美國安進 (AMGN) 2014 Q1 法說會逐字稿

My name is Martin, and I will be your conference facilitator today for Amgen's First-Quarter Earnings conference call.

(Operator Instructions)

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

Mr. Sood, you may now begin.

Thank you, Martin.

Good afternoon, everybody.

I would like to welcome you to our conference call to review our operating performance for the first quarter of this year.

Our performance gives us confidence that we are on track to deliver our full-year guidance.

In addition, consistent with our expectations that 2014 will be a data-rich year, we have already reported significant data on Evolocumab and T-VEC and expect Phase 3 data on four of the programs in the remainder of the year.

Our Chairman and CEO, Bob Bradway, will lead the call today.

Bob will provide a brief review of our operational progress, followed by our interim CFO, Michael Kelly, who will review our Q1 results.

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

Sean Harper, our Head of R&D, will then provide a brief update on the many late-stage opportunities that we have in our pipeline.

After Sean's comments, we should have plenty of 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.

With the first quarter of the year complete, we are confident that we are on track to deliver our financial and operational targets for the year.

Revenues were up 7% for the quarter, reflecting strong performance in Europe, and the benefit of our international expansion, including having acquired back from Roche our rights to Neulasta and NEUPOGEN in a number of emerging markets.

In the US, while underlying demand for our products remains strong, sales were affected by inventory drawdowns across the portfolio, as Tony will describe shortly.

We maintained discipline around our capital and operating expenses in the quarter, as reflected in our 18% growth in operating income and strong cash flows on the quarter.

Turning to our operational progress, we said in January that we expected 2014 to be a data-rich year for us.

And that's certainly is what it has been so far.

We are excited about Evolocumab and the data we generated in our pivotal programs, and we're moving rapidly now to file our regulatory submissions in the US and Europe this year.

With both once-monthly and twice-monthly dosing options, we believe Evolocumab will be an important advance for patients with high levels of LDL cholesterol.

Onyx is performing well, and we're encouraged by the prospect of Kyprolis moving into earlier lines of therapy in multiple myeloma as further data become available later this year.

We will be presenting data on T-VEC and blinatumomab at the upcoming ASCO meeting, and expect to report on four other Phase 3 programs during the course of the year.

In addition to our innovative portfolio, our biosimilar portfolio continues to progress favorably, with three of our six programs in pivotal trials currently.

Heading into the balance of the year, we feel we are in a strong position to continue investing in the long-term growth of our business, while returning capital to shareholders in the form of increased dividend payments.

Before turning to Michael Kelly to walk us through the financials, let me thank my Amgen colleagues for their focus on delivering for our shareholders and the patients we serve.

Michael?

Thanks, Bob.

Let me start by highlighting a few important points in our financial results.

The underlying operating performance of the Company is tracking well against our plans for 2014; and accordingly, our revenue and EPS guidance remain intact.

Our full ownership of Enbrel in the US and Canada drove 18% operating income growth, as we were able to keep operating expenses flat even after absorbing the operations of Onyx.

Turning to page 4 of the presentation, you will see revenues grew by 7%, with 5% product sales growth, and $78 million of growth in other revenues, primarily due to our Nexavar and Stivarga partnerships.

Revenues declined on a quarter-over-quarter basis, which is consistent with our historical pattern for the first quarter.

However, the decline was a bit exacerbated this year by the wholesaler end user inventory dynamic at the end of 2013.

As I mentioned, operating income grew 18%, as operating expenses were flat year over year.

Within operating expenses, cost of sales margin improved by 0.5 points to 15.7%, driven by lower royalties.

Research and development expenses increased by 17% year over year, with roughly half of that growth driven by the addition of Kyprolis and the balance due to other late-stage clinical programs.

SG&A expenses decreased by 14%, driven by significant reduction in Enbrel-related expenses.

Other income and expenses were $160 million in the quarter, unfavorable to the first quarter of 2013 due to realized gains on our cash investment portfolio a year ago.

Despite 14% growth in pretax income, net income declined 4%; and earnings per share declined 5%, due to favorable tax items in the year-ago period.

Specifically, you will recall that last year we recognize the full amount of the 2012 federal R&D credit, and resolved federal audits, which enabled us to release provisions we held against potential tax liabilities.

The tax rate in the first quarter this year was 15.4%, in line with our full-year tax rate guidance.

Finally, our share count increased 1% as we did not repurchase any shares over the last 12 months.

Now turning next to cash flow and the balance sheet on page 5.

We generated $1 billion in free cash flow in the first quarter of 2014, a year-over-year increase of 9%, ahead of revenue growth.

We also increased our quarterly dividend per share by 30%, with payments totaling $0.5 billion in the quarter.

