Amgen Q2 2023 Earnings Report

Amgen EPS Results

• Actual EPS: $5.00
• Consensus EPS: $4.44
• Beat/Miss: Beat by +$0.56
• One Year Ago EPS: $4.65

Amgen Revenue Results

• Actual Revenue: $7.00 billion
• Expected Revenue: $6.66 billion
• Beat/Miss: Beat by +$336.27 million
• YoY Revenue Growth: +6.20%

Amgen Announcement Details

• Quarter: Q2 2023
• Date: 8/3/2023
• Time: After Market Closes
• Conference Call Date: Thursday, August 3, 2023
• Conference Call Time: 4:30PM ET

Amgen (NASDAQ:AMGN) is a biotechnology company that discovers, develops, manufactures and delivers medicines for serious illnesses. Its research focuses on areas including oncology, cardiovascular disease, inflammation, bone health, nephrology and rare diseases. The company uses biologic research, genetics and other advanced technologies to develop treatments intended to address significant unmet medical needs.

Amgen’s medicines include Enbrel for certain inflammatory diseases; Prolia and Evenity for bone-related conditions; Xgeva for complications associated with cancer and bone disease; Repatha for cardiovascular risk reduction; Otezla for inflammatory conditions; and Aimovig for migraine prevention. Through its acquisition of Horizon Therapeutics, Amgen also added medicines such as Tepezza, Krystexxa and Uplizna to its portfolio.

Founded in 1980, Amgen is headquartered in Thousand Oaks, California, and serves patients and healthcare providers in the United States and international markets. The company’s products are distributed globally through healthcare systems, pharmacies and other channels. Robert A. Bradway has served as Amgen’s chairman and chief executive officer since 2012.

Amgen Q2 2023 Earnings Call Transcript

Key Takeaways

• Amgen delivered $7 billion in Q2 revenues, up 6% year-over-year, with record non-GAAP EPS of $5 (an 8% increase) and 11% global volume growth across all therapeutic areas and regions.
• Osteoporosis franchise Prolia achieved $1 billion in quarterly sales for the first time (up 11%), supported by real-world data showing a 36% hip-fracture risk reduction versus alendronate.
• Pipeline momentum remains strong with positive Phase 2 data for DLL3-targeting BiTE tarlatanab in relapsed small cell lung cancer and Phase 3 CodeBreaK-300 results showing lumacraft plus Vectibix significantly improved PFS in KRAS G12C colorectal cancer.
• The planned Horizon Therapeutics acquisition faces a U.S. FTC lawsuit, but Amgen expects to prevail in September court proceedings and still aims to close by mid-December.
• Otezla sales grew just 1% year-over-year, as patient demand is constrained by competitor free-drug programs for new topical and systemic psoriasis treatments through 2023.

Presentation

[Arvind Sood, VP of Investor Relations at Amgen]

Good afternoon, everyone, and welcome to our call to discuss our results for the second quarter. We continued down the path of strong unit volume growth during the quarter that led to an improved outlook for the rest of the year. This also sets the stage for growth longer term, augmented by some meaningful pipeline updates, particularly within oncology development. Our Chairman and CEO, Bob Bradway, will lead the call with some prepared remarks, followed by a broader review of our performance by other members of our leadership team. You should have received a link to our slides that we posted. Through the course of our discussion, we will make some forward-looking statements and use non-GAAP financial measures to describe our performance. Just a reminder that actual results can vary materially. With that, I would like to turn the call over to Bob. Bob?

[Bob Bradway, CEO at Amgen]

Okay, thank you for joining our call. It was an excellent quarter across the board for Amgen. One that demonstrates why we remain very confident about our ability to deliver attractive long-term growth in sales and earnings. We delivered $7 billion in quarterly revenue, up 6% from a year ago, along with record non-GAAP earnings per share of $5 a share, up 8% over the prior year. Volume growth globally was 11% in the quarter. That reflects all three of our therapeutic areas and all three of our geographic regions contributing to performance. For example, volume in our general medicine business grew by 21% in the quarter, while volume in our Asia Pacific region, which we have previously identified as a key source of growth for us, was up 46%.

[Bob Bradway, CEO at Amgen]

At a time of product shortages in the industry, our world-class manufacturing capabilities have enabled us to meet growing demand for our products and continue our long-standing tradition of serving every patient, every time. Nine of our medicines generated record sales in the quarter. This is consistent with my comments from our first quarter call in April when I said we see the potential for many of our currently marketed products to reach significantly more patients over time and to contribute substantially to our long-term growth. In April, I spoke about Repatha and the growing contribution it's making in the fight against cardiovascular disease. Today, I'll highlight Prolia, which achieved $1 billion in quarterly sales for the first time, up 11%.

[Bob Bradway, CEO at Amgen]

Prolia is one of the first biologics to be widely prescribed by primary care physicians to treat a chronic disease, something we expect to see replicated over time in other categories like cardiovascular disease. For all of Prolia's success, though, we know that osteoporosis remains an underdiagnosed and undertreated disease, placing millions of elderly women at risk for life-changing fractures. With recently generated real-world data, we've established that Prolia is superior to alendronate, the most frequently prescribed bisphosphonate treatment in the U.S., in reducing fractures, and not by a little, but by a lot. To give you one data point, in May, we announced that in a real-world study, Prolia reduced the risk of hip fracture by 36% compared to alendronate. That's superior.

[Bob Bradway, CEO at Amgen]

Prolia and EVENITY, which achieved 47% sales growth in the quarter, give us a powerful one-two punch against osteoporosis, a disease that will only become more prevalent as the world grows older. You'll hear more from Murdo shortly about our very strong commercial performance through the first half of 2023. We're seeing strong momentum in our pipeline, too. As you'll hear in detail from Dave Reese, we're sharing positive data today for our BiTE tarlatamab in small cell lung cancer and for LUMAKRAS in combination with Vectibix in colorectal cancer. We are especially excited about the tarlatamab readout, not only because of what it may mean for patients whose prognosis is otherwise exceptionally poor, but also because it adds to our growing conviction that bispecific T-cell engagers are an effective way to treat solid tumors as well as liquid tumors, as we have demonstrated with BLINCYTO.

[Bob Bradway, CEO at Amgen]

Elsewhere in our pipeline, we continue to advance registration-enabling trials for several potential new first-in-class medicines, including olpasiran in heart disease, rocatinlimab in atopic dermatitis, and of course, bemarituzumab in gastric cancer. We look forward to additional readouts from our pipeline in the second half of the year. Turning to our planned acquisition of Horizon Therapeutics, we remain very enthusiastic about what our companies can achieve together for patients suffering from rare, serious diseases. Horizon has certainly accomplished a great deal as an independent company. Amgen's global commercial manufacturing and R&D capabilities, especially for biologic products, will enable Horizon's medicines to reach even more patients more quickly than Horizon could have achieved on its own. As you know, this combination has been approved by regulators around the world, with the exception of the Federal Trade Commission in the United States.

[Bob Bradway, CEO at Amgen]

The FTC's arguments in this case are based on speculation and hypothetical notions. Their arguments are not grounded in long-established antitrust law. Notwithstanding that, in choosing to pursue this case, they've ignored the commitments we made to address their stated concerns. The life-changing medicines that Amgen and Horizon offer treat different diseases and different patient populations. Simply put, there are no competitive overlaps and no incentives to bundle our drugs with theirs. We look forward to making our case in court in September, and I'll confident rather, that we will prevail. In the meantime, we're working closely on integration plans with Horizon so we can hit the ground running by mid-December, which is when we anticipate being able to close the deal. Let me just reiterate one more point before I hand over to Murdo, Murdo.

