美國安進 (AMGN) 2013 Q4 法說會逐字稿

My name is Marvin, and I will be your conference facilitator today for Amgen's Fourth Quarter and Full Year 2013 Financial Results Conference Call.

(Operator Instructions)

I would now like to introduce Arvind Sood, Vice President of Investor Relations.

Mr. Sood, you may now begin.

Thanks, Marvin, good afternoon everybody.

I would like to welcome you to our conference call to review our operating performance for the fourth quarter and full year 2013.

We have accomplished a lot during 2013 on many fronts, including operational and strategic, and we are looking forward to delivering in 2014 a year which will be characterized by significant clinical data flow.

Leading the call today will be our Chairman and CEO, Bob Bradway, who will provide a strategic report on our performance in 2013 and outlook for 2014.

We also have our Interim CFO, Michael Kelly, who will review our Q4 and full-year results and provide financial guidance for 2014.

Tony Hooper, our Head of Global Commercial Operations, will then discuss our product performance during the quarter and trends that we see going forward.

And finally, Sean Harper, our Head of R&D, will then outline the expected flow data for many of our pipeline products.

After Sean's comments, we should have ample time for Q&A.

We will use slides for our presentation today.

These slides have been posted on our website, and a link was sent to you separately by e-mail.

Our comments today will be governed by our Safe Harbor Statement, which, in summary, says that through the course of our presentation and discussion today, we may make certain forward-looking statements and actual results may vary materially.

So with that, I would like to turn the call over to Bob.

Bob?

Okay, thank you, Arvind.

I think confident is the best way to describe how we feel about our long-term growth prospects as we head into 2014.

Our confidence is bolstered by our performance in 2013 on all fronts: financial, operational, and strategic.

Financially in the fourth quarter, as you can see from our results, revenues were up 13%, and our earnings-per-share were up 30%.

For the full-year, revenues were up 8%, and earnings-per-share up 17%, reflecting strong execution and continued momentum in our business.

Geographically, we grew across all our markets.

We were strong in the US.

And once again this year, I believe we are one of the few companies growing revenues in Europe, and that reflects the strength of our current products, and recent launches as well.

In terms of individual products, the highlights for 2013 include: Prolia and XGEVA, contributing $1.8 billion of sales, Sensipar, exceeding $1 billion for the first time, and after 15 years on the market Enbrel remaining the leading anti-TNF therapy, and of course Neulasta and NEUPOGEN, continuing to grow with the benefit of their established safety and efficacy track record.

While delivering strong operating performance in 2013, we invested in the growth of our business, and that's reflected in our advanced pipeline.

We have 10 molecules that are in late stages of development, and set to deliver pivotal data by 2016.

We also have a portfolio of 6 biosimilar molecules that we expect to begin launching in 2017.

2014, in particular, will be a data rich year for us, and Sean will provide details on when we expect information to become available during the year.

Just this past week and earlier this afternoon, we reported top line results from the third and fourth of our five pivotal studies for Evolocumab.

We're excited about the results that we're generating, and think they're forming the basis of a strong package for global registration.

In addition to making investments in our own R&D programs, we acquired Onyx and ivabradine rights in the US, and we look forward to advancing Kyprolis in the rapidly growing multiple myeloma market.

As you know, we believe Kyprolis has an important role to play as a backbone of therapy in multiple myeloma, and ivabradine looks to have an interesting prospect in heart failure.

On international expansion, we made significant progress in 2013 in Japan, China, and the key emerging markets.

In Japan, our partnership with Astellas is off to a strong start, developing five innovative molecules in a business which Amgen can gain control of as early as 2020.

In China, we have filed (technical difficulty) and have in place a partnership with Beta Pharma to help launch the molecule.

We expect to be able to launch Kryprolis in China shortly after Vectibix.

In emerging markets through the reacquisition of our Neulasta and NEUPOGEN rights from Roche, we're now present in more than 75 countries, enabling us to exceed our international expansion goal two years earlier than originally planned.

Expanding our business into new regions is an important element of our growth strategy for the long-term.

So let me conclude my comments with a few key messages.

2014 is a year in which we expect to generate a lot of data.

And while this data will inform our long-term growth prospects, we expect solid performance from our base business during the course of the year.

With full ownership of Enbrel now in the US and Canada, we expect to grow its operating income contribution by some $800 million in 2014.

And as Michael Kelly will detail in a moment, we expect solid growth in revenues and adjusted earnings-per-share during 2014, which will enable us to continue growing our dividend consistent with our capital allocation strategy.

Finally, I'd like to thank all of my Amgen colleagues, many of whom may be listening into the call, for their contributions to delivering for our shareholders and patients last year.

