Amgen Inc

NASDAQ:AMGN

Q3-2025 Earnings Call

[Operator]

My name is Julian, and I will be your conference facilitator today for the Amgen Q3 2025 Earnings Conference Call. [Operator Instructions]

I would now like to introduce Casey Capparelli, Vice President of Investor Relations. Mr. Capparelli, you may now begin.

[Casey Capparelli, executive]

Thank you, Julian, and good afternoon, everyone. Welcome to our third quarter 2025 earnings call. Bob Bradway, will lead the call and be followed by a broader review of our performance by Peter Griffith, Murdo Gordon and Bob Bradway. Through the course of our discussion today, we will use non-GAAP financial measures to describe our performance and have provided appropriate reconciliations within the materials that accompany this call. We will also make some forward-looking statements, which are qualified by our safe harbor statement. And please note that actual results could vary materially. Over to you, Bob.

[Robert Bradway, executive]

Okay. Good afternoon, everyone, and thank you for joining us today. Amgen delivered another strong quarter, driven by rising demand for our medicines and meaningful progress across the pipeline. Volume growth once again paced our progress in an environment where selling prices are declining across the industry. This volume growth reflects the strength of our portfolio and the value our medicines provide to patients and prescribers. We saw growth across all 4 therapeutic areas this quarter. Revenues were up 12% year-over-year and volume up 14%. The 1 of our products grew double-digit rates and 14 are now annualizing at over $1 billion in sales.

Our Broad base of innovative medicines is generating powerful momentum and gives us confidence in our ability to sustain long-term growth. We've also been working to expand access to our medicines. And we recently launched Amgen Now, a new direct-to-patient platform that allows qualified patients in the U.S. to access Repatha at one of the lowest prices in the world. This is an important step forward in helping more people benefit from the kind of innovation that's represented by Repatha.

Let me take a moment to recognize the scale and complexity of what we do in biologics manufacturing, which is both an art and a science. And at Amgen, we've built one of the most advanced capabilities in the world in making large molecules. We benefit from 45 years of experience in this space and from having a manufacturing network that's predominantly based here in the U.S., serving American patients and patients all around the world since our inception. We continue to invest in manufacturing with more than $3 billion in planned investments in the U.S. this year alone. This builds on over $40 billion invested in manufacturing and research and development since the passage of the Tax Cuts and Jobs Act in 2017. This foundation positions us well to support growing global demand for our products.

Now let me just turn briefly to each of our 4 therapeutic areas. In General Medicine, we're expanding impact across underserved disease areas with substantial runway. Cardiovascular disease remains the world's leading public health challenge with tens of millions of patients at risk for heart attack and stroke. At the upcoming American Heart Association meeting, we will share data on Repatha, showing important benefits in preventing a first heart attack or stroke. We had a powerful signal for the impact or potential impact of Repatha in primary prevention. In bone health, EVENITY is a transforming care for postmenopausal limit at high risk of fracture. It is the first and only bone-building therapy that increases bone formation and decreases bone resorption. EVENITY continues to deliver strong performance and with treatment rates still low among women with high fracture risk, we believe there is significant room for growth. We expect this product to remain a growth driver throughout its life cycle.

Looking ahead, both MariTide and olpasiran offer additional pathways for growth in obesity and cardiovascular disease, 2 of the world's most pressing health issues. In rare disease, our portfolio of growth drivers are all early in their life cycle. These products are performing well now, and we expect them to continue to grow well into the future. For example, with new indications such as IgG4-related disease and generalized myasthenia gravis on the horizon for UPLIZNA, we're excited by what this product can offer an increasingly broad range of patients. I would also say that the progress that we are seeing with UPLIZNA across a range of different diseases, reaffirms our belief for the potential of CD19-directed therapies to address a wide range of rare autoimmune diseases. In inflammation, we've been a leader for decades, and we are very encouraged by what we're seeing with [indiscernible] as physicians are increasingly comfortable with its profile, increasingly comfortable with the fact that it is a well-tolerated and broadly effective agent able to intervene upstream in the inflammatory cascade. We remain highly encouraged by the long-term prospects for Test buyer.

In oncology, we're continuing to establish new standards of care, and Delta has generated strong clinical enthusiasm in small cell lung cancer. LINTA is, of course, now firmly established as the standard of care in frontline consolidation for B-cell acute lymphoblastic leukemia. And we are seeing encouraging project -- progress rather with Zalurydamic in prostate cancer as it advances through Phase II. Meanwhile, our biosimilar strategy continues to deliver results as well. You can see that in the quarter, our revenues were up more than 50% year-over-year and are now annualizing at roughly $3 billion in sales. To close, let me just say that we continue to engage with policymakers in Washington and elsewhere around the world to support policies that improve access protect innovation and strengthen the biomanufacturing ecosystem, especially here in the U.S. We've built a strong springboard for 2026. The products that will drive our next wave of growth are in hand, supported by compelling data reinforced by readouts this year and still early in their life cycle. We're encouraged by the momentum we're seeing in the business and confident in our ability to deliver innovation and growth well into the next decade. I want to extend my thanks to our colleagues around the world for their commitment to patients. With that, let me turn it over to Peter for a financial update. Thank you.

[Peter Griffith, executive]

Thank you, Bob. We are pleased with our strong third quarter performance and remain on track with our 2025 full year goals and long-term objectives. The financial results are shown on Slide 6 and 7 of the slide deck. In the third quarter, revenues increased 12% year-over-year to $9.6 billion, reflecting the continued strong performance of our 6 key growth drivers, Repatha, EVENITY, TEZSPIRE, and our innovative oncology, rare disease and biosimilar portfolios. The quarter also benefited from discrete items, including roughly $250 million from favorable changes to U.S. estimated sales deductions and a government order for endplate of $90 million. I would also note that the third quarter included $105 million in sales for [indiscernible] a small molecule within the rare disease portfolio, for which we now have a generic competitor as of October.

