美國安進 (AMGN) 2015 Q2 法說會逐字稿

My name is Brian.

I will be your conference facilitator today for Amgen's second-quarter earnings conference call.

(Operator Instructions)

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

Mr Sood, you may begin.

Thank you, Brian.

Good afternoon, everybody.

I would like to welcome you to our conference call to review our operating performance for the second quarter.

It's another strong quarter that provides good evidence that we are on track to achieve our long-term objectives.

I'm joined by several members of our leadership team today including: our Chairman and CEO, Bob Bradway; our CFO, David Meline; Tony Hooper, who heads our Global Commercial Operations; and Sean Harper, our Head of R&D.

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.

Let me welcome all of you, who have dialed in for our second-quarter earnings call.

The strategy we laid out at our 2014 Investor Day continues to deliver strong results.

Our Q2 financial and operational performance is a good indication that we're on track to deliver our long-term objectives.

This is an exciting time at Amgen.

Not only are we delivering strong financial results but our new product story continues to take shape as well.

It was a successful second quarter on this front, both with recent launches and preparations for upcoming launches well underway.

We entered the year excited about six new product launches.

At the halfway point, we're already reporting progress on five of them.

With its European approval, Repatha was the first PCSK9 inhibitor approved globally.

We were pleased with the FDA advisory committee recommendation for approval in the United States and look forward to an approval on or before our PDUFA date next month.

When we acquired Onyx, we believed that Kyprolis would become part of the backbone of multiple myeloma therapy by demonstrating superiority over the current standard of care and moving into earlier lines of therapy.

The results of ASPIRE and ENDEAVOR exceeded our expectations.

We clearly have an attractive opportunity now with Kyprolis in our expanded indication in relapsed multiple myeloma.

The response to BLINCYTO has been positive with physicians.

It's making a difference in certain leukemia patients, who have exhausted all other treatment options.

The Neulasta On-body Injector, our innovative delivery system that provides differentiation in the filgrastim marketplace is performing well in the few short months since its launch.

We're making progress with Corlanor as well by communicating the value proposition to physicians and payers, while paving the way for Repatha in the US cardiology community.

It's very rewarding to see the difference that these innovative products are making for patients.

Beyond these products, our pipeline continued to deliver results.

Sean will provide additional details on our progress in a moment.

In addition to what was accomplished in the second quarter, we have other pipeline milestones in the near-term, including global regulatory submissions for AMG 416, our innovative calcimimetic and upcoming data from Omecamtiv mecarbil in heart failure, Romosozumab in osteoporosis and of course our biosimilar, bevacizumab as well.

All of what I've just talked about gives us confidence in the long-term growth of our business.

For this year, we're raising guidance again.

David Meline will share details of that with you momentarily.

In summary, I'm very pleased with our continuing strong execution against our priorities for the year.

This includes our progress on the five newly launched products, the strong growth in our key products like Enbrel, Prolia, XGEVA, Sensipar, Vectibix and Nplate and our ongoing transformation efforts.

Before turning it over to David, let me just thank my Amgen colleagues, many of whom are listening to this call, for their commitment to deliver for patients and for our shareholders.

David?

Okay.

Thanks, Bob.

Turning to the second quarter on page 5 of the slide deck, revenue at $5.4 billion grew 4% year-over-year, with product sales growth driven at 6%, driven by continued momentum across our product portfolio.

Other revenue decreased $86 million year-over-year, due primarily to milestones recognized in the second quarter of last year.

Total revenue and product sales were negatively impacted by approximately 2.5% due to foreign exchange headwinds.

Adjusted operating income at $2.6 billion grew 10% from prior year.

Adjusted operating margin improved 2 points to 49% for the quarter, reflecting our continued growth and the benefits from our transformation initiative.

On an adjusted basis, the cost of sales margin at 15.1% improved 0.8 points driven by lower royalties and higher average net sales price.

Research and development expenses at $918 million were down 6% versus the prior year.

R&D spend was favorably impacted by the transformation and process improvements across the area, partially offset by increased support for later stage clinical programs.

SG&A expenses were up 2% on a year-over-year basis, increased commercial investments in new product launches were partially offset by savings from transformation and process improvement efforts.

Total operating expenses declined 1% year on year and increased 9% sequentially.

