Once again to the 43rd Annual Healthcare Conference, and it's actually the first TD Cowen Healthcare Conference. I'm Yaron Werber, a biotech analyst here at TD Cowen, and it's a great pleasure to moderate the next fireside chat with Amgen, and the management really needs no introduction. All the way at the left, at the end is Peter Griffith, who's EVP and Chief Financial Officer, and to his right is Murdo Gordon, who's EVP of Global Commercial Ops. Gentlemen, good to see you. Thank you so much for joining. Great to be here. Great be here. Great to see you, Yaron. For many of you who've been at the lobby, you can see there's actually a video on talking about innovators in biotech, and Murdo's on the video with us. We shot that at JPMorgan about a month and a half ago. Yeah, don't send it to my daughter. Yeah. She'll critique me. Got it. Peter, let's start with you. Maybe give us a little bit of opening remarks. Yeah About guidance and sort of what's at stake for the year. Let me do that. Yaron, thank you and congratulations on your transaction, TD closing on the acquisition. We have great relationship with both institutions, we wish you well, and I'm sure you'll do better. Thank you. One plus one will equal three, as you always ask us. 2022 was a year of continued solid execution. At Amgen, we drove unit volume growth at the portfolio of leading innovative brands, achieving record sales on 16 of our brands. Progressed our innovative pipeline, advanced 6 first-in-class molecules into phase III or registration-enabling trials. We advanced our industry-leading biosimilars business, generated positive phase III data for 3 molecules. Last month, as you know, we launched our HUMIRA biosimilar AMJEVITA in the United States. We strengthened our product portfolio through the acquisition of ChemoCentryx for almost $4 billion in October of 2022, with their key product TAVNEOS addressing ANCA-associated vasculitis. We've announced the acquisition of Horizon Therapeutics for $27.8 billion, and we're very excited about what that has to offer when that transaction closes. We delivered robust operating margins while investing in product launches and pipeline opportunities with strong balance sheet and free cash flow, which was $8.8 billion last year, enabled us to continue our disciplined capital allocation approach in 2022. 2023 outlook reflects confidence in our ability to execute through continued macro headwinds. 2023 guidance of $26.0 billion-$27.2 billion in revenue and $17.40-$18.60 of non-GAAP EPS, excluding any impact from the announced acquisition of Horizon Therapeutics. This reflects continued volume growth at the portfolio level, products like Repatha, Prolia, TAVNEOS, TEZSPIRE, and EVENITY. It also reflects declines in certain established products like Neulasta and EPOGEN, as well as some continued price pressure on the oncology biosimilars. It's important to note that our current publicly available consensus estimates are derived from a combination of estimates of Amgen as a standalone company, along with estimates from some analysts who've already added Horizon into their estimates. There's a little bit of a mixed bag there. As of today, this is true for both the first quarter and for the 2023 consensus. I just wanted to say a couple of clarifying things, Yaron. Thank you. Our Q1 outlook excludes any impact from Horizon. To be clear about our expectations, there's some reminders as we work our way towards the end of the first quarter. We expect the first quarter 2023 revenues to be below Q1 of 2022. Simply reflects our COVID antibody revenues last year that we're lapping, that we don't expect to repeat this year. We continue to expect a non-GAAP operating margin for the full year of roughly 50%. As we indicated in the year-end call, we expect the margin to be below 50% in the first quarter with correspondingly lower operating income. Reflects one-time residual Puerto Rico excise tax of about $125 million, most of which we expect to materialize as a charge in the first quarter with no corresponding tax benefit. We also reflects an anticipated double digit year-over-year increase in non-GAAP research and development expense in the first quarter. Reflects advancement of numerous priority programs here in the pipeline, including olpasiran, rocatinlimab, and bimeratuzumab. It also reflects the year-over-year margin impact of those higher COVID antibodies in the first quarter of 2022, so we're lapping that. We expect our first quarter non-GAAP tax rate to be in line with our full year guidance of 18%-19%, reflecting the reclassification of that Puerto Rico excise tax from cost to sales down into the tax provision line. First two months are proceeding with our expectations. We remain confident in our full year outlook. The announced acquisition of Horizon can further augment our long-term growth potential. Their key products, TEPEZZA, KRYSTEXXA, and UPLIZNA, can benefit from our decades of