At the end of the quarter, we held $23.2 billion in cash, short-term, and restricted investments, up approximately $2 billion versus a year ago.

And our debt balance was $32 billion, reflecting the financing of the Onyx acquisition and our commitment to maintain a solid investment-grade credit rating.

Lastly, turning to page 6, we are reconfirming our revenue guidance of $19.2 billion to $19.6 billion for the year, and our earnings guidance of $7.90 to $8.20 earnings per share.

Our guidance on tax and capital expenditures remains unchanged as well.

On the tax rate, let me remind you that our guidance assumes that the R&D tax credit will be extended in 2014 and retroactively applied to the full year.

Let me now turn to Tony.

Thank you.

Thanks, Michael.

Good afternoon, folks.

You will find a summary of our global sales performance for the first quarter on slide 7.

Product sales grew 5% year over year.

Our international business grew 9%, driven by its strong performance in Europe and the acquisition of filgrastim rights in several new and emerging markets.

In the US, our business grew 4% year over year.

As Michael said, quarter over quarter, global sales were down 9%, a trend which is consistent with the first quarter of last year.

This was driven predominantly by US inventory drawdowns in the first quarter, following wholesaler and end customer inventory builds in the fourth quarter of last year.

This affected nearly all products, but most notably, Enbrel.

Total US wholesaler days on hand declined from 15 days at the end of 2013 to 13 days at the end of this quarter.

Our underlying business, however, as evidenced by the IMS in-market prescription data across our products, remains strong and in line with our expectations.

As Bob mentioned, we are confident that we will achieve our full-year revenue guidance.

Let's review our first-quarter product performance, beginning with Enbrel.

As I said, sales were impacted by wholesaler and end customer inventory builds at the end of 2013.

The in-market IMS data shows underlying demand in rheumatology continues to be strong, while we have seen a slight decline in the dermatology segment.

Both of these segments, however, are growing at double digits.

These demand trends for Enbrel have continued into second quarter.

With the extended exclusivity of Enbrel and its established track record of long-term efficacy and safety, we will continue to invest in growing this important brand.

Turning now to Neulasta and NEUPOGEN.

As a reminder, Neulasta represents over 75% of combined sales for these two products.

As I noted earlier, this quarter includes sales in several new and emerging markets, where we acquired commercialization rights effective January 1. This is a further step in our strategy to expand globally.

On a year-over-year basis, Neulasta increased 5%, while NEUPOGEN declined 3%.

We have seen nominal impact from recently launched short-acting competition in the US and long-acting competition in Europe.

Nevertheless, we are taking this competition seriously and are responding accordingly to maintain our leadership position across both brands.

NEUPOGEN and Neulasta have a long history of safe, efficacious and reliable high-quality supply.

Moving on to Aranesp.

Aranesp sales were down 2% year over year.

Looking forward, we continue to expect pricing pressure and competition in Europe.

EPOGEN increased 6%.

We continue to monitor the hemoglobin levels and dose utilizations within the new bundled payment system.

Sensipar sales increased 2% year over year, driven by high unit demand and continued segment growth.

Next, Nplate and Vectibix.

Sales in aggregate were higher by 18% year over year, driven by strong unit demand.

For Vectibix, we continue to gain share in both Europe and the US.

In Europe, which represents over 50% of Vectibix sales, we continue to highlight the recent addition of first-line metastatic colorectal cancer to our label.

And we are excited about the opportunity to serve these patients.

Now a few comments on our Denosumab franchise.

Let me start with Prolia.

Sales grew 38% year over year, driven by segment share gains in both the US and Europe.

We did see some seasonality that we have come to expect during the first quarter.

The second quarter is off to a good start there.

Our new direct-to-consumer campaign on television launched in January this year, led to a significant increase in unaided awareness, from 10% to 23%, as well as driving a four-fold increase in traffic to the Prolia.com website.

As announced earlier this month, we have also ended our collaboration with GSK in Europe and selected markets.

We're in the process of transitioning all commercial activities.

We believe this will definitely enable us to leverage our experience of successfully launching Prolia in other parts of the world to drive greater growth in these markets.

Further, it will build experience and capacity in countries that will be important in accelerating future growth of our pipeline products.

XGEVA sales increased 25% year on year, driven by strong unit demand growth in both the US and European markets.

In the US, we continue to see share gains, despite generic Zometa competition.

Outside the US, sales grew 76%, driven by the momentum of several successful launches in Europe during 2013.

Our focus remains on highlighting the superior clinical profile of XGEVA.

Let me now turn to our newest product, Kyprolis.

Underlying demand trends remain consistent.