[Bob Bradway, CEO at Amgen]

As the second quarter illustrates, Amgen's business is performing very well, and our organic outlook for growth is strong. Adding Horizon will serve to enhance our growth prospects even further. Let me close by thanking my Amgen colleagues around the world for their unwavering commitment to patients and to our business. We're excited about the future and our ability to serve many, many more patients than we do today. Murdo?

[Murdo Gordon, EVP of Global Commercial Operations at Amgen]

Thanks, Bob. I'm very pleased with our performance in the second quarter, fueled by a commitment to deliver on our mission to bring innovative products to millions of patients globally. Execution is strong across the business, with record quarterly sales for nine brands and robust volume growth across our General Medicine, Inflammation, and Hematology Oncology portfolios. Excluding the impact of foreign exchange, second quarter global product sales grew 8% year-over-year. Including the impact of foreign exchange, product sales increased 6% year-over-year. Volume growth was 11%, with strength across our regions. U.S. volume growth was 9%, volume growth in our Europe, Latin America, Middle East, and Canada region was 8%. Consistent with our international expansion strategy, Asia Pacific continues to be our fastest-growing region, with 46% volume growth in the quarter.

[Murdo Gordon, EVP of Global Commercial Operations at Amgen]

Starting with our General Medicines business, which includes Repatha, Prolia, EVENITY, and Aimovig. Overall revenue for these four products grew 19% year-over-year in the second quarter, driven by 21% volume growth. Cardiovascular disease is a growing public health crisis, and the state of care for high-risk ASCVD patients with elevated LDL cholesterol is poor. Family Heart, the real-world analysis of 38 million high-risk Americans, revealed that fewer than 30% of them ever reach their recommended LDL levels. This is a clear call to action that lowering LDL cholesterol as much and as early as possible with Repatha will reduce cardiovascular risk for patients. So to meet this need, Amgen is committed to improving patients' ease of access and affordability. To date, we have best-in-class formulary coverage for Repatha, helping 90% of eligible U.S. patients gain access to this important medicine.

[Murdo Gordon, EVP of Global Commercial Operations at Amgen]

Improved access is enabling broad adoption of Repatha by cardiologists and increasing adoption by primary care providers. This has set the stage for growth for Repatha sales, which increased 30% year-over-year to a record $424 million in the second quarter. In the U.S., volume growth of 34% was driven by a record number of new patients starting treatment. Outside the U.S., we saw 37% volume growth, with momentum across our regions. We recognize there are still many more patients around the world who can benefit from Repatha, and to meet that challenge, we are increasing investment to intensify our engagement with healthcare providers, bring our message directly to patients through direct-to-consumer media, and drive urgency around LDL-C testing and adherence to treatment guidelines.

[Murdo Gordon, EVP of Global Commercial Operations at Amgen]

Transitioning to Bone Health, Prolia sales grew 11% year-over-year to a record $1 billion in the second quarter, driven by 11% volume growth. As Dave will discuss in more detail, new real-world evidence data presented at the World Congress on Osteoporosis in May, demonstrates that Prolia significantly reduces fracture risk across multiple endpoints when compared to alendronate. Our sales teams are now equipped with these data and are actively helping physicians understand the superior ability of Prolia to reduce the risk of fracture for their osteoporosis patients. EVENITY, which complements Prolia in our bone portfolio, had record sales of $281 million for the quarter, driven by strong volume growth across markets. In Japan, EVENITY has achieved a 42% share of the growing bone builder market, steadily increasing performance versus competitors, and increasing initiation for naive patients.

[Murdo Gordon, EVP of Global Commercial Operations at Amgen]

EVENITY sales are now annualizing at over $1 billion. Given the severe impact of fractures on the lives of women who are postmenopausal, our success in Japan, the first launch market for EVENITY, enhances our confidence in the significant growth potential through this decade. Otezla sales increased 1% year-over-year, driven by 2% volume growth. Otezla remains the only approved oral systemic therapy with a broad indication and is well-positioned to help the more than 1.5 million systemic naive U.S. patients with milder psoriasis that cannot be optimally addressed by a topical treatment and can benefit from a systemic drug like Otezla. Our U.S. Otezla business has been impacted by free drug programs for newly launched topical and systemic competitors, and we expect new patient demand will continue to be affected by these programs for the remainder of 2023.

[Murdo Gordon, EVP of Global Commercial Operations at Amgen]

Despite this, we see a compelling opportunity to invest in growth of Otezla and to drive increased awareness amongst physicians and patients. We're confident in the growth potential of Otezla, given its unique combination of established efficacy and safety profile, broad payer coverage with limited prior authorization requirements, and a lack of testing required for initiation, and of course, ease of administration. Enbrel sales grew 84% quarter-over-quarter, following the seasonal impact on price and large drawdown of inventory during the first quarter in the U.S. Year-over-year, Enbrel sales increased 2%, driven by favorable changes to estimated sales deductions and higher net selling price, partially offset by lower inventory levels. Although year-over-year volume was flat in the second quarter, the number of new patients in the U.S. starting treatment increased by 6%, driven by improved payer coverage.

[Murdo Gordon, EVP of Global Commercial Operations at Amgen]

For the remainder of 2023, we expect this improved coverage will lead to continued growth in new patients. We also expect declining net selling price on a full year basis. TEZSPIRE continues to show robust growth, with $133 million in sales in the second quarter. Sales increased 39% sequentially, driven by 37% volume growth that benefited from the introduction of our self-administered, prefilled, single-use pen, approved by the U.S. Food and Drug Administration in the first quarter. The pen offers patients a convenient option to administer TEZSPIRE at home, which improves accessibility and provides more flexibility in treatment options for all patients in the U.S. with severe uncontrolled asthma. Sales of TAVNEOS were $30 million in the second quarter. U.S. volumes grew 28% quarter-over-quarter, driven by an increase in new patients starting treatment.

[Murdo Gordon, EVP of Global Commercial Operations at Amgen]

In the U.S., approximately 2,000 patients have now been treated with TAVNEOS by over 1,300 healthcare providers. Looking forward, Amgen's deep experience in inflammation and nephrology and substantial market presence will allow us to bring TAVNEOS to even more patients with ANCA-associated vasculitis. AMGEVITA sales increased 29% year-over-year for the second quarter, driven by 60% volume growth, partially offset by lower inventory levels and net selling price. U.S. sales decreased 63% sequentially, driven by inventory drawdowns after stocking to support the launch in the first quarter, partially offset by volume growth. Moving to our Hematology and Oncology business, which includes LUMAKRAS, KYPROLIS, XGEVA, Vectibix, Nplate, and BLINCYTO. Strong commercial execution and exciting new clinical data drove 12% volume growth year-over-year for these six innovative products.

[Murdo Gordon, EVP of Global Commercial Operations at Amgen]

BLINCYTO sales grew 48% year-over-year, with adoption across academic, community, and pediatric centers, following positive data from the registration-enabling E1910 study presented in December of 2022, and updated NCCN guidelines that were issued in May. Both the positive data and the updated guidelines support our confidence in the continued growth potential for BLINCYTO. Vectibix sales increased 20% year-over-year for the second quarter, driven by 20% volume growth, supported by promotional positive data from the phase III PARADIGM trial, demonstrating the superiority of Vectibix over bevacizumab in combination with chemotherapy for patients with wild-type RAS colorectal cancer. KYPROLIS grew 9% year-over-year, driven by 15% volume growth, partially offset by lower net selling price. LUMAKRAS reported $77 million of sales for the second quarter.

