Right. Thanks for joining us, everybody. I'm Terence Flynn, Morgan Stanley's U.S. BioPharma Analyst. For important disclosures, please see Morgan Stanley's research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. Very pleased to be hosting Amgen this afternoon. I'm going to turn it over to the company's new CFO, Thomas Dittrich, who's going to make some opening remarks, and then we'll launch into Q&A with the rest of the team. Thank you everyone for being here.
Terence, thank you so much, and it's really good to be here. Before we get into Q&A, I'd like to take some time to introduce myself and share a few thoughts on how we see the business today. As many of you know, this is my second chapter at Amgen. I spent nearly a decade here earlier in my career and worked with Bob and the rest of the Amgen team back then. Since leaving, I've had the opportunity to serve as CFO of three publicly listed companies, where my remit extended beyond traditional finance to strategy, transformation, and operations. I gained experience also in a more consumer-oriented healthcare environment and before that, actually, in a rare disease environment. So I come back to Amgen knowing the company well, but also looking at it through fresh eyes informed by my experiences over the last 12 years.
Also, given my recent background with a private equity-led IPO of a fast-growing company in a more consumer-focused healthcare environment, my focus will be on working together with my fabulous colleagues at Amgen as one team, driving execution and financial discipline to enable growth acceleration commercially as well as of the pipeline. I'll focus on cash- on- cash returns, which is very consistent with Amgen's long-standing approach to capital allocation. Onto the second quarter, our second quarter results were really driven by the breadth and depth of the portfolio, and once again demonstrated our ability to grow through patent expirations and increased competition. Our six growth drivers, Repatha, EVENITY, TEZSPIRE, our rare disease portfolio, innovative oncology, and biosimilar portfolios, really delivered. Together, they grew 26% year-on-year in the quarter and represented nearly 70% of second quarter product sales.
Overall, in the quarter, total revenues exceeded $10 billion, up 10% year-on-year, and 22 products delivered double-digit sales growth. So these results, including strong margin and earnings performance, were achieved while we increased the investment in innovation, reflecting the really solid financial structure that Amgen has. Here's the point, many of our medicines address large under-penetrated disease areas, and that gives us confidence that there are significant opportunities ahead to reach many more patients as we move forward. We're adding new indications to some of our products like TEZSPIRE, UPLIZNA, and IMDELLTRA, while also broadening our geographic reach for those and other medicines. We have recently announced exciting phase III results from two of our approved medicines. First, we announced landmark phase III results from DeLLphi- 305, evaluating IMDELLTRA in combination with durvalumab as first-line maintenance treatment for patients with extensive- stage small- cell lung cancer.
The study demonstrated statistically significant and clinically meaningful improvement in overall survival, progression- free survival, and objective response rate compared to durvalumab alone. We view these data as important inflection point for IMDELLTRA. As you know, in the first- line setting, IMDELLTRA is already becoming a standard of care supported by strong survival benefit, clear clinical differentiation, NCCN recommendations, and rapid adoption across sites of care. These landmark results from DeLLphi -305 suggest IMDELLTRA will further revolutionize the standard of survival earlier in the treatment journey and meaningfully shift the treatment paradigm for people facing this devastating disease. Therefore, we are advancing IMDELLTRA through a broad phase III program across first-line extensive stage and limited- stage SCLC, while also pursuing more convenient administration. Together, these programs represent a combined addressable population of approximately 28,000 U.S. patients.
Yesterday, we also announced that the FDA has approved an update to the IMDELLTRA label that substantially reduces the recommended monitoring time for the first two doses of treatment in an appropriate healthcare setting. What does this mean? This means the patients receiving IMDELLTRA should now be monitored for six to eight hours from the start of the first two doses compared with the previously recommended 22-24 hours, an important step in simplifying care for people living with and treating extensive- stage small- cell lung cancer. We believe IMDELLTRA has the potential to become a foundational medicine across the small- cell lung cancer continuum and will continue to be an important growth driver for our innovative oncology portfolio.