Kyprolis continues to be the therapy of choice in third-line multiple myeloma in the US.

We expect the next major revenue inflection point for Kyprolis will be when second-line data is included in the label.

Lastly, the Other Products category, which includes our businesses in Turkey and Brazil, decreased 36% year over year.

This was a $250 million business, with annual growth inclusive of negative foreign exchange impact, in mid-single digits.

They are compact or tender-driven businesses, and therefore fluctuate quarter by quarter.

In conclusion, we feel very confident in the strength of our underlying business.

With the first-quarter inventory drawdown behind us, we expect the second quarter to be in line with underlying demand.

We remain confident that we will deliver on our full-year revenue guidance.

Let me now pass you to Sean.

Thanks, Tony.

Good afternoon.

2014 is a data-rich year for us, and we're off to an exciting start.

The reception by cardiologists and lipid experts to our pivotal Phase 2 Evolocumab studies at the American College of Cardiology was remarkable.

The data themselves, coupled with the flexibility of every two week and monthly delivery options, were overwhelmingly viewed as positive.

In addition, positive results from our Phase 2 Evolocumab study in Japanese patients were recently presented at the Japan Circulation Society.

We are working diligently on our 2014 Evolocumab global filing packages, including the US submission.

Further within our cardiovascular portfolio, FDA recently granted fast track status to Ivabradine in chronic heart failure.

And we are on track to make this submission in 2Q.

Together these two innovative molecules, Evolocumab in dyslipidemia and Ivabradine in chronic heart failure, represent very meaningful potential value to patients with cardiovascular risk.

Turning to our oncology programs, we continue to look forward to new Kyprolis data, including a review by an independent data monitoring committee of an interim analysis of that ASPIRE study in relapsed multiple myeloma patients, and the final analysis of the FOCUS study, in relapsed refractory multiple myeloma.

In both of these event-driven studies, making precise estimates of the timing of the analyses is quite challenging.

Our best estimates are that one or both of these analyses could occur in Q2, although either of these analyses could instead occur in Q3.

Our immuno-oncology programs continue to advance.

In 2013, we reported that our Phase 3 T-VEC in metastic melanoma met its durable response rate primary endpoint.

We recently announced that with a P value of 0.51, we narrowly missed statistical significance on the secondary endpoint of overall survival, a pretty strong result given that this study was not statistically powered for survival.

These data will be presented at ASCO.

And we are currently reviewing the results with clinicians, regulators, and payers to determine the best course forward.

In addition, we continue to believe that there is an opportunity for T-VEC to prime the immune system with checkpoint inhibitors.

We are currently investigating T-VEC in combination with Ipilimumab, or Yervoy, in a Phase 1b/2 metastatic melanoma study.

The 1b portion will be presented at ASCO this year, and we are moving forward with our collaborative efforts with Merck on PD-1 antagonism and exploring other such collaborations.

We also recently reviewed the blinatumomab confirmatory Phase 2 results in relapsed refractory adult acute lymphoblastic leukemia.

These data, which will also be presented at ASCO, continue to support a positive benefit-risk profile on these patients who have exhausted other therapeutic options.

We are therefore initiating discussions with regulators on the potential for filing, based on these data.

Our psoriasis program for brodalumab, which we're developing with our partners at AstraZeneca MedImmune, consists of three Phase 3 studies, one placebo-controlled, and two head-to-head studies, comparing it to ustekinumab or Stelara.

We expect to see the data from the placebo-controlled study in the second quarter, with the other two studies reading out during the course of the year.

We look forward to seeing you at this program which we hope will be not only remarkable efficacy, but also of paramount importance in psoriasis, a strong safety profile.

I'm also pleased to announce that we have initiated our Phase 3 program in psoriatic arthritis.

As you may recall, we have developed the only monoclonal antibody antagonist that the CGRP receptor in the clinic, AMG-334, which has demonstrated a potent ability to block this axis in humans.

We therefore moved directly into Phase 2b dose-ranging studies in the setting of migraine prophylaxis, with what we feel is the most optimal modality of receptor antagonism using a monoclonal antibody.

We expect to see the results of our episodic migraine Phase 2b study by the end of this year, and the results of our recently-initiated chronic migraine Phase 2b dose-ranging to start next year.

Finally, I'd like to take a moment to thank my colleagues in R&D and many other parts of the Company for helping to make possible the data flow we are experiencing this year to help patients in need.

Bob?

Thank you, Sean.

Martin, why don't we open up the call to questions.

And would you please remind our listeners of the process for the Q&A?

(Operator Instructions)

Matt Roden, UBS.

At ACC, it sounded like you weren't quite sure if you would be able to file Evolocumab in the US this year, but now you're talking about global filings in 2014.

