Arvind Sood, Vice President of Investor Relations Bob Bradway - Chairman and CEO David Meline - Chief Financial Officer Tony Hooper - Head, Global Commercial Operations Sean Harper - Head, R&D.

Eric Schmidt - Cowen & Company Matt Roden - UBS Matthew Harrison - Morgan Stanley Mohit Bansal - Deutsche Bank Mark Schoenebaum - ISI Group Michael Yee - RBC Capital Markets Ying Huang - Bank of America Merrill Lynch Yaron Werber - Citi Terrence Flynn - Goldman Sachs Eun Yang - Jefferies Josh Schimmer - Piper Jaffray Howard Liang - Leerink Geoffrey Porges - Bernstein Chris Raymond - Robert Baird.

My name is Marvin, and I will be your conference facilitator today for Amgen’s Third Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. There will be a question-and-answer session at the conclusion of the last speakers prepared remarks.

In order to ensure that everyone has a chance to participate we would like to request that you limit yourself to asking one question during the Q&A session. (Operator Instructions) I would now like to introduce Arvind Sood, Vice President of Investor Relations. Mr. Sood, you may now begin..

Thank you, Marvin. Good afternoon, everybody. I would like to welcome you to our third quarter conference call. Unlike past quarters, our format today will be a bit different.

As we are conducting a comprehensive business review tomorrow morning, we’ll limit our comments to reviewing our solid performance during the third quarter and keep this call brief to about 30 minutes, including taking some of your questions.

Joining me today are Bob Bradway, our Chairman and CEO; and our CFO, David Meline, who will both make some prepared comments, outlining our operating performance during the quarter.

Tony Hooper, who as you know is our Head of Global Commercial Operations; and Sean Harper, our Head of R&D are also here with us to address any questions you might have for them. To further help with the understanding of product sales drivers, we have posted some slides on our website.

Our comments today will be governed by our Safe Harbor statement, which in summary says that through the course of our presentation and discussion today, we may make certain forward-looking statements and actual results may vary materially. So, with that, I would like to turn the call over to Bob.

Bob?.

Thanks, Arvind. Good afternoon, everyone. And thank you for joining us today to discuss our strong third quarter results. As Arvind indicated, David Meline and I will offer some brief commentary in context of the quarter and then we will take some questions together with Tony and Sean.

Again, just to reiterate, since we are meeting tomorrow morning for a comprehensive business review, we’ll really try to keep the focus for this call on our quarterly results.

Our third results just announced reflect strong sales performance across the portfolio, which when combined with our ongoing expense discipline generated 22% growth in operating income and 19% growth in earnings per share.

Given the strategic emphasis we placed on growing our international presence, we were particularly pleased with the 14% growth in international sales during the quarter.

Consistent with the strong underlying prescription trends that we’ve seen through the first three quarters of the year, our product sales performance for the third quarter was up 4% year-over-year. And to recall, however, last year we recognized $155 million government order for NEUPOGEN that was reflected in our Q3 2013 results.

Sales grew 8% year-over-year, excluding that one-time order from last year. Overall then, the Q3 performance was strong across the board and on a year-to-date basis revenues have increased 8%, with operating income increasing 24%, reflecting our improving margin structure.

In a moment, David, will review the drivers of our key products and the financials in more detail, but as you know R&D is the engine that will drive future growth at Amgen and we continue to make good progress in advancing our registrational program, so I’ll say a few words about those.

We reported positive Phase 3 results from three innovative programs in the quarter, the second positive study for AMG 416, which is our intravenous calcimimetic, which performed well in the study versus placebo, Kyprolis Aspire study, which generated exceptional progression free survival data in the relapsed multiple myeloma setting, as well as evolocumab data in Japan, which is also an important opportunity for us.

We submitted marketing authorizations for four programs in the quarter, with ivabradine in the U.S., evolocumab, blinatumomab and TVEC in the U.S. and EU, with both ivabradine and blinatumomab currently under priority review by the FDA.

We also announced the first positive Phase 3 results for one of our biosimilar programs that being ABP 501 in psoriasis as we prepare to became launching our biosimilar portfolio beginning in 2017.

We’ll talk about strategy tomorrow and we look forward to providing more granularity on our progressing pipeline, our commercial plans for launching new products, our capital allocation plans, our business transformation initiative and progress, as well as an update on our biosimilar and manufacturing activities.

Now, let me turn to David, who will walk you through the financials and then we’ll open it up for questions..

Okay. Thanks, Bob. I want to take a moment first briefly discuss the key drivers of product sales performance during the quarter. Enbrel units grew 3% year-over-year and 5% quarter-over-quarter, reflecting strong underline demand, as this reflected in the prescription data.

