Arvind K. Sood - Vice President-Investor Relations Robert A. Bradway - Chairman, President & Chief Executive Officer David W. Meline - Chief Financial Officer & Executive Vice President Anthony C. Hooper - Executive VP-Global Commercial Operations Sean E. Harper - Executive Vice President-Research & Development.

Matthew K. Harrison - Morgan Stanley & Co. LLC Eric Schmidt - Cowen & Co. LLC Geoffrey Meacham - Barclays Capital, Inc. Alethia Young - Credit Suisse Securities (USA) LLC (Broker) Terence C. Flynn - Goldman Sachs & Co. Matthew M. Roden - UBS Securities LLC Michael J. Yee - RBC Capital Markets LLC Joshua E. Schimmer - Piper Jaffray & Co (Broker) Mark J.

Schoenebaum - Evercore ISI Eun K. Yang - Jefferies LLC Cory W. Kasimov - JPMorgan Securities LLC Ying Huang - Bank of America Merrill Lynch Brian P. Skorney - Robert W. Baird & Co., Inc. (Broker) Nick Abbott - Wells Fargo Securities LLC.

My name is Jake Long, and I'll be your conference facilitator today for Amgen's fourth quarter 2015 earnings conference call. I would now like to introduce Arvind Sood, Vice President of Investor Relations. Mr. Sood, you may now begin..

Okay, thank you, Jake. Good afternoon, everybody. I would like to welcome you to our conference call to review our operating performance for the fourth quarter and full year 2015.

I would particularly like to acknowledge those who are new in their coverage of Amgen, including Steve Chesney of Atlantic Equities in London, Ronny Gal of Bernstein, Alethia Young of Credit Suisse, Hartaj Singh of BTIG, and Brian Skorney of Baird. Welcome. Each of us look forward to working with you and helping you understand of our company.

We have a lot of ground to cover today, so let me make some very quick introductions. Leading the call today will be our Chairman and CEO, Bob Bradway, who will provide a strategic report on our performance in 2015 and outlook for 2016.

Following Bob, our CFO, David Meline, will review our Q4 and full-year results and update you on our previous preliminary financial guidance for 2016. Tony Hooper, our head of Global Commercial Operations, will then discuss our product performance during the quarter, with a particular focus on newly launched products.

Following Tony, our head of R&D, Sean Harper, will provide a pipeline update. We will use slides for our presentation today. These slides have been posted on our website, and a link was sent to you separately by email.

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..

Okay, thank you, Arvind, and let me add my welcome to those of you who are joining our call. Let me start off by saying that 2015 was an exceptional year for Amgen. It was another year of consistent and reliable performance as we delivered for patients and shareholders. I think you can see that first in our financial results.

Eight percent revenue growth in 2015 reflects the strength and breadth of our products, and our 19% adjusted earnings growth reflects the operating leverage we've created through our successful and ongoing transformation efforts.

The momentum of our products can be seen in the 17% growth we recorded from our inline brands, including Enbrel, Prolia, XGEVA, Sensipar, Vectibix, and Nplate. Together these brands generated $11 billion for us. Our legacy medicines also performed well, and these continue to be strong cash flow generators for us.

And we remain positioned to compete as new players enter the market. While delivering these solid results for the year, we also laid important groundwork for our future growth with four innovative launches in oncology and two in cardiovascular disease over the past 12 months.

As we've said before, we expect Repatha and Kyprolis to be significant opportunities for us, and see these as great examples of innovative medicines that address big unmet needs by providing significant clinical benefits and demonstrable value propositions for patients and providers.

The importance of having value propositions such of these is only said to grow in the innovative biopharmaceutical industry, and we're well-positioned to embrace that reality in our pipeline. Developing innovative medicines to address serious illness is at the core of what we do.

Behind our six new product launches are a number of additional exciting innovative pipeline opportunities, notably romosozumab in bone health; and AMG 334, which is directed at migraine in the neuroscience area.

Also of note is our nephrology product, etelcalcetide, which is under regulatory review, and omecamtiv mecarbil, which is an intriguing opportunity for us in cardiovascular disease. In addition to our own pipeline of molecules, we expect to remain active in business development.

When it comes to later-stage opportunities, we would expect this to revolve around our six core areas, which are hematology/oncology, cardiovascular, inflammation, bone health, nephrology, and neuroscience. Focus will remain important to us, and you see that reflected in our decision this week to out-license our respiratory molecule, AMG 282.

While we were intrigued by the genetics behind this target and the potential for the molecule in asthma and COPD, we feel the commercialization of it can be better optimized by Genentech, given their established presence in this field.