leadership in inflammation and nephrology, as well as our global scale. We continue to expect the deal to close in the first half of 2023. I would once again too mention how important TAVNEOS is that we acquired in October to address ANCA-associated vasculitis. We're really excited about 2023 and delivering through 2030. Yaron, back to you. Great. Peter, that was a lot of information. Thank you for that. The first question is, you did get a second request from FTC, and you're still very comfortable with first half. It sounds like you anticipated that letter, or that's just, you think that's something you can, you know, answer pretty quickly? We don't anticipate anything out of the government. I would just say we continue to be optimistic about closing in the first half of this year. I think one of the rating agencies changed the rating, the other one didn't based on the deal. Yes. You're comfortable with where you are. I think we're modeling about a 5% and obviously the debt hasn't been priced, but is that sort of where you see the market right now for you? Yeah. The debt is priced. The deal transpired. We have a 5.4% coupon on them, on all the tranches of the new debt, average maturity about 16 years. That takes our overall portfolio, Yaron, keeps it at about 16 years in maturity, then the overall interest expense rate will be about 420 basis points, 4.2%. We received the proceeds from that last Thursday. We're all set on that. As you can imagine, we're thoughtful and careful about how we invest that. We're advantaged by strong short-term rates right now. Yeah. When you're thinking about you, about a year ago, you gave a, you know, a forward-looking sort of view through 2030. Obviously, Horizon was not a part of that guidance, presumably. How does Horizon, I know you're not prepared to change anything here today, but how does conceptually does Horizon change your outlook? If I can answer it this way, both ChemoCentryx and Horizon, we view as opportunities to de-risk and be additive to our pipeline and what the company's doing. You know, what we issued in February 8, 2022, was organic. We feel great about the organic business. We, you know, we like what's in the market right now. Certainly, you know, Murdo will jump in and talk to you about Repatha, and Otezla, and Prolia, and EVENITY, and TEZSPIRE had a great year, and we look forward to more great things from TEZSPIRE and how it treats patients with severe asthma. We look forward to TAVNEOS in the market now and having that as part of our portfolio. We feel great organically about where we're at, and so we continue to prosecute that. The pipeline's great, right? We talked about we're spending money on olpasiran, on rocatinlimab, on bimeratuzumab that are phase III. We have tarlatamab in a registration-enabling phase IIB trial, which is, as you know, Yaron, small cell lung cancer. There hasn't been anything there. This is a Bispecific T-cell Engager to address a solid tumor that nothing exists out there. We're excited about that. The pipeline feels really strong. We talk about biosimilars on the way to 2030. We continue to be confident in that guide of a double of 2021 base at $2.2 billion by 2030. We think about the strength of Repatha. Great volume growth last year, I think in excess of 50%. Mm-hmm. Otezla, we still like. We like where it sits between the topicals. As Murdo likes to say, post-topical, pre-biological. We feel great about that medicine. Then, of course, our rest of our portfolio continues to move along strong and provide cash flow for us to reinvest in innovation, both internal and external. Maybe, I mean, to both of you, and definitely Murdo chime in here. TEPEZZA, I know this is not your product, it's very hard for you to comment. TEPEZZA's been a little lumpy, you know, kind of had a very strong first half, kind of slowed down and kind of stabilized, so to speak. I know, you know, a sales force usually is fairly distracted in the middle of a deal. It's been a little flattish. I think historically, consensus numbers sort of expected TEPEZZA to double to $4 billion. They've been at a run rate of about $2 billion-$2.2 billion right now, roughly, depending on which quarter you're looking at. Where's the growth gonna come from? Yeah. I think, the Horizon team deserve a ton of credit for what they've done with that product. I mean, they've taken a condition that is severely debilitating for many patients with thyroid eye disease, where there was no treatment other than surgery, and they've turned it into a medically treated disease with a drug that has a demonstrable effect on symptoms. You know, kudos to the Horizon team for what they've done. You know, I won't go over the history, but we all know what happened there. I mean, they were disadvantaged by the IRA and some other things. They've weathered that extremely well during a pandemic. I think, where they're at now is investing to grow the brand. One thing just to