I would also like to point out that Enbrel continues to see strong segment growth in both rheumatology and dermatology at 21% and 24%, respectively. Recall last quarter that we called out $60 million of Enbrel inventory build in Q2 that we expected to burn-off in Q3, masking the strength in demand.

Prolia's sales increased 43% in the quarter due to strong unit demand. As you’re aware, we normally see some seasonality in Prolia in Q3 and we saw the expected sales ramp up as we exited the quarter. We continue to capture share in the growing market with XGEVA and despite generic competition over the past year, XGEVA sales increased 22%.

Our newest products Kyprolis realized sequential sales growth of 21% to $94 million, much of which was driven by strong unit demand. We remained confident that Kyprolis will become the proteasome inhibitor of choice and you’ll have the opportunity to hear from Pablo Cagnoni, who leads our Onyx business tomorrow.

Finally, I would also like to highlight Vectibix, which grew 29% year-over-year on the strength of our new first line label in the U.S., as well as growth in the EU. Let me now make a few brief comments on our operating performances.

Our operating expenses declined 5% due to Enbrel’s improved profitability from the expired profit share agreement, as well as due to efforts to manage cost. This led to a 47% operating margin, a 7 point increase compared to the third quarter of 2013.

Based on our progress through the first nine months of the year and our confidence in the underlines trends of the business, we’re again raising our 2014 revenue guidance to $19.8 billion to $20 billion, and our 2014 adjusted EPS guidance to $8.45 to $8.55 per share. I would also like to provide a brief update on our transformation actions.

At the time of our announcement in July, we estimated a headcount reduction of 12% to 15% of our global workforce or 2,400 and 2,900 staff. We have now completed and largely implemented the adjustment with the confirmed total in excess of 2,900 reductions. On the U.S. GAAP basis, restructuring charges totaled $376 million in the third quarter.

We now expect the total cost of this action to be $835 million to $885 million through 2015, including an estimated $150 million charge in Q4 of 2014. We are also updating our guidance for the 2014 tax rate today.

Based on uncertainty concerning the timing for the extension of the R&D tax credit within the 2014 calendar year, we’ve chosen to remove the benefit from our projected 2014 adjusted tax rate, resulting in guidance of 16% to 17% for this year versus our previous guidance of 15% to 16%.

We also saw in the quarter $1 billion increase in free cash flow to $2.6 billion reflecting the benefit of higher product sales and ongoing improvements in working capital. Our cash balance increased $1.6 billion over the previous year, now totaling $28.1 billion.

Our debt balance of $33 billion is $5.8 billion higher versus Q3 of 2013 due to debt related to the Onyx acquisition. That completes our review of the quarter. I will now turn the call back to Arvind for Q&A..

Excellent. Thank you, David. Marvin, let’s go and open it up for Q&A and let’s do that for about next 15 to 20 minutes if you want to start out by reviewing the procedure again for asking questions..

(Operator Instructions) Our first question comes from the line of Eric Schmidt with Cowen & Company..

Thanks a lot for taking my question and congrats on our really strong performance in Q3. I guess the questions for David on the guidance. Even with the pumped up tax rate in 2014, if you hit your revenue guidance for the fourth quarter, it implies a pretty big decrease in operating margins.

Just kind of wondering what might be behind that?.

Yeah, Eric. So generally what we see in the fourth quarter is a pickup of the expenses. It’s a seasonal trend that occurs until each year. And so what we’re expecting is a similar pickup here in Q4. So I think nothing unusual but there's certainly some additional cost in Q4..

Eric, as you know, we’re gearing up for some potential launches next year, including launches that could take place early in the year. So that will be reflected as well when we get into the fourth quarter OpEx..

Our next question comes from the line of Matt Roden with UBS..

Great. Thanks very much for taking my questions as well and congrats on the nice results. So you pointed out the expanding margin here in the second quarter and third quarter, certainly better than it’s been in recent years. We understand that Enbrel profitability is part of that.

But these numbers are also ahead future year estimates as a consensus estimates. So I just want to get a sense for with the caveat of an uptick of expenses in the 4Q and realizing, you can’t really give guidance for 2015 at least today.

Just wanted to get a sense for how sustainable you can keep this operating margin level and to what significant you think you grow from that new level? Thank you..

Thanks for the question, Matt. It’s Bob. That’s and important question for us to address tomorrow and we look forward to addressing head on. As you point out, we benefited from an improve profitability at Enbrel but also from ongoing expenses supporting across the rest the business. I have a lot more say about that when we get together tomorrow..