So the question is, what has changed?

Is that based off the FDA interaction, and how confident are you that you could get that done this year?

Related, now that you have the data, how do think this product is going to be used, how is outcomes data?

What are the docs telling you?

Thanks.

Thanks, Matt, those are good questions.

Sean, why don't you?

First part.

I think this is clearly an evolving situation, which we assess on an ongoing basis, our interactions with regulators, as well as where the program stands, with respect to the accumulation of the weight of evidence required for a file, and all around, at this point, we have a good degree of confidence in our ability to file this year, including in the United States.

That is why we are making that statement.

Tony, would you want to --?

From a medical perspective, it is clear to me that there are individuals who have a high cardiovascular risk residual, despite the use of existing therapies, particularly statins.

Either because, despite full dose intensive statin therapy, they still have a modifiable risk factor in elevated LDL, or they are unable to be subjected to an intensive, or even moderate intensity statin regimen.

And it is clear to me that those patients are viewed by the physicians that I talked to, as patients who would be appropriate for a therapy like Evolocumab, even prior to the availability of outcomes data.

So from a pure medical doctor to doctor interaction, that is the sense I get, there is a real patient population out there in need.

This is Tony.

The only thing I would add to what Sean just said, is that we have physicians talking about patients in three buckets.

Obviously DFS patients are the unique subpopulation, and then, secondly, the high-risk patients.

And the high-risk patients are those that either can't take a statin, or can no longer tolerate a statin, or those who are on a statin, but not yet at the goal level.

So those continue to be the [nearest] physicians see, this drug will bring the growth that we'll value.

Truly, again, all-around high risk cardiovascular patients.

Terence Flynn, Goldman Sachs.

Just two quick ones for me.

First on Enbrel, Tony, I was wondering if you could quantify the inventory impact in the quarter for us?

And then on the PCSK9 outcomes trial, Sean, I was wondering if you can give us any sense of enrollment at this point, and then any insight on powering of the interim and final analyses?

Thank you.

Let me take Enbrel first, then.

As you look at our data, it is clear that our fourth quarter is always slightly larger than the first quarter, and during the fourth quarter of last year, we did have some strange snowstorms in the East Coast, which resulted in about $120 million of product that moved from one year to another.

When I look at the Enbrel data itself, what I was looking at this morning, in fact, was the NRxs from IMS.

And to me, the NRxs, which account for about 35% of total Rxs, are the true indicator of where the brand is going in the future.

On the rheumatology side, NRxs grew quarter on quarter 14%, and on the dermatology side, the NRxs grew 11% quarter on quarter.

So just to give you an idea of the brand's large growing segment areas, with Enbrel itself getting new prescriptions as well.

Sean?

We are quite pleased with the outcomes study enrollment.

The study is very adequately powered to detect an effect size that would be clinically relevant to patients and to physicians, and this, of course, is a product that we think has great potential, so we spared no expense in the design of the trial.

There is no interim analysis, formal interim analysis of an outcomes study of this sort.

Matthew Harrison, Morgan Stanley.

I wanted to ask on the cost side, and you had talked a little bit about this on the call, but it looks like quarter over quarter, I'm sorry, year over year, you were up, you were down about $160 million, and you had suggested Enbrel was about $800 million for the year in terms of savings, so there's a $40 million delta.

I'm just wondering if that was all Onyx-related expenses, and if we should expect to see that amount of the Enbrel savings drop to the bottom line for the rest of the year?

Thanks.

Thank you Matthew.

I think you should assume that you would see this run rate of Enbrel drop to the bottom line offset by the Onyx expenses.

Thank you.

Eric Schmidt, Cowen and Company.

Maybe for Tony on the GCSF business, I thought you pulled in about $200 million from the Roche acquisition, in terms of ex-US sales.

It didn't look like we recognized nearly as much in Q1.

Is that $200 million on an annual basis, $50 million on a quarterly basis.

Is this a tender business also, that's quite lumpy going forward?

The acquisition looked like it was about a $200 million acquisition, obviously broken into quarters, the quarters tend to trend about 25% each.

I think the first quarter was slightly lighter than that normal 25%, about 23%.

Okay so that is offset by some share losses, then?

As I said, we have Granix in the marketplace competing against Neupogen in the US, and we have long-acting competition in Europe.

We haven't seen a huge impact from them, but of course, they have a lot of small impact, yes.

Okay, thank you.

Robyn Karnauskas, Deutsche Bank.

Just trying to get -- drill down a little bit more on inventory versus what is going on with some of the products.

Are you seeing any impact from generic Neupogen, and are you seeing any impact from Otezla in the market on Enbrel?

I will try to take those two points.