I know I can count on my Amgen colleagues, as we work to create even more value in 2014.

Now let me welcome Michael Kelly to the call, and ask him to walk you through our financial performance for the quarter.

Michael?

Thanks, Bob.

Turning to the fourth quarter on page 4 of the slide deck, you can see revenues grew by 13%, driven by strength across our product portfolio both in the US and internationally.

This also reflects incremental revenues following our acquisition of Onyx Pharmaceuticals, both from Kryprolis as well as from Nexavar and Sofargen.

Operating income grew by 24%, as operating costs grew well below revenues.

Within operating expenses, our cost of sales margin improved by 0.8 points to 16% driven by lower royalties.

Research and development costs increased year-over-year, with roughly half of the increase due to the acquisition of Onyx and its Kryprolis clinical program.

The remainder was driven by our late stage clinical trials, particularly for Evolocumab.

SG&A expenses decreased by 3%, due to the end of the Enbrel profit share in the quarter.

Specifically, on October 31, our profit-sharing arrangement with Pfizer ended and was replaced with the royalty on Enbrel sales, which we will continue to report in the SG&A line going forward.

The two month benefit of this change reduced expenses by about $130 million versus the year-ago quarter, and will contribute about $800 million next year.

That benefit was partially offset by the addition of the Onyx SG&A expenses.

Net income increased 28%.

Similar to last quarter, the tax rate was lower compared to 2012, due to the federal R&D tax credit and the change in the geographic mix of expenses and revenues.

Finally, adjusted earnings-per-share were 30% higher, helped by a lower average share count compared to 2012.

In summary, for the full-year on page 5, revenues grew 8% to $18.7 billion, and adjusted EPS grew 17% to $7.60 per share.

We exit 2013 with good momentum as we move into 2014.

Turning next to cash flow and the balance sheet on page 6, we generated $5.6 billion in free cash flow in 2013, and increased our quarterly dividend per share by 31%, with payments totaling $1.4 billion.

As you are aware, we announced another 30% increase to the dividend starting with our first-quarter 2014 payment.

We remain committed to our capital allocation strategy, and continuing to increase the dividend over time.

At the end of the year, we held $22.8 billion in cash, short-term, and restricted investments, and $32.1 billion in debt.

The roughly $5 billion increase in debt from the end of the third quarter reflects borrowings to complete our Onyx acquisition funding.

Finally in 2013, share repurchases amounted to $800 million, at an average price of $85 per share, all in the first quarter.

You will notice that our average share count increased sequentially in both the third and fourth quarters, as we did not repurchase shares, and saw some dilution from stock-based compensation.

Let me remind you that we don't expect any significant repurchase activity in 2014 and 2015, and thus, expect to see similar effects on share count going forward.

Now let me turn to guidance for 2014 on page 7. We expect total revenues in the range of $19.2 billion to $19.6 billion, and adjusted earnings-per-share in the range of $7.90 to $8.20.

This includes the $800 million operating income benefit from our full ownership of Enbrel in the US and Canada.

Our adjusted tax rate is expected to range between 15% and 16%, which assumes that the R&D tax credit legislation will be passed in 2014, and retroactively apply to all of 2014.

And lastly, capital expenditures are expected to be approximately $800 million, a slight increase from the last few years, reflecting investments in Onyx Pharmaceuticals and our global manufacturing operations.

Let me now turn to Tony.

Thank you.

Thanks, Michael, and good afternoon everyone.

You'll find the summary of our global sales performance on slide number 8.

We delivered strong fourth-quarter performance with product sales, including Kyprolis growing at about 11%.

In the US, our business grew 11% year-over-year and in the fourth quarter.

US wholesale inventory levels ended at the high end of our normal range.

Outside the US, our business grew 9% in the fourth quarter, or 10% excluding the impact of foreign exchange.

I'd like to review our fourth-quarter product performance, beginning with Neulasta and NEUPOGEN.

Year-over-year global sales for Neulasta increased by 10% in the fourth quarter.

This was mainly driven by price, with unit demand remaining stable.

NEUPOGEN sales were flat year-over-year, while quarter-over-quarter sales declined 34%, due to the $155 million order from the US Government in the third quarter.

We've seen minimal impact from recently launched competition, as Neulasta and NEUPOGEN shares remained stable in both the US and Europe during in the fourth quarter.

We continue, however, to take all competition seriously.

Now to Enbrel, fourth-quarter sales grew 3% year-over-year, largely due to price.

Our investment in direct-to-consumer advertising with Phil Mickelson continues to drive brand awareness, which is important, as physicians continue to honor over 90% of Enbrel patient requests.