We continue to expand our global geographic reach, now with full ownership of our products in new markets and the very exciting approval of Repatha in Japan with our partner Astellas, which represents our first product approval for this Japanese partnership.

Our biosimilars program is also making tangible progress, with one under regulatory review, one having completed Phase 3, and another for which Phase 3 results are expected later this year. We're making significant progress with our transformation efforts here at Amgen.

We've already reduced gross costs by $700 million, enabling our 2015 adjusted operating margin to grow by some four points. We will make further progress in 2016, and we're expecting another $400 million of gross savings as we expect to reduce adjusted operating expenses year over year.

Our transformation has also made us more agile, and you see the benefits of that in our competitive performance across our products.

In manufacturing, our teams are significant contributors to our transformation efforts, driving down our cost of sales and making final preparations for the licensure of our next-generation bio-manufacturing facility in Singapore.

Improved drug delivery systems are an important differentiator of our medicines, and we're delivering solid results with them. The Neulasta Onpro kit has been extremely successful in the marketplace. And we filed our Repatha once-monthly dosing option globally.

We'll continue to innovate with patient and provider-friendly delivery systems to help differentiate our products. We've also remained focused on smart capital allocation.

Through a combination of share buybacks, dividends, and value-creating business development activities that are aligned with our overall strategy, we expect to drive shareholder value. We established a set of targeted financial commitments through 2018.

These metrics were chosen in part to provide evidence that we are making clear progress on our strategy through a period of patent expiration and new product launches. I'm pleased to report that as we closed 2015, we've made significant progress toward accomplishing these longer-term metrics.

And finally, as we enter 2016, our position is strong, our strategy is clear, and we're excited about the year ahead. I'd like to think my Amgen colleagues, many of whom are listening to this call, for their unwavering commitment to deliver for patients and for our shareholders. David, over to you..

Thanks, Bob. Turning to the fourth quarter on page five of the slide deck, revenues at $5.5 billion grew 4% year over year, with a 3% increase in product sales. Other revenues at $207 million increased $50 million versus the fourth quarter of 2014, reflecting an increase in royalty income and a milestone payment recognized in the quarter.

Adjusted operating income at $2.4 billion grew 16% from the prior year. Adjusted operating margin improved five percentage points to 44% for the quarter, reflecting the continued benefits of our transformation program.

On an adjusted basis, total operating expenses decreased 4% year over year, including a favorable foreign exchange impact of approximately two percentage points. Cost of sales margin at 14.3% improved by 1.6 percentage points, driven by lower manufacturing costs, higher net selling price, and lower royalties.

Research and development expenses at $1.1 billion were down 10% year over year, reflecting the Q4 2014 upfront payment to Kite Pharma of $60 million for our cancer immunotherapy collaboration, as well as the benefit of R&D expense savings from transformation and process improvement efforts.

SG&A expenses were up 3% on a year-over-year basis, reflecting incremental expenses in Q4 for new product launches, partially offset by savings from transformation and process improvement efforts.

Other income and expenses improved by $53 million year over year to a net expense of $120 million in the quarter, primarily due to cash investment portfolio activities as well as higher interest income due to higher cash balances this year. The tax rate was 11.6% for the quarter, a 1.4 percentage point increase versus Q4 of 2014.

This increase was primarily due to a decreased benefit from the R&D tax credit in 2015 versus 2014 due to higher pre-tax income and reduced R&D expenses. As a result, adjusted net income increased 19% and adjusted earnings per share increased 21%. You will find a summary of our full-year 2015 results on page six of the presentation.

Our 2015 full-year revenues grew 8% to $21.7 billion, and adjusted earnings per share grew 19% to $10.38 per share. For the full year, adjusted operating income grew to $10.1 billion, a 19% increase, based on the combination of solid revenue growth along with flat operating expenses. Operating margin improved by four percentage points to 48%.

On an adjusted basis, cost of sales margin improved by 1.3 percentage points year over year to 14.5%, driven by lower royalties, higher net selling price, and lower manufacturing costs. Research and development expenses decreased 5%, driven by savings from transformation and process improvement efforts.

And SG&A expenses were up 6%, primarily due to increased commercial expenses for new product launches, partially offset by savings from transformation and process improvement efforts.

Other income and expenses improved by $114 million year over year, primarily due to higher interest income due to higher cash balances, partially offset by higher interest expense due to higher debt balances. The tax rate was 16.8% for the full year, up 1.9 percentage points versus 2014.