First, Tony, on Neupogen, again, if you want to address --

As I said, with Neupogen, we have Granix on the market from Teva.

They have been on the market since late last year.

We have seen a nominal impact from this product in the marketplace.

As regard to Enbrel, we think all the excess inventory is now being worked out of the system, and as I said earlier, when I looked at the NRxs, those are showing double-digit growth as we go from quarter to quarter.

Josh Schimmer, Piper Jaffray.

A couple on the CGRP receptor antibody program for migraine.

First, do you have any data from the deCODE data set, what the phenotype is for patients with CGRP or CGRP receptor mutations?

And second, who do you think is in the lead, amongst the CGRP antibodies, either receptor or how close to the lead are you?

Thanks.

There are not, the sort of validation for this particular drug target is less from human genetics, and more from the work that has been done with the small molecule receptor antagonists, and now, reportedly, by a couple of the ligand sequestering antibodies, where we haven't seen detailed data, but there has been releases of positive results.

We have a reverse pharmacology level of human validation of the target.

With respect to an antibody that blocks the receptor, we are clearly well in the lead.

We have the only antibody-blocking receptor, because they are difficult, very difficult to engineer.

In the case that just any antibody, I would say that I think we are in a very strong position right now, to potentially make it first to market with any of the antibodies, but that is a little hard to say, when you are still in Phase II.

We are excited about this program, Josh, and excited about the early data, but as is the case with Evolocumab, we just want to keep our head down and keep executing against the program, and it looks exciting to us, but the competitive profile here is not completely transparent.

So we'll take the next question.

Geoffrey Porges, Sanford Bernstein.

Question for Bob, there is a lot going on in pharma and larger biotech in terms of asset swaps, relocations of assets.

I'm just wondering, from the outside, Amgen has two businesses, legacy products and growth products, and with all the restructuring going on, has Amgen considered any different structures or ownership of the assets that might enhance shareholder value?

Sure, Geoff.

As you would expect, we continually review things that we can do to drive shareholder value, and that is absolutely what we are focused on.

We continue to believe that the strategy that we are following is the one that will enable us to drive most value for our shareholders, and that obviously includes executing against the innovative programs in our pipeline, and we have talked about a few high profile programs here on this call already, and continuing to advance our biosimilar programs, and we have six programs there that we think we're very competitively positioned for, and we began to launch in 2017.

And of course international expansion we think is an opportunity for further growth for us, as well.

We are focused on executing our strategy, but we obviously pay close attention to what is going on in our industry, and we will continue to look for opportunities that may offer us a chance to drive incremental value for our shareholders.

Yaron Werber, Citi.

Actually a little bit of a question on Kyprolis, and just trying to understand a little bit, what are you expecting from FOCUS and ASPIRE?

Based on our analysis, ASPIRE may be unlikely to stop it at the next loop, but FOCUS has been taking quite a long time.

So trying to get a sense, what should we read into your comments?

Are you not expecting much in terms of acceleration until label expansion into second line, that is technically an ASPIRE program, not a FOCUS program?

And then, just a follow-up question on Oprozomib.

You're really buying from the same sub-unit, my understanding, as Kyprolis, so your thoughts about potential heart failure, and also what are you seeing on the GI side, power-ability wise for the new formulation?

Thank you.

We may take these question in two parts, Yaron, I think there is a piece of the first question for Sean on the timetables and FOCUS and ASPIRE, and then Tony can talk about moving to other lines of patients and Sean --

I think it is always tempting when we see these trial event driven studies take longer than is expected through the original estimates that are made, to read into that, that there is something going on, that the therapeutic is having a bigger effect than was anticipated, or what have you.

I have learned through experience, that is not a wise thing to do, generally.

Whatever is going on with the kinetics of collecting last events that are necessary to do these studies, which at this point, we are talking about single-digit number of events coming in per month, and it can be quite stochastic month to month, in both of the studies.

This is fairly typical as these studies accrue up to their final numbers.

I don't think it is wise to try to read anything scientifically into that, around whether the agents are having the desired effect or not, in the trials.

Touch on Oprozomib, Sean.

On the Oprozomib, yes, with Oprozomib, we are still in early stages, and the product we know can have a GI toxicity at some doses, and so we are developing the product with that in mind, working on formulations, working on dosing schedule, to try and make sure we can deliver the greatest therapeutic benefit, without having an intolerable GI safety profile.

So that is the name of the game when developing an oral version of this class of drug.

My comment about the next inflation has no hidden meaning at all.

We had always assumed that the ASPIRE data would give us the second-line indication in the US first, which would be followed by our launches outside the US, because we have to post-registration negotiate pricing.

Mark Schoenebaum, ISI Group.