[Murdo Gordon, EVP of Global Commercial Operations at Amgen]

Year-over-year sales were flat in the quarter as 20% volume growth was offset by lower net selling price and inventory levels. We see future growth opportunity for LUMAKRAS, driven by launches in new markets and our comprehensive global clinical development program. Our execution is strong across the business, driving growth and exemplifying our dedication to serving patients. With the announced acquisition of Horizon Therapeutics, we have the potential to serve many more patients who can benefit from our decades of leadership in inflammation and nephrology. With that, I'll turn it over to Dave Reese.

[Dave Reese, EVP of Research and Development at Amgen]

Thanks, Murdo. Good afternoon, everyone. For R&D, the second quarter was one of high-quality execution as we progressed our innovative pipeline with two important data readouts, multiple registration-enabling studies on track, and additional exciting data coming later this year. Beginning with oncology, we are exceptionally pleased to announce positive top-line results from the global phase II DeLLphi-301 trial, evaluating tarlatamab, a first-in-class DLL3-targeting BiTE molecule in patients with relapsed or refractory small cell lung cancer that progressed after two or more prior lines of treatment. tarlatamab demonstrated an objective response rate, the primary endpoint, that substantially exceeds what was previously reported in the phase I study. Responses were durable and longer than what is expected with standard of care chemotherapy. Safety and tolerability were also more favorable compared to the phase I study.

[Dave Reese, EVP of Research and Development at Amgen]

This is the first time that a bispecific T-cell engager has shown unequivocal activity in a common solid tumor, a real milestone in the field. We look forward to discussing these data soon with the FDA and other regulatory agencies, and presenting detailed results of this potentially registrational phase II study at an upcoming medical congress. Based on the data we have observed, we are moving tarlatamab into earlier lines of therapy with DeLLphi-304, a phase III study underway comparing tarlatamab with standard of care chemotherapy in second-line small cell lung cancer. We are also planning to initiate two additional phase III studies of tarlatamab in earlier lines of small cell lung cancer. From my personal vantage point as an oncologist, I believe this molecule can be transformative and can't wait to share these data with the field.

[Dave Reese, EVP of Research and Development at Amgen]

Turning to LUMAKRAS, we continue to execute on our comprehensive clinical program designed to generate the breadth of data necessary to understand KRAS biology and the role LUMAKRAS can play in non-small cell lung cancer, colorectal cancer, and other solid tumors. We are delighted to announce that the global phase III CodeBreaK 300 trial, evaluating LUMAKRAS combined with Vectibix in chemo-refractory metastatic KRAS G12C mutated colorectal cancer, met its primary endpoint of progression-free survival for both the 240 mg and 960 mg doses. At comparable doses, efficacy results were consistent with what was previously observed in this setting, with no new safety signals. We look forward to sharing these results with global health authorities and presenting the detailed results at an upcoming medical congress.

[Dave Reese, EVP of Research and Development at Amgen]

The FDA recently granted Breakthrough Therapy designation to LUMAKRAS in combination with Vectibix for the treatment of patients with metastatic KRAS G12C mutated colorectal cancer, as determined by an FDA-approved test, who have received prior chemotherapy based on data from the prior CodeBreaK 101 study. Beyond these data, we continue to explore novel combinations as we seek to move LUMAKRAS into the first-line setting. Recently presented data from the SCARLET study provide the rationale to initiate a phase III trial of LUMAKRAS combined with chemotherapy in first-line non-small cell lung cancer patients with PD-L1 negative tumors. Phase I-B data in combination with Vectibix and chemotherapy support the initiation of a phase III study of LUMAKRAS with Vectibix and FOLFIRI in first-line G12C mutated colorectal cancer.

[Dave Reese, EVP of Research and Development at Amgen]

In June, the FDA approved a supplemental Biologics License Application for BLINCYTO for the treatment of adults and pediatric patients with CD19 positive B-cell precursor acute lymphoblastic leukemia in first or second complete remission, with minimal residual disease greater than or equal to 0.1%. The approval converts BLINCYTO's accelerated approval to a full approval. Global regulatory submissions are on track for E1910, a phase III trial conducted by the National Cancer Institute, Eastern Cooperative Oncology Group, and the American College of Radiology Imaging Network Cancer Research Group, that demonstrated superior overall survival with BLINCYTO treatment added to consolidation chemotherapy over standard of care consolidation chemotherapy in newly diagnosed adult patients with Philadelphia chromosome-negative ALL, who are MRD negative following induction and con intensification chemotherapy. Three important updates were made to the National Comprehensive Cancer Network clinical practice guidelines in oncology in B-cell ALL.

[Dave Reese, EVP of Research and Development at Amgen]

These included listing the BLINCYTO E1910 regimen as the only preferred regimen for the first-line treatment of Philadelphia-negative adult patients, adding BLINCYTO to multi-agent chemotherapy as consolidation in MRD negative disease, and lastly, moving BLINCYTO in combination with a tyrosine kinase inhibitor to the top of the treatment algorithm for MRD negative Philadelphia-positive disease. In April, data were published in The New England Journal of Medicine demonstrating that BLINCYTO added to chemotherapy improved two-year survival in KMT2A rearranged B-ALL in infants compared to historical data. BLINCYTO two-year survival was 93% versus 66% for chemotherapy alone. If you look at the totality of the data, it is clear that BLINCYTO is changing the paradigm for the treatment of B-cell ALL in late-stage disease, in early disease, in young patients, and in older patients.

[Dave Reese, EVP of Research and Development at Amgen]

We remain excited about its future potential and are focused on further investigating BLINCYTO in earlier lines of treatment and improving patient convenience through subcutaneous administration. As the first BiTE, BLINCYTO also provides a roadmap for the development of molecules such as Tarlatamab, which could have an enhanced activity in settings of lower tumor burden. Two additional early oncology programs to watch are xaluritamig and AMG 193. xaluritamig is a first-in-class STEAP1 targeting bispecific being studied in advanced prostate cancer, where STEAP1 is expressed on almost all tumor cells. We are observing significant antitumor activity with this molecule and are rapidly enrolling dose expansion cohorts. xaluritamig provides another example of a bispecific T-cell engager demonstrating activity in a solid tumor setting. AMG 193 is a first-in-class, small molecule, MTA-cooperative PRMT5 inhibitor being studied in patients with advanced MTAP-null solid tumors.

[Dave Reese, EVP of Research and Development at Amgen]

The overexpression of PRMT5 in the absence of MTAP leads to the accumulation of MTA. We leverage this biology in the unique design of AMG 193, which requires the presence of MTA to effectively inhibit PRMT5. Alterations in this pathway occur in approximately 15% of solid tumors, are often associated with a poor prognosis, and historically have been very hard to drug. We are currently enrolling a phase I-B/II study of AMG 193, and while it is early, we are encouraged by the antitumor responses we've observed in multiple tumor types. We look forward to sharing data from both xaluritamig and AMG 193 this fall. In general medicine, we are advancing our cardiovascular franchise and emerging portfolio of obesity molecules with a focus on clinical trial execution.

[Dave Reese, EVP of Research and Development at Amgen]

A phase III outcome study of olpasiran, our potentially best-in-class Lp(a) targeting siRNA molecule and atherosclerotic cardiovascular disease, is enrolling well, as is a phase II study of maridebart cafraglutide, formerly known as AMG 133, in patients with obesity, with or without diabetes and related comorbidities. The goal of the phase II study is to generate data that will provide broad optionality to design a phase III program, leveraging the unique properties of maridebart cafraglutide that will deliver strong, sustainable weight loss. In May, as mentioned, we presented data from a real-world study of nearly half of a million postmenopausal women with osteoporosis in the United States Medicare program, showing Prolia's substantially reduced fracture risk in patients versus oral alendronate. In addition, the same study showed that longer duration of Prolia treatment was associated with a greater reduction in major osteoporotic fracture risk.