For the quarter, operating expenses benefited by 3 percentage points from foreign exchange year-over-year.

We also saw an increase of spending in Q2 versus the prior quarter, which is a typical pattern for the business.

In the second half of the year, we expect quarterly expenses to increase in line to modestly above historical experience, reflecting increasing launch and R&D investments through the balance of 2015.

Other income and expenses declined by $65 million or 45% on a year-over-year basis to a net expense of $79 million in the quarter.

The year-over-year decrease was primarily driven by gains in our strategic and venture investments.

I would note that Q1 is a better indicator of the underlying run rate for other income and expenses in light of the investment gains in Q2.

The adjusted tax rate was 20% for the quarter, a 3.8 point increase versus Q2 2014.

This increase was primarily due to the unfavorable tax impact of changes in our geographic mix of earnings.

Our tax rate for the first half of the year was 18.6%, consistent with our guidance for the year.

As a result, adjusted net income and adjusted earnings per share increased 8% on a year-over-year basis.

Turning next to cash flow and the balance sheet on page 6. For the second quarter, we generated $2.7 billion in free cash flow, an increase of $0.6 billion over the prior year.

This increase was driven by improved working capital and higher operating income as well as cash gains realized from a portion of our foreign exchange forward contracts.

Total debt outstanding ended Q2 at $32 billion.

Cash and investments totaled $30 billion.

Additionally our second quarter 2015 dividend was $0.79 per share, an increase of 30% versus the prior year.

Finally, in the second quarter of 2015, we increased our share repurchase activity versus the prior year with $500 million of cash deployed through share repurchases, or approximately 3.3 million shares in the period.

We continue to execute on the commitment to repurchase $2 billion of shares by year-end 2015.

As of now, we have repurchased a total of $1.3 billion worth of shares at an average price of $157 since our business review last October.

Turning to the outlook for the business for the remainder of 2015 on page 7. We remain on track with our plans to grow the business and invest for the future, while transforming to a more agile and efficient operating model.

In 2015, we remain on track to deliver over $400 million of efficiency savings from the transformation, most of which will be reinvested in the business.

With regard to our updated outlook for 2015 revenue, we are increasing our guidance to $21.1 billion to $21.4 billion from our prior range of $20.9 billion to $21.3 billion, reflecting continued solid revenue performance.

Versus 2014 results, we expect an unfavorable revenue impact of almost $400 million or 2% in 2015, assuming current foreign exchange rates prevail through year end.

Our revenue guidance also reflects progress on our product launch activities, as well as our latest view of evolving competitive dynamics.

We are also increasing our 2015 adjusted earnings per share outlook to $9.55 to $9.80 a share, from the previous $9.35 to $9.65 forecast.

The revised earnings outlook reflects continued conviction in our strategy and strong performance, including lower expenses due to cost discipline.

Versus 2014 results, we expect an approximate $0.11 adjusted EPS impact in 2015 at current foreign exchange rates.

Turning to the tax rate, for the full year, we expect to have an adjusted rate within the range of 18% to 19%.

As a reminder, this excludes the benefit of the federal R&D tax credit in 2015.

We now expect capital expenditures of approximately $700 million this year, which is $100 million lower than our previous guidance.

As our results through the first half of the year highlight, our transformation efforts are now well-established.

We are encouraged to see cost improvements across the business.

This concludes the financial update.

I now turn the call over to Tony.

Thanks, David.

Good afternoon, folks.

You will find a summary of our global sales performance for the second quarter on slide number 9. Once again, we delivered a strong sales quarter.

We saw excellent execution across all aspects of our commercial strategy, growing our newer products, defending filgrastim and EPOGEN and launching important new medicines.

Globally, product sales grew 6% year on year.

Our Us business delivered 9% year-over-year growth, with our International business growing 5% year-over-year, excluding the negative impact of foreign exchange.

Let me now turn to the products, beginning with Enbrel.

On slide number 11, you'll see that Enbrel delivered strong growth of 8% year-over-year, primarily driven by net selling price.

Segment growth remains strong in rheumatology and dermatology, growing 23% and 28%, respectively.

Quarter-on-quarter, we held our share in rheumatology at 29%, while share in dermatology declined 1 percentage point to 26%.