Our non-GAAP operating margin was 47% and reflects significant investments across the business, led by non-GAAP R&D growth of 31% year-over-year. This includes several business development transactions, resulting in roughly $200 million of incremental R&D spending. Excluding these business development transactions, Q3 non-GAAP operating expenses rose 14%, and non-GAAP R&D grew 19% year-over-year. reflecting increased investment in our late-stage pipeline. Our continued investments in programs, including MariTide, [indiscernible] zyuritamic and rare disease will drive sustainable, long-term growth and strengthen our leadership and innovation. Our non-GAAP OI&E resulted in a $568 million expense. We continue to strengthen our balance sheet with $4.5 billion of debt retired in 2024 and and $6.0 billion of debt retired in 2025. We are pleased to report that we have returned to our pre-Horizon capital structure ahead of plan, and we will achieve greater than $500 million in pretax cost synergies in 2025 in connection with the acquisition.

Our non-GAAP tax rate increased 4.8 percentage points year-over-year to 18.2% primarily due to the change in earnings mix. We generated $4.2 billion in free cash flow in the third quarter, reflecting operational momentum across the business rigorous management of working capital, all while continuing to invest in innovation. In addition to the increase of 31% in non-GAAP R&D described above, we continue to advance and accelerate technology and AI across the value chain from discovery to development to manufacturing and through to commercial execution. AI and trial enrollment, manufacturing optimization and customer engagement are all among [indiscernible] leveraging innovation to drive productivity at speed and scale. We're also accelerating molecule design and other aspects of early-stage research powered by modernized AI and data platforms.

For 2025, we now expect capital expenditures of roughly $2.2 billion to $2.3 billion to expand network capacity for our products across the portfolio and our innovative pipeline, including Maritime. Our capital expenditures reflect significant investments across the United States, including Ohio, North Carolina, Puerto Rico, Rhode Island, California and Massachusetts. We expect our projects to continue to be on budget and on time. In addition, we returned capital to shareholders through competitive dividend payments of $2.38 per share, representing a 6% increase compared to the third quarter of 2024.

Turning to the outlook for the business for 2025 on Slide 8. The benefit of our portfolio was clearly seen this quarter, and coupled with momentum across the business, we are raising our 2025 guidance ranges for both revenue and non-GAAP earnings per share. We expect 2025 total revenues in the range of $35.8 billion to $36.6 billion and non-GAAP earnings per share between $20.6 and and $21.40. This guidance includes the estimated impact of implemented tariffs. It does not account for tariffs or pricing actions announced or described, but not yet implemented.

In addition, let me highlight a few updates to our outlook for the remainder of the year. For the full year, we now expect other revenue to be approximately $1.5 billion. Non-GAAP R&D expenses are now expected to grow at a mid-20s percentage rate year-over-year in 2025. We -- this is driven by increased investment in our late-stage programs and the previously mentioned Q3 business development transactions. We now anticipate non-GAAP OI&E to be in the range of $2.1 billion to $2.2 billion in 2025. We now expect a non-GAAP tax rate in the range of 15.0% to 16.5%.

And for [indiscernible] in the United States, we continue to expect quarterly sales to fluctuate and do not expect any sales in the fourth quarter. And let me remind you of prior items that have not changed. We continue to expect the full year non-GAAP operating margin as a percentage of product sales to be roughly 45%. The outlook continues to reflect our investments in advancing key late-stage programs, including maritime all pass ran rare disease and [indiscernible] and leveraging technological advancements, including artificial intelligence. Our operating margin outlook also includes incremental launch and commercial investments.

We're focused on delivering sustained long-term growth and value for patients and shareholders by doing what we innovation in areas of high unmet medical needs and maintaining rigorous financial discipline. We continue to focus on execution excellence across the enterprise and remain well positioned for sustained growth throughout the long term. I'm grateful to work with all of our colleagues worldwide in serving patients. This concludes our financial update. I'll now hand it over to Murdo for an update on our strong commercial progress in the quarter. Murdo?

[Murdo Gordon, executive]

Thanks, Peter. In the third quarter, sales increased 12% year-over-year, driven by 14% volume growth. products delivered double-digit or better growth, clear evidence of the strength of our portfolio and the disciplined execution of our teams around the world. Starting with General Medicine. Repatha delivered $794 million in the third quarter sales, up 40% year-over-year and now annualizing at approximately $3 billion.

Since Repatha's launched a decade ago, the PCSK9 inhibitor class remains underutilized with these therapies currently reaching fewer than 5% of patients eligible for [indiscernible] therapy. With roughly 100 million people still in need of effective LDL-C lowering Repatha has a substantial opportunity to expand its use to address cardiovascular disease, the world's #1 public health crisis.

As you'll hear from Jay, we have recently announced important data from the Vesalius CV outcome study, which met its dual major adverse cardiovascular events or MACE endpoints in patients at elevated cardiovascular risk without prior heart attack or stroke. I've worked in litho management for more than 30 years, and I've witnessed numerous landmark statin studies demonstrating how intensive LDL cholesterol lowering reduces cardiovascular risk. The [indiscernible] CB results demonstrate that Repatha provides additive benefit above and beyond stats, delivering even more reduction in cardiovascular events in primary prevention patients at higher risk. Currently, greater than 95% of patients insured in the U.S. have coverage for Repatha and most insured patients pay less than $50 out of pocket per month. The prior authorization requirements for many of these patients have also been removed or substantially reduced. In the U.S., we're taking bold steps to improve access with the launch of Amgen Now our new direct-to-patient program.

Repatha is the first therapy available through Amgen Now at a monthly price of $239 or roughly $8 a day. This is nearly 60% below the current U.S. list price, which is already one of the lowest in the world. The launch of this program is a meaningful step toward providing additional affordability and access to Repatha for American patients. EVENITY delivered $541 million in third quarter sales, up 36% year-over-year. In the U.S., sales grew 44%, driven by higher prescription volumes from both established and newly activated prescribers EVENITY is the only therapy that builds bone and slows bone loss, which is a unique advantage in helping postmenopausal women reduce fracture risk. In the U.S., EVENITY continues to lead the [indiscernible] segment with over 60% market share and approximately 270,000 patients treated to date. However, many remain at high risk of fracture. With close to 90% of the roughly 2 million very high-risk patients still not receiving appropriate therapy.