[Dave Reese, EVP of Research and Development at Amgen]

These data are a great demonstration of the importance of Prolia in treating postmenopausal osteoporosis and the ability to study treatment effects in large patient populations using real-world evidence. In inflammation, beyond severe asthma, we are investigating multiple additional indications with TEZSPIRE, including separate phase III studies in chronic rhinosinusitis with nasal polyps and eosinophilic esophagitis. We also have two phase II studies, one in chronic spontaneous urticaria and the other in COPD. The CSU study is complete, with top-line data anticipated imminently. The COPD trial is fully enrolled and has recruited a broad population of COPD patients, including patients with both high and low eosinophil counts. We look forward to the readout of this study in the first half of 2024. Rocatinlimab, a first-in-class anti-OX40 monoclonal antibody, being investigated in patients with moderate to severe atopic dermatitis.

[Dave Reese, EVP of Research and Development at Amgen]

Recruitment is off to a strong start on the ROCKET phase III clinical development program. We are also planning to initiate a phase II study in moderate to severe uncontrolled asthma, as we explore rocatinlimab in this additional indication. Rounding out the clinical summary, we've continued to execute both on time and on budget with our biosimilars portfolio, including the recent initiation of a pivotal study evaluating the pharmacokinetic similarity of ABP 206 compared with Opdivo, one of six planned new biosimilars. In closing, I'd like to highlight a recently announced collaboration with TScan Therapeutics. This is a multi-year collaboration that will use TScan's proprietary target discovery platform, TargetScan, to identify the antigens recognized by T cells in patients with Crohn's disease and represents a novel approach to investigating this tough-to-treat illness.

[Dave Reese, EVP of Research and Development at Amgen]

I'd like to thank Amgen staff around the world for their relentless focus on execution as we work hard to meet the needs of the patients we serve. I'll now turn it over to Peter.

[Peter Griffith, EVP of Finance and CFO at Amgen]

Thank you, Dave. We're pleased with our strong second quarter performance, growing volumes by 11%, increasing investment in research and development, and delivering 8% year-over-year non-GAAP EPS growth. This drives our confidence in delivering against our 2023 objectives and keeps us in position to meet or beat our longer-term commitments. I'll review our second quarter results before discussing our 2023 guidance. As a reminder, these results and outlook reflect Amgen on a standalone basis without any adjustments for the announced Horizon acquisition. Turning to our second quarter financial results, which are shown on slide 41, total revenues of $7.0 billion grew 6% year-over-year and represent the highest quarterly revenues in Amgen's history. Product sales increased 8%, while total revenues increased 7% year-over-year, excluding the negative impact of foreign exchange rates.

[Peter Griffith, EVP of Finance and CFO at Amgen]

Second quarter total non-GAAP operating expenses increased 7% year-over-year. We invested in and advanced our pipeline and accelerated growth across our priority marketed products, while delivering a non-GAAP operating margin as a percent of product sales of 52.6%, demonstrating expense discipline. Non-GAAP R&D spend in the quarter increased 7% year-over-year, reflecting growing investments in our pipeline, driven by higher spending on late-stage programs and marketed product support. Non-GAAP cost of sales as a percent of product sales increased 2.4 percentage points on a year-over-year basis to 17.1%, primarily driven by higher profit shares and a changes in product mix. Non-GAAP SG&A expenses in the second quarter decreased 6% year-over-year.

[Peter Griffith, EVP of Finance and CFO at Amgen]

We continue to focus on our continuous improvement operating model, prioritizing investments, digitalization, and driving productivity, and beginning, and in other cases, continuing what we have already started historically to execute in any number of uses of artificial intelligence. Non-GAAP other income and expenses were a net $307 million expense in the second quarter. This year-over-year favorability was driven primarily by the change in BeiGene accounting from equity methods to a mark-to-market investment, with the impact included only in our GAAP results. As expected, our second quarter non-GAAP tax rate increased 1.7 percentage points to 16.4%, primarily due to the 2022 Puerto Rico tax law change that replaced the excise tax with an income tax beginning in 2023. We continue to execute on our capital allocation priorities.

[Peter Griffith, EVP of Finance and CFO at Amgen]

We continue our priority investments in the best innovation, both internal and external innovation. In Q2, we drove higher spend in late-stage programs such as AMG 133 and olpasiran, as well as support for our marketed products, including TAVNEOS. We continue investing in our business. Capital expenditures are at near peak levels, driven by simultaneous construction of our state-of-the-art manufacturing facilities in Ohio and North Carolina. We expect our annual capital expenditures to begin to decline starting in 2024, with the completion and licensing of our Ohio plant, capital expenditures will then begin to return closer to historical levels, levels over the coming years. We plan to continue to return capital to our shareholders. We paid dividends of $2.13 per share in the second quarter, representing a 10% increase over the second quarter of 2022.

[Peter Griffith, EVP of Finance and CFO at Amgen]

The company generated $3.8 billion of free cash flow in the second quarter of 2023 versus $1.7 billion in the second quarter of 2022, primarily driven by the timing of tax payments and includes higher interest income and higher operating income. We expect strong cash flow for the remainder of the year, consistent with our full year 2023 financial outlook, that includes a non-GAAP operating margin of roughly 50%. Now turning to the outlook for the business for 2023 on Slide 43. Our guidance is currently provided on the Amgen standalone business and does not include any Horizon projections. As the Horizon transaction is expected to close by mid-December, resulting contributions from Horizon would be included after that period.

[Peter Griffith, EVP of Finance and CFO at Amgen]

Given our strong performance, we are raising our 2023 revenue guidance to $26.6 billion-$27.4 billion, versus previous guidance of $26.2 billion-$27.3 billion. Although our results give us confidence to raise our full year guidance, we expect the third quarter sales may be lower compared to the second quarter due to the impact of the Medicare donut hole, which is more pronounced in the second half of the year, and also to certain favorable changes to estimated sales deductions in the second quarter. Regarding our non-GAAP earnings per share guidance, we intend to increase investments in our internal innovation and priority marketed products from a position of strength, given the acceleration in our business and our pipeline.

[Peter Griffith, EVP of Finance and CFO at Amgen]

Reflecting our improved revenue outlook, along with our investment plans, we are revising our non-GAAP EPS guidance to $17.80-$18.80, versus previous guidance of $17.60-$18.70. Again, although our results give us confidence to raise our full-year non-GAAP EPS, we expect Q3 non-GAAP EPS to be lower compared to the Q2, resulting from the expected Q3 sales and our investments in the business. Important additional points to consider as you model the remainder of 2023. We now project full-year Neulasta sales of approximately $800 million and full-year combined KANJINTI and AMGEVITA sales of approximately $900 million.

[Peter Griffith, EVP of Finance and CFO at Amgen]

We now expect other revenue for 2023 to be in the range of $1.1 billion-$1.3 billion, versus our prior range of $1.2 billion-$1.5 billion. Note that our third quarter 2022 results included about $90 million of other revenue related to our COVID antibody manufacturing agreement and the milestone we earned that we do not expect to repeat in the third quarter of 2023. We anticipate full year non-GAAP operating expense for 2023 to increase by closer to 3% versus last year, compared to our previous estimate of a 1% increase, with higher cost of sales from projected increased sales, additional investments driving our innovative pipeline, and increased support for our growing priority marketed products, including Repatha and Otezla.