We also recently announced positive top-line results from the phase III study of TEZSPIRE in people living with eosinophilic esophagitis, EoE, and positive phase III data for TEPEZZA in Japanese patients with chronic thyroid eye disease. Beyond these programs, our late-stage pipeline is progressing well and provides additional opportunities for growth, and we are advancing MariTide, for instance, dazodalibep, and xaluritamig in phase III development. All of those programs have the potential to address areas of significant unmet medical need and to drive long-term growth. We continue to develop olpasiran targeting Lp(a) for cardiovascular risk reduction. Recently, a competitor announced top-line results from their phase III program targeting Lp(a), raising many questions for the field. We look forward to seeing the detailed presentation of these data to better understand the potential implications for the field and to our ongoing clinical research with olpasiran.
Now, moving on to our biosimilar portfolio, we are advancing a third wave of biosimilar candidates to KEYTRUDA, OPDIVO, OCREVUS, and EYLEA HD. We recently completed a phase III study of ABP 234, our biosimilar candidate to KEYTRUDA, which met both primary and secondary endpoints. The full results will support our planned regulatory submissions in the second half of this year. For ABP 206, that is our biosimilar candidate to OPDIVO, our Biologics License Application with the FDA has been submitted and accepted for review. There, we expect an FDA action on this BLA by the end of the year. As we look ahead, our business continues to perform well. We are excited about the future and our ability to drive durable growth well into the next decade. With that, Terence, happy to take your questions.
Great. Looking forward to it. I guess the first place I want to start, I've been asking most companies this, is just it seems like we're in a different place from a policy perspective versus last year. Is there anything that the company's picking up coming out of D.C. as we head into midterm season that we should have on our radar screen?
Yeah, Terence, I'll take that and then ask Jay or Thomas to add. Thus far, it's early days going into the midterms. Obviously, we don't know the outcomes of the midterms yet. There's a lot of conversations going on in D.C. around reimbursement, pricing. 340B is a particularly hot topic at the moment, and just generally value of innovation. We're also seeing a pickup in policy work outside the U.S. as countries around the world respond to some of the policies from last year when we were with you. So we stand ready to engage with both sides of the aisles on each of these matters.
Our focus is trying to make sure medicines remain accessible and affordable, and that there continues to be a good environment for innovation, and as a U.S.- domiciled company with a hefty U.S.- domiciled manufacturing network, continue to be incentives to manufacture in the U.S. But beyond that, too early to tell given what's coming up in about 60 days now.
Okay. The kind of related question is 340B, I know has been a tailwind for a number of companies in 2Q, and there's this pilot that's going in place in January. So how should we think about that heading into 2027 as a potential tailwind of the business?
Yeah, I am going to take that in two parts. Generally, on the macro side of 340B, we still see that program with substantial growth. If you look at last year, there were $100 billion of purchases in the program, $80 billion of incremental discounts across the board, grew 23%. That is the fourth straight year of over 20% year-over-year growth. Program has tripled in size since 2020. That is driven by this lack of meaningful safeguards within the program that allow hospitals to buy at very low government prices and then resell to insurers, employers, patients, everyone in this room, at a substantial markup. Without reform of the core program, we do not see that incentive really changing or the dynamics changing on that overall growth.
Now, within that program, and I have been around it for 20 years, you do see from time to time, quarter- to- quarter variability, year- to- year variability along those lines. There were some buying patterns that we had detected late last year when enforcement looked like it was picking up that has not really materialized. We are not in a position to call it going forward other than to say reform needed, and without reform, you could expect that growth rate from a macro standpoint to largely go unchecked. In terms of the pilot, there is a rebate model specific for MFP drugs, drugs "negotiated" by Medicare. That will help one of our medicines going forward, potentially ENBREL, and in the future, Otezla, considering it was negotiated last year. But too early to tell at this point, Terence, on exactly what it means outside of those particular products.
Okay, great. Maybe Thomas, over to you. I guess, whenever you have a new CFO in the role, it is interesting to hear about perspectives on setting guidance, obviously one of the more important roles. As you think about that, anything you can say at this point about your approach to setting guidance versus maybe the past?
Yeah. I think our philosophy will remain consistent here. It is basically about giving a realistic view of the business, knowing the headwinds, tailwinds, and getting that out there. Also the investments we are making to achieve our value creation outcomes over time. Then clearly, from a maybe style standpoint or philosophical standpoint, setting guidance, Terence, is always about promise and deliver, and I think that will stay true to that one as well. Yeah.