We remain the value share leader in both rheumatology and the dermatology segments, and we are confident in Enbrel's potential growth.

Moving on to Aranesp.

Aranesp sales were down 4% year-on-year.

We continue to see price pressure in Europe, and segment slowdown in the US.

EPOGEN sales increased 10% year-over-year.

This was mainly driven by an increase in unit demand, due to the withdrawal of Omontys in early 2013.

Hemoglobin levels have remained relatively stable throughout 2013, based on our most recent data.

We will continue to monitor end user dose utilization, as the new 2014 bundle payments go into effect.

Now I'll turn to Sensipar.

As Bob mentioned, global Sensipar sales exceeded $1 billion in 2013 for the first time ever.

For the fourth quarter, sales increased 20% year-over-year, due to segment growth, and increased penetration in Europe.

Nplate and Vectibix sales in aggregate were higher by 16% year-over-year, mainly due to increases in unit demand.

Our European Vectibix label for the treatment of meta static colorectal cancer, now includes the new end RAS and first line data.

We're excited about the growth potential for Vectibix in Europe and its benefits for patients.

For Nplate, we've continued to see segment growth in both the US and European markets.

Moving now to Denosumab.

As Bob noted, the D-mab franchise contributed sales of $1.8 billion in 2013.

In the fourth quarter, Prolia sales grew 53% year-over-year, driven by increased segment share in both the US and Europe.

We've now launched in all major European countries.

In the US, our direct consumer campaign has been very successful.

Prolia is now the most requested brand by new postmenopausal osteoporosis patients.

We are launching a new campaign with Blythe Danner in the next few weeks to continue raising patient awareness.

I'm pleased to note that XGEVA also reached the $1 billion milestone in 2013.

This is our seventh product to exceed $1 billion in annual sales.

For the fourth quarter, XGEVA global sales grew 33% year-over-year.

Outside the US, XGEVA grew 124% year-over-year.

Our commercial focus remains in reminding physicians and patients of the superior clinical profile of XGEVA.

This is an important differentiator in the face of generic zolodronic acid competition.

We grew market share in the US by 3 percentage points, and saw successful launches and growth in Europe.

XGEVA is now available in all major markets.

Let me now turn to our newest product, Kyprolis.

Kyprolis achieved quarter-over-quarter growth in the fourth quarter as the Onyx acquisition closed.

The underlying demand growth was consistent with second and third quarters.

Based on our data, Kyprolis continues to be the therapy of choice in the relapsed refractory multiple myeloma settings in the US.

We expect the next major inflection point for Kyprolis will be upon inclusion of second line data in our label.

In summary, we'll built on the progress we made in 2013, as we execute on growth opportunities for 2014 and beyond.

Let me now pass it to Sean.

Good afternoon.

We have an exciting year ahead with data flow from our pipeline that's already begun with our new press releases recently on top line results from our third and fourth phase III studies of Evolocumab, which were very encouraging for patients with Dyslipidemia and high risk for cardiovascular [events].

We anticipate the results of our last pivotal phase III efficacy study in patients with heterozygous familial hypercholesterolemia in the near future.

We believe these studies will support a global filing plan in 2014, based on the reduction of LDL cholesterol.

Of course, the precise timing will depend on our ongoing discussions with various regulatory agencies.

In the US, for example, timing for Evolocumab is dependent on having achieved appropriate progress in our outgoing outcome study.

Turning to our oncology programs, we were encouraged by the feedback on Kyprolis from clinicians at the ASH meeting last month, and are looking forward to new Kyprolis data in the first half of this year.

Including a review by an independent data monitoring committee of an interim analysis of the ASPIRE study in relapsed multiple myeloma patients.

I would note that ASPIRE compares a regimen containing Kyprolis on top of Rev-Dex to Rev-Dex alone, and may be an instrumental study in expanding Kyprolis'slabel to earlier lines of therapy.

We are also expecting the final analysis of the FOCUS study in relapsed refractory multiple myeloma during the first half of the year.

Our two amino oncology programs continue to advance as well.

In 2013, we reported that our phase III T-VEC study in metastatic melanoma met its durable response rate primary ends line with favorable interim trends in overall survival.

We continue to expect the final overall survival data in the first half of this year.

We believe there is also an opportunity for T-VEC to prime the immune system with the so-called checkpoint inhibitors, and we are currently investigating T-VEC in combination with ipilimumab in a phase I-B study.

And are planning to study T-VEC soon with other immune-based therapies such as PD one antagonism.

We also expect blinatumomab confirmatory phase II results in relapsed refractory adult acute lymphoblastic leukemia in the first half of 2014, and we've also initiated a phase III study in this indication.