[Peter Griffith, EVP of Finance and CFO at Amgen]

We continue to expect the full year 2023 operating margin as a percentage of product sales to be roughly 50%, although will vary in each of the remaining two quarters. We continue to expect non-GAAP cost of sales as a percentage of product sales to be between 16% and 17%. We now expect our non-GAAP R&D expenses in 2023 to increase about 5% year-over-year, which is higher than our prior guidance of 3%-4%. We continue to expect non-GAAP SG&A spend to be slightly down year-over-year as a percentage of product sales. We now expect non-GAAP other income and expenses to be in the range of $1.1 billion-$1.2 billion, down from the prior guidance of $1.2 billion-$1.3 billion.

[Peter Griffith, EVP of Finance and CFO at Amgen]

For the full year, we anticipate a non-GAAP tax rate of 17.5%-18.5%, down from prior guidance of 18.0%-19.0%. We expect Q3's tax rate to be near the upper end of the revised range of 17.5%-18.5%. Our capital expenditure guidance remains unchanged at approximately $925 million in 2023.

[Peter Griffith, EVP of Finance and CFO at Amgen]

Our confidence is strong in the long-term outlook and long-term growth for Amgen. We look forward to completing the announced acquisition of Horizon by mid-December, as Bob indicated. I'm incredibly grateful to our 24,000 plus colleagues for successfully executing on our mission of serving patients in the second quarter and beyond. This concludes the financial update. I'll turn it over to Bob for Q&A.

[Bob Bradway, CEO at Amgen]

Okay. Thank you, Peter. Now we'll open the line for callers so they can ask questions, and I just ask our operator to remind you of the procedures for doing that, please.

[Operator]

Thank you. If you would like to ask a question, please press star, followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by one. Again, to ask a question, please press star one. Our first question comes from Mohit Bansal from Wells Fargo. Please go ahead. Your line is open.

[Mohit Bansal, Managing Director and Co-Head of Therapeutics Research at Wells Fargo]

Great. Thank you very much for taking my question, and congrats on the quarter. Maybe one, one question on, one question on OX40. There are some concerns, and people are talking about the, the safety of OX40. Like, one, like one concern is regarding the autoimmune phenomena, and I'm reading some literature and suggest that in OX40, lacking OX40 animal models, there is a, there is an impairment of interferon-γ. Just trying to understand how are you managing that risk in this particular drug? And how... autoimmune phenomena, is it, is it a concern at all there? Thank you.

[Dave Reese, EVP of Research and Development at Amgen]

Yeah, thanks, Mohit. This is, Dave. We're aware, aware of those conversations. What I can tell you is that, you know, let me approach your question in two parts. You know, one, mechanistically, OX40 is primarily expressed on activated, T cells and activated pathogenic T cells in the setting, of atopic dermatitis. In the phase II program, we did not observe autoimmune phenomena. Obviously, this is something we are tracking, we have no clinical signal, or indication, of such concerns at this time. Likewise, y-your question regarding, interferon-γ would, would, you know, imply risk, for example, for infections. That's also something that, that we did not see, at a, greater rate, in treated patients than, placebo in the, phase II program.

[Dave Reese, EVP of Research and Development at Amgen]

These are things that, that we will follow. They're followed routinely for almost all cytokine, inhibition programs, but to date, we have not had a signal.

[Operator]

Thank you, Mohit. Our next question comes from Michael Yee from Jefferies. Please go ahead. Your line is open.

[Michael Yee, Managing Director and Senior Biotechnology Analyst at Jefferies]

Hey, guys. Thanks for the question. You know, Bob commented about the enthusiasm for the Horizon deal. I know in general, there's a lot of uncertainty in the, in the TED market going on with sales. Can you maybe just describe your ongoing confidence with what you think is going on in the TED market, why you're excited about this, and your confidence around regrowing this business? Have you been in discussions or at least aware of the ongoing dynamics, or at least an ongoing dialogue with the, with the company about the market for TED? Thank you.

[Bob Bradway, CEO at Amgen]

Yeah, sure, Mike. We've answered in two parts. Maybe I'll kick it over to Murdo in a moment, but let me just reiterate that we remain very excited, and of course, we're watching carefully developments in the marketplace and talking as appropriate with our friends at Horizon about, about that. Again, based on our view of the clinical data and our view of the international opportunities and ability to expand the reach of the product, you know, we're, we're very excited about what we think we can do there. Myrtle, why don't you elaborate further?

[Murdo Gordon, EVP of Global Commercial Operations at Amgen]

Yeah. From, from our vantage point, Mike, what we see is strong execution by the Horizon team in the U.S., and there are several catalysts for growth here. They've already expanded their commercial footprint, and so that should start to take traction. They have the data now for the low CAS patient population, with the positive results from that trial in public domain, not yet published, but in public domain, having been presented and in hand with their sales forces. That's very recent and not reflected necessarily in their historical performance. Bob mentioned the international market launches. We, we continue to believe post-close, we will be able to help accelerate the work being done there.

[Murdo Gordon, EVP of Global Commercial Operations at Amgen]

We're also seeing some improved medical policies being issued prior to the new calendar year, and so that's very encouraging to see payers improve or remove restrictions, I should say, on the use of TEPEZZA for the lower CAS patient population. There are many good catalysts, and what I see is Horizon systematically unlocking those additional opportunities for growth, and we remain quite bullish on TEPEZZA's utility across a very large population of thyroid eye disease patients who would benefit from that treatment, given the clinical data. The last thing I should mention on TEPEZZA is they also were able to replicate the low CAS population results in OPTIC-J. In their OPTIC-J trial, sorry, their not the low CAS, but the registrational data for thyroid eye disease in OPTIC-J.

[Murdo Gordon, EVP of Global Commercial Operations at Amgen]

That sets them up well for future potential launch in Japan. Really good data flow, really good execution and investment and focus here. Look, beyond TEPEZZA, we also remain very, very excited about their other two large in-line brands with Krystexxa and obviously UPLIZNA. Overall, we remain excited and confident that the two companies working together on this really strong portfolio will be a good, a good parent.

[Operator]

Thank you, Michael. Our next question comes from Salveen Richter from Goldman Sachs. Please go ahead. Your line is open.

[Salveen Richter, Biotechnology Equity Research Analyst at Goldman Sachs]

Good afternoon. Thanks for taking my question. Could you put the top line phase II data for tarlatamab in small cell lung cancer into context for us and, and share any more details on the, on the profile? In particular, how does this compare to the phase I data, where you had a confirmed objective response rate of 23% and a median duration of response of 13 months? I think you noted it substantially exceeds the phase I results. Thank you.

[Dave Reese, EVP of Research and Development at Amgen]

Yes, Salveen, thanks for the question. Very, very excited about this molecule. If you step back, you know, I, I think it, it, it represents, you know, what we had hoped to see in the BiTE platform, and, you know, substantial clinical effects in a major solid tumor. To put the data in the context in comparison to phase I, as noted, we substantially exceeded the 23% response rate that we reported in phase I. You know, we are, we are planning to present these data at a fall, you know, conference on, on bargained in term. You know, of course, in terms of providing more specifics. I, I can tell you that I couldn't be more pleased with the response rate data, the duration of response, and overall survival.

[Dave Reese, EVP of Research and Development at Amgen]

For context, in patients with small, small cell lung cancer in the third line, response rates are typically, you know, well under 50%, but importantly, they are vanishingly brief, in most instances, often, a matter of weeks, or a few months. So, you know, based on what we're observing, I think we really have a chance to change the natural history of this disease, particularly as we march towards earlier lines of therapy, where the activity of the BiTE in a lower tumor disease burden setting, should be enhanced, as we have observed, with BLINCYTO. So all of our efforts now are focused on executing, earlier line trials.