Our next question comes from the line of Matthew Harrison with Morgan Stanley..

Great. Thanks for taking my question. I just want to ask two-partner on Enbrel. So first, in the slides, you gave the price and inventory. Now if you look at inventory, you called out $16 million headwind as the case it looks like it was about higher slight about $110 million.

So do you expect some inventory to reverse in the fourth quarter? And then the second is, you’ve taken two 7% price increase this year yet you reassured about 1% year-over-year price pump. Is that because you gave most of the price back in terms of the contract and could you just talk a little bit about that too? Thanks..

Sure. Matt, why don’t we ask Tony to address those two questions. Right, Tony..

Matt, the two questions, first one, you are correct, we actually entered the quarter accounting about $60 million. Inventory is fairly normal during the week but months and quarters tend to land in different places in that week which of course is shifting up and down.

In addition to the $60 million we carried into the quarter that we had a burn-off, we actually closed the quarter at unusually low level of inventory with about $40 million reduced inventories. So that $100 million will directly flow into the fourth quarter.

I think the price number that you’d seen for the third quarter, there is a lot of ins and outs on those calculations. And I don’t think you can take this as a true reflection as the net impacted price that we’re applying in the market place. Marvin, let’s take the next question please..

Our next question comes from the line of Robyn Karnauskas with Deutsche Bank..

Great congratulations. This is Mohit Bansal for Robyn Karnauskas. Thanks for taking my question and congratulations on a good quarter. My question is regarding Enbrel. So given that the decent launch of TESLA in psoriasis and psoriatic arthritis, are you seeing any impact on Enbrel sales there in derm space.

And then you talked about geographical mix bringing up the tax rate. So just wanted to get some sense of how should we think about it in the future? Thanks..

Okay. I think you have two separate questions. I will ask David obviously to address the second, Tony if you want to tackle first..

Okay so -- talking about those launched into psoriasis in late September. So the actual data that we have available is fairly light at the moment. I would assume that the fourth quarter show a bit more robust data around prescriptions.

Net, net in the third quarter, we don’t see any reduction in the number of new naive patients going on to injectable biologics for psoriasis. And we also don’t see any dramatic changes in the trend of our market share.

David?.

Yeah. In terms of tax rates, so as I mentioned I think you understood why we took the rate up here in the quarter. And what’s going to happen now is we’ll look out and I think best address tomorrow I’ve got a piece where I’ll talk about how to think about taxes going forward and what are the key drivers of that.

So, if you don’t mind I m going to take it up with you in the morning..

Great. Thanks..

Yeah..

Our next question comes from the line of Mark Schoenebaum with ISI Group..

Hey guys. Thanks for taking the question. Looking forward to (indiscernible) tomorrow. I had a question for Tony, on NEUPOGEN, would it be possible to in the U.S. for you to please give us the unit share that NEUPOGEN still enjoys of the short-acting TCS market. And I noticed on that slide, the impact of price on a year-on-year basis is not in the slide.

What happened to price on the year-on-year basis? Thank you..

Mark, price on NEUPOGEN year-on-year is negligible that why it got actually listed and as regard to market share from a total Filgrastim portfolio, we still hold just over 98% of the market..

And short acting?.

I’ll have to get to that number, but the actual market share hasn’t changed dramatically versus the third -- the second quarter..

All right. See you tomorrow. Thank you..

Okay. Sure..

Our next question comes from the line of Michael Yee with RBC Capital Markets..

I had a follow-up question on NEUPOGEN as it relates to you last. I guess, as you are seeing some competitors impact, you noted that in your slides on the short-acting. How would that be different if at all for our Neulasta and what actually happens in terms of NEUPOGEN shares, is there are price issue, does that just continue some share.

What exactly is going on there and how does relate to any risk from Neulasta in the future? Thanks..

So I am not quite sure of the detail of your question but obviously we have seen Neulasta to continue the trend it had for last couple of quarters. We see little-to-no impact from the recently launched short-acting Granix. As you know, we do have a long-acting competitor in Europe and we’ve seen a slow impact from them over the last year or so..

Our next question comes from the line of Ying Huang with Bank of America Merrill Lynch..

Hi. Thank you for taking my questions. I have a couple. First one is you guys had a decent quality sales for EPOGEN and so growth was primarily driven by price. So, I was wondering if you can talk about the pricing trend in that market and then do you expect any competition to come in 2015, U.S. or not? Then I have a second question for maybe Sean.

Have you guys looked to add any post-talk analysis of cardiovascular events in the like heart trial?.