think about TEPEZZA is the course of treatment has a fairly significant lag between intent to prescribe and when that first infusion occurs. A lot of the things that are happening in the market with the increase in investment in sales and marketing resources and some medical resources may take a while to flow through in the demand performance of the product. That's just something for everybody to keep in mind as they look at TEPEZZA. From our perspective, one of the things that we got really excited about was the international expansion of TEPEZZA. Horizon were building new affiliate structures while planning for launch. Now in, you know, a post-close world, the affiliate structure of Amgen exists. I mean, we're in over 100 markets, so we don't need to be building and launching at the same time. We just need to launch. We can expand perhaps the number of markets that we can go into from perhaps where Horizon is, and we might be able to speed some of that up. That's a major source of growth for TEPEZZA. Then it's about broadening the prescribing base and broadening the patient population that could take advantage of it. You know, they did a clinical activity cutoff point in their clinical trial that was that granted them an approval, but their indication statement is for thyroid eye disease. It doesn't specify the Clinical Activity Score. There's work that needs to be done, including their chronic trial. I think additional work in the market and with payers to show the benefit of treating more patients with perhaps lower Clinical Activity Scores who could benefit from thyroid eye disease. This Clinical Activity Score kind of takes what is a human condition and makes it numeric. These are people, even with low Clinical Activity Scores, that are miserable. Their eyes are itchy, they have some proptosis, they have some, visual acuity issues, and they really do need treatment. Surgery is not a good option for them when there's a medical treatment available. You know, we're very, very excited about TEPEZZA. As I said, I think we can build on the strong work already done by Horizon. Yeah. We're gonna stay on the M&A side. TAVNEOS, the first quarter, if I remember correctly, was kind of mid-teen, $17 million, if I remember correctly. Could be off just the last quarter that you reported. TAVNEOS has been ramping- You mean Q4. Q4, yeah. I meant the first quarter that you yearly reported sales. That number was actually fairly good. Is there anything that we need to think about inventory build replenishment, or was this organic growth? No, we've got good organic momentum on TAVNEOS. Super young launch, right? You know, the ChemoCentryx guys, I guess, again, did a very nice job in rheumatology, roughly a third of the ANCA-associated vasculitis patients get diagnosed and treated by nephrologists. They were just beginning to expand into that nephrology community. We have nephrology coverage. We've got broad rheumatology coverage. We are able to drive awareness of TAVNEOS both in rheumatology and in nephrology. I think you'll see an acceleration in the demand of that product. Really excited about that. There's also an opportunity to broaden the prescribing base here. It's an oral, doesn't require infusion infrastructure. It just requires knowledge of how to diagnose the disease and knowledge that there's now a therapy that could potentially alter the course of disease and reduce remission and perhaps reduce the glucocorticoid use, which is a big issue in the treatment of autoimmune disease like this. You know, we tend not to talk about the long-term effects of long-term treatment with drugs like prednisone, but if TAVNEOS can help there, we wanna make sure that patients have the opportunity to benefit from it. Can we talk about TEZSPIRE? You know, the $170 million first year was, you know, really encouraging. The feedback's been really strong. It was strong into the launch. Our survey work continues to be very strong. Good feedback here on the panel. Why is it going so well? If you looked at previous biologics, they were definitely more sluggish initially. I think severe uncontrolled asthma being treated with biologics has become a much better understood thing, and I think what you're seeing is the overall biologics category grow. I also think, you know, this is where you have to look at the strength of the partnership we have with AstraZeneca. You have two very large companies with a highly differentiated product and differentiated mechanism that can simplify the treatment of uncontrolled asthma. We're seeing, if you look at our revenues, roughly half of our revenues are coming from biologic-naive patients, so we are contributing to that expansion of the biologic class. Half are coming from other biologics that patients might have seen in their frontline treatment of severe uncontrolled asthma. Of the base of business we're getting, we're also seeing, yeah, we're getting slightly more low EOS and