In Japan, if entity has been prescribed to approximately 800,000 patients since launch, making it the leader in the bone builder category with greater than 50% market share. The success of EVENITY in Japan underscores the significant untapped in the U.S., where improvements in screening and diagnosis and increased treatment could meaningfully expand patient reach and drive continued growth.

[indiscernible] delivered $1.1 billion in sales, an increase of 9% year-over-year. The biosimilars have launched today in the U.S., and we see competitive dynamics evolving in line with expectations. In future quarters, we expect increased competition to negatively impact Pro sales. Our rare disease portfolio grew 13% year-over-year to $1.4 billion, now annualizing at over $5 billion with strong performance across the board. [indiscernible] sales increased 46% year-over-year to $155 million. The launch of UPLIZNA IgG4-related disease is progressing well with significant uptake of rheumatologists and key academic medical centers. while IgG4-related disease is a recently defined condition, our educational efforts are rapidly building awareness and diagnosis. We've seen over 300 unique prescribers since launch across multiple specialties, demonstrating breadth of adoption of UPLIZNA in this indication. UPLIZNA is a leading FDA-approved treatment for NMOSD with growth driven by increased new patient demand and strongly so treatment initiations and adherence.

Additionally, launch preparations are underway for the anticipated approval of UPLIZNA in generalized myasthenia gravis or GMG, a chronic autoimmune neuromuscular disorder driven by pathogenic B cells. We look forward to the potential of serving more patients who can benefit from UPLIZNA's differentiated profile, including its durable efficacy and convenient dosing and administration.

[indiscernible] grew 15% to $560 million in the quarter, driven by increases in inventory and price. We're encouraged by our launch in Japan, where more than 800 patients have been treated with ADESA since December. In the U.S., approximately 25,000 patients have received treatment since launch to reach even more patients who can benefit from TEPEZZA. We continue to engage a broad prescriber base who have indicated an increasing intent to prescribe. Tape sales were $107 million in the third quarter, an increase of 34% year-over-year, driven by strong volume growth. more than 6,700 patients with ANCA-associated vasculitis have been treated with tabs in the U.S. over 3,800 health care professionals of now prescribed [indiscernible] representing a 31% increase in the prescriber base so far this year.

In inflammation, TEZSPIRE delivered another strong quarter with sales up 40% year-over-year to $377 million and has now achieved over $1 billion in sales year-to-date. TEZSPIRE is well positioned to help many more patients in the U.S., given its differentiated and broadly applicable profile to treat multiple triggers and drivers of severe uncontrolled asthma. In addition, TEZSPIRE has recently been approved in the U.S. for add-on maintenance treatment in adults and [indiscernible] aged 12 years and older with inadequately controlled chronic rinsinositis with nasal polyp. This disease is associated with elevated eosinophils and has observed in roughly 20% of patients with severe uncontrolled asthma.

This reinforces TEZSPIRE proven efficacy in eosinophilic disease. Importantly, in this registrational trial, TEZSPIRE demonstrated a reduction in the need for surgery further expanding its view and potential to help an even broader in population. Our innovative oncology portfolio, which includes unit $3 billion growth in oncology is fueled by our industry-leading bispecific T cell engager platform. The foundation for [indiscernible] these medicines are redefining standards of care in difficult-to-treat cancers and extending survival for more patients worldwide.

IMDELLTRA generated $178 million in third quarter sales, fueled by strong clinical conviction and rapid adoption across care settings. IMDELLTRA is widely recognized as the standard of care for patients with extensive stage small cell lung cancer who are progressing on or after chemotherapy. Over 1,400 sites of care in the U.S. are now administering IMDELLTRA with more than half of the doses occurring in the community setting. Following superior clinical entrance in the Phase III [indiscernible] the NCCN guidelines have been updated to reflect IMDELLTRA as the highest recommended therapy in the second-line setting. We look forward to the anticipated full confirmatory approval later this year.

BLINCYTO grew 20% year-over-year to $392 million in sales, driven by broad prescribing across both academic and community segments. We see [indiscernible] in combination for both adults and pediatric patients with Philadelphia chromosome-negative B-cell [indiscernible] similar portfolio delivered another strong quarter with sales increasing 52% year-over-year to $775 million and now annualizing at $3 billion. Since our first product approvals in 2018, our biosimilars have generated nearly $13 billion in sales. Additional launches are providing meaningful top line growth and durable cash flow.

[indiscernible], a biosimilar to EYLEA continues to gain momentum in the third quarter. Retina specialists have responded very positively to launch of [indiscernible] citing is convenient prefilled syringe format and Amgen's high-quality biosimilar manufacturing as important advantages. I'm very pleased with our performance in the quarter, fueled by the unwavering commitment of Amgen employees around the world to deliver on the company's mission to serve patients. And now I'll hand it over to Jay.

[Unknown Executive]

Thank you, Murdo, and good afternoon, everyone. The third quarter was a period of strong and disciplined execution across R&D. We advanced multiple late-stage programs and deepen the evidence base for our marketed medicines. Starting with MariTide, both of our Phase III chronic wave management studies are fully enrolled. Interest was significant, enrolling approximately 5,000 adults in roughly 6 months. We have rapidly advanced into additional Phase III studies with strong enrollment momentum in MariTide CV and MariTide HF for the study of arteriosclerotic cardiovascular disease and heart failure, respectively. Recall, in our Phase II chronic wave management study, we observed statistically significant reductions in systolic blood pressure, triglycerides and ADAS CRP, a key marker of [indiscernible] inflammation. These statistically significant improvements in validated cardiovascular risk factors highlight the potential impact of MariTide beyond weight loss. We have also recently initiated 2 Phase III studies in obstructive sleep apnea. With 6 global Phase III studies now underway, we're building a robust evidence base for Maritime. In addition to MariTide, we are advancing our early-stage portfolio for obesity and obesity-related conditions. This includes AMG51B presently in Phase I and a number of ride and preclinical candidates for both incretin and nonincreasing targets, featuring both oral and injectable routes of administration. Beyond obesity, in general medicine, as Murdo noted, the Repatha Phase III [indiscernible] CV clinical trial met its dual primary endpoints, demonstrating significant reductions in major adverse cardiovascular events or MACE, in higher-risk individuals without a prior heart attack or stroke. Vesalius CV asked a clinically vital question. can people at higher risk for a first heart attack or stroke benefit from Repatha when it is added to optimize lipid-lowering therapy.