New dermatology entrants are not simply taking share from the incumbents, but also growing the market.

Quarter-on-quarter Enbrel sales increased 21%.

You'll recall that in April, I described how the first quarter was negatively impacted by lower wholesaler inventories and then customer inventory burn off.

In the second quarter, inventories returned to normal levels.

Enbrel has delivered significant growth for us.

With exclusivity in the US until 2029, we will continue to invest in Enbrel and believe it is well on its way to becoming a $5 billion brand.

Sensipar grew 15% year-over-year driven by strong unit growth in both the US and Europe.

I'll now move to Prolia.

Prolia delivered 29% growth year on year, driven by volume increases in both the US and in Europe.

The graph on slide 13 will remind you of the historical pattern of Prolia sales in which the second and the fourth quarters are our strongest.

Our focus on direct-to-consumer marketing and simplifying patient access in the US continued to drive higher new patient starts and improve patient adherence once on Prolia.

This has led to unit share gains of about 4% in the US and about 3 percentage points in Europe.

XGEVA grew 11% year-over-year.

Unit share increased about 4 percentage points in the US and about 6 percentage points in Europe.

The quarter-over-quarter decline in the US was driven by a Q1 customer buy-in.

Absent the buy-in, the US sequential unit growth was 6%.

Our brand strategy continues to focus on XGEVA's superior clinical profile versus the competition.

We've also recently successfully negotiated expanded XGEVA access for patients in France, one of our largest markets outside the United States.

The expansion of Vectibix into earlier lines of therapy in metastatic colorectal cancer in both the US and Europe continued to deliver growth.

We continue to see unit growth in the US of close to 40% and in Europe of nearly 10%.

The second quarter was also positively impacted by timing of shipments to our Japanese partner.

Nplate grew 6% year-over-year driven by a 7% unit growth.

Now to Kyprolis, which delivered year-over-year growth of 53% and a quarter-over-quarter growth of 10%.

We're very excited about the recent US approval in relapsed or second line multiple myeloma.

The ASPIRE data clearly demonstrated the longest period of progression-free survival in any Phase III trial to date.

This is an important treatment regimen that will now become available to a greater number of relapsed patients as shown on slide number 8.

The US team launched this new indication on Monday this week.

The ASPIRE data coupled with our compelling ENDEAVOR data, which we've just submitted to the FDA demonstrating superiority over Velcade in relapsed multiple myeloma, strengthens Kyprolis' position as the best-in-class proteasome inhibitor.

We anticipate further approvals for Kyprolis outside the United States by the end of this year including Europe, Canada and South America.

Let me now turn to our mature brands, starting with the filgrastim franchise.

Neulasta delivered year-over-year growth of 2%, driven mainly by net selling price.

The launch of the On-body Injector for Neulasta is going exceptionally well.

As a reminder, the On-body Injector means that patients no longer have to return to the hospital or clinic 24 hours after their chemo.

The On-body Injector simply delivers Neulasta at home at the appropriate time.

I'm pleased to report that the Neulasta On-body Injector has already achieved 8% market share of the Neulasta business in its first full quarter on the market.

We continue to grow both the depth and breadth of prescribing.

Over 50% of our Neulasta counts have purchased the On-body Injector.

NEUPOGEN declined 14% year-over-year in the second quarter.

This was primarily due to branded short-acting competition in the US, which gained about 2 share points versus the first quarter.

We continue to compete account by account and reinforce NEUPOGEN's long track record of clinical efficacy and safety as well as our ability to supply patients reliably.

Turning now to our ESA products, EPOGEN declined 4% year-over-year including an 11% decline.

About one-third of this unit decline was due to competition.

The remaining unit decline was a shift in purchases to Aranesp in some of our US dialysis accounts.

With select US dialysis customers having an increasing interest in a long acting ESA, we're actively promoting Aranesp to them and seen some early success.

Global Aranesp sales declined 7% year-over-year.

There were some important underlying dynamics however, as the US saw an 8% unit growth per year, driven by the shift in some dialysis business from EPOGEN to Aranesp that I just mentioned.

While International sales declined year-over-year because of foreign exchange rates.

Although Aranesp has prolonged exclusivity in the US extended to 2024, we know that biosimilars to EPOGEN, NEUPOGEN, and Neulasta are making plans to launch in the US market.