My question, number one, has the commercial performance of Kyprolis since the acquisition of Onyx, has it met your expectation, exceeded your expectations, or come in below your expectations?

And number two, I'm sorry to beat this horse, I still do not understand, it's a late night over on the East Coast here.

Still don't understand what exactly happened with Enbrel in the quarter.

You said NRxs are up, but is it your assertion that total patient demand increased 1Q sequentially over the 4Q?

Thank you very much.

Thank you Mark, we'll get to both of those questions.

Tony, why don't you start with Kyprolis.

Starting with Kyprolis, I think the Onyx team, going through the transition and the acquisition, has done a superb job in maintaining FOCUS and keeping the people's attention locked to the business.

We continue, as we speak now, to be the number one drug of choice for third line, which is exactly where the label is.

Our market share in this particular indication, we estimate to be at least double that of our nearest competitor.

So, in terms of our ability to deliver value relating to the label, we continue to deliver what we expected.

We continue to believe in the drug, that this particular class will be the backbone to treat this disease and we look forward to expanding the label with the second line, and later perhaps the first line data.

Let me go back to Enbrel.

Enbrel, as you know, what happened was purely an additional buy in.

Because we're shipping biologics, we want to make sure that the product will reach the customer within 48 hours, so therefore, we're very careful about when we ship product.

The snow delayed some shipments, we held them back, and there was an additional demand, about $120 million that took place in the last week of 2013.

The majority of that was Enbrel.

When I look at the end market data, to date, in fact, I see growth in both rheumatology and in the dermatology business.

To me, I look at the NRxs as being a predictor of how the business is growing.

In this particular area for Enbrel, NRxs are about 35% of total TRxs.

I do see a distinctive growth between the fourth quarter and the first quarter.

So although the first quarter is expected to be smaller than the fourth quarter, I see a 14% growth in rheumatology, and a 11% growth quarter on quarter in dermatology.

Thank you.

Sharing a lot of data with you there, Mark, but fundamentally we think the demand is intact for Enbrel and the rest of the base business.

Okay, let's go to the next question.

Geoff Meacham, JPMorgan.

I have one for Tony on Kyprolis, is there anything on the demand side, either post the ASH meeting, or the market share, that you can talk about on a sequential basis?

And then, one for Sean, also, on Kyprolis, does the slower event rate for FOCUS or ASPIRE, does that change your assumption and make you think differently about the head-to-head study that is ongoing with Velcade?

Thanks.

Geoff, thanks for the question.

When we look at our best ability to read end-market demand, we do see positive growth between the fourth quarter of 2013 and the first quarter of 2014.

Yes.

It is low single-digit growth.

With respect to reading, again, anything through from the time it takes to accrue the last of these events in these type of trials, it is very difficult for me to read anything scientifically, that would project anything about the design or strategy of having the head-to-head studies to Velcade.

I think those remain unrelated in my mind.

Okay, thank you.

Ian Somaiya, Nomura.

Another question on Kyprolis, maybe just a follow-up to Geoff.

What would lead to you maybe reconsidering the size of the head-to-head studies versus Velcade?

What would you need to see in the ASPIRE study or the FOCUS study to maybe have you rethink the sizing, or maybe trying to get the data set before Velcade ultimately goes generic?

That is a tough question to answer, are you are asking us to respond to a hypothetical.

Sean, I don't know if you have anything you could add to help?

I think it's relatively unlikely that we will see anything from these two studies, that would change what we are doing in the head-to-head studies.

They are moving along right now at considerable pace, and changing the design would be potentially challenging to do at this point, anyway.

I would doubt that the results would warrant that.

Michael Yee, RBC Capital Markets.

A question on FOCUS and ASPIRE, from an expectation standpoint, both in the Street and maybe for your expectations.

Do you believe that FOCUS is a higher risk study than ASPIRE, and if FOCUS, for some reason, does not hit on survival, how confident are we that ASPIRE would still support a European approval, given its PFS endpoint, if you could walk through some of that thinking?

I think probably with FOCUS, you're looking at Kyprolis monotherapy against a combination therapy of some older drugs, that are not used as frequently these days, but do represent standard of care in many of the European countries.

That is one picture.

The other picture is, of course, you're taking Kyprolis, and you're adding it on top of rev dex, and comparing that to rev dex alone.

I suppose that I could say that the ASPIRE study is most likely to have a positive result, because we know what happens if you put Velcade on top of rev dex, you get a pretty reasonable additional clinical benefit.

So just from a scientific perspective, that would be how I would look at that.

We do believe that the ASPIRE study will stand alone, in leading to an indication for the population that it studies.