eosinophilic patients, but we're getting high EOS and eosinophilic patients as well. That means the message of you don't need to do the phenotypic workup, you don't need to worry whether it's allergic or whether it's low EOS, or high EOS. They're using TEZSPIRE in a broad array of patients. We have slightly more depth of prescribing in the allergist community. That's probably a function of it being a physician-administered product launch. We would expect the prescribing base to broaden now that we've launched the self-administered option. We're, we're super excited. you know, clearly launches were definitely slowed by the impact of COVID and access to physicians. I'm very proud of the Amgen and AstraZeneca teams that have been able to take this product out to our customers. Okay. Let's move to AMJEVITA. That product was launched about just about 5 weeks ago. Two different price points, right? 5%, 55%, you know, presumably to address the different structures of plans that PBMs wanna address. We're waiting for your interchangeability data soon. I believe it's coming this half or so. How fast can you then file and potentially launch that? When you're thinking about conversion in general from, you know, branded Humira this year, just given how plans are set up and the volume and the incentives related to price in next year, sort of a year into it, at that point, you have an interchangeable version. There's a lot more versions out there in general. At what point do we really see the conversion? A lot to unpack there. First off, when we launched AMJEVITA, we said that interchangeability was a nice to have, not a need to have. I think that that's still the case. We've secured broad access for AMJEVITA to the three large national PBMs. We're now working through pulling some of that access through in demand. The dual pricing structure, yes, it addresses the different customer types, but it also helps patients lower their out-of-pocket costs if they get the low list price prescribed. That was another benefit of why we chose that pricing strategy. Then we've got some integrated delivery networks who are very interested in converting from Humira to AMJEVITA. Overall, the launch is progressing according to internal expectations, so nothing to report yet on that. You'll hear more when we report on the quarter. When you think about this market, I would think about it in kind of three phases. I would think about it as, you know, the period of time where we're on our own in the market. The period of time post July when there are other competitors in the market, the period of time beginning in January of 2024. That's important because even though there are new biosimilars coming in middle of the year and may have the opportunity to contract for some access, the contracting cycle tends to be on an annual basis. I think we continue to believe that the description of our launch as being a gradual uptake is appropriate, and I think that, you know, we'll continue to work with clients and customers who are willing to drive biosimilar adoption on behalf of their patients. The overall interchangeability effect, I think eventually will become important in the U.S. as it is in some other markets around the world. non-medical switching or switching of patients without a physician involvement on a biologic today in the U.S. is not something that's happening all that much on the pharmacy benefit side. I think we decided it was important to have. We initiated the trial. As you said, we'll have data soon on that. But it augments an already very strong program. Last but not least, like Amgen's got, you know, over 40 years biologics manufacturing experience. We can supply the market. We're the leading form of adalimumab outside the U.S. We have the commercial infrastructure to pull it through at physician. We have the patient support structure to help support at the patient level. You know, we think we can compete effectively. Yeah. Any I imagine, and I don't know how much you can comment, you know, I recall one of the reasons back in the days to doing the Otezla deal is to go, obviously leverage exponential international expansion and the ability to then contract for the portfolio, right? Now you have Enbrel, you have AMJEVITA, and you have Otezla. Is that still an attractive package on a when you contract for access, or things are getting more complicated? It's always complicated. There are advantages to having depth in a portfolio because some PBMs want to restrict not just the number of products, but the number of manufacturers that they develop contracting relationships with. We're definitely at the table when it comes to those types of insurers and/or pharmacy benefit managers. I also think just there's a certain advantage to being in the market and having negotiations across multiple assets in a category 'cause you can cross-reference and see where trends are going with respect to gross to net. I think it helps you with strategy for your pipeline. Mm. It helps you then understand what are the development criteria that I need to share with Dave and his organization. David Reese, our head of R&D, and his organization, so we know what we're shooting for when we go to market. We did that with TEZSPIRE, right? We said, "Hey, you're gonna have to differentiate here." 