[Dave Reese, EVP of Research and Development at Amgen]

You know, this is one to, I think, pay attention to, as we go forward, and we're really looking forward to presenting these results this fall.

[Bob Bradway, CEO at Amgen]

Dave, do you want to say anything about safety? Obviously, you're involved-

[Dave Reese, EVP of Research and Development at Amgen]

In terms of the safety, you know, I think we have learned a lot in the development program about the clinical management here. We're quite pleased with the, the rates of, you know, principal side effects like cytokine release syndrome. And we'll look forward to sharing those details as well when we present the data this fall. Exceptionally happy with the tolerability and safety profile as well.

[Operator]

Thank you, Salveen. Our next question comes from Jay Olson from Oppenheimer. Please go ahead. Your line is open.

[Jay Olson, Managing Director and Senior Analyst covering Biotechnology at Oppenheimer]

Oh, hey, congrats on the quarter, and especially the tarlatamab and LUMAKRAS results. Happy birthday to Arvind.

[Arvind Sood, VP of Investor Relations at Amgen]

Uh-uh.

[Jay Olson, Managing Director and Senior Analyst covering Biotechnology at Oppenheimer]

For LUMAKRAS... Absolutely.

[Arvind Sood, VP of Investor Relations at Amgen]

Thank you.

[Jay Olson, Managing Director and Senior Analyst covering Biotechnology at Oppenheimer]

For the LUMAKRAS phase III in, in colorectal cancer, can you just talk about the, the filing strategy and timeline and, and maybe a little bit about the market opportunity in, in CRC for LUMAKRAS? Thank you.

[Dave Reese, EVP of Research and Development at Amgen]

Yeah, you know, in regards, you know, this is obviously a smaller patient population. About 4% of colorectal cancers harbor the G12C mutation. In terms of next steps here, our plans are to, you know, have discussions with the FDA and other regulatory authorities on the phase III data. As those conversations unfold, I'll provide guidance about the potential regulatory pathway. Then, as I mentioned, you know, based on the strength of these data and phase Ib data in the first-line setting, using a Vectibix chemotherapy, LUMAKRAS combination, we are also advancing...

[Jay Olson, Managing Director and Senior Analyst covering Biotechnology at Oppenheimer]

Yeah

[Dave Reese, EVP of Research and Development at Amgen]

... a phase III trial in, first-line disease. I, I think it's full steam ahead in colorectal cancer as well. Again, I'll give guidance, about next steps as we've had the appropriate conversations.

[Operator]

Thank you, Jay. Our next question comes from Chris Raymond from Piper Sandler. Please go ahead. Your line is open.

[Chris Raymond, Managing Director and Senior Biotech Analyst at Piper Sandler]

Thanks, and warm birthday wishes to Arvind from, from us here at Piper as well. Just a question on AMGEVITA. You know, obviously the uptake in the, in the U.S. has, you know, not been maybe what was originally sort of contemplated, you know, when you guys were first talking about that opportunity. Maybe a couple questions. Can you, can you maybe talk about, first, maybe the split in scripts between the high and low priced SKU? Then second, maybe there's, there's been a lot of talk around what AbbVie has done, you know, to sort of blunt uptake, you know, biosimilars to date.

[Chris Raymond, Managing Director and Senior Biotech Analyst at Piper Sandler]

You know, what, if anything, on their, on their part, has surprised you guys maybe the most in terms of what they've done and, and, you know, what's the plan maybe going forward?

[Bob Bradway, CEO at Amgen]

Sure. Yeah. Take tackle of that, Murdo?

[Murdo Gordon, EVP of Global Commercial Operations at Amgen]

Sure. Thank you for the question, Chris. We're obviously very early innings still in this biosimilar market with AMGEVITA, and we're seeing clearly what, what, what is new payer behavior in light of such a large product having biosimilar competition. With respect to the high versus the low, you know, we're, it's kind of a different mix. We see mostly the high in PBM utilization and the low in the IDN utilization, where the low cost, low net cost is attractive to them. Again, it's very early, and the product mix, I don't think has settled out yet between those two SKUs. I would also say that we're still waiting to see what happens in the next payer negotiation cycle going into 2024.

[Murdo Gordon, EVP of Global Commercial Operations at Amgen]

As you've seen, many of the PBMs are on record as saying that they haven't done a whole lot in terms of driving utilization of biosimilars in 2023. Plan to do more of that in 2024. I think there's a lot more to follow here. With respect to AbbVie's strategy, look, we compete against them in the innovative side, and we now compete against them with our biosimilar, and we know their practices well, so not a lot of surprises there. I think the, I think that the clarity of how pharmacy benefit works with biosimilar uptake or lack thereof, is becoming clear to us and to other biosimilar manufacturers and other onlookers, so more to follow there. I would say, though, we, we remain very excited about the growth of biosimilars in the longer term. We continue...

[Murdo Gordon, EVP of Global Commercial Operations at Amgen]

as Dave mentioned, we continue to commit research investment in the development of additional biosimilars, with most recently with the initiation of ABP 206, a biosimilar to Opdivo. We also are continuing to look at being able to launch other biosimilars in the medical benefit reimbursement system in the U.S., and that's, that's where we were successful, obviously, with KANJINTI and MVASI, in our previous launches. Going forward, the, the majority of our biosimilar growth will come from ex-U.S. and U.S. medical benefit biosimilars, and we continue to believe we'll be able to generate strong growth, having previously said that we would more than double our 2021 annual sales of roughly $2 billion.

[Operator]

Thank you, Chris. Our next question comes from Umer Raffat from Evercore ISI. Please go ahead. Your line is open.

[Umer Raffat, Senior Managing Director at Evercore ISI]

Hi, guys. Thanks for taking my question. Dave, I felt like you were on a roll on Arvind's birthday today, so congrats on all the data. My question is, 3.5 months was the PFS in the prior data. I think it was 20%+ response rate, judging by the way you were describing it as transformative, is it fair to say PFS also improved in a meaningful way in the DL3 study? Secondly, back on the Horizon deal, I feel like two things are clear. You're very committed to the deal, but also that TEPEZZA is falling dramatically short, at least so far. The question that's coming up from investors is: Is there any way to renegotiate the purchase price? Thank you very much.

[Dave Reese, EVP of Research and Development at Amgen]

Yeah, what I can say, Umer, without, without getting into specifics on, on the, the number being under embargo, is that I'm very happy with the efficacy package, overall response rate, progression-free survival, duration of response, and overall survival. We'll have a, you know, presentation of all of those data at an upcoming medical congress. You know, to me, this is a very, very compelling efficacy package. Okay, on Horizon, Umer, you're right. We remain enthusiastic about proceeding on the basis of the deal that we announced. I would, I would take issue, at least with our, our perspective is different from what was implicit in your question, but we'll leave that for another day.

[Operator]

Thank you, Umer. Our next question comes from Yaron Werber from TD Cowen. Please go ahead. Your line is open.

[Yaron Werber, Managing Director and Senior Biotechnology Analyst at TD Cowen]

Great. Thanks for taking the question. I have a question on Otezla and sort of as relating to Enbrel, too. Specifically, Enbrel sort of bouncing back, which is good to see. It looks like that's really a net benefiting from the contracting that you've put in place, given Entyvio and generic Humira. Otezla, though, is facing Sotyktu, which is actually doing pretty well in terms of uptake. It's got a benign label and obviously a drug program. What gives you a lot of confidence in the outlook ahead? Thank you.

[Peter Griffith, EVP of Finance and CFO at Amgen]

Thanks, Yaron, for the question. Yes, you're right. Enbrel has, did have a strong quarter and is benefiting from, quite frankly, the best access we've ever had on Enbrel, where we're covered across all the major PBMs now.