Okay. I think you addressed this in your prepared remarks, but just capital deployment, what's the latest strategy there? Any insights on the current market dynamics?
Yeah. On capital deployment, our strategy or hierarchy is very clear. It's about really, number one, funding innovation, and then number two, funding the business to bring that innovation to as many patients as possible. That means commercial investments. That also means investment in manufacturing footprint, all of those things. On the innovation side, we're pretty agnostic. It's about best innovation, be it inside the company or outside the company. When it's outside the company, clearly the priority is it on target? Is it part of our therapeutic areas? Is it really the best possible science here? Are we the best owner? Then, do we see positive cash- on- cash returns over time, risk-adjusted? We'll prosecute that very hard. Then clearly, can we integrate anything we would buy rapidly to go into value creation mode quickly.
Okay, great. Maybe Jay, we'll pivot over to you. I want to talk about Lp(a), but before we go there, I think the next upcoming pipeline read on the late-stage side is dazodalibep for Sjögren's.
Yeah.
So maybe just talk to us about what success looks like in these two trials. Then probably the related question might be more for Casey, is just disclosure plans around the data.
Yeah. Thank you. Dazodalibep is a CD40 ligand targeting complex biotherapeutic that we are developing presently in lead indication of Sjögren's disease. This is an area of huge unmet need. It is actually a relatively common autoimmune condition, and there has been very little innovation in this disease until recently. The CD40 hypothesis is strong biologically, and it is supported further still by very compelling phase II proof of concept data with dazodalibep that included patients both in the systemic as well as in this more symptomatic or local stage of disease. Building upon these findings, we started two phase III clinical trials that are quite brilliant in their design. They segregate the symptomatic and the systemic disease populations, applying different and more focused scores to each on a regulatory paradigm.
These two studies will read out in the second half of this year, which we are in, so we are very much looking forward to seeing these data and then reporting them out. It is a humbling thing to develop in Sjögren's disease. There have been a lot of failures, but the support of proof of concept data, both on the receptor side and on the ligand side from our company and a competitor, are a good setup for these trials. What we are hoping to achieve with these studies is both a statistically significant and clinically meaningful benefit to patients, in particular around the symptoms that they experience that are keeping them from their activities of daily life. More to follow on the completion of those studies later this year.
Casey, anything in terms of just disclosure? Because the question we get a lot is just do they come together? Do they come separately? Are the trials close enough to read them out together?
Yeah, Terence, in terms of disclosure, we try not to predefine how and when we will disclose. As Jay said, the studies are on track to read out the second half of this year, and we will have more to say once we have data in hand.
Okay. Jay, you mentioned it. There have been a lot of failures. I think high placebo responses have been one issue historically. Just anything that you guys have done here versus maybe some prior trials that maybe had ran into that issue.
Yeah. Placebo responses in autoimmune conditions are challenging, in particular, where they're being scored by endpoints that aren't quite as hard as RECIST criteria on a CAT scan measured in millimeters. In these multiparametric questionnaires, ESSPRI, ESSDAI, DASPRI, there is always that chance. To mitigate that, we power up the study to success. We segregate the two populations with bespoke scores for each that define the integrated Sjögren's disease experience. We run the studies out just that little bit longer. These studies will run 48 weeks readouts, and we hope that all three of these measures will sharpen up the placebo response, giving us an even better chance to quantify a potential benefit of dazodalibep.
Any early read if you think you could file on just one positive study? Obviously, you said you segmented the population, so there's two different groups here. Let's say, again, pick which one of them. There's one positive, one negative trial. Would that be enough to file on just a single study, do you think?
We're not operating against a predefined regulatory strategy. A lot depends, as Casey said, by what we see in the data. We'll have more to share on that when we see the data.
Okay. Got it. Okay, I want to go over to olpasiran. Thomas addressed some of this in his opening remarks, so I think I know the answer to some of these, but I figured I would ask them anyways. Obviously, we need to see more data from Novartis. But before we see that, just remind us of the key differences in terms of your asset, but also the trial design.