This landmark study enrolled over 12,000 patients, approximately 85% of whom were maintained on moderate to intensive statin-based LDL-C-lowering therapy. At a median follow-up of approximately 4.5 years, both primary [indiscernible] endpoints were met and no new safety signals were observed. We are very excited to share the full results from this trial at the American Heart Association Scientific session on November 8 and and would encourage all to review the detailed data when presented. In addition to the Vesalius CV data, we will also present several real-world studies that report on the state of current lipid management and the effectiveness of Repatha treatment in clinical practice as well as new data from the FOURIER open-label extension study. Together, these data reinforce Repatha's long-term benefit and established safety profile while providing new insights into atherosclerotic cardiovascular disease risk management. The size, scope an ambition of our cardiovascular program, including efficacy from clinical trials and effectiveness from real-world data demonstrates Amgen's unwavering commitment to people living with heart disease and the impact that affordable transformative medicines like Repatha can have on their care.

Turning to Olpasiran, our promising best-in-class small interfering RNA medicine targeting Lp(a), we are pleased by the conduct and progression of the fully enrolled event-driven OCEAN A Phase III cardiovascular outcome study. We continue to follow the aggregate endpoint accrual rate which is lower than initial predictions. As the study matures, we will update on the date for primary analysis as appropriate. We retain strong conviction in the potential of lowering Lp(a) to reduce cardiovascular events owing to very compelling genetic and epidemiological data that link elevated Lp(a) to cardiovascular disease. Moving to our rare disease portfolio UPLIZNA we recently presented additional data from the Phase III MITIGATE trial in IgG4-related disease, featuring subgroup analyses stratified by baseline characteristics and organ involvement such as the pancreas, kidney and bile ducts. These data demonstrate benefits comparable to those seen in the overall trial population, supporting UPLIZNA's potential across the spectrum of IgG4-related disease patients.

For UPLIZNA generalized myasthenia gravis, we look ahead to the December 14 PDUFA date and continue to receive encouraging physician feedback that heights the need and opportunity for highly active durable and convenient treatment options for patients with gMG. In inflammation, we are excited by the FDA and European Commission approvals of TEZSPIRE for the add-on maintenance treatment of inadequately controlled chronic rhinosinusitis with nasal polyps for the benefit of adult and pediatric patients aged 12 and older. The Phase III data supporting this approval [indiscernible] rapid and sustained symptom improvement and a meaningful reduction of systemic steroid use. Notably, among patients treated with TEZSPIRE, we observed a near uniform avoidance of surgical intervention.

Additionally, our 2 Phase III studies of TEZSPIRE and chronic obstructive pulmonary disease are enrolling patients with moderate to very severe COPD with blood [indiscernible] counts greater than or equal to 150 cells per microliter. Our Phase III study in eosinophilic esophagitis continues to mature. By targeting [indiscernible], or TSLP, at the top of the alarm and inflammatory cascade, TEZSPIRE targets the root cause of serious inflammatory diseases driven by Th2 inflammation.

Moving to oncology. Our bispecific T cell engager or BiTE platform is delivering outstanding clinical results for patients facing advanced cancers. IMDELLTRA, our DLL3 targeting BiTE molecule now established as standard of care in second line small cell lung cancer is generating compelling data in combination and in earlier lines of therapy. In September and October, we presented results from multiple arms of the DeLLphi-303 Phase Ib study of IMDELLTRA in patients with small cell lung cancer, tested in combination with a [indiscernible] inhibitor as first-line maintenance therapy.

IMDELLTRA demonstrated a promising overall survival of 25.3 months, approximately doubling survival observed in other studies featuring the existing standard of care. In separate arms of DeLLphi-303 IMDELLTRA tested its first-line treatment in combination with platinum-based chemotherapy in a PD-L1 inhibitor, demonstrated 12-month overall survival of 81% and with median overall survival not yet reached. In both settings, the safety profile was manageable and consistent with the known safety of each component. We are now evaluating these combinations in the pivotal DeLLphi-305 frontline maintenance and DeLLphi-312 frontline induction and maintenance Phase III studies. Previously, we shared the remarkable results of the DeLLphi-304 study, evaluating IMDELLTRA versus standard of care in subjects with relapsed extensive stage small cell lung cancer after platinum-based first-line chemotherapy. The U.S. regulatory submission has been accepted by the FDA with a PDUFA date of December 18, 2025.

Regulatory reviews are also underway in a number of additional geographies. We are developing IMDELLTRA for expansive impact in small cell lung cancer and other DLL3-positive malignancies including Phase Ib studies evaluating novel agent combinations, less frequent dosing regimens and subcutaneous delivery. As an oncologist, let me share that the impact of IMDELLTRA for patients facing such a challenging disease as small cell lung cancer is honestly very moving. This disease has seen little innovation in decades and IMDELLTRA is now benefiting so many in this fight with BLINCYTO, our CD19-targeted BiTE medicines, we continue to work to improve and evolve the standard of care for patients here with B-cell acute plastic leukemia. Recently, we initiated a potentially registration-enabling study of subcutaneously administered blinatumumab in both adult and adolescents with relapsed or refractory [indiscernible]

Our first-in-class [indiscernible] CD3 bispecific T-cell engager [indiscernible], is advancing in Phase III clinical development with 2 studies now underway. The first study, [indiscernible], is enrolling patients with metastatic castrate-resistant prostate cancer who have previously been treated with [indiscernible] chemotherapy, comparing [ xaluritamig ] monotherapy versus investigator's choice of standard therapy. The second study, Valiance is evaluating the combination of xaluritamig and [indiscernible] versus investigator's choice of standard therapy in patients with chemotherapemia naive metastatic castrate-resistant prostate cancer. We are also exploring xaluritamig and other combinations and in earlier stages of prostate cancer with multiple Phase Ib studies ongoing. Across IMDELLTRA, BLINCYTO and xaluritamig, we see meaningful long-term potential from our bispecific T-cell engager platform and remain committed to bringing transformative and innovative therapies like these to patients with cancer.