Sandoz announced its intention to launch a short-acting filgrastim biosimilar in the US sometime after September 3 this year.

We expect other biosimilars may come in 2016.

Although Sandoz's biosimilar against NEUPOGEN will serve as the first true biosimilar entrant into the US market, Teva's GRANIX has served somewhat of a proxy, having captured about 17% share of the short acting filgrastim market after about 18 months on the market.

We are planning for the arrival of new competition and are prepared to compete.

We will leverage the success that we've had in US versus branded competition as well as our considerable experience competing against ESA and new NEUPOGEN biosimilars in Europe.

We expect our products to continue to generate substantial cash flows for years to come even after competitors enter the market.

Let me now update you on our new product launches.

As you know, our cholesterol lowering medication Repatha was improved in Europe earlier this month.

We're very excited to be making this new cholesterol-lowering medication available for patients and are actively engaged in obtaining reimbursement across Europe.

We anticipate the first European launches to begin during the third quarter of this year.

In the US, we look forward to upcoming FDA approval, remember our PDUFA date is August 27.

Our cardiovascular sales force is already in the field with the recent launch of Corlanor, which I'll discuss in a moment.

We're hearing a lot of excitement from our customers about the eminent launch of Repatha.

We've already achieved 60% plus penetration of eligible patients in the US with BLINCYTO, our innovative antibody for acute lymphoblastic leukemia.

With an approval based on Phase II data, we continue to expand awareness of the significant benefits of BLINCYTO across the physician base that treats these seriously ill patients.

We look forward to expanding BLINCYTO's label and our black platform into other cancer types.

Corlanor was approved in second quarter as an add-on to CHF standard of care and the team is making great progress with penetration and access.

With Corlanor, we're also paving the way for our Repatha launch.

Our CV sales force has already called on the majority of our targeted cardiologists.

As I look ahead, this is a very exciting time for Amgen.

I'm pleased with the strong performance of the first half of this year led by our growth products Enbrel, Sensipar, Prolia, XGEVA, Vectibix, Nplate and of course Kyprolis.

This has given us excellent momentum in the second half of the year.

We've also made tremendous progress with four of our six innovative new launches this year.

BLINCYTO, Corlanor and the Neulasta On-body Injector are all off to great starts.

On Monday, we launch Kyprolis into the expanded indication of relapsed multiple myeloma.

We're anticipating the approval in the US for TVEC, our novel oncolytic for metastatic melanoma later this year and Repatha in the US imminently.

Our teams are laser-focused, poised and ready for launch.

We look forward to bringing these new innovative medicines to patients following the FDA approval.

Before I close, I'd like to express my thanks to our Amgen customer-facing teams across the world for their unwavering focus on delivering value to patients and shareholders alike.

Let me now pass you to Sean.

Thanks, Tony.

Good afternoon.

It continues to be, as Tony said, an exciting time at Amgen.

I'd like to begin from an R&D perspective with Repatha, which was the first approved PCSK9 inhibitor in the world, based on our recent approval in the EU.

It's important to keep in mind, I think, it was early work by Amgen research scientists that led to significant advances in the elucidating the pathway by which PCSK9 regulates LDL-cholesterol and which led to the publication of the crystal structure of PCSK9 in 2007.

I just want to recognize the effort within the Amgen R&D organization to advance this program from discovery research to the clinic in less than a decade.

As I've said before, having the in-house scientific expertise to elucidate complex biology is an often under appreciated attribute.

But it's critical in establishing strong intellectual property.

In the US, we were quite pleased with the vote of the FDA advisory committee and are working with the agency to get Repatha to patients as soon as possible.

The FDA's target action date is August 27.

We continue to be inspired by the potential for Repatha to help us drive a revolution in the global fight against cardiovascular disease, the world's greatest killer and are looking forward to the results in 2016, from our intravascular ultrasound imaging study that we're conducting in collaboration with the Cleveland Clinic.

As well as our 27,500 patient outcomes trial which has completed enrollment and for which we expect results no later than 2017.

This is an event driven study and as we stated before, at the FDA advisory committee meeting there's a possibility we could see the data in 2016.

Turning to oncology, we were very pleased to receive approval from FDA for our Kyprolis submission for relapsed multiple myeloma based on the ASPIRE data.