Okay. So let me then respond to your questions. As regard price, obviously we don’t give any forward guidance on price. We did take a 4.9% price increase on EPOGEN in May this year and based on the contracts we have some of that flow through.

As regards competition, as you know, MIRCERA have the right to enter the market effective July, 2014 and we do lose patent in May of 2015..

And regarding the analysis of the cardiovascular events in the Phase 3 studies, this analysis are performed in some of the longer-term exposure studies and those are actually published in the literature. There is a paper circulation where you see about half of the rate of cardiovascular events in the Evolocumab versus the placebo controller.

I just cautioned interpretation around these various small numbers of events. It’s extremely difficult to know whether these are play of chance or a real drug effect. I will just remind you that the numbers of events that are necessary generally to evaluate this thing is in the thousand of events versus double-digit numbers of events..

Thank you..

Our next question comes from the line of Yaron Werber with Citi..

Great. Nice quarter and also thanks for taking my question. So, Sean, it’s a question for you or I don’t know if Tony wants to pick it up. Relating to Evolocumab, so your Phase 3 actually hit the endpoint using the EMA definition of statin intolerance. Regeneron’s compound missed using the U.S.

definition but at this point you guys haven’t completed your Phase 3 using the FDA definition of statin intolerance. And so my question really has to do with, do you think that you can approve in the U.S. before that data is generated? Thank you..

I think, first of all, there has been discussion by companies in this space by European and the U.S. regulators. But I would not want you to think that there are clear guidances or definitions around this coming from the regulatory agencies.

In fact, they are expressing to us the clear sense that they don’t know exactly how to define this population, how to study it, what the study designs that would be necessary to actually get specific language around statin intolerance and is unclear whether such language is necessary.

For example, one could define high-risk individuals who have not reached out the treatment goals despite the use of available therapy that would cover statin intolerant patients and non-statin intolerant patients. So it’s a very difficult area.

We actually are exploring a different ways of studying this problem so that we can eventually describe those data hopefully in our labeling. But it’s not as clear set of guidelines from the regulators as they might appear on first blush..

Our next question comes from the line of Terrence Flynn with Goldman Sachs..

Hi. Thanks for taking the question. So we know Sanofi filed for approval of a biosimilar version of NEUPOGEN this summer. Our team has done some work that suggests that additional patents beyond the composition of matter patent could be fairly significant impediments here in the U.S.

to the first biosimilars, just given potential delays for litigation and appeals. So just remind, I just want to know if you can remind us if you guys have any additional patents beyond composition for NEUPOGEN and Neulasta and if we should place any weight on those patents to potentially delay biosimilar and trends? Thanks..

I noticed a lot of discussion of that recently in the investment community. And again, it’s something that we’ll talk about tomorrow. But I think, as you are aware, we and Sandoz are litigating one intellectual property issue now that relates to your question.

And so we’ll have an answer from the courts at some point on important piece of the question that you’re asking. And generally, we expect that we will face competition for NEUPOGEN through time on the biosimilar pathway in the U.S. We also expect that we’ll start to see some challenges for the long-acting Neulasta product as well in the U.S.

probably at some point in 2016..

Marvin, before you move on to the next question, I just wanted to respond to Michael Yee’s question about the market share or about the segment share for Neulasta. So on a sequential basis, we actually gained about a percentage point and also on a year-over-year basis, we gained about a percentage point in terms of unit share on Neulasta.

Just take the next question, please..

Our next question comes from the line of Eun Yang with Jefferies..

Thank you. Question on Kyprolis. So based on our discussions here with the physicians, Kyprolis has been used to off-label beyond Neulasta for multiple myeloma.

So with the positively internal ASPIRE data, do you expect to see increases in sales in the next couple of quarters, or do you think medical community is waiting for over the survival data? Thank you..

This is Tony. As you know the data is quite sparse, so what we do is we do about a thousand chart orders and then we do an extrapolation each quarter to determine the market shares. As I look at quarter three, we sold a distinctive increase in our market share in third line. We also saw an increase in our market share in fourth line plus.

We have not seen a dramatic change in any second line uses of this particular stage. We will be presenting the data in ASH. The publication would be -- these ASH data will be public on about 6th of November and at that stage we’ll see what happens. But we haven’t seen any dramatic change in the marketplace to date now..

Our next question comes from the line of Josh Schimmer with Piper Jaffray..

Hi. Thanks for taking the question.

Hopefully, you can help, I guess, elucidate the extent of which in relevant territories your own internal projections have been able to accurately project biosimilar impact? And then how confident are you that your internal projections, whatever they maybe going forward for biosimilar erosion of your mature franchisees really do capture the likely effect?.