The year-over-year increase was primarily due to the unfavorable tax impact of changes in the geographic mix of earnings. Turning next to cash flow and the balance sheet on page seven, for the full year 2015 we generated $8.5 billion in free cash flow versus $7.8 billion last year. This increase was primarily driven by higher sales and profitability.

As a result of this strong cash flow performance, total cash and investments increased to $31.4 billion. This balance included over $2 billion in the U.S. and $29 billion outside the U.S. Total debt outstanding increased slightly to $31.6 billion. As a result, net debt decreased by $3.5 billion to $200 million at year end 2015.

Our total debt portfolio has a weighted average interest rate of 3.6% and an average maturity of 10 years. Additionally, for 2015, we increased our dividend per share by 30% to $0.79 per quarter, with payments totaling $2.4 billion. We also announced a 27% increase to the dividend to $1.00 per share for our first quarter 2016 payment.

Finally, at our 2014 business review, we indicated the intent to repurchase shares totaling up to $2 billion by the end of 2015, which we have now accomplished with repurchases of approximately 13 million shares since Q4 of 2014. At the end of 2015 we had approximately $4.9 billion remaining under our board-authorized share repurchase program.

We intend to repurchase an additional $2 billion to $3 billion of shares in 2016 and are on track to deliver our capital allocation commitments to shareholders. I will now turn to guidance for 2016, summarized on page eight. As you will recall, we provided preliminary 2016 guidance on our October earnings call.

Today we are increasing our 2016 guidance, which reflects an improved revenue outlook, due to revised timing of new biosimilar competition, as well as the inclusion of the R&D tax credit, which has been permanently extended.

With this background our 2016 revenue guidance is $22 billion to $22.5 billion versus prior guidance of $21.7 billion to $22.3 billion. And our adjusted earnings per share guidance is $10.60 to $11 per share. In addition, we now expect our adjusted tax rate to improve by one percentage point versus prior guidance, 19.5% to 20.5%.

Finally, we continue to expect capital expenditures to be approximately $700 million this year.

As a result of our strong progress in 2015 and the 2016 outlook, we remain confident we will meet or exceed commitments provided for the 2014 to 2018 period, including double-digit adjusted EPS growth, adjusted operating margin improvement from 38% to 52% to 54%, $1.5 billion of transformation savings with a net $800 million reduction in operating expense, and return to shareholders of at least 60% of adjusted net income during the period.

We also previously guided for total restructuring expense related to the transformation program of $935 million to $1.035 billion during the period through 2018.

Based on better than anticipated results from the exit of two of our closed facilities, we now expect to incur a total of $800 million to $900 million in restructuring expense through 2018, with nearly $700 million recognized already in 2014 and 2015.

In summary, we delivered another year of strong financial results in 2015, and we are increasingly confident in the outlook for Amgen's success in 2016 and beyond. This concludes the financial update. I will now turn the call over to Tony..

BLINCYTO, which continues to make inroads with ALL patients; and IMLYGIC, where we are pleased with the initial response in key institutions with met (24:05) indication as well as its future potential in combination with other immunotherapies. Let me now turn to inflammation with ENBREL.

On slide number 19, you'll see that ENBREL grew 8% year over year, driven by net selling price. You'll recall, net selling price includes the impact from list price changes as well as contracting and access changes that have occurred over the past 12 months.

Year over year, segment growth remained strong, as rheumatology grew 27% and dermatology grew 46% on a value basis. Quarter on quarter, our rheumatology value share was stable at 28%, while our share in dermatology declined two percentage points to 22% due to intensifying competition from new therapies.

I'll remind you that rheumatology accounts for about 80% of ENBREL sales. Given ENBREL's exclusivity through 2029, we continue to invest in the brand, and its outlook for further growth remains strong. I'll now move to bone health and Prolia. Prolia grew 21% year over year in the fourth quarter, with about 20% unit growth in both the U.S.

and Europe, delivering $1.3 billion of sales for the year. Growth was driven by continued share gains in both the U.S. and Europe, and we expect this momentum to continue in 2016.

With our recent agreement with GSK, we look forward to transitioning Prolia as well as XGEVA and Vectibix back under Amgen's control in 48 countries and continuing to drive growth. This is another important step in delivering our international expansion strategy.

We're also looking forward to a potential important addition to our bone health franchise with romosozumab, which will soon have its Phase 3 data and Sean will be discussing in a moment. Turning now to our nephrology franchise, starting with EPOGEN; EPOGEN declined 37% year over year, driven by a shift in ESA use.