It won't cover the later line-type patients who would be the subject of FOCUS, but it will -- we do believe that, in Europe, it will stand alone.

PFS is a very well accepted surrogate endpoint in this particular type of malignancy.

Thank you.

Ravi Mehrotra, Credit Suisse.

You touched on this briefly, but just go back to the Prolia ex-US buyback from GSK, was that deal mainly driven by the want and need to change the trajectory of the product, or to lay down operational bedrock?

And if the operational bedrock comes in, could you remind us what other ROW infrastructure you've brought in or acquired recently?

I'm just going to take a crack at the high level, Ravi, and then Tony you can speak to the details of Ravi's question.

Obviously our business has changed a lot, Ravi, since the time we formed that venture with Glaxo.

We have been very successful in expanding internationally over the past several years, including the transactions that we referred to on this call, buying back Neupogen and Neulasta in a number of the markets around the world from Roche.

We have a presence now in regions of the world that we didn't previously and we remain very excited about the potential for Prolia, so this was a good opportunity for us to take full control back of that product.

We had designed the deal in such a way that we could exit the partnership if we felt it was in our interest to do that, and I think both we and Glaxo felt that we had found a fair way to transition full ownership back to us.

Tony, why don't you talk a little bit about some of the specifics in the marketplace, and why we are optimistic for the growth potential?

There were a couple of things.

One, the final label for Prolia was slightly different than what was envisaged when we first did the negotiation.

It is a slightly more focused target audience we call on the [month].

Number two, we have been very successful on our own in developing strong market share with the product, and clearly working in a partnership is not as effective as doing it ourselves.

We truly believe that the clear focus by ourselves will result in us calling on a defined target audience, and having the ability to pick up and grow this business more effectively.

Secondly, that would then result in us having a broader footprint in this particular area.

The Filgrastim acquisition gave us rights, in quite a large number of countries around the world, but predominantly increased the size of our businesses in the Middle East, Russia, Latin America, Mexico and Southeast Asia.

Those were the big ones.

That's great.

Thanks.

Ying Huang, Barclays.

First of all, Tony mentioned that the inventory for this quarter went down from 15 days from last quarter to 13 days.

Did I see that stabilizing at this level, or do you continue to see a decline in level for inventory for wholesalers?

Secondly, maybe for Sean, you mentioned that we can't just take default that Kyprolis is outperforming expectation, given that the time had been delayed twice already, so just confirm your view on this.

Does that mean also that [comperidome], which is rev dex, is also doing better than the expectation when the trial was designed?

Thank you.

Let me take that inventory question first.

When we look at the average days on hand for 2013, they already fall around 13 days, so we don't think the 13 days is going to be changing much, as we go forward.

That should be average days as we expect them.

Again, with the situation with these trials, again, when we make these, these are event driven studies and always when we make these estimates, when we expect the events to accrue, there is pretty big confidence around that, and as you get closer, they narrow.

But then as you get towards the end, it becomes really again very stochastic.

So you might have, one month you will have nine events, the next month you have two, then you have seven, then you have one.

It's that kind of thing were drawing a projection from those kind of data is very difficult.

I don't think there is, what I have learned over the years, 20 years of doing this is, you can speculate a lot when you are blinded to this kind of thing, and say this could be happening because the treatment effect of the drug is big or the control arm is doing better, or the baseline population that was enrolled is just sicker or less sick than you expect, but you actually have no way of figuring out that, based on a blinded situation that we are in.

I think it is just, you have to wait to get the data.

It is frustrating, I know, but you just have to wait and look at the data, when we get it.

Thank you.

Eun Yang, Jefferies.

Based on what we hear from docs, the average baseline of the LDL levels for studies for PCSK9 inhibitor that could be lower than 100 milligrams per deciliter.

So question is, are there ultra-low LDL levels where no further benefits can be gained?

Well, so, first of all, I don't know where that information comes from, because it is difficult for anybody to know what the average LDL level is, that is accruing in these trials, by running individual study centers, and investigators may have their own individual experiences.

But in general, which you want to be doing here is targeting people who are still well above the range of the 70, or below, that are still the target that people are looking for, even the new guidelines that are not supposed to be target-based mention repeatedly 70.

The reason for 70 is largely because when you get below 70, you start seeing the reversal of atherosclerosis, rather than holding it progression.

The question of whether, certainly in absolute terms, as you began to go lower and lower in LDL, the absolute amount of benefit that you would expect to gain with a statin, for example, does go down.

In percentage terms, it has been maintained, as far as it has been possible to push LDL.

In large outcomes studies with intensive statin therapy, there, as you might imagine, is a big bell curve of response, in terms of LDL lowering.