[Peter Griffith, EVP of Finance and CFO at Amgen]

We're, we're seeing really nice new patient growth on Enbrel, so more new patients coming onto treatment with Enbrel, and we think that that will support sustained volume through the course of the year. We did give up a bit of price to do that, so that's also flowing through Enbrel. Overall, I think there were some concerns, perhaps last quarter, that the, that the biosimilar activity in this category was somehow impacting Enbrel, and, and I was pretty clear last quarter that, that, that wasn't what we were seeing, and it's definitely now clear in the second quarter that, that, that biosimilar competition for Humira is not negatively impacting Enbrel. We're, we see stability in Enbrel going forward. For, for Otezla, we're actually seeing some strength in Otezla.

[Peter Griffith, EVP of Finance and CFO at Amgen]

We are pleased with what new patient acquisition looks like. We think we can do better, and we, as I mentioned in my prepared remarks, are investing more in Otezla through the back end of this year, and Peter also mentioned that. The reason we're optimistic is, we're gaining momentum in helping those post topical first systemic patients, and the epi here is pretty significant. There's 1.5 million of these patients in the U.S. that persist with topical treatment that would be better being initiated on a systemic agent, and Otezla is really the ideal for a systemic agent. We have great commercial coverage with Otezla, with very little prior authorization requirement. We have no testing requirement for initiation, and the affordability and out-of-pocket is very good.

[Peter Griffith, EVP of Finance and CFO at Amgen]

Otezla is an attractive option for PBMs and payers to maintain on their formularies, and it's an easy option for dermatologists as the first systemic agent that they would choose for a patient coming off of topicals and being treated. Again, this milder form of disease, and no one else is indicated for that mild population from a systemic perspective. Overall, the thesis is good. I think Sotyktu coming into the market clearly put pressure on us, where there were patients who were probably on our oral and didn't have full resolution of their psoriasis symptoms, and, you know, they would have switched to Sotyktu. What we're seeing is that, that has slowed. We're losing less to Sotyktu in our current mix of patients that we have on Otezla.

[Peter Griffith, EVP of Finance and CFO at Amgen]

We think that the other, the other dynamic that put pressure on us in the first part of the year was the topical treatments also had free goods programs out there, and they were getting trial, and that has abated. They flattened out, so we're getting less pressure from topicals and, and much less patient movement away from Otezla to Sotyktu. I think we really have to see into 2024 how the access will evolve for the novel agents, but we're very confident with our current access and the current perception of the safety and efficacy of Otezla, we can further penetrate that population of patients. Going forward, we're, we're feeling good about it.

[Operator]

Thank you, Yaron. Our next question comes from Gregory Renza from RBC Capital Markets. Please go ahead. Your line is open.

[Gregory Renza, Senior Biotechnology Analyst at RBC Capital Markets]

Great. Thanks. Thanks, guys. Congrats on the quarter, thanks for taking my question. Bob, we, we certainly appreciate you framing up the, the case for the Horizon deal before the eyes of regulators and, and, and the courts. Maybe just to, to build on, on the conviction that, that you laid out, I just wanted to ask on your thoughts on the implication to potentially a, a negative outcome on the, the biopharma value creation ecosystem, and essentially the ability for, for companies like Amgen to, to bring medicines to patients. If we just call it that this novel legal theory, like bundling, does prevail, what impact would that have? Maybe to that, how far would you and the Amgen team really be willing to take this to preserve that opportunity to, to close the deal? Thanks so much.

[Bob Bradway, CEO at Amgen]

Well, again, I think I would reiterate what I said in my prepared remarks, Greg, which is that we don't believe that their case is based on any established antitrust law. We, we think it's based on hypotheticals and, you know, speculative notions, we look forward to having a chance to assert that in court. Again, we expect to prevail in court. You know, I think what, what, what's implicit in your question is a recognition that we live in a very fragmented industry, and that there are a lot of innovators in particular, that are of a size that makes it difficult for them to capitalize on the full potential of their innovation, especially globally.

[Bob Bradway, CEO at Amgen]

You know, there is a role for companies like ours to play in, in bringing value to companies like Horizon. We've, we've talked about it repeatedly, but we think the capabilities we have with our global commercial organization, the demonstrated expertise we have in manufacturing, you know, develop- research and development for products like this, I think, will enable us to reach far more patients than the company would be able to on its own. You know, this is an industry that has flourished by being able to capitalize on the innovation ecosystem that exists for biotechnology companies, for the most part, in the United States.

[Bob Bradway, CEO at Amgen]

Again, we, we expect that that will continue and, and think that, you know, were it not possible, for companies to combine to benefit from each other's strengths, the result would be fewer innovation reaching fewer patients. You know, that would be an unfortunate outcome.

[Operator]

Thank you, Gregory. Our next question comes from Evan Seigerman from BMO. Please go ahead. Your line is open.

[Evan Seigerman, Managing Director, Head of Healthcare Research, and Senior Biotechnology and BioPharmaceutical Analyst at BMO]

Hi, guys. Thank you so much for taking my question. Maybe one for you, Dave. Can you just expand on the biologic rationale to target STEAP1 versus PSMA in prostate cancer? I'm asking this in context of an update you- we had from a competitor today, where their PSMA program, different than yours, they had to modify significantly due to safety issues. Thank you very much.

[Dave Reese, EVP of Research and Development at Amgen]

Yeah. thanks, Evan. You know, we're, so a couple reasons to target STEAP1. Number one, it's almost universally expressed on advanced cancer cells. There is not extensive high-level normal tissue expression, so that allows you to generate the therapeutic window that we're always looking for with bispecific T-cell engagers. You know, PSMA has been a challenging target. There appear to be unique properties with that target. As I think you're aware, multiple molecules, including some of our own, have gone into and then fallen out of clinical development, and I've come to the belief that that may be in part target related. You know, STEAP1 is a relatively novel target.

[Dave Reese, EVP of Research and Development at Amgen]

You know, we are in the clinic, I, I think, you know, far advanced compared to anyone else, and based on the clinical data that we're seeing now, this is a program we really want to accelerate. This is another one of the programs where we'll we will be presenting data this fall, and I'd urge you to put xaluritamig onto the radar screen and pay attention to those data. You know, this one I think has a real opportunity.

[Operator]

Thank you, Evan. Our next question comes from Colin Bristow from UBS. Please go ahead. Your line is open.

[Colin Bristow, Managing Director in Biotechnology at UBS]

Hey, good afternoon, thanks for taking the questions. Maybe just a quick one on TEZSPIRE. You know, you have the upcoming COPD data in the first half of 2024. I was just curious as to get your, your expectations here. What's the threshold for success, especially in light of the, the recent sort of very positive BOREAS data? Thank you.

[Dave Reese, EVP of Research and Development at Amgen]

Yeah, I, I, I think, you know, in, in light of what we've seen in the field, you know, we would look to, to see something, that is, you know, competitive with that. You know, just to level set everyone, you know, the rationale for this study is that, you know, the target of TEZSPIRE, TSLP, is expressed in bronchial mucosa. Sputum can be detected in bronchoalveolar lavage fluid in patients with COPD. The pathway may be a contributor or driver of exacerbations, and that's really the hypothesis that we are testing here. We'll look at the totality of the clinical data, but I think some of the things you've seen recently published give us benchmarks as to what we'll hope to see.

[Operator]

Thank you, Colin. Our next question comes from Dane Leone from Raymond James. Please go ahead. Your line is open.