This decline has three primary components. First, around 30% of the decline is due to the shift from EPOGEN to Aranesp in the dialysis setting. We continue to see uptake of Aranesp with medium-sized and independent dialysis centers.

Second, roughly 20% is a result of the burn-off from a large customer purchase in quarter three, as we discussed on our last call. The remaining 50% of the decline comes from the shift from Mircera at Fresenius. Fresenius represents about a third of the U.S. dialysis business.

In October, they disclosed that just over half of their dialysis patients utilizing ESAs had switched to Mircera. EPOGEN sales in 2016 are likely to be impacted by further share declines at Fresenius and the potential for additional switching to Aranesp.

Just a reminder that we have a very good business partnership with DaVita, and our agreement with them extends through 2018 to purchase at least 90% of their ESAs from Amgen. Aranesp sales increased 4% year over year, with a 25% unit growth in the U.S., driven by continued shift in dialysis business from EPOGEN to Aranesp.

International sales were negatively impacted by foreign exchange rates. Sensipar grew 21% year over year for the fourth quarter and delivered $1.4 billion in sales for the year, driven by net selling price and unit growth in both the U.S. and Europe, with good growth prospects for 2016.

Our nephrology franchise has another exciting opportunity with Parsabiv, the new trade name for etelcalcetide, an intravenous calcimimetic, currently under regulatory review in both the U.S. and Europe. I would like to close by outlining our expectations for 2016. We do not expect Neulasta or EPOGEN biosimilars in the U.S.

until the end of 2016 at the earliest, assuming potential competitors provide us 180 days' notice between approval and launch. EPOGEN is likely to face continued competition at Fresenius and the conversion to Aranesp.

EPOGEN continues to face headwinds with new competition, while we expect Neulasta sales to continue to grow given the assumed delay of the U.S. biosimilar competition. We expect ENBREL, Prolia, XGEVA, Sensipar, Vectibix, and Nplate will all see continued growth in 2016.

And our recently launched products, notably Repatha and Kyprolis, will continue with meaningful growth in 2016. Kyprolis's improved label in the U.S. coupled with our launches around the world will continue to drive solid growth.

Repatha growth is expected to be steady in the near term, with breakaway potential once we have the outcomes data in our label. It sure has been a busy and very exciting time for our teams across the world, and I'd like to thank them for their hard work and dedication to delivering for patients. Let me now pass it to Sean..

Thanks, Tony, and good afternoon. 2015 was an unprecedented year for Amgen with a record number of regulatory submissions and approvals, and 2016 promises to be another very busy year. We've already announced two regulatory approvals, and there are a lot more R&D events to come.

Beginning with our cardiovascular franchise, last week Repatha was approved in Japan for the treatment of patients with familial hypercholesterolemia and patients who are at high risk for cardiovascular events who are not adequately responding to statins.

This is the first approval of a PCSK9 inhibitor in Japan and the very first approval by our joint venture, Amgen Astellas Biopharma.

I'm also happy to report that our outcomes study remains on track, as we continue to expect the data in the second half of this year along with the results of our coronary imaging study we're conducting with the Cleveland Clinic.

We believe that demonstrating a reduction in plaque burn with Repatha will resonate with cardiologists and complement the outcomes data. We've also been reviewing in detail along with our partners at Cytokinetics and Servier the Phase 2 data for omecamtiv mecarbil, our novel myosin activator for heart failure.

We've been extremely encouraged by the feedback we've received from our discussions with experts in the field as we prepare to meet with regulators to discuss a potential path forward. Turning to oncology, last week in the U.S. we also received a new indication for Kyprolis in combination with dexamethasone in the relapsed multiple myeloma setting.

This was based on the ENDEAVOR data, which demonstrated clear superiority over Velcade, as Kyprolis doubled the amount progression-free survival time. This FDA decision also converted the initial accelerated approval to full approval and added important dosing flexibility. The Kyprolis ENDEAVOR data are currently under review in the EU.

Subgroup analyses of ASPIRE and ENDEAVOR were presented at the American Society of Hematology meeting last month, and the response from physicians reinforced our view that Kyprolis will be a backbone of multiple myeloma therapy as physicians pursue deeper, more durable responses for their patients in search of cure.

In support of this, we're exploring the use of Kyprolis in combination with newer therapies for multiple myeloma and announced an initial agreement late last year in which we are providing drugs to Janssen for combination study with daratumumab.

In the fourth quarter, we also received three marketing authorizations in Europe, including Kyprolis in combination with Revlimid plus dexamethasone for relapsed multiple myeloma based on the ASPIRE data.