Recall that addition of Kyprolis to Revlimid and dexamethasone resulted in the longest progression-free survival ever reported in the relapsed multiple myeloma setting.

This regimen was considered by the expert discussion at the recent ASCO multiple myeloma session to be quote, the standard of care.

Again, in the relapsed setting, we were quite encouraged by the response of physicians at ASCO to the ENDEAVOR data, demonstrating a doubling of progression-free survival in patients randomized to Kyprolis compared head-to-head with Velcade in the context of much lower peripheral neuropathy risk with Kyprolis.

We've submitted the ENDEAVOR data in the United States.

We'll submit these data after the ASPIRE accelerated assessment approval in the EU.

We've recently completed enrollment in our Phase III CLARION study of Kyprolis versus Velcade in newly diagnosed multiple myeloma patients and look forward to those results sometime in 2017.

We have also initiated our Phase III study of once weekly dosing for Kyprolis in the relapsed refractory setting, potentially providing patients and physicians with a more convenient dosing option.

In our continued effort to develop medicines that provides the greatest benefit to patients, we recently reported results of the studies demonstrating that Vectibix had an overall survival benefit versus best supportive care in a Phase III study of chemo refractory metastatic colorectal cancer patients with RAS wild-type tumors.

We were gratified to see the support of the FDA advisory committee for the use of TVEC as a monotherapy in the metastatic melanoma setting.

We continue to work with regulators to bring this agent to patients.

We see the greatest potential of TVEC in combination with the so-called checkpoint inhibitors.

We continue to advance our collaborations with the Merck anti-PD1 and Roche anti-PDL1 antibodies that we've recently announced.

We also very recently announced a positive Phase II study of BLINCYTO in Philadelphia chromosome positive relapsed refractory ALL, which demonstrated similar efficacy and safety to our US approved indication in Philadelphia chromosome negative ALL.

Approximately one-fourth of adults with ALL are Philadelphia chromosome positive.

Our study included relapsed patients that were refractory to tyrosine kinase inhibitor therapies, who have very poor prognosis.

We look forward to discussing the results with regulators to determine next steps.

At ASCO, we presented data that demonstrated Prolia significantly reduced bone fractures in breast cancer patients receiving aromatase inhibitors suggesting a potential benefit of initiating Prolia with aromatase inhibitor therapy to decrease the risk of fracture.

Also in our bone programs, we're getting closer to seeing the fracture data from Romosozumab with the first placebo-controlled postmenopausal osteoporosis study expected to read out in the first half of 2016.

Recall that Romosozumab is our anti-sclerostin antibody we're developing with UCB.

Due to the extent that Romosozumab is able to increase bone formation, the high quality of that bone coupled with strong human genetic validation for the pathway.

All of this leads us to believe we'll see a significant reduction in fractures.

Romosozumab will become a important addition to the treatment of osteoporosis.

One final regulatory update is we anticipate initiating global regulatory submissions in the third quarter for our innovative peptide calcimimetic AMG 416 in dialysis patients with secondary hyperparathyroidism.

Our migraine prophylaxis program with our CGRP receptor antagonist antibody AMG 334 is now enrolling Phase III episodic migraine studies.

The 52-week data from our Phase IIb episodic migraine study were recently presented at the meeting of the American Headache Society demonstrating durability of effect with no new safety signals.

Our Phase IIb chronic migraine study continues to enroll patients, We look forward to seeing those data next year.

We continue to view AMG 334 as a very exciting opportunity to help patients suffering from this debilitating condition.

In our earlier stage pipeline, we're looking forward to data from our Phase II study of the oral formulation of Omecamtiv mecarbil, the myosin activator we are developing with Cytokinetics in the heart failure setting in the fourth quarter of this year.

We also continue to make progress on our bite platform with our next molecule AMG 330 close to initiating Phase I in the acute myeloid leukemia setting an area of profound unmet need.

We're also advancing new molecules in the clinic in neuroscience and immuno-oncology areas.

I look forward to speaking with you about these programs in the future.

Finally I'd like to thank the Amgen R&D team for their continued focus on innovation and execution of our key programs.

In particular, I was very proud of our command of the science and the data at our recent FDA advisory committee meetings.