For trebananib, our peptibody direct to the angiopoietin access, we continue to estimate the final overall survival analysis from the ongoing pivotal study in recurrent ovarian cancer to occur in the second half of 2014.

Recall that this study met its PFS primary endpoint in 2013.

Velcalcetide or AMG 416, is our novel IV calcineumatic being investigated for the treatment of secondary hyperparathyroidism in patients with chronic kidney disease on hemodialysis.

Phase III data are expected in the second half of this year.

Our psoriasis program for brodalumab consists of three phase III studies, one placebo-controlled and two head-to-head studies comparing to ustekinumab or Stelara.

I'm pleased to report we expect to see the data from the first of these studies in the first half, with the other two reading out during the course of the year.

On January 1st, our romosuzumab phase II data in postmenopausal osteoporosis was published in the New England Journal, and described in the accompanying editorial as quote, a potential breakthrough in osteoporosis therapeutics.

We have reassessed the sample size for our placebo-controlled two-year fractures trial on the basis of a slightly lower than anticipated event rate, and accordingly increased the sample size in [debt].

The study actually completed enrollment in Q4.

Recall that this is a two-year fracture study, and consequently, we expect the study will read out in the first half of 2016.

We have also initiated a phase III head-to-head study of romosuzumab against teriparatide, exploring the bone mineral density, advanced imaging, and biomarker end points in postmenopausal women previously treated with diphosphonates.

We remain very excited about the potential for romosuzumab.

As you may recall, we have developed the only monoclonal antibody antagonist of the CGRP receptor that's in the clinic, AMG 334, which has demonstrated a potent ability to pharmacodynamically block this access in phase I. Accordingly, we've initiated a phase II dose ranging study in patients with episodic migraines, and are planning to soon initiate a study in chronic migraines.

Our biosimilars unit continues to make good progress, and I am pleased to report that enrollment has commenced in our biosimilar Avastin and pivotal study.

To remind you, we now have three pivotal biosimilar studies underway: Avastin, Herceptin, and Humira.

Finally, I'd like to take a moment personally to thank my colleagues both in R&D and many other parts of the Company for helping to make possible a very promising 2014, with lots of momentum building toward delivering a wave of innovative therapeutics for patients in need.

Bob?

All right.

Thank you, Sean.

Let's open it up now for questions, and Marvin why don't you remind our callers of the procedures and we'll start with the first question.

(Operator Instructions)

Robyn Karnauskas, Deutsche Bank.

Starting off with the pipeline AMG 416, maybe you could talk a little bit about how you see its place in the market versus where Sensipar is now, and what kind of data would make doctors think it's superior?

And then I guess another part of that question is it's IV, so it might be in the bundle.

How do you think about the market opportunity given that?

Thank you, Robyn.

So from a market perspective, let me just talk quickly.

Obviously, Sensipar has been very successful in terms of both growing the segment and increasing penetration in their [one of the moment].

One of the issues we have of course is constant patient compliance, and we find a large number of patients aren't staying on their drug for the entire 12 month period.

The IV form, of course, which will be covered administered during dialysis would make life much easier, and therefore, we think both in terms of outcomes and in terms of maintaining patient on the drug it will be a unique opportunity to add to the bundle.

Mark Schoenebaum, ISI Group.

I was just wondering, Sean, I think you said you're going to file on 145 in 2014?

I was just confirming that the first time you said that or maybe I just haven't done my homework.

And second of all, there's been --we've heard from other folks that the FDA has asked PCSK9 sponsors to have roughly 25% of their events accrued in the outcomes trials at the time of filing.

Can you give us any color if you've received that kind of feedback, or if you would encourage me not to believe those people that are saying those things?

Thank you very much.

Okay.

Well first of all, yes, I think this is the first time that we've been clear that we would be receiving all the pivotal data sets in a timeframe where we would be pursuing global filing plans in 2014, and that is our intent.

As I mentioned, with each jurisdiction, we'll have discussions with regulators about the precise timing and requirements for filing.

It's clear that the FDA are interested in understanding that these outcomes studies are progressing and that there's an ability to have some sense of when the final results would become available from an outcomes study.

But really, these are ongoing discussions.

We have initial consultations with regulators when we're just in a concept phase.

And later when we actually have data, we have much more in depth interactions and discussions.

So I don't generally discuss the details of these fluid interactions that go on over the course of time with regulators.

But it is clear that the agency is wanting to have an understanding of the trajectory of the outcomes trials before they would proceed with approving this class of product, based on just LDL lowering alone if they did make that choice.

Eric Schmidt, Cowen and Company.