IMLYGIC was approved for the treatment of adults with unresectable melanoma that is regionally or distantly metastatic with no bone, brain, or other visceral disease. And BLINCYTO was approved for the treatment of Philadelphia chromosome-negative relapsed or refractory B-cell precursor acute lymphoblastic leukemia.

We recently conducted an analysis of the events occurring in our large ongoing Phase 3 trial of XGEVA in the setting of skeletal-related events prevention in multiple myeloma patients. And with the usual caveat that this is an event-driven trial, we currently estimate we'll see the data toward the end of this year.

We also continue to expand our immuno-oncology platform and announced new collaborations with Merck combining their PD-1 inhibitor with BLINCYTO in the setting of diffuse large B-cell lymphoma; and AMG 820, our anti-colony-stimulating factor one receptor antibody in advanced solid tumors.

Finally, in oncology, our Phase 1 study of AMG 330, our anti-CD33 BiTE, continues to enroll acute myeloid leukemia patients. In the area of bone health, we along with our partners at UCB are awaiting the results from our registrational Phase 3 study of our sclerostin antibody, romosozumab, for post-menopausal osteoporosis.

We expect these data this quarter. In this study, we are assessing the effect of romosozumab dosed monthly for 12 months compared to placebo dosed for 12 months, after which both cohorts are treated with Prolia for 12 months. The co-primary endpoints are the incidence of vertebral fracture at 12 and 24 months.

And important secondary endpoints include clinical and non-vertebral fractures. We're also conducting a Phase 3 study of similar design comparing romosozumab to alendronate in year one, followed by both cohorts being treated with alendronate in year two. We expect romosozumab to be used in high-risk osteoporosis patients.

And with a total of 12 monthly doses, we believe the most effective way to ensure proper dosing and maximum benefit in this patient population, at least initially, is through administration by a healthcare provider.

We'll continue to evaluate the development of potential indications, formulations, and delivery options that could be attractive for certain patient populations. In fact, we will be seeing data from a Phase 3 study assessing the improvement in bone marrow density in men with osteoporosis in the first half of this year.

While osteoporosis and osteoporosis-related fractures are more commonly associated with postmenopausal women, as many as one in four men over the age of 50 will suffer a fragility fracture in their remaining lifetimes.

Before I leave our bone franchise, I'd point out that we'll also be receiving data from a Phase 3 Prolia study in glucocorticoid-induced osteoporosis. Millions of patients are on glucocorticoid therapy around the world, which can result in significant bone loss and fracture.

In neuroscience, our Phase 3 study in episodic migraine with our CGRP receptor antibody, AMG 334, continues to enroll extremely well across two studies, a testament to the unmet need and desire by patients for an effective prophylactic therapy.

In the chronic migraine setting, our Phase 2b study is expected to read out in the second half of this year. Meanwhile, the Phase 1 study of our anti-PAC-1 antibody for migraine, AMG 301, is currently enrolling patients. And finally, we received a target action date from the FDA on ABP 501, our biosimilar Humira, on September 25 of this year.

As I said at the outset, 2015 was a very productive year and we have a lot in store for 2016. I would like to thank all of my colleagues at Amgen for continuing to deliver for patients.

Bob?.

Okay, thank you, Sean. Jake, we're ready now for questions. So if you could just remind our callers of the procedures, we'll open up the lines..

And your first question comes from Matthew Harrison of Morgan Stanley..

Great, good afternoon. Thanks for taking the question, maybe if I could just start with one for Sean. On romo [romosozumab], people are obviously focused on this data and focused on the potential safety of that molecule.

Could you just address for us how you think about the potential for some imbalances and falls or hearing loss or some of the brain volume growth that obviously make people worried about neurological symptoms? And then in addition to that, just talk about, to the extent you can, what the DSMB has looked for, what sort of monitoring you have, and the study around those issues.

Thanks..

Yes, so I think obviously when one looks, this is a genetically validated target, and when one looks at the rare familial forms of absence of sclerostin or partial absence of sclerostin activity such as van Buchem's disease or sclerosteosis, these individuals from conception are deficient in sclerostin.

And so as a consequence of course, over time, often in their third or fourth decade, they begin to have some untoward effects from this, such as very thick skull plates and the foramina in which cranial nerves that exit from the skull can impinge on the nerves due to overgrowth of bone.

I think that this is something that is an effect developing from conception with the absence of sclerostin. And I just would contrast it sharply with giving one year of therapy to generally quite elderly, at least middle-aged at minimum, osteoporotic patients.