Lastly, we are disappointed to announce that FORTITUDE-102, a Phase Ib/III study of bemarituzumab plus chemotherapy nivolumab in patients with first-line gastric cancer was stopped for an adequate efficacy at an ad hoc analysis requested by the data monitoring committee. We are deeply grateful to the patients, investigators and partners who made this study possible. We remain committed to creating and developing medicines for challenging cancers where unmet need is significant as for patients with gastric cancer. Here, however, the magnitude of observed efficacy did not meet our standard for an Amgen medicine. On these innovative medicines, our next wave of biosimilar candidates is advancing in Phase III clinical development, featuring biosimilars to Opdivo, KEYTRUDA and OCREVUS. With breadth and depth across 4 therapeutic areas, we are excited about the potential to deliver for patients, and we are well positioned to deliver sustained long-term growth.

In closing, thank you to the Amgen teams whose disciplined execution and patient-first mindset make this progress possible. I'll now turn it over to Bob for Q&A.

[Robert Bradway, executive]

Okay. Thank you. Why don't you remind our callers of the procedure for asking questions, and we'll try to get to as many of you as possible. I know it's a couple of minutes past the top of the hour now. So we'll try to get through these. And if we don't get to everybody on the call, we'll be available afterwards to answer any outstanding questions. So let's get started.

[Operator]

[Operator Instructions] Our first question comes from Salveen Richter from Goldman Sachs.

[Salveen Richter, analyst]

With olpasiran, you mentioned best-in-class and in context of a competitive landscape out there. And you also noted that the event rate for the OCEAN(a) outcome study is lower than you expected. Could you just speak to your confidence in this program and what the event rate means for a base case readout, whether it's now in 2027 versus year-end '26 prior-- and then separately, from a BD perspective, you spoke to how you're back at pre-Horizon debt levels. How does this impact your approach to business development heading into 2026?

[Robert Bradway, executive]

I'll take the first question around olpasiran. And as I mentioned, our conviction remains very strong. The genetic association for Lp(a) in cardiovascular disease is crystal clear. from human genetics, from epidemiological data. Lp(a) is fundamentally an inflammatory lipoprotein particle, and we know a lot about that biology in the vascular beds from analogy to LDL-C. Olpasiran has true best-in-class properties. It's frequency of administration is better. The depth of Alta suppression is better, has a very clean safety profile. Ocean A is an event-driven study. We're accustomed to conducting these global studies, look at VESALIUS CV. We're very pleased with study conduct and look forward when we do read this out to seeing the impact of [indiscernible]. We won't guide today on that particular date, but we'll keep all posted as we put into focus.

[Unknown Executive]

[indiscernible], I wouldn't say that the return to the leverage that we had pre-Horizon affects our thinking and business development to any great extent. We're actively looking for opportunities in business development. As you know, we're particularly focused in the therapeutic areas that you're familiar with as areas of interest for us. And just given the number of things we have in the late-stage clinic right now, we're focused primarily on earlier-stage things. And the good news is there are more of those than late stage anyway. So we're focused to open for business, but we have been. So thank you for the question.

[Operator]

Our next question comes from Terence Flynn from Morgan Stanley.

[Terence Flynn, analyst]

I appreciate it. Peter, I was just wondering by level, I know you're going to give 2026 guidance at this point, but maybe you could walk us through some of the puts and takes that we should think about heading into 2026. And then Jay, just one clarification on [indiscernible]. I noticed you completed that trial and it said the safety was consistent. Just wondering if there is any gastrointestinal ulcerations in that study? I know you saw those before in some of the prior studies.

[Peter Griffith, executive]

Yes, Terence, thank you very much for the question. And I would point towards our key growth drivers when you think about the top line and where the company is going. We've just had an excellent quarter, 14% volume growth for Repatha, EVENITY, TEZSPIRE [indiscernible] rare disease, now annualizing at over $5 billion off the quarter, biosimilars annualizing at close to $3 billion. So that's how we're thinking about that. As we go down the P&L, maybe the easiest thing for me to do, [indiscernible], would be just to spend a minute because I think people probably are thinking about operating margin. And we've been clear in the past number of years about that and when we have an opportunity to achieve cash-on-cash returns greater than our hurdle rate, we're going to drive those opportunities for shareholders. So nothing's changed in that. We're at about 47% operating margin level in 2024 as we continue to accelerate the investing in research and particularly development [indiscernible], of our later-stage pipeline. We're going to continue and have continued to invest in 2025, again, focused on research and development. We're going to stick with this disciplined capital allocation approach. We haven't changed from that investing in the best innovation, as Bob just said, looking externally inside the company internally, remains at the top of our capital allocation hierarchy, Nothing's changed there. So we'll keep that up. We haven't provided longer-term margin targets, so nothing into 2026. But I'd just say we remain focused on achieving industry-leading margins while continuing to invest in the very best innovation. So as you think about the business going forward, here's a couple of thoughts for you to think about. First, we're focused on our earlier pipeline. Bob just mentioned that again, investing in the best innovation to further build out that part of the pipeline. In terms of R&D expenses, I just want to note, we experienced what I might characterize as a step change increase in R&D expenses over the last year. We don't anticipate an incremental step change going forward in terms of R&D expense, think of a lot of puts and takes there. We'd remind you that we've completed a number of Phase III studies in 2025, including Repatha VESALIUS, confirmatory study from IMDELLTRA along with several rocutinlumab bemarituzumab studies and we've added studies, of course, for MariTide [indiscernible], and those will carry forward into 2026. I'd also remind you, [indiscernible], that our non-GAAP operating margin guidance of roughly 45% for the full year 2025 includes $2 million of business development activities in the third quarter, along with incremental launch and commercial investments in the fourth quarter. So just kind of summarizing hoping that answers your question and gives you some thoughts about where we're at this year and continuing into '26. We're going to continue to drive executional excellence. Productivity and ruthless prioritization around the organization. We worked very hard as an enterprise for many years to be among the leaders in margins in our industry and we certainly expect to continue to remain there. So Terence, thank you very much for the question.