What you will be looking for in the Novartis data to either give you more confidence or less confidence in those features of your drug and your trial that we should all look to when we see the data, assuming it is AHA in November?
Sure. Olpasiran is a small interfering RNA that targets Lp(a), which is a genetically defined cardiovascular risk factor, and that risk for cardiovascular disease increases with increased Lp(a) in populations. One in five of us here today has Lp(a), so get yours checked. It is now part of the lipid guidelines to do so and know your risk. Then modify your risk around Lp(a) for sure. These are facts that are not influenced by the Novartis readout of late. Olpasiran is a very powerful medicine. It has about a 95% reduction of Lp(a), 95%-99% compared to pelacarsen, which was more like 70%-80% in various clinical studies. This medicine is also given quarterly, which is a potential advantage of the medicine. Our clinical trials are a little bit different.
We targeted a higher index Lp(a) measure, 200 nmol versus 150 nmol on that study, and we chose a different endpoint. Rather than a four-point MACE endpoint that includes stroke, we focused on a three-point MACE endpoint, as our epidemiology analysis did not see stroke as a strong driver of outcomes mapping to Lp(a). With that said, the Novartis data caught our attention. We had, going into their data readout, a predefined set of actions, and we are now just waiting to see what the data actually are. All that has been communicated to date is missing the primary endpoint in the overall study population. That can mean a lot of things. We will go into AHA, where we presume also these data will be presented, and like many in the community, we will be interested to dissect several parameters.
It's a long list, by the way. I don't want to consume the rest of our time together. But these large cardiovascular outcome trials afford a possibility to really go deep into a statistical hierarchy if you hit the primary, which they apparently did not. We're going to take directional descriptive guidance from things like response to the medicine, a graded response to the endpoint based on the index Lp(a), the admixture of LDL-C control, which has been improving thanks to Kave's work in Repatha in the broader community, as well as predefined subsets of patient populations. A lot of people are interested in ASOs versus siRNAs as a general theme, and we are as well, intending to be a real contributor to this pharmacology.
I'm interested to know how that medicine was tolerated as an ASO with respect to local active site injections, systemic responses, and maybe also how they navigated COVID, which was tricky for cardiovascular outcome trials. There's just a lot to learn from that study, and we just haven't learned it yet.
Yeah. You mentioned one of the things that was a question, I think, going into the trial, is just background treatment. Obviously, that has improved significantly thanks to Repatha, also GLP-1s. Is that an area that you think could have influenced it, and are there any differences in terms of your population versus their population, high level, that you think could also be another factor we need to think about?
I won't speak too much to the differences in populations. There's a lot we've not shared for competitive reasons about the parameters of the patients that we've enrolled on this study. But I do hope that one of the driving reasons that the event rates are a little bit lower is improving background care. I will say that our real-world evidence would suggest that we still have a very long way to go, even with the tools that we have, like PCSK9 inhibitors, like evolocumab or Repatha, in order to really read drug efficacy through to broad population drug effectiveness.
Yeah.
LDL-C will be an interesting and important parameter to look at as these two biologies, both inflammatory lipoparticles, are converging on the same endothelial and vascular smooth muscle pathways of inflammation and atherogenesis.
Okay. Maybe just one for Kave, just on the importance of treatment guidelines in cardiovascular disease. Again, let's say olpasiran has positive data 2028. What does it mean from a guideline perspective? What's going to be needed for guidelines to really kind of move the needle? Jay mentioned increasing testing on Lp(a).
Right.
How important are guidelines? What have you guys learned from kind of the Repatha situation?
Yeah. I think when it comes to guidelines, especially in cardiology, they're obviously quite important. I'd say specifically more recently for Repatha, not only were the guidelines important from an update, even though they did not yet include VESALIUS-CV, but the adoption by the primary care community of those same guidelines, I think, has been a major driver of better LDL-C control more recently overall. In terms of the guidelines for Lp(a), look, it's really hard to predict the timeline of guideline updates in cardiovascular disease. I think it was seven or eight years between guideline updates this last time. We were excited to see that Lp(a) testing was in these guidelines, obviously pending readout of trial. But after the fact, it may be several years before guidelines are updated.