'Cause if you go in there and you're not differentiated, you're gonna get a really difficult time trying to secure access... Mm. at a reasonable rebate rate. Mm. I think all of that helps. What are you seeing on Otezla? It's facing competition from SOTYKTU. It's still early in that launch, but then increasingly, you're beginning to see ZORYVE and VTAMA coming in too, you know, on the topical side with biologics-like activity. Yeah. I think it's important that you mention the new topical launches. We've been fortunate with Otezla in that the data have turned over well since we acquired that product. We got the mild data, mild to moderate data at the beginning or prior to last year, but we got the indication last year. Since then, we've been moving the positioning of the product to that post-topical first biologic, which Peter mentioned earlier. The beauty of that is it's a, it's a huge unaddressed population, right? You got roughly 4 million patients on topical treatment for their psoriasis. We would estimate about 1.5 million of those patients aren't going to get sufficient symptom relief for their psoriasis just on a topical. They're gonna need to add a systemic. Majority of those patients are cycling through topicals 'cause they don't wanna take a biologic. This is where Otezla, as the only systemic agent that's indicated for the treatment of psoriasis without regard to the severity of the disease, becomes the first systemic treatment option available that dermatologists can offer their patients. What's happening right now in the market? The two topicals are running free drug programs. SOTYKTU is running a free drug program. Dermatologists in general don't love treating psoriasis because they make more money and prefer to be doing things like BOTOX and electrolysis. For the patient who says, "Hey, you know, I'm not doing that well on my topical," that's when Otezla becomes a really good option for them. Our access helps reinforce that. Mm-hmm. We have broad coverage, major at the major PBMs, we have very few restrictions on that coverage. The utilization management criteria are relatively simple, in many cases, we don't have any utilization management criteria other than perhaps physician attestation. Really nice situation for Otezla. It is clear we've got a little bit of pressure on the business right now because of those free drug programs, there's a bit of switch away. The other thing to remember here with Otezla is roughly half of the patients who will try Otezla will not get the symptom relief they're looking for and will go on to other therapies. That's where we see the role of another oral, like SOTYKTU or even a biologic, as a post-Otezla treatment. That first systemic option of Otezla, I think, is really well-positioned. Okay, great. I was gonna talk about Stelara, because we're expecting interchangeability data, I believe this year, right? Even this half. You haven't said a lot about your launch timelines. I believe you can launch this year, but it's pending some potential litigation that's still ongoing with J&J. I don't know how much you can say about that, but whatever you can share. I think the simplest way to answer that question, Yaron, is we expect to be first or first wave in terms of a Stelara biosimilar launch. Okay. I believe the patents should have expired, the composition should have expired in May of this year. Am I in the right ballpark, but there's other logistical-? There are other things to consider, but we expect to be first or first wave launch. Again, here, the interchangeability data is coming afterwards. When we looked historically, and we just published this not too long ago, it's usually the first two launchers that really capture the lion's share of the market, right? Then there is always a share war and a price war that happens afterwards. They usually are the stick it to brand. Was that sort of the always the strategy, get there first again, even if you have to supplement with interchangeability later, you're not gonna lose that much share? Definitely. We feel that the most important criterion when reviewing biosimilar target opportunities is can we be first or in first wave? Very close to first or simultaneously first, if you will. That's a criterion that we apply to the strategy of our biosimilars business. I think where we've done that, we've been very successful, and we've established leadership. The other thing just to remember is the reason that the follow-on biosimilars have a tough time penetrating is most of the benefit is from the innovator to the biosimilar in terms of price