[Robert Bradway, executive]

[ Jay ], do you want to speak to [ ASTRO ]?

[Unknown Executive]

Glad you would turn thanks for asking for all on the call, ASTRO is a 52-week study of rocatinlimab, the OX40 directed T-cell rebalancing agent. In this case, in adolescents with moderate to severe atopic dermatitis, tested 2 doses, 150 and 300 milligrams. We studied the medicine as monotherapy as well as combination therapy with low-dose steroids or [indiscernible] modulation, Study met its co-primary endpoints at 24 weeks, save quite consistent with the other studies. We did observe GI side effects, mostly mild in nature and not at an excessive rate. as we bring to close the 8 studies of the ROCKET program, we start to reflect on the target product profile, we'll have more to say about that in the near future.

[Robert Bradway, executive]

All right. Let's move on to the next question, see if we can keep it to 1 question so we can get through as many of you as possible. Who's next?

[Operator]

Our next question comes from Jay Olson from Oppenheimer.

[Jay Olson, analyst]

Congrats on the quarter. We're curious about VESALIUS CV results and how you expect them to impact the overall market opportunity for Repatha? And also, what should we look for in the details when you present them at AHA? And related to that, just any lessons learned that you can apply to olpasiran.

[Robert Bradway, executive]

Jay, I'm glad you're interested and excited about the VESALIUS study. So we look forward to having a chance to share with you in detail. Maybe 2 parts. Jay, you want to kick off and then Murdo, you can follow up.

[Unknown Executive]

Yes. Thanks, Jay. Cardiovascular disease is still the #1 killer heart attack every 40 seconds in the United States and just about everybody in the world knows about bad cholesterol or LDL-C that Repatha so dramatically lower. And we know that lower is better, yet lipid management globally is still very poorly managed about 100 million people in the world who are in better control. Repatha, so firmly established as accessible, affordable, efficacious in the prevention of recurrent CV events in VESALIUS CV. We really vital important question, can we prevent first events. And indeed, this is the first -- the only PCSK9 to demonstrate such an effect. MIs are first event. And so it's a really important question. Can't wait to share these data at the upcoming [indiscernible]. Importantly, on this study, as Murdo mentioned in the top of the program, this is in addition to optimize lipid management. And so for patients and doctors on a statin but inadequate LDL-C control, this is a major a major advance. We're looking very much forward to sharing the complete results. You asked about lessons learned. They work with great people. The Time Group was outstanding. We carry all of the learnings of how to conduct a global study of this incredible span in nature, more than 12,000 patients worldwide. And I think it also serves to emphasize by hitting both dual primary endpoints, just how much room there still is to improve cardiovascular care targeting inflammatory lipo particles.

[Murdo Gordon, executive]

Well, thank you cover most of it, Jay. I would say that if you're not doing anything this weekend and you're really curious, being New Orleans or tuned in. I really -- I think that the word landmark gets thrown around a lot in describing clinical trials, but I don't think it's an inappropriate moniker to put on this one. I think this is a substantial advance in understanding how you can prevent first heart attacks and strokes. This is a call to action for primary care physicians everywhere, and we will make sure that immediately after the presentation of these data that our medical teams, our field sales teams, our patient support organizations are out there in full force, making sure that prem care physicians are aware of these data and that patients have the benefit, as we said, of an affordable solution that gives them incremental risk reduction beyond any established lipid-lowering therapy on the market today with Repatha. So it's an exciting time. We've systematically told you all that we were opening up access for Repatha and that we were asking primary care physicians to do more beyond the cardiologist role here, and these data give us yet another opportunity to to continue that important work.

[Robert Bradway, executive]

And Jay, as we mentioned a couple of times on the call, in our prepared remarks, Amgen now, obviously, is an important part of the thinking here. We don't want there to be any excuse for anyone not to be able to get access to this at an attractive price relative to the benefit that the medicine provides. So anyway, thanks for asking the question.

[Operator]

Next question comes from Matt Phipps from William Blair.

[Matthew Phipps, analyst]

The FDA recently released new biosimilar guidance and maybe removing the need for comparative efficacy studies. Wonder if that changes your view at all in the business, maybe some of the barriers to entry, but also the calculus on what biologics might be worth pursuing a biosimilar for.

[Murdo Gordon, executive]

Thanks, Matt, for the question. I don't think it changes our strategic focus on biosimilars. This has been a a very good growth business for Amgen, and we continue to see it as such. Obviously, we pay attention to the new guidance and our development teams and regulatory teams are very focused on making sure we're ready to adapt to them. I would say that all of the technical functions here at Amgen are in a position to compete effectively regardless of the guidance, whether it's heavy clinical trial requirements or whether it's technical comparability requirements. We've got a great process development team here in our manufacturing operations organization. who continue to do very innovative things in the development of biosimilars such as helping us be the only biosimilar to EYLEA commercially available on the market. So we think we'll be in good shape. We'll be competitive. And no matter what the guidelines come. Obviously, we'll look closely at them, as I said, and we'll understand how that might impact development of products going forward.

[Robert Bradway, executive]

And just quickly, Matt, at a strategic level, I would observe that there's an undercurrent of question in some quarters, particularly in Washington about how successful the biosimilar market is in the United States right now as a leading competitor perspective as the market is performing very well. We think the ground is well set for this to continue to be a flourishing market in the U.S. with patients having access to alternative supplies of important medicines after their patents have expired. And we would we watch carefully to make sure that policies don't emerge that might move this marketplace in the direction of the generic drug industry, where there have been, obviously, a number of abuses that have given rise to quite a bit of anxiety about that market and its impact on patients. In contrast, we think the biosimilar market is working well. we think regulatory and other policies that are in place today enable that to continue. And we would advocate for again a recognition that the things that are in place now are working well.