So I think of course in an abundance of caution, we are doing testing on hearing and some other things that are designed to assess these kind of theoretical risks. But I would certainly be very surprised to see a pharmacodynamic response from the drug that would result in those kind of complications.

The DSMB, of course, is fully aware, as all our investigators are out doing the trials, and patients through informed consent that all of the theoretical and established potential risks of these kinds of investigative products..

And your next question comes from the line of Eric Schmidt from Cowen & Company..

Maybe for Tony on Repatha's uptake, you noted the happiness on your part with the share gains. But are you disappointed overall with the size of the pie at this stage? I know you're seeing reimbursement headwinds.

But nonetheless, I guess is this on a more shallow trajectory than you thought? And assuming we do get the positive outcomes data toward the second half of the year, should we see an immediate benefit from that, or would you think it would still take some time to work with payers to work through these headwinds?.

Thanks, Eric. So I'm glad you see the relative performance in the marketplace. The hub we put together was clearly done because we understood there was going to be a little bit of time before the payers made a decision around formulary approval.

And to me, the hub has therefore been a surrogate to the level of prescriptions that cardiologists and endos and primary care physicians are prepared to prescribe. We are seeing a really robust level of prescriptions coming through the hub.

So to me, that continues to give me great confidence in terms of physician willingness to prescribe this drug for patients who fit inside the label. The prescriptions themselves in terms of both the NBRxs and the TRxs are continuing.

It's clear that the utilization management criteria in place is restricting the number of prescriptions that get dispensed. And we are working with payers at the moment to make sure that patients who are eligible actually get access to these drugs..

Then on the outcomes study..

So the outcomes study, clearly I think one thing that's clear what the value of this drug is, physicians, patients, and payers will realize a tremendous amount of value. Now I think there will be a time between the data becoming present and the data moving into the label that we'll be negotiating with payer by payer.

But once it's in the label, it's clear that we should see some dramatic uptake then, yes..

Jake, let's take the next question please..

Your next question comes from the line of Geoff Meacham from Barclays..

Afternoon, guys. Thanks for taking the question, a couple on Repatha as well. So, Tony, when you look at the subtleties, either reimbursement or populations or clinical practice, can you compare the EU and Japanese markets to the U.S., assuming that you do get an outcomes data this year? And then just to follow up to Eric's question on the U.S.

market, what can you tell us in terms of leading indicators of demand? In other words, like physician prescribers or visits to your hub or things like that? Just want to get some demand metrics beyond TRx. Thanks..

I think I understand your question about access outside the U.S. So one has to remember that outside the United States, once access is granted, physicians are not making a decision on anything other than a clinical decision around the value for patients. So there is no economic decision once you have access in Europe and in Japan.

So the negotiation is to get access as quickly as possible, and then to move patients onto the drug as physicians prescribe. From an inside the U.S. perspective, yeah, it's the number of prescriptions we're seeing across the range of physicians who have been prescribing it is encouraging.

And I'm not quite sure what more you want to hear about it, Geoff, sorry.

Did I answer your question? Or did I miss a question there?.

And your next question comes from Alethia Young from Credit Suisse..

Yeah, hang on, Jake. Before you move on to Alethia, Tony was asking if he had addressed Geoff's question..

Geoff, was that okay? Was there anything else?.

Okay, looks like we might have lost him, so let's go on with the next question from Alethia. Alethia, go ahead..

Alethia, we can hear you. Go ahead..

On NEUPOGEN, I know you said you were going to compete account by account. And so far you have share – you still have 76% share. But can you give us a little flavor on the progress that you've done there? Have you spoken to the majority of accounts? Just help us think about how much defense you're playing and how much success you're having.

And then on Neulasta, I guess I wanted to think about – with the Onpro device, do you think that business is now sticky? And we should think about that as share that's now protected if there were a biosimilar to emerge in 2017?.

Okay. So NEUPOGEN, tough to answer your question. We clearly segment the NEUPOGEN account between large, medium, and small. And we decide which ones we're going to defend and which ones we're going to be letting go. As you know we've had competition on the market for over a year now plus a biosimilar competitor for close to six months.

And we still hold 76% of the market share. As regard to the on-body injector for Neulasta, the main reason we brought it to market is the unique distinctive value this drug – or that this device brings to patients and to the physicians and clinics and institutions.

Most patients try and get their chemo on a Friday; then they can spend the weekend recovering before they go back to work. Neulasta requires them to come back on a Saturday morning to get their last injection. So sometimes what was happening is patients were getting the injections too early, which is actually not good.