It's on the revenue guidance for 2014.

It looks like you're not only forecasting a deceleration in growth, but also a slower rate for sales than you are exiting Q4 in, and I assume some of the inventory effects that Tony mentioned have to do with that.

But maybe if you could just broadly outline how you're thinking about the current portfolio and its growth prospects in 2014, which if any franchises might be declining.

Sure.

Go ahead, Tony, why don't address Eric's specific comments, and then I'll add if I could.

So fundamentally, the inventory we sold half of in the US when I say ending at the slight up end of the range is about a day, so it's about $50 million in terms of wholesale of inventory.

We think there might have been another $50 million at the end user, but not a large amount of money.

The product mix as we go forward into 2014 starts to change slightly, of course, as we get to the first and the full competition on the filgrastim portfolio.

We have potential competition from Mircera against Epogen, and our growth brands are now coming off a much higher base.

So that's why you've possibly seen some slowdown but strong positive growth.

And, Eric, the other thing I'd add is while we provided revenue and earnings-per-share growth, we obviously also addressed the strong operating income growth that we're expecting driven by the improved contribution from Enbrel.

So, you ought to expect that we're focused on driving strong operating income growth this year, and with that, strong cash flow growth.

Terence Flynn, Goldman Sachs.

Was just wondering with respect to the PCSK9, if you can give us any latest thoughts on your delivery device, and if a bridging trial is going to required for the new device?

And then I realize you're not going to comment directly on pricing for this class, but maybe can you walk us through any of the potential factors that are going to guide your decision on pricing?

Thanks a lot.

Okay, this is Sean.

I think we remain clear in our position that we don't want to get into the details around these devices, and the regulatory strategy behind them.

We're confident in having a every two week and monthly presentations for the product, and I'd prefer not to get into more detail than that.

Tony, you may want to comment on the second half of the question.

So just in terms of price, everything is really around the fact that there continues to be a huge unmet medical need with patients with cardiovascular risk, even when they're on statins.

We expect or we see more than 30% of patients don't reach goal, and therefore, remain at high risk of either heart attack or death in fact.

So we will price this drug clearly around that unmet need in the marketplace, understanding that this is a biologic, yes.

Yaron Werber, Citigroup.

This is also a little bit of a financial question, but if you looked historically, I guess I just follow on to Eric's question.

I'm just trying to get a sense here of how conservative is your guidance or rather how much competitive headwinds are you expecting in the revenue line?

And what are you -- help us understand maybe if you can a little bit of the OpEx, too.

Because I think the guidance is below consensus and [it's still]surprising.

Well, Yaron, as I said, we expect to drive strong operating income growth this year, and that includes our expectations.

We've talked about from some time that we will drive operating income contribution by an incremental $800 million for Enbrel, and we ended the quarter with momentum as you saw in our results.

Tony outlined a couple of the areas where there's some uncertainty heading into the year, but fundamentally across the products and geographies, we feel very good about the performance that we ended the year with, and therefore, the momentum that we're carrying over in the first quarter.

So we expect strong results, as I said, during the course of 2014 as we continue to invest in the long-term drivers of growth here, which are the pipeline, and international expansion, and biosimilars and the things that I talked about my remarks.

But I think we touched on the elements of Eric's comments.

Tony, do you want to add anything to the --?

(multiple speakers)

No, we continue to drive the growth brand.

We're building market share.

It's a bit early in the year to be saying we know exactly where we will land, and we are competing at every stage, and we look forward to actually building this business and growing it.

Yaron, I think the tax rate and shares, in terms of the bottom line, I think the tax rate and shares were probably above where we were as well if you look at those consensus numbers.

So the tax rate clearly in 2013 was low for reasons that won't be repeated in 2014, and I think we were pretty clear during the course of the year with each of our quarters as to what was going on there.

And on our share count, again, I think Michael tried to provide some clear guidance for you on that front as well as we head into 2014.

Yaron, I would just note that our guidance that we have given is actually bracketed by the consensus expectations, because the consensus is $19.5 billion for revenues, and for earnings per share it's $8.16.

Michael Yee, RBC Capital Markets.

A question actually on AMG 334, I think that's the first time that you mentioned that, at least speaking about it on the call.

I'm sure you're aware that Lilly made an announcement I think just a couple weeks ago on theirs.

Maybe you could speak to whether or not we'd actually get data on that drug this year, and how that would be different than Lilly's drug?

So, it is hard to be sure when we'll see the data, but it is possible that data from the first study, which is in episodic migraine, might be available by the end of the calendar year.

The difference in the drugs is fundamental.