Bob?

Okay.

Thank you.

As you can see there's quite a lot happening at Amgen both in the current quarter and things that are setting us up for long-term growth as well.

So let's turn to questions.

Brian, before we open the lines could you remind our callers of the procedure for Q&A?

(Operator Instructions)

Geoff Meacham, Barclays.

For Repatha, assuming that you have a similar label to your competitor, I wanted to get a sense from whether you would push to submit imaging data for differentiation?

Or do you think it makes sense just to wait for the outcomes data?

I guess the question is, do you think the imaging data ultimately could be dramatically differentiated in the marketplace?

Thanks.

It's a good question, Geoff.

I think that the data from these two types of investigations are really quite complementary.

While we will see from the outcomes study, obviously, reductions in events we hope, as we all know how those studies read out.

But being able to really understand the degree to which one can observe actual disease modification and regression potentially of the atherosclerotic burden in patients is pretty important information to understand.

So I think that we believe that the data are important.

There are other precedents for these kinds of data appearing in the labels of statins.

The exact timing relative to when we have the outcomes data is a little hard to judge.

But I do think it's differentiating data.

I do think it's going to be very important data for the cardiology community in particular to see that out of study.

Okay.

Thank you.

Matt Roden, UBS.

Good job on the quarter.

We've been able to see your label in Europe and your competitor's label here in the US.

Your programs were similar but a little bit different in terms of the patients you enrolled.

So I guess the question is, would you expect the US Repatha label that's more similar to your EU label, which is a little bit broader?

Or the Praluent US label, which is a little bit narrower?

What would be the basis for that decision?

Thanks very much.

Matt, I'm not going to speculate about the label that the FDA's going to grant us at this time.

We're very close to this process right now with the agency back and forth.

I think it's just not our place to speculate on the label they're going to grant us.

Okay.

Thanks a lot.

Matthew Harrison, Morgan Stanley.

I just wanted to ask on the dialysis franchise, you talked a little bit about EPO and Aranesp.

Maybe if you could just expand, what sort of competition are you seeing?

Would you expect that to get more heated as the quarters progress?

Then do you think the growth in Aranesp use in the dialysis is sustainable?

Or would you expect that to tail off a bit?

Thanks.

Tony?

I think the numbers that have been made public is that FMC have moved about 45,000 patients to Mircera in the second quarter.

So those number of patients will continue in to the third and fourth quarters.

That's our competition.

The use of Aranesp in dialysis, the sustainability of that.

Do you want to comment on that?

Aranesp has clearly been used, it's being purchased by the customer.

They have a couple of thousand patients on Aranesp as well.

They continue to grow their business as well.

Terence Flynn, Goldman Sachs.

Maybe just a two-part one for me.

On Kyprolis, I was wondering if you can give us any commentary with respect to duration, what you're seeing?

Broadening the prescriber base?

Then congrats on expanding the Board.

Just wondering any comments there that you can provide in terms of that decision?

Thanks.

Sure, Terence, this is Bob.

I'm happy to take the second question.

We're delighted to welcome Fred to the Board.

He has terrific experience in the global biopharmaceutical industry.

I think he shares our enthusiasm for the innovation that's being generated here at Amgen and for our long-term growth prospects.

So we're happy to have him on the Board.

Tony, why don't you talk about the progress we're making on Kyprolis?

In the third line at the moment, our length of therapy's running at about 5.6 months on average.

When we look at the data in second line the existing therapies as well as our own clinical trial, we expect the duration of the therapy to at least double over time.

Mark Schoenebaum, Evercore ISI.

Good quarter.

Guys, I was wondering I didn't understand, or just couldn't hear -- I got a lot of e-mails, a lot of other people couldn't either -- your answer to someone's question around what's going on in the dialysis marketplace?

Fresenius gave out a figure today to 44,000 patients are on Mircera.

They also made comments that suggested that the price point of Mircera is dramatically below EPOGEN.

So I was just wondering if you could talk about that.

Then also just update us on the balance sheet, I know after the Onyx deal, you wanted to go through a period of deleveraging, where you felt like you probably weren't in a position to do an Onyx type of deal.

What about now?

How does the balance sheet look now?

If an Onyx-sized opportunity came along now, do you believe you've got the financial flexibility to do it?