It actually reduces the effectiveness of the drug quite dramatically. Or two, they were not coming back for the injection at all, so exposing themselves to potential febrile neutropenia.

So the real value that we've picked up from patients, from nurses, from physicians, and from institutions has been we are increasing the opportunity to give patients the right number of cycles at the right time and really reduce the possibility of febrile neutropenia dramatically.

This is the benefit we sell the device on consistently, which I'm sure will continue and stick..

Great, thanks..

And your next question comes from the line of Terence Flynn from Goldman Sachs..

I was wondering, you talked about the label expansions and some of the benefit there.

But I was just wondering if you could comment on the potential future contribution from once-weekly dosing? Is that really one of the key drivers of an inflection here? And then any commentary you can provide on average treatment duration trends for Kyprolis? Thanks..

So I think with Kyprolis, we have to start with our true belief that driving deep remission is where clinical practice is going to go. And the combinations using Kyprolis as one of the products in the backbone is clearly showing us these huge extended periods of PFS, which by definition is helping us drive deep remission.

Patient convenience down the line will become important. And I think the once a week dose will certainly help with patient convenience to ensure that patients stay on the drug for as long as we can.

As regards to duration, when we look at the chart orders, we see that products in this category in second line are probably being used between about seven months to eight months at the moment. It's difficult to quote Kyprolis data yet, because we only got approval for the second line in July.

So we're hoping to see some extended data in the next couple of quarters..

And your next question comes from the line of Matt Roden from UBS..

Great, thanks very much for taking my question. I want to go back to romosozumab. Just wanted a little bit more from the commercial side, because if the trial works, we're all going to be interested in the opportunity for the product.

So to that end, I was wondering if you could elaborate a little bit more on the strategy to at least initially administer the drug in the doc offices by a healthcare provider.

Can you just talk about why you think that's beneficial for the patient? And whether or not you think that that's the best way to maximize the potential to impact patients? And then I guess a related follow-on to that would be, can you talk about what work you're doing to maybe provide a self-injection option down the line? Thanks..

So let's start with Prolia because we've spent the last four or five years now building a level of expertise on Prolia. And we were the first biologic, injectable biologic to launch into a GP-type market, a complex process which I think the team have got their hands around.

And as you see the data in the U.S., Prolia continues to grow in leaps and bounds as we get both breadth and depth of prescribing happening. It's clear to us that a lot of these patients are elderly, and coming back to the doctor is important to ensure they get the injection.

When I think about any other potential competition to romo, the biggest complaint they have is the difficulty of daily injections, of course. So we do see that the same targets that are prescribing Prolia would be targeted to go to, to talk about romo.

And we think that the large unmet opportunity in the marketplace, this is quite a large opportunity for us to go to market with..

Do you want to say anything about future plans on administration?.

We are always looking to advance and improve on the way we actually bring to market a combination device product, and we will continue to look at effective and efficient ways for those patients who decide that self-injection could be an option, yes..

And your next question comes from line of Michael Yee from RBC Capital Markets..

Thanks. I had a question for Sean regarding romo. I think that certainly we think that should work, but I actually wanted to ask scientifically.

Could you remind us how confident you are in translating that superior BMD data to superior fracture data, particularly against a high-efficacy drug like Forteo, if similar or to what magnitude it could be much better numerically? And then in year two – I know you're testing the hypothesis of that design in your study.

But what would you expect in year two? And is there any reason that it would not be maintained across year two? Thanks..

What I would say is that the confidence level we have about the BMD, which as you know is the most impressive BMD increase that's been seen in humans with any treatment, translating that into fracture resistance, that confidence is high. I think that the genetic validation that exists for the pathway is very convincing to people in the field.

Also, we saw – this is one of the few areas where the preclinical models, particularly those performed in non-human primates, are really quite predictive of what you'll see in humans. And then in a non-human primate, we were able to do biomechanical testing of bone, of course, after animals are sacrificed.

And so we know that we achieved extremely high bone strength in these animals commensurate with the BMD increases. And finally, we've done very advanced imaging of humans that have been treated with romosozumab and compared it head to head to what we see with Forteo.

And as you probably know, Forteo has its major impact on trabecular bone and has a relatively limited impact on cortical bone. And cortical bone really is what matters for the majority of long bone fracture risk, which is really where the clinical need is.

And so we have multiple reasons to believe the genetics, the preclinical information, and the imaging that we've done in humans that we should have only not only a greater BMD increase, but that the quality of the bone that we're producing is of a higher quality than what one gets using PTH analogues.