The other agents are agents that [amoclanab] are considered directed at epitopes on CGRP itself, Our strategy is to block the receptor, which is then independent of CGRP concentration and timing of release.

So then the synapse, that can be very important.

So, our first principles thinking about this biology as well as the pre clinical data that we've generated have suggested that it's a much more effective approach potentially to have a receptor antagonist than a ligand sequestering antibodies.

So there is a differentiated feature there.

Ian Somaiya, Nomura.

Quick question on Kyprolis.

I just was hoping to get your thoughts on the competitive landscape as we are expecting phase III data from Lilly's one competitor, Bristol and AbbVie, their drug elotuzumab.

So I just wanted to get your thoughts on how we should think about your data sets and also the emerging data sets for that molecule.

And then just into the future a little bit, HDAC 6 inhibitors, and how if there are any plans to run combination studies with Kyprolis.

So this is Tony, let me start some of that discussion, and perhaps Sean can add.

When we looked at the multiple myeloma market, it's clear that in spite of the tremendous advances over the last decade or so, there continues to be a huge unmet medical need.

Average life expectancy has moved now to only six years, and we clearly believe that physicians will be looking more and more for drugs that deliver efficacy or combinations of drugs that deliver efficacy and extend life.

As a Company, we continue to believe that the proteasome inhibitors will continue to be a backbone of multiple myeloma therapy.

And based on our own scientific evaluation, our clinical evaluation, and talking to experienced KOLs around the world, we continue to believe that Kyprolis has the potential to be the best in class in this particular category.

So we look forward to advancing our phase III data, expanding our label, and giving physicians an opportunity to use this drug in earlier lines with patients as we go forward.

It's little to add, I agree and I think the issue of the combinations with things like the antibody therapies through HBAC inhibitors will play out over time.

But it's hard to imagine a situation in which the proteasome inhibition backbone is displaced in any near-term sense.

Geoffrey Porges, Bernstein.

Sean, you've now seen four of the five pivotal trials, or at least the near term pivotal trials for 145.

And you've disclosed more or less that the LDL reduction is consistent with phase II.

Could you give us a sense of what you're seeing qualitatively and quantitatively in terms of CV events?

I realize there's not probably statistical significance to the studies individually, or even in aggregate.

But is the trend in the right direction?

Yes, it's an interesting question.

We, as you know, these or many of these studies are 12 week efficacy studies.

And we do have longer safety experiences over time, but it would require many more patient years of exposure that we have currently to expect to have the numbers of events that would allow even if we were for example cutting risk in half.

You still couldn't expect to have any measure of real power for that.

So, we don't have a formal analysis looking at that, yet.

When all the data are put together in total for filing, or course, we will have analyzed them at that level.

But I don't expect to see a lot of benefit when we're talking about such small numbers of events.

This is of course why the very large long-term outcomes trials are required, as you know.

And fundamentally, Geoff, as you can glean from our remarks on the call, we're excited about the data we've seen.

We're excited about the role that this medicine could play for patients that are at risk of cardiovascular disease.

So, we continue to deliver on this program, and that's what we intend to do.

Chris Raymond, Robert Baird.

Just another question on 145, if you'll bear with me.

Kind of curious, one of the earlier questions in the queue, I think Sean's answer to it, I think I heard you say, Sean, that with respect to the need for the outcomes data and the percent of events, et cetera.

I understand not wanting to give a lot of answers here.

But I think I heard you say, Sean, that essentially FDA is looking for something relative to with info on the trajectory of events.

Can you expand on that?

What are they mean by that?

Is that something new?

Thanks.

No, that's the term I'm using to try to just convey the fact that I think what occurs in many cases and we all know this from the data that has been published on this issue, is that it can be very difficult to anticipate with accuracy when a sponsor is going to actually complete a post marketing commitment such as an outcomes trial.

And I think the agency is keen to understand the time that would elapse between an initial approval based on a surrogate, even a robust surrogate like LDL, and when the outcomes data will become available.

So that's why I was using this term of trajectory, meaning can you predict with some reasonable idea when you're going to actually see the data?

Is it going to take 3 years, 5 years, 10 years?

That's meaningful from a regulatory perspective.

Tony Butler, Barclays Capital.

And sticking to 145 just briefly, Sean, would -- again the comment around the FDA, would that necessitate looking not only at Fourier but also one of the other long-term outcome trials as well?

In other words, do both of them collectively, do they get pooled, and would that then therefore need to be disclosed?

And I'm sorry, just one very small housekeeping, and it's really related to Tony.

In Q3, you commented about some of the geographies like Brazil and Turkey being negative, claiming that there would be tenders in Q4.

Was that the case for Q4?