advantage. Going from biosimilar to biosimilar doesn't yield you a large price advantage, but you still have to, if you're a healthcare provider or a network or a payer, you have to deploy resources to create that switching. The ROI on that effort isn't always that good. We call it switching costs. You even see it outside the US. Okay. What about the aflibercept, 2 milligrams? I think that's potentially launching in 2025. We saw some phase III data last year. There's gonna be another, I think, the full set of phase III data coming this half. I don't know what you could discuss on the data. What are we gonna get now that we didn't get last time? Look, for competitive reasons, we're not gonna comment on that. Again, we feel really confident in that program and we expect to be first or first wave. What about high-dose EYLEA? They filed a brand new BLA, which, you know, they're eligible for a 13-year protection for that 8-milligram formulation. What about the underlying composition on the aflibercept? Is that gonna get a whole new 13-year clock, or how do you think about that? You'd need to ask the innovator that question. We think that there's an opportunity for our biosimilar, and so that's what we're pursuing. Okay. An 8-milligram approval should not impact your ability to launch a biosimilar 2 milligram. We still think there's an attractive opportunity in the area. Okay. I think that you'll see more companies looking at strategies to develop new BLAs, so that shouldn't be a surprise. You know, some of those may be successful and many of them won't be. I guess my question is essentially, we can I guess there's a question of whether it's a new drug or it's really a new formulation, and there's a whole bunch of, you know, logistical considerations for that. Does that mean that you won't be able to launch another formulation for a 13-year clock or is it a question of just developing your own formulation and circumventing whatever patents they might have? There's complexity to every individual situation, so I'm not gonna comment on that one. I do think you'll see more companies considering strategies like you're seeing play out in the market because of the IRA and other things. I see. Okay. Any questions from the audience? If not, then let's talk in the last 2 minutes or so about the IRA. There are some puts and takes in the bill. It's highly complicated. It provides some incentives to developing biosimilars. The timing is critical. There's also this sort of catastrophic coverage. There's multiple facets to it. How do you view the IRA? I view the IRA as a wasted opportunity to help improve care for patients and to reduce the cost of medical treatment for patients. I think, you know, you've heard different members of our industry come out and say, you know, that there were a number of different things that happened in the IRA. Had they been passed on to patients, we would've understood it. Unfortunately, it's going to, you know, debt reduction and other parts of the government budget. Having said that, you know, this is a piece of legislation that I think Amgen is well-positioned to endure, if I can say that. We have predominantly a biologics-based business. We are in specialty areas. We have many products that are single orphan indication. I think, you know, we have the opportunity at Amgen to continue to run a very successful innovative company for many years to come. You know, the IRA will change some of the way in which we think. We will have to look at small molecule and biologic products and prioritize differently than we might have in the past because you have a 9-year period of exclusivity prior to a government selecting your product for a price reduction on the small molecule versus a large. I think the inflation caps are, you know, things that we can deal with. That's already impacting our business. That was in, as Peter said, that was in our consideration, our long-range guidance that we provided at the beginning of last year. When it comes to the biosimilar legislation, I think we can help CMS understand how to implement that in a way that doesn't disincentivize biosimilar drug development. We've engaged there, and we hope that they will listen to some of our ideas on that. Yeah, overall, it's a shame that it went down as it did. The catastrophic piece is something that you mentioned. I'm not sure that's well understood, Yaron, so that's probably, you know, another discussion another time, but the PBMs are likely to react to that, and it won't be in a way that helps patients. Yeah. Maybe just finally, Enbrel is obviously the most exposed product from 2026 onwards for negotiation. Of the roughly $4 billion, how much was Medicare facing with Enbrel? Very little. Yeah. It's predominantly commercial. Well, great. Peter and Murdo, thanks so much for joining us. Yaron, thank you. Appreciate it. Thank you, TD. Thank you, Cowen. Thank you. Great to see everybody. Be healthy. Thanks, everyone.