And the low end of that bell curve, the tail of that bell curve, those individuals get pushed down quite low, in terms of LDL, and those individuals appear first to have, to the extent that you can make these assessments in as subgroup like that, they appear to have the same degree of benefit, and they appear not to suffer any adverse effects.

Certainly the genetic data all suggest strongly in humans that there would not be a breakdown of this relationship between LDL and outcomes, or that the safety would be problematic, because it is clear humans can have very low LDL levels, and be just fine.

Most of us were born, just to remind you, with LDL levels in the 20s, and they climb over time with diet, and so on.

I think we are exploring new frontiers here, to be able to push LDL levels down to -- and test whether the lower is better hypothesis continues to be true, as you get into unchartered water.

My prediction is that it will, but we have to generate the data to see.

Chris Raymond, Robert Baird.

Just a question on XGEVA.

You mentioned in your prepared remarks, that you are still seeing some generic Zometa impact.

I think it has been over a year now since the first generic Zometa launch, and at least as far as I understand it, the impact is most acute in the first two full quarters of that availability, which I would have thought might have washed out.

Can you maybe talk about what other impact you are seeing here?

Chris, this is Tony.

In the US, we saw market share in units grow from about 42% to 43% quarter on quarter, and we saw the dollar value market share grow from 70% to 76% quarter on quarter.

Zometa went generic in about March last year, and when you think about the ASP plus 6 reporting situation, it is calculated on a rolling 12-month reported two quarters in arrears.

So, by definition, your ASP impact is somewhere between 12 to 18 months.

Thank you.

Joel Sendek, Stifel.

Sorry if you might have already mentioned this, but what is the total inventory drawdown for the quarter, and then when might you start or restart the share repurchase?

We will take that in two parts, Joe.

Tony has talked about inventory build, let us go back through it for you.

Let me remind you again that, historically, our fourth quarter has always been slightly higher than the first quarter.

What we do see in 2013 at the end was a strange week at the end, was about $120 million of additional buying by both wholesalers and end-user customers.

We think all of this will work through the system during quarter one, and we entered quarter two without any excess inventory.

Joel, with respect to buybacks, we're not expecting any major activity this year, but again, cash flow growth was attractive in the first quarter, and we will continue to look for ways to return that to our shareholders, as appropriate through a mix of dividend growth and buybacks.

Howard Liang, Leerink.

Couple questions for Sean, first on your thoughts about filing for T-VEC, given the OS data?

I know you're still talking to regulators, but your thoughts on that would be great.

Second, Blinatumomab, do you already have all the data to potentially file?

I know, you're presenting it at ASCO with all the registrational data.

T-VEC, we really are fresh with the data, and I think that there is little question that we could file.

The questions we have to understand are more about the product in its current form, with the formulation and the data that we have in hand from a single study in monotherapy study with physicians, regulars, payers, and figure out what the best way to proceed is.

We have a lot of sense of value to this product over time, as an important, potentially cornerstone therapy in immunotherapy.

So we want to make sure we proceed in the best way possible for this from a long-term view.

With Blinatumomab, we clearly feel, at this point, that the data set that we generated is worthy of consideration for the filing data we have in hand for filing and approval.

And that is the discussion we are beginning to have with regulators, is around the data set that we actually have in hand.

Now, that said, we're always accumulating more data.

As you might recall, we actually started a randomized controlled Phase III study in the same population, and that will be accruing, and we have pediatric programs, et cetera.

All of those data continue to accrue and all of that information would be submitted in the filing whenever we determine the data cutoff date.

Boris Peaker, Oppenheimer.

Just have a question on the GCSF franchise.

Specifically, how are competitors in the US and Europe positioning themselves in the market, and what do you see their strategy for gaining share in the future over the next few years?

And do you see them talking or you aware of them talking to insurance companies, or is that coming back to you in some way in any kind of discussion?

Just general thoughts of that market intelligence.

It's tough for me to comment on the competitive strategy bars.

Probably best to talk to them, but obviously in the US, Granix is not a biosimilar.

It has a very different label to our product and their positioning has been around different product, different price.

In Europe, they have the same situation.

They're having to lean upon their label, which is different than ours, and in both cases the Amgen label is broader, the Amgen label has many more years of experience, much more data around both efficacy and safety, and we have an incredible track record of delivering quality product, on time, every time.

Have you adjusted your marketing message to some extent to counter detail to Granix?

No.

We still talk about the fact that we have the longest level of data available and we have highest quality product available.

Thanks for dialing in.

Arvind will be around to take questions, if we didn't get to any of you on the call.

We appreciate your interest.

Thanks.

Ladies and gentlemen this concludes Amgen's first-quarter and financial results conference call.

You may now disconnect.