[Operator]

Our next question comes from Yaron Werber from TD Cowen.

[Yaron Werber, analyst]

Great. Maybe just a question for Jay. The second year of the maritime data is expected by year-end. We know you're looking at 3 different things. You're looking at the same dose, lower dosing. Going to placebo and you're testing Q12 weeks in that study. There's no Q8 weeks. Any sense sort of -- is this going to be in a medical meeting? And can you give us any sense kind of what to really expect and put it in context.

[Unknown Executive]

Yes. Thanks, Yaron. Part 2 of the Phase II chronic weight management study is indeed a very interesting study, having achieved strong efficacy in part 1, 52 weeks. Part 2 will contribute a first maintenance experience. And just to remind you the design, as you covered already, we are testing quarterly dosing, full dose. We're testing low dose at monthly, and we're comparing these measures to placebo and continued treatment. And these data will be very useful to us. This will inform our maintenance strategy that will provide guidance to additional Phase III designs. And we'll have more to say about our disclosure approach in due course.

[Operator]

Our next question comes from Chris Schott from JPMorgan.

[Christopher Schott, analyst]

Is that maybe a bigger picture question on obesity. We've had a number of updates in the space lately. We've got the [indiscernible] headlines going around. We've got some discussions on lower Medicare pricing for BC drugs. I just be interested in just Amgen's latest view on kind of the obesity market and the company's role within the market with Mirati and the broader pipeline. Just just the latest kind of lay the land from your perspective?

[Robert Bradway, executive]

Yes. Thanks for the question, Chris. I would say that we are -- we remain very enthusiastic about the opportunity for us in obesity. We believe strongly, as you know, we have a differentiated approach to this market than the competitors that are in the space presently and different from what we see others advancing in their portfolios. So again, our interest in this based on everything we know about our molecule and everything we see in the marketplace remains very, very constructive. So I'll invite Jay and Murdo, I'm sure they'll have thoughts they want to add, Jay, why don't you kick in?

[Unknown Executive]

Sure. Thanks for the invitation. It's a major public health crisis. living in the United States. So many people face this every day. Maybe 40% of adults in the United States will have a BMI over 30 and fifth of children. It's also massively costly to the health care in the United States. The CDC will estimate over $170 billion a year. Murdo can speak to it, but the market is totally underpenetrated implying that health care can significantly improve. But for it to improve, we think it will take really differentiated assets, not just another weekly injectable peptide, which have proven very hard to keep patients on those types of medicines with failure to continue medicines beyond the calendar year. And of course, obesity itself as well as the related conditions require much more enduring in chronic therapy. And so we think the maritime has a fantastic and differentiated profile to contribute there. But as you asked about the broader pipeline, we've been in obesity and metabolic medicine discovery research for more than 20 years. And this pipeline, we have another Phase I asset, AMG 513. And we have preclinical programs advancing. For novel targets within the incretin and non-incretin pathways. Some will be oral, some will be injectable. And so we're really in it to have a huge impact on this major public health crisis. Murdo?

[Murdo Gordon, executive]

Yes. Thanks, Jay. I mean the only thing I would continue to reinforce for everybody listening in as we continue to feel that MariTide a true differentiation compared to what is available in the market. I mean it is interesting that there's a bidding war in 2 companies for GLP-1 that is through some lipid technology enabled potentially to maybe be monthly. So to have a product that's well defined, clearly monthly, perhaps even less frequently in a market, as Jay described, that is massive and undersatisfied, where we hope to go into this market, not just to reduce the weight of patients who struggled with obesity, but also to help deliver on the medical benefit of managing that weight. And I can't wait to see the results of our Phase III program, and I'm really pleased with how the team is executing, look forward to that day. Thank you.

[Robert Bradway, executive]

Let's go to the next question.

[Operator]

Our next question comes from Evan Seigerman from BMO Capital Markets.

[Evan Seigerman, analyst]

Bob, your comment kind of on the biosimilar sector struck with me I'm wondering if you could highlight what you think needs to change from a policy perspective to encourage even more uptake of biosimilars. For example, the #1 selling adalimumab product is [indiscernible] and not Amjevita. How can you, as a biosimilar leader really encourage more use of these products.

[Robert Bradway, executive]

Yes. Again, I think there's a difference in the U.S. between the Part B medicines and the Part D medicines or the retail and the physician administrative medicines. So I think market dynamics are evolving differently in those 2 areas. Obviously, the payers are very involved in the Part D where the rebate dynamics are important, but that erodes over time and I think we see happening that now. very confident when you look back over the fullness of time, you will see that AMGEVITA or adalimumab biosimilar will have been a very successful product for us. We see that internationally. It continues to be a strong product for us, and I think it will continue to be that. I think, again, in the U.S., safe, reliable supply of a true biosimilar like ARRIS will do well in the long term.

[Operator]

Our next question comes from Umer Raffat from Evercore ISI.

[Michael DiFiore, analyst]

This is Mike DiFiore for Umer. I just want to go back to the MariTide Phase II trial for a bit. There is some confusion on whether we'll get 2-year weight loss data the upcoming Part 2 readout of the Meratideobasi Phase II trial. So can you clarify the design, especially as it relates to the washout post week 52. And since most of these patients will have lost weight in year 1 isn't it reasonable to assume that weight loss in year 2 part 2 will be a lot less in year 1 Part 1.

[Robert Bradway, executive]

Yes, Jay, you go ahead.