Or do you want to continue to de-lever?

Thanks.

Let me clarify the question on dialysis.

There are 45,000 patients at FMC on the Mircera product.

There are about 15,000 patients on Aranesp.

I'm afraid I can't tell you what the difference in price is.

You'll have to talk to FMC for that.

Okay, Mark, on the balance sheet.

The balance sheet's strong.

We have emphasized our desire to return capital to our shareholders through a mix of dividend and buyback.

As David noted on the call, we increased the dividend by 30% versus this quarter last year.

We are on track to continuing to -- to continue to grow and pay out and also repurchasing shares.

As David mentioned, we've repurchased $1.3 billion since the investor meeting last October.

So we're continuing to focus on returning capital to our shareholders while maintaining a strong balance sheet.

Our focus is on earlier stage transactions that we think can bring innovation to the Company that we can add value to, but we have the flexibility in the balance sheet if attractive opportunities arise that are of the larger size.

Thanks a lot.

Thanks.

Robyn Karnauskas, Deutsche Bank.

This is Mohit for Robyn.

Congratulations on a good quarter and progress through the quarter.

So my question is regarding the biosimilars.

If you could help us understand the implications of the latest ruling in the Sandoz case about that BLA sharing is not necessary under BPCIA.

How does it impact your thought process around biosimilar filing?

The second part would be that, is Apotex following the BLA sharing process for their Neulasta biosimilar?

Thanks.

Okay, Mohit.

I think there are two questions there.

But Tony, why don't you pick those up?

Mohit, it's Tony.

In all the strategic planning we've done with the biosimilars, we have accepted the 180 days as part of the legislation and have planned accordingly.

As to whether the other organizations have been supplying us data or not, we're not prepared to comment on that at the moment.

Eric Schmidt, Cowen and Company.

Maybe just a bigger picture question for Bob on M&A.

It's kind of a frenetic environment out there as you know.

Some have viewed Amgen as a target, some view you as an acquirer.

How are you thinking about M&A and building shareholder value in today's environment?

Yes.

We're very focused, as I've said earlier on the call, Eric, very focused on executing our long-term plan for growth, which we outlined in some detail last October.

I think we're making great progress on advancing the things that we think will enable us to grow and deliver real value for shareholders.

That includes the transformation activities we've talked about, the progress that we're making with our legacy molecules and the new product story that's emerging so powerfully with the five products that we've launched already and those that we expect to launch after this.

So very focused on executing our long-term strategy for growth.

Eun Yang, Jefferies.

Recently, Merck indicated their REMICADE biosimilar pricing is down about 45%.

But then it seems like in some European countries, discount is close to 60%.

So what do you think operating margin for Amgen to biosimilar product would be once marketed?

Well, Eun, I think if your question is about operating margins for the products that we expect to launch between 2017 and 2021, we'll probably hold off giving you operating margin guidance at this point.

If your question was more generally about the pricing environment for REMICADE, I'd be happy to share our perspectives on that.

Tony, do you want to?

Sure.

As we watch the marketplace -- obviously as the number of biosimilar competitors come to market, potentially there could be some more price erosion.

The countries outside the United States where REMICADE has experienced such a dramatic reduction in price with the biosimilars are generally the smaller countries, where it is a hospital-based business, which is tender driven and the tender will not take the role.

So it's clearly a different structure and a different process in terms of deciding which drug to use, not by physicians but by the government tenders.

Thank you.

Geoffrey Porges, Bernstein.

Sean, I just wanted to ask you about Romosozumab.

You highlighted that data coming in the first half of 2016.

Could you clarify whether that's the 12-month or the final 24-month data?

When you would anticipate filing that program?

I also just wondered what dose you would expect to be filing with?

Whether you have a formulation that can deliver it in a single 1-ml injection?

Thanks.

Yes.

We're talking about the primary analysis in the placebo-controlled study.

So that would be at the 24-months time point.

We would plan on filing it as soon as we can put it together and file it, obviously.

We always do that as fast as we possibly can.

It's hard to anticipate without seeing the data, what kind of additional questions might be required to be answered and that sort of thing.

But this is a very high priority program for us.

So we'll certainly be focused on that.

I think it's premature for us to be able to talk about the format in which we would be providing it commercially.