Thanks very much.

Okay.

We'll start there with your geographic question, Tony.

Listen, if you look at Q4, Tony, there was actually about a 135% increase between quarter 3 and quarter 4 as the tenders both back in, and these come mainly out of the Middle East and Russia.

So yes, a dramatic growth in that last quarter for the year.

Sean?

I'm not sure I completely understood the first part of the question.

I think that from an outcomes data perspective, reduction of the cardiovascular events like heart attack, stroke, sudden death, cardiovascular death, the only meaningful study that we will have to address that question is the Fourier outcomes trial.

It's properly designed and powered to read that sort of thing out.

Certainly, there are combined analyses that are done across all of the studies that are performed in any of these development programs to look for generally adverse effects, including, if you saw, events traveling the wrong direction that would obviously be a concern.

So those analyses are always done more from the perspective of assuring safety than in trying to look for an efficacy signal.

Geoff Meacham, JPMorgan.

Got a couple of P&L questions.

You guys have made a ton of progress on the pipeline with a lot of readouts this year.

I just wanted to get your perspective on what this means to pre commercial spend on the SG&A line, and R&D as well.

And then the other revenue line has grown incrementally higher over the past couple quarters, just wanted to get a sense for the constituents and the sustainability of that looking forward.

Thanks.

Yes, Geoff, we provided the guidance for 2014 at the top line and EPS.

We weren't planning to get into detail of expense line item by line item.

But based on my comments about operating income growth, you can expect that we expect to see operating income leverage this year, again, driven by the $800 million contribution from Enbrel.

And with respect to other income, Michael do you want to add any insights for Jeff?

I'd just say on a historical run rate basis, other revenue has been $300 million to $400 million a year, and with the addition of Onyx it will just about double.

Not quite, but just about double.

Ravi Mehrotra, Credit Suisse.

Bob, you talked about the notable international expansion you've had over the last couple of years.

Can you take us through further expansion plans from a geographical perspective, your preference of organic versus M&A to do that?

And linked to that whole commercial organization platform, for biosimilars would you commercialize those globally through the Amgen commercial branded platform, or a separate entity?

Thank you.

Sure, thanks, Ravi.

You're right to point out that international expansion has been an important objective for us.

We see that as a source of long-term growth for Amgen, and we've talked in particular about our desire to expand into Japan, China, and selected emerging markets.

And so far, we've been successful we feel in doing that through a combination of partnerships and acquisitions.

Obviously, in Japan, China, and Russia, we used partnerships to help advance our interest, and we've used acquisitions in Brazil, Turkey, and now with the reacquisition of Neupogen and Neulasta rights in a number of other key emerging markets as well.

So I think we feel we have a strong platform now from which to profitably expand in these international markets.

So we have a presence from which we can organically launch our molecules in nearly all of the international markets that are of interest and we think important for the kind of medicines we're advancing.

We'll look to supplement our position with ongoing acquisitions, Ravi, but I think there aren't many and so we're right now executing against our organic plans.

And with respect to biosimilars, again, our first launches for biosimilars begin in 2017, so there's still quite some time before we have to commit to specific answers to your question, but we think that our biosimilar portfolio will be an attractive source of growth for Amgen, particularly internationally.

So where we look at international markets it's likely that it will be through the Amgen organization, and in the more developed markets, we still have time before we disclose exactly how we want to do that.

Matt Roden, UBS.

A lot of the big picture questions have been taken, so I'm going to hit you with a nerdy one for Sean maybe.

It's on Kyprolis, the ASPIRE trial.

Can you remind us when the last interim data monitoring committee analysis was done on safety for ASPIRE?

And at what threshold difference in cardiovascular events would cause the stoppage on safety?

I'm just trying to get a sense for how to interpret what you've said earlier about the DMC findings.

And then, just related if there are any updates on the ENDEAVOR and CLARION trials ongoing.

Yes, so, I don't have on the top of my head the last ASPIRE DSMB review.

These typically will occur in these kind of trials on a quarterly basis often.

And -- but I don't know off the top of my head when the most recent one was.

And there are no specific stopping rules in these regarding cardiovascular events, they're a overall assessment that the risk benefit of the product continues to look appropriate to a very seasoned DSMB who understand the disease and so on.

There really aren't any updates to give on ENDEAVOR and CLARION, and they're in an enrollment phases, and there's not too much to say about those right now.

Eun Yang, Jefferies.

Question on AMG 145, so you just said the trials were conducted in various patient populations, and according to clinicaltrials.gov outcomes data is not coming out until 2018.

So without outcomes data, are those patient population approval indications?

And if not, what would be the reason of a indication that you couldn't go after with that prior to outcomes data?