I will say there is a different behavior when a patient gets a high Lp(a) than a high LDL-C. With that high Lp(a), given how infrequently it is tested and just seeing that it is a genetic disease, we do see patients much more open to really managing cholesterol in a major way. We do see an activation pathway through its normal risk scoring into the LDL pathway. That is different than with a high LDL-C, where we see patients obviously often try to diet, exercise, and take minimal statins in order to get their LDL down. So different patient population may ultimately yield something. Again, we have to wait and see what we see from the pelacarsen data to understand what it could mean going forward, though.
Okay. Got it. Maybe just going over another cardiometabolic pipeline asset, which again is, I think, going to increasingly be front and center here as we go into 2027, is MariTide. Maybe, Jay, you could just remind us kind of the target profile here that you are aiming for with these large phase III trials that you are rolling out, and it sounds like enrollment has been going pretty good.
Enrollment to the MariTide phase III program has been outstanding. We have recently completed enrollment, end of August, I believe, Casey, of our obstructive sleep apnea studies. This is a sweeping set of, in the fullness of time, a dozen phase III clinical trials that will establish MariTide, we believe, as an important medicine for the treatment of obesity and its most core morbid conditions. In studying these diseases in one parallel approach, we are starting to get a shape of the rising target product profile. In a field that has had a lot of innovation and a lot of, I would say, redundant innovation around weekly injectables, MariTide starts to emerge as a bit of a singularity, a medicine that, because of its monoclonal antibody background, is by design built to be monthly or less frequently dosed. This is very important when we think about persistence.
There are now more Americans who have taken a GLP-1 and no longer take it, than are on it right now. Why is that? Why do half of patients stop this medicine, these helpful weekly medicines at a calendar year? We have been working to really understand this out in the community, and Kave and others, Susan Sweeney, have led this effort. A lot of it comes down to challenges associated with weekly injectables, symptoms associated with the week injectable access and durable access to the medicine. Because of the monoclonal antibody backbone, we expect MariTide to be an optimal medicine to start on if it is your first GLP-1- based medicine, and then stay on for the long haul, as well as to switch from a weekly injectable or an oral that can also not be very well tolerated or as efficacious to switch, and then stay on MariTide.
The phase III program will create these data. We have reported the activity of MariTide on an every eight-week administration basis, and we have also shared the insight that on every 12-week basis, MariTide with more of a maintenance mindset, is also quite active. When you couple this with outstanding tolerability at target dosing, the target private profile of MariTide starts to be really unique. You might know that the GLP-1 injectables grew up as twice-a-day medicines, and then chemistry achieved once-a-day medicines, and miracles of chemistry achieved ultra-long-acting weekly medicines. This medicine, owing to its flexibility in dose and schedule, will be very appealing to patients, very appealing to providers, and potentially to payers as well.
It is our work now to focus on the execution of the broad phase III program and turn in outstanding data, which will not be this calendar year on the phase III program, but we will have more to say about that in the new year.
Just remind us on the I know you guys have done a lot of work on the titration steps to kind of minimize the GI tolerability that you see with the GLP-1 axis. Where are we on that journey now, and do you ultimately think you will end up in a place that the rates look very similar to what you see with Zepbound, for example?
Yeah. Thank you. It turns out for MariTide, just like all the GLP-1 medicines, whether they are injectable or oral, that the index dosing, the initiation of therapy benefits from dose escalation over a period of time. Through a series of phase I and phase II clinical trials, we prepared the data necessary to establish the right dose and schedule for what is for MariTide, a three-step dose escalation to target dosing that takes two months to complete, from 21 mg to 35 mg to 70 mg. Curiously, once a patient has had 70 mg, they are attenuated to the GI or other side effects of MariTide largely, such that you can go right to target dosing, even if it is 350 mg owing to a need for substantial weight loss. That turns out to be quite unique.
So we will see in our phase III program if these phase I learnings read through to competitive tolerability, which we expect. Importantly, at target dose, we think MariTide can be quite differentiating. We more and more hear about day of injection, nausea and vomiting, and challenges associated with the weekly injectables and the orals even. Here, MariTide owing to its very smooth pharmacokinetics that the antibody just kind of hangs out in the bloodstream, not hitting the area postrema with GLP-1 agonism with every excursion from trough to peak in Cmax. Target dosing with MariTide is remarkably well- tolerated. We will have more to say on that when we see the phase III data, but we expect a competitive profile.