[Dane Leone, Managing Director at Raymond James]

Thank you. Maybe just two quick ones for me. Firstly, in terms of the rebound in Otezla and the good strength that seems to be coming out of some of those trialing periods for competitive products on the topical side and also oral side. Can you just maybe provide whatever response makes sense to your competitor's analysis on the oral side, suggesting they've achieved over 40% TRX share? Whether you think that share could go back in favor of Otezla during the back half of this year, or is that something you would see steady state from here on out?

[Dane Leone, Managing Director at Raymond James]

Then secondly, just regarding the phase II tarlatamab, is, is there anything we need to be aware of that maybe the patient population in this phase II small cell lung cancer study was, was maybe less heavier pre... less heavily pretreated, as opposed to what was seen in the phase I study, which is sometimes the case? Thank you.

[Dave Reese, EVP of Research and Development at Amgen]

Yeah. Why don't we take it in two parts?

[Murdo Gordon, EVP of Global Commercial Operations at Amgen]

Yeah, Dane, I'll, I'll, I'll, I'll attempt to answer your, your Otezla question. As I said, we are, we are encouraged by what we're seeing in the market here. It's really hard for me to comment on market share claims from other companies, particularly when they're adding what we can see versus what we can't see in their free drug program. They're giving a lot of product away, and I think they're including that in their denominator when they're providing share. I actually don't think that's gonna be reflective of what their ultimate end market performance will look like, because we've seen that in many categories where free programs or bridging programs are not representative ultimately of the final access picture and the final effect that that new access picture will have on demand.

[Murdo Gordon, EVP of Global Commercial Operations at Amgen]

I, I think that given our very good access coverage with little to no prior authorization requirements across many of those plans, we are definitely in a position should some of those free drug patients end up getting rejected for sustained actual insurance coverage because of the broad coverage we have. We have not factored that into our go forward, but it could happen.

[Dave Reese, EVP of Research and Development at Amgen]

Regarding tarlatamab, no substantive, you know, differences, very heavily pretreated our population. We'll provide details this fall.

[Operator]

Thank you, Dane. Our next question comes from David Risinger, from Leerink Partners. Please go ahead. Your line is open.

[David Risinger, Senior Managing Director and Senior Research Analyst at Leerink Partners]

Yes, thanks very much. Could you please provide an update on your oral obesity phase I trial and also discuss your evaluation of backup candidates? Thanks very much.

[Dave Reese, EVP of Research and Development at Amgen]

Yeah, in terms of the oral, oral obesity program, it's moving through. It, it's phase I, which includes, single dose and short-term multiple dose. We expect probably now to have data in the first half of next year. Behind that, we have multiple programs looking at orthogonal mechanisms of action, many of them non-incretin based. And as some of those progress towards the clinic, you know, we'll, we'll start to talk about them and give you insights into our portfolio approach here. So thank you.

[Arvind Sood, VP of Investor Relations at Amgen]

Hey, Julian, why don't we take one last question as we are over our allotted time?

[Operator]

Certainly. Our final question will come from Robyn Karnauskas from Truist Securities. Please go ahead. Your line is open.

[Robyn Karnauskas, Managing Director and Senior Biotech Analyst at Truist Securities]

Great. Thank you. Congratulations on tarlatamab, or I'm going to call it tmab to make my life easier. Can you just opine a little bit? Usually first, the first innovators expand a market like small cell to be much bigger than what people think of today. Walk us through the cadence of these phase I trials, in particular, I think the checkpoint inhibitor combination trial. When could we see data from that, and how do you view, even harpoon the competitive landscape, and how you are differentiated from them? Thanks so much.

[Dave Reese, EVP of Research and Development at Amgen]

Sure. Let, let me start with the latter. I, I'm extremely enthusiastic about this molecule. You know, as always, I'll let others talk about their molecules, but, you know, this one is one that we're really putting muscle behind. To sort of level set everyone here as you start to think about the unmet medical need, you know, there are roughly 240,000 cases of lung cancer in the United States each year. Roughly 15% of them are small cell lung cancer, and comparable numbers in Western Europe. For example. That gives you a sense of the patient numbers. The clinical development program, over time is going to be designed to look at really that broad swath of patients.

[Dave Reese, EVP of Research and Development at Amgen]

Of course, we're starting in third-line therapy, but our goal here is to quickly advance into second and earlier lines of treatment. You know, we'll talk more about those clinical studies as we get through later in the year. But this is one again, where I think when we get into settings of lower tumor burden, as we've observed with BLINCYTO, we can really affect the natural history of the disease. Recall that, upon initial diagnosis, only 7% of patients with small cell lung cancer will be alive five years later. That's, you know, that the opportunity to change that, I think, is in front of us now.

[Bob Bradway, CEO at Amgen]

Okay, well, thank you, for your, for your question, Robyn, and thank you all for joining. As Arvind said, we know we're a couple of minutes over the allotted time, so I wanna be respectful of your calendars. I also just do wanna make one more statement, if I may, which is, before we break, I wanted to announce that after nearly 19 years, in the role, Arvind Sood will be transitioning his head of IR responsibility, to our Treasurer, Justin Claes. Arvind will remain a VP in finance and will help Justin transition seamlessly into this new role. He's while he's not leaving, this is nonetheless a big moment, and I wanted to acknowledge it 'cause I know Arvind is something of a legend and a fixture in the investor relations world.

[Bob Bradway, CEO at Amgen]

On a personal note, I, I wanna just add that I've worked with Arvind now for more than 20 years, so we began working together even before we both joined Amgen. I wanna publicly congratulate him on his accomplishments in the IR profession, and I wanna, again, publicly state that I'm delighted that he's gonna remain part of the finance group, working with me and Peter and the rest of the team. On his birthday, we have a second thing to celebrate, which is the culmination of nearly 19 years in his role at Amgen. Those of you who haven't met Justin will enjoy getting to know him. He's been with Amgen for more than 20 years and served as our treasurer for most of the past four years.

[Bob Bradway, CEO at Amgen]

I know you'll all join me in wishing Justin well as he begins his transition into this role, and I know you'll all join me in wishing Arvind a good celebration here with us later this evening. Thank you. We'll talk to you after the next quarter.

[Arvind Sood, VP of Investor Relations at Amgen]

Great. Thank you, everybody, and we'll keep in touch.

[Operator]

This concludes our 2023 Q2 earnings call. You may now disconnect.

Participants

Executives

• Arvind Sood, VP of Investor Relations
• Bob Bradway, CEO
• Dave Reese, EVP of Research and Development
• Murdo Gordon, EVP of Global Commercial Operations
• Peter Griffith, EVP of Finance and CFO

Analysts

• Chris Raymond, Managing Director and Senior Biotech Analyst at Piper Sandler
• Colin Bristow, Managing Director in Biotechnology at UBS
• Dane Leone, Managing Director at Raymond James
• David Risinger, Senior Managing Director and Senior Research Analyst at Leerink Partners
• Evan Seigerman, Managing Director, Head of Healthcare Research, and Senior Biotechnology and BioPharmaceutical Analyst at BMO
• Gregory Renza, Senior Biotechnology Analyst at RBC Capital Markets
• Jay Olson, Managing Director and Senior Analyst covering Biotechnology at Oppenheimer
• Michael Yee, Managing Director and Senior Biotechnology Analyst at Jefferies
• Mohit Bansal, Managing Director and Co-Head of Therapeutics Research at Wells Fargo
• Robyn Karnauskas, Managing Director and Senior Biotech Analyst at Truist Securities
• Salveen Richter, Biotechnology Equity Research Analyst at Goldman Sachs
• Umer Raffat, Senior Managing Director at Evercore ISI
• Yaron Werber, Managing Director and Senior Biotechnology Analyst at TD Cowen