So let me try and respond. Obviously, there never been a historical situation in the U.S. that we can actually model anything on. The competition we have at the moment against NEUPOGEN is of course not a biosimilar competition. We have, however, in Europe looked over the last five, seven years, a large amount of biosimlar competition.

And we have modeled Europe and it worked successfully to defend our business in Europe over the last five, seven years. So we’ve done a combination of modeling Europe as a totality. We’re taking countries inside Europe that as best as possible would potentially emulate practices of all behaviors in the U.S.

And we use those models to create our long-range plans. Obviously, these are our best assumptions at present and only time will tell in terms of where the market will actually go..

I think as well, Josh, what I would add is if you look at a big picture, we have said that reliably, safety supplying biosimilars is not something that can be taken for granted. And if you look at the experience in Europe, you see several suppliers have struggled to fulfill the different tenders that they’ve won through time.

So the barriers to entry are the challenges of safely supplying the marketplace with biosimilars has proven the challenge and that’s reflected in how we see marketplace competition evolving. I suspect that as we get into more biologics, patent and more complex modules, we will continue to see that being an issue.

But generally now with the benefit of more than handful competitors, over more than a handful of years, and a number of markets in Europe the competition has been fairly predictable both from a pricing and share standpoint..

Got it. Thank you..

Our next question comes from the line of Howard Liang with Leerink..

Thanks very much. So Neulasta, you had a very strong quarter but also managing the slight impact by competition.

Does that mean that there is some inventory buildup? Can you talk about in general whether there is some meaningful or significant inventory changes quarter-over-quarter for all the products?.

For Neulasta, there was a slight decline in inventory inside -- in the quarter. As you know, the Neulasta is clearly a line to a number of monosuppressant chemo regimen that takes place in the quarter. We have not seen a dramatic increase or decrease of those regimens that takes place, Howard, at the moment.

So I don’t think there is much inventory flow, maybe $20 million to $30 million that will flow into next quarter, but the usage has not been impacted by Granix and we continue to get long-acting usage in all the accounts we haven’t mount..

So Marvin what I am thinking of so we can get back to preparing for our business review and have a more full time discussion tomorrow.

Why don’t we just take two last questions?.

Our next question comes from the line of Geoffrey Porges with Bernstein..

Thanks very much. So let me jump in with question. I just want to follow up with Tony and perhaps with David. Tony could you break out price by U.S. and ex-U.S.

You gave us the net which was very helpful, but just give us the trends there? And then David, could you just talk about currency effects during the quarter and what we should be expecting for the next couple of quarters presuming that things stay where they are? Thanks..

Geoff, sorry is this price in total, price specific on the product..

Just in aggregate for Europe versus -- or ex-U.S. versus the U.S.

would be helpful?.

Okay. So we deal only with price decreases outside the United States, right. So there are continuous challenges around pricing in Europe and in Japan even though we don’t have any visibility yet, but the price increases are predominately in the U.S. and not outside the U.S..

Got it. Thank you.

And then currency David?.

Yes. On currency, first of all, as you would know, we have a fairly limited exposure right now as a company to currency movements given the profile of the business. Secondly, the company has a rolling hedge program so we have quite an extensive portfolio against any of the traded currencies where there is a forward market.

I mean, as a consequence, you don’t see any impact this quarter in our results due to foreign exchange movements, because they are offset by the hedge portfolio. And then if you look into next quarter, it’s around $0.02 of a share negative, which is incorporated in the updated guidance..

Terrific. Thanks very much..

Our last question comes from the line of Chris Raymond with Robert Baird..

Thanks a lot. Let me side in here. Just the question back on Kyprolis. So just noticing even you back out inventory and the other effects. The unit growth, it looks like you had really the strongest sequential growth since around the beginning of the launch.

And I know ASPIRE which is top line, but just kind of what you ascribe that reacceleration do generally, if you can maybe give a little bit more color on that would be great?.

Let me spend a few minutes to say now the 'the growth' was about $16 million, $10 million of that is U.S. and $6 million in outside the U.S. As you know outside the U.S. we are getting some free approval sales in Europe and in Turkey. And we have the product approved in both Israel and Argentina. So $10 million growth in U.S.

and $6 million outside the U.S. The $10 million in U.S. is about 13% growth, now that’s say predominantly growing in third line and fourth line plus..

Thanks a lot..

Thanks for that, Tony. I also want to thank all of you for your participation in our call this afternoon and look forward to seeing you tomorrow morning..

Ladies and gentlemen, this concludes today’s Amgen third quarter earnings conference call. We thank you for your participation. You may all disconnect..