Great. Maybe just last one is Pfizer's working on a monthly program as well. Again, maybe just talk to us about anything that struck you at ADA about their profile versus what you see for MariTide and differentiation, because I think a lot of investors are doing these cross-trial comparisons side by side, like who is going to have more share in the monthly market? The timelines are pretty similar. As you look across that long-acting program, what are some of the key features that you think give MariTide a leg up?
Well, Pfizer and others are performing a lot of the standard I am a discovery chemist, are performing a lot of the standard discovery chemistry moves to make what are really short-lived biomolecules longer lived. Adding a lipid can lead to association with albumin, stays around in the bloodstream just a little bit longer. Various formulations and gel formulations, of course, have used in the past. These may lead to tolerability over one month. But I do believe that it will be hard for them to measure up as an efficacy endpoint. We will see as the data reads out, and it is always hard with cross-trial comparisons, but I know that some of these companies, including Pfizer, are studying those very medicines with weekly dosing. We have no weekly study of MariTide. In fact, we are moving more towards every eight and every 12 week dosing through our ongoing maintenance and switching studies.
I do believe that there is just nothing like MariTide from a durable efficacy and durability of effect today in late-stage clinical development.
Yeah. Okay, great. Maybe Kave, I would just go to you, just high level. This market has been front and center, I think, for the last several years in the biopharma sector, and I think our estimate's $190 billion. Just what's the company's high-level go-to-market strategy? We've seen the rise of the DTC channel here. You guys have leveraged your own DTC offerings for some of your other products. Maybe just talk to us about how you guys lean into that. Thomas, you mentioned you had some consumer background as well, so maybe there's something you want to add as well to that conversation.
Yeah. No, thanks, Terence. I think last year we announced our AmgenNow program for Repatha. That was our first direct-to-consumer program. We now have, I believe, four or five medicines within it. It has served 20,000 patients over the last year. 18,000 of those are Repatha patients, providing us early learnings of how to operate within that channel. Look, it's a huge category. I think there's almost a billion people on the planet that could benefit from these medicines. There are offerings, good offerings today that are starting to penetrate that. Over time, we see that market fragmenting into separate sub-markets. We think MariTide can play both in the induction phase and importantly in the maintenance phase, where we know, as said earlier, more patients have started and stopped these medicines than are on them today.
We look forward to bringing some of the capabilities that we've built around Repatha and EVENITY, these very large markets where we're treating lots of patients, to bring MariTide forward, building on those capabilities and going more into the traditional HCP setting, but also into the direct-to-consumer setting once we get there. A lot of this will depend on the profile we see, and we'll see the totality of that profile will help us define where we play and which markets going forward. But Thomas has really good perspective here from his Galderma days, specifically on the consumer side. Do you want to add, Thomas?
Yeah, as you said, it really depends on the profile, and I think Jay has characterized it really well what we are expecting there. When you then translate that to the more consumeristic side of the market, there is a real shift happening where patients no longer act as patients but as active consumers and make a choice, and maybe in this case wear an Oura Ring, et cetera. They want to know about what their health status is and involve themselves in the choices. That starts with how they consume data, how they use AI, that they go to social media. In the previous place, we knew exactly before any treatment decisions have five visits to social media websites. Therefore, it is important that you are not only showing up branded, but also you to have unbranded awareness to satisfy people's information collection requirements.
The path to treatment is also a different one, and you have to make it as smooth and simple as possible. Then these patients go and choose the treatment outlet, maybe Hims & Hers or whatever, or even centers, on that basis. The final point is these patients are commitment patients. They make choices about their life, be it on the aesthetic side, but also about their health levels that they want to have for themselves and commit to that and stay on that for longer term and are happy to pay cash with it. So you have to really treat them in that way, but what you get in return is a lot of stickiness from them. Really exciting area and couldn't be at a better place than Amgen at this point in time.
Great. Well, I think we are up against time, but thank you all so much. Really appreciate it.
Thank you.