[Unknown Executive]

I'm happy to answer the question. As I shared, it's principally a maintenance study that tests low dose monthly and full dose quarterly against placebo and continued MariTide target dose. As the study was powered really to inform Phase III, and we derive a significant amount of guidance from Part 1. There are some aspects of part 2 that are more descriptive. As you may know that to participate in part to Patients had to achieve greater than 15% weight loss in Part 1, and then they were randomized to a number of arms. And the power to make significant insights into weight loss between the arms is not strong, but there will be patients that continue on at their target dose. And as patients in Part 1 did not achieve a weight loss plateau, we'll be interested to follow those patients for the second calendar year.

[Robert Bradway, executive]

And just to be clear there, Jay, when you say the power is not strong. I mean, it's not designed numerically, it's not designed for that purpose.

[Murdo Gordon, executive]

That's right. This is a shared is a study that's designed to inform our strategy on maintenance MariTide as well as further Phase III programming, and we fully expect to drive all the information needed from part 2 of the study for those purposes.

[Unknown Executive]

Again, I'm mindful we're getting up to the half past the hour. So we'll take 2 more questions and I apologize to the rest of you we're available for calls later in the day.

[Operator]

Our next question is from David Amsellem from Piper Sandler.

[David Amsellem, analyst]

I don't plus specific question. So you're seeing pretty strong performance in the wake of the label expansion in IgG4-related disease. Can you talk to the extent to which there's been pent-up demand here? Give us your refreshed views on the sales opportunity here? And then I guess beyond that with the GMG label expansion, how are you thinking about rapidity of uptake there, given that that's a more competitive landscape and there some competitive dynamics to consider in GMG.

[Robert Bradway, executive]

We'll try to get it efficiently for you here. But I think, Margo, I'm sure you're going to want to have say a few things about the exciting dynamic we see for [indiscernible]

[Murdo Gordon, executive]

Yes. Thanks for the question, David. Obviously, we're very early in the IgG4 launch. As I mentioned, we've got roughly 300 unique prescribers that have prescribed replica for IgG4. I'm not sure I would characterize it as pent-up demand. IgG4 is a disease that really only got its own ICD-10 code in 2023. So this is a patient that often presents with an obvious diagnosis on the part of the physician. We're actually seeing awareness, our education and the fact that we've got the FDA approved treatment for IgG4 as a catalyst for even more growth. The estimate is about 20,000 patients in the U.S. But as I mentioned, given that the diagnostic codes are relatively new here, the actual market could be much bigger. We have obviously demonstrated overwhelming efficacy when you can reduce flares by as much as 87% substantial reduction in steroids and really have patients who are in significant trouble here. have their disease resolved and have their flares reduced as a very important therapy. So it's helped us a lot. Jay, will want to expand further on that. But before I turn it to him, I'd just say that in NMOSD, we expect to have a strong -- sorry, in gMG, we expect to have a strong presence in that market, given the profile that we were able to show in the MINT trial. We've got a very convenient dosing here after the first loading dose, you get to twice a year of therapy, a very durable effect, perhaps more durable than some of the agents that are in the market today. And given that the data are already out there, there we have some real interest on the part of the people who are treating the gMG patient population. The other thing to think about in gMG is there's a lot of switching between treatments and between classes of therapy. Usually, a patient is on a primary therapy for no longer than a year to 1.5 years and they see at least 2 medications, sometimes as many as 3 medications until they feel stabilized. So it is a market that's still dissatisfied despite the number of entrants. Jay?

[Unknown Executive]

Yes. Thanks, Murdo. I think the differentiation is really strong, as Murdo shared. I think it's attributable to targeting the core disease biology. I mean targeting the CD19 positive sell is really the entirety of the B-cell compartment, not just the mature cells, but also the immature cells that start to elaborate the auto antibodies. And because of this, although it's always hard to make trial to trial comparisons, we see numerically higher efficacy by [indiscernible], which is a standard measure. We see more steroid sparing than [indiscernible]. We see incredible durability, as Murdo said, during the randomized control period and a serious dosing advantage with 6 months dosing after the loading dose. And so durable, sustained efficacy are not just promising for gMG, but more broadly, to the other diseases that are driven by pathologic [indiscernible] antibodies. And as you might know, we have open studies of [indiscernible] as well as [indiscernible] in autoimmunity that are open and enrolling in a very dynamic and exciting space where CD19 medicines of many classes are showing profound activity in severe advanced autoimmune diseases, and we, of course, have 2 in-market brands. So we're in a good spot to take advantage of this opportunity to help these patients.

[Operator]

Our last question today will come from Dave Risinger from Leerink Partners.

[David Risinger, analyst]

I was just hoping that you could maybe just call out the top 2 or 3 pipeline cards that are turning over that could be most impactful for Amgen in the next 6 to 12 months that we should be focused on?

[Robert Bradway, executive]

Jay, do you want to go ahead and talk about a couple of things that you're watching careful.

[Murdo Gordon, executive]

Yes. Well, I'm obviously very excited in this moment about VESALIUS CV, which we're going to be sharing in just a week. And so I really quite encourage you to pay close attention to this. The further development of IMDELLTRA and [indiscernible] is also very exciting. We see very dramatic activity in the cases that are now being communicated back to us if patients save from impossible situations, as I shared, is very powerful. And as we've learned from blinatumumab moving [indiscernible] into combination therapy into frontline use into a setting where there could be less active disease owing to the debulking of chemo, all promises, as we've seen in this dramatic 303 study presented at World Lung as well as ESMO for really meaningful activity in frontline in Phase III. And this is 1 of those moments, David, where time just can't move fast enough to read out those Phase III studies. .

[Robert Bradway, executive]

We had an opportunity here before the call, Dave, to see some PET scan data on a patient who's in tough shape, who is experiencing quite a profound response to the medicine. So it's a medicine that we're excited about. I think somebody at ESMO described it as WOW Squared. So stay tuned. We're hopeful about the data that's forthcoming on IMDELLTRA platform here over time.

All right. Well, thank you all for your attention and for joining the call. Casey and his team will be available through the afternoon and evening if anybody didn't get a chance to raise a question that they have an interest in. We look forward to being with you after the next quarter. Thanks.

[Operator]

This concludes our Amgen Q3 2025 earnings conference call. You may now disconnect.