and you're talking about high single-digit growth. So are you expecting some, looks like pretty explosive growth off of the first quarter and the second, third, and fourth, to get to those kind of numbers, and I'm just trying to get a sense as to whether or not that's achievable.

Let me take that question. We had 18% growth in the first quarter, and we're predicting high single digit growth for Neupogen throughout the year, which really reflects an underlying growth rate in the mid single-digits, and we think the demand is there for that. Does that answer your question?

Yeah, but I'm also trying to understand why it's declining for 2 quarters in a row if it's just an inventory drawdown. It had to be a lot of inventory.

Well, the first quarter again had an inventory drawdown. It just wasn't as deep as the inventory drawdown in the first quarter of 2000. So we had a price increase on Neupogen in November of last year. There's naturally an inventory buildup around that time, so we have a buyout period. It just was shallower than the previous year, and so that will slightly pump our Neupogen growth rate for the entire year. I think you can, sort of, count on a mid single-digit rate in terms of underlying demand for the product, sale or demand.

Okay, let's go to the ARANESP questions then.

Okay, in terms of getting ARANESP on formulary, we're already working with hospitals. Obviously we have a great value proposition for this product, and we have a great sales force, we have excellent corporate account management, in fact we've built that team up over the last few years. And so we really think we've got a great story to tell. This will of course take some time depending on the hospital, but we'll be there in the end. In terms of off-label use, I'm sure there'll be some, but we really don't want to comment on that.

It's basically impossible to predict, and we of course cannot market directly off-label. There will be some periodicals, and I'm sure there'll be a lot of interest. And the last question I know you had was data, whether we have and if so, when we'll show it on the once every 3 week dosing, and George Morstyn can comment.

We presented some data on that at the American Society of Hematology

Meeting. If you don't have the abstract, I'm sure Cary could send it to you if you call him later. We're not presenting any other data at the ASCO meeting on once every 3-week dosing. That's obviously something we continue to look at.

We've got time for one more question.

Thank you sir. The final question will come from Meirav Chovav with CS First Boston. Please go ahead.

Thank you. My question is, when you are designing the ARANESP trials in oncology, are you going to obviously, from the data we've seen so far, efficacy is highly dependent on dose. So would one of your goals would it be to design a pivotal trial such that in theory you can get label or a result that has higher efficacy than Procrit? And also an unrelated question, relating to leptin; as far as I remember, you were developing 2 derivative forms of leptin which were supposed to overcome the issue of the fact that you couldn't give enough leptin to actually get overweight people to lose weight. I think it worked if you didn't need to lose weight because the heavier the person was the more leptin they needed. So I was wondering if you can update us on the status of a dose trial, on the second generation leptin. Thanks.

This is Roger. I'll take those two. First of all, clearly we want to develop ARANESP at its most effective dose for its indications, and as you indicated, of course the response is dose dependant. It is always a balance in terms of efficacy, getting maximal efficacy and at the same time ensuring that we have the minimal efficacious dose well defined. So part of the effort, of course, in a well-designed Phase III study as you recognize is to bracket those doses and make sure that we understand what the appropriate dose recommendation should be; something, which

thereafter is discussed in detail with the FDA. That's perhaps all we need to say about the design of those Phase III studies. With respect to leptin, we continue to be interested in the range of indications for leptin both in its traditional form and also in modified versions, which have different pharmacokinetic profiles. We are studying leptin to ask the question of whether or not it would be useful in the context of either those who have managed to reduce weight by other programs in terms of maintaining weight or to directly cause weight loss. We're still in the process of analyzing these data, and we hope to be able to come to a conclusion about the broader utility of leptin in the relatively near future.

Okay, thank you very much. We appreciate your interest today, and we look forward to the future. Thanks a lot.

Ladies and gentleman that does conclude your conference for today. You may all disconnect, and thank you for participating.