But we do feel that it can be delivered once a month likely in a single injection.

Okay.

Thanks very much.

Michael Yee, RBC Capital Markets.

Congrats on the quarter.

I had a question for Sean on CGRP.

You previously spoke about the advantages of block and receptor.

Your data as well as others have come out now, so although still early, do you think that thesis you had is playing out?

How do you think your data is positioned?

How is this going to be differentiated as we go forward now that some of this data has all come out now?

Yes.

That's a good question.

I think that there's no doubt that the potency of a receptor antagonist is expected from first principles and all the pre-clinical data to be higher than that of ligand sequestration.

That's exactly what we're seeing in humans, as well is particularly you can measure that in the doses that are required to suppress the skin reactions in the capsaicin PD assays that were used by many of the companies in the early Phase development.

I think really what it comes down to and what I've always referred to is that this will be -- this is an ambulatory otherwise well patient population that are going to want the easiest potential dosing format once a month, let's say, small volume, low pain injection in a disposable auto-injector.

The question is, whether all of these products can achieve that kind of profile.

It's going to be easier for us to do that, we believe, because we have a more potent agent.

So there's only so much antibody that can be packed into 1 milliliter.

So it remains to be seen whether the ligand antibodies can thread that needle and get to a single injection monthly.

Some may, some may not.

We're quite confident about being able to do that.

So I think it's bearing out scientifically.

But we'll have to see whether it translates into a real clinical differentiator in the marketplace.

Time will tell.

Thank you.

Ying Huang, Bank of America.

Just to follow-up on Eun's question on M&A, you just announced that Fred Hassan was assigned to the Board.

We all know that he played an instrumental role in Pharmacia, Schering-Plough, Bausch & Lomb.

Should we read that into some sort of indication or are we reading too much in the tea leaves?

Then secondly, Enbrel's year-over-year growth was mostly driven by pricing.

I was wondering if you have any thoughts on longer-term pricing strength in this market?

Thanks.

Yes, Ying.

I think you're over reading the tea leaves there.

As I said, Fred shares our excitement about the innovation that's emerging here and the long-term growth prospects for the Company.

But Tony, why don't you talk about Enbrel?

So, Ying, the pricing of Enbrel will continue to be a consolidation of list prices as well as adjustments in contracts we have with various payers and players in the marketplace.

We continue to see movement or ability to move prices in the future as well, yes.

Thank you.

Cory Kasimov, JPMorgan.

For Repatha, do you have any indication as to whether or not you may need to negotiate exclusive formulary contracts with payers or are you confident that you'll be able to coexist with PRALUENT on parity contracts?

Thanks.

It's Tony.

Let me just say, we've had some preliminary discussions with payers on a very broad medical basis.

Clearly we're not able to do any negotiations with them until we get full approval from the FDA.

Our position has always been that choice given to both patients and physicians is the most important thing in our marketplace.

So we will continue to strive to look for choice.

Okay.

Thank you.

Ian Somaiya, Nomura Securities.

Just wanted to get a sense from you, whether the PCSK9 class will be subject to class labeling?

Or is there potential for nuances, differences in label claims across the two or three drugs that we all know of?

I think you may have gotten cut off there.

But this is Sean.

Of course there will be a degree to which the labeling will look similar across the products, no matter how many there are.

I think that will be pretty evident as you see for example the first two labels whether it's Europe or the United States.

However, the products are not developed identically.

They don't all have the same studies.

They don't all have the same safety profile, in fact.

So I think that you will see differences between the products.

I anticipate that will be true, because not all of the safety profile, for example, is mechanism based.

Some of the safety profile issues result from differences in molecular structure, formulation and that sort of thing, which can lead to differences in the way that the body reacts to the protein and formulation, as an example.

To our knowledge, we're the only Company doing an IVUS study for example.

So, yes, you'll see differences between the labels but there will be similarities from a class perspective for sure.

All right.

Well, let me thank you all for joining the call.

We're looking forward to the second half of the year.

A lot of exciting things to come ahead.

So we'll look forward to seeing you and having a chance to talk to you on the third and fourth-quarter calls.

Thank you.

Thanks, everybody.

Ladies and gentlemen, this concludes Amgen's second quarter and financial results conference call.

You may now disconnect.