So, the first thing I'd point out is that the kind of date that gets put on .gov is a very crude estimate of when one would expect an event driven trial to complete, and it's often done by a straight line linear modeling, which is rarely actually accurate in terms of what happens the best you can do when you start out from the very beginning estimating that.

So I wouldn't pin too much on that exact date when it's that far out into the future.

It may take longer, it may take less, considerably less time.

The issue of the approvability of the various subgroups, we do study populations in our clinical trials, sometimes for purposes of being able for example to understand in a very clean background way, on a really clean background, safety for example.

And not all of the populations that we studied, and we've studied a very broad range of populations, may end up as specific language and indications for a product like this.

In fact, if you look at the statin class, you won't find that.

You won't find that, and I think the way I always think about this is this product is going to be appropriate for individuals who have high cardiovascular risk, despite having availed themselves of all available existing therapies, particularly statins, and still have a substantial modifiable risk factor in the form of LDL that's not let's say below 70 where it generally you would feel that you had it under pretty good control.

I think that's the population that we're seeking to serve.

And -- but it is -- you won't usually find very specific indication statements for each individual population in the labels of these products.

Howard Liang, Leerink Partners.

AMG 785 or romosuzumab, I think the phase III that was published in Internal Medicine has a retreatment component.

When do we see data from the retreatment?

So when I say retreatment data, I noticed I think you were testing a couple of different formulations.

Can you give us some color on that?

So, we often do in phase II a wide range of things with the therapeutics, where we can begin to get some understanding of issues like withdrawal, retreatment, and so on.

And so, we do have some features like that in the long-term extensions of these phase II studies.

They don't necessarily predict claims that we would be seeking by doing phase III type studies.

As you can imagine in this field with fracture endpoints being required, that it's very difficult to do ornate studies that require fracture endpoints beyond just what we're already doing with two large fracture studies that will perform with the product.

The product has got no particularly unusual formulation issues associated with it.

It's an injectable monoclonal antibody, and we're doing the usual things with that with respect to both formulation and device formats.

Joel Sendek, Stifel.

I have a follow-on question to the biosimilar topic regarding the 2017 launch.

I'm wondering if you could share with us some of your assumptions behind that time frame to get there?

For example, which of the three biosimilars are you contemplating?

Or all three of them?

And is there is the potential to accelerate that time frame?

And is it contingent at all upon FDA guidance to industry?

Thank you.

Sure, Joe, maybe we'll take a couple different cuts at this.

Just again to remind you, we have six programs under way, three of which are in pivotal trials.

Our plan is to try to be first or certainly among the first few for these as they're -- as patents expire around the globe, we seek to be ready to launch a biosimilar product.

So, that's true in 2017, and I don't think we're going to get into specific details at this stage about which products we're launching in which jurisdictions when, but generally our strategy is to seek to be first and among the first few for these molecules.

And so far, the progress in advancing them through pivotal trials is proceeding in line with our expectation, and the remaining three we expect to move forward during the course of the year as well.

Sean, do you want talk about guidelines from FDA on advancing?

I think that it's fair to point out that this is unchartered territory, and a new area, and there may be issues that we don't anticipate.

However at this point, we wouldn't engage in enrolling pivotal trials for registration of these products if we didn't have a pretty good sense that there's a roadmap.

And so, obviously there's the usual dynamics, which always takes longer than we all can imagine to do these things like enroll trials, and get the data, and file, and get it reviewed, and get the product to market.

But in some ways, a lot of that is based on fairly standard approaches to looking at those kind of timelines.

Marvin, let's go ahead and take one last question if there is one.

Gene Mack, Brean Capital.

I wonder if there's any update you can give for us on oprozomib where the compound stands at this point, and what next steps might be in 2014 in terms of development?

Thanks.

So oprozomib is, as you know, the oral proteasome inhibitor which is in development at Onyx, and it is sort of at a phase II A stage of development where it's still in relatively small numbers of patients.

And we're understanding the various things you do at that stage in terms of how well tolerated it is as a monotherapy formulations that we play around with, combinations with some of the things that we know that it would have to be combined with.

So, a lot of work that is aside from the fact that it's an oral versus an intravenous agent, is relatively straightforward from the perspective of what comparing it to the work that was done by Onyx with Kyprolis.

Great, thanks, Sean.

I would also like to thank you all for your participation in our call this afternoon.

If you have any additional questions, of course we can continue the dialogue separately.

Thanks again.

Ladies and gentlemen, thank you for joining us for today's Amgen fourth quarter and full-year 2013 financial results conference call.

We thank you for your participation.

You may all disconnect.