One way of thinking about this is there really are two master regulatory switches for controlling BMD. One of them is RANK Ligand, which controls osteoclast function that we direct in us met (52:27) there. And the other is sclerostin, which controls osteoblast function, and there sclerostin is the key mediator.

So what you're doing here like with romosozumab is throwing a master physiologic regulatory switch. And so what you're expecting to get and what we see in everything that we've observed is physiologic high-quality bone formation..

Can you talk about year two, Sean?.

Year two, I think the thing that is interesting here in this paradigm is that this is a one-year treatment. And so the first year of the study is very important because it's a placebo-controlled period.

We know from our experience with humans that we can't just withdraw the product and leave patients on no therapy, so the gains that are so impressive will melt away relatively quickly. And so it is necessary to lock in these gains with an antiresorptive agent. So what we expect to see is – we obviously know a lot about Prolia.

We expect the placebo group to respond well to Prolia in the second year, but the patients on romosozumab will also get substantial benefit. And so if there's a meaningful difference in fracture risk at the end of year one, that should persist more or less out to the second year and even in theory well beyond that.

But this is a new paradigm in osteoporosis, this relatively short period. And the study designs are quite different than what people are used to seeing in the field, so we'll all be fascinated to see the results obviously..

Jake, before you go on to the next question, Tony had an additional comment on Geoff Meacham's question about the Repatha demand indicators.

Tony?.

Sure. So, Geoff, I think I better understand your question now, more around in addition to TRx's, what else should we be looking at to see future growth in the marketplace. Like always, to me TRx's and MDRx's in terms of new naive patients are the most important thing to measuring in terms of the growth.

But with a new launch like this where the plans are put into place at the formularies, one has to remember that IMS only reports dispensed prescriptions; i.e., prescriptions that come to a pharmacy or a specialty pharmacy and the patient actually walks away with the drug.

What you have to be able to look at inside that data is how many prescriptions get to the pharmacy and how many are rejected versus how many are abandoned.

So we are seeing that the majority of prescriptions getting to the pharmacy at the moment are being rejected, rejected because the prior authorization process has not been properly completed or there's some outstanding information and patients have to go back and get some more data.

All patients are seeing the copay at this particular stage because the product is not properly on formulary yet as being too high a copay, and they abandon the prescription and they walk away.

So the data you're seeing is really important, but you have to understand that the majority of prescriptions getting to the pharmacy are either being rejected or abandoned at the moment while the plans complete their process, which is why we spent so much time with the plans at the moment showing them the number of eligible patients who are on label getting to pharmacy and not getting product.

It really is a concern. And when you think about the potential Repatha patient, these are patients that are at risk right now for a cardiac event and therefore early intervention is essential, so we're spending quite a bit of urgent with the payers..

Great. Thanks, Tony. Jake, let's take the next question, please..

And your next question comes from the line of Joshua Schimmer from Piper Jaffray..

Hi, thanks for taking the questions. I just wanted to come back to the Repatha management criteria that are limiting uptake. Can you elaborate a little bit on what the primary causes for rejection are? Give us any sense as to the evidence that you are making progress in addressing some of these issues.

And then given what those issues are, what gives you the confidence that the cardiovascular trial data may ultimately resolve that as a barrier? Thanks..

So it's Tony here, Josh. Utilization management criteria obviously differ plan by plan, but they include things such as patient must restate naturally tolerated statin dose or someone requires you to be on one or two statins. Some of them require you to have done statins plus a step-through to Zetia.

There's clearly a requirement around your LDLC level, they have to be at a certain level. But probably the more complex thing is the prior authorization documents. There are five pages of handwritten stuff that physicians have to find out about.

And most of the rejections are because the form is not properly completed, and this is the time to collect the data. So as we get the process running a bit more efficiently and hopefully moving from paper to an electronic process, the prior authorizations could go faster.

And then as we show the payers the impact of too draconian a utilization management criteria not getting to the right patients, we will see some changes there. The outcomes data of course will dramatically change the value of this particular drug, and we do expect to see some changes in the utilization criteria once we have that turn..

And your next question comes from the line of Mark Schoenebaum from Evercore ISI..

Hey, guys. Thanks for taking the question, three questions. First, I'd like to know where Arvind buys his ties. Second question is Pfizer has made the decision to enroll primary prevention patients I believe into their Phase 3 PCSK9 outcomes trial, Sean and Tony, and I was wondering.

They expect to have a label indication for that, and they believe that that's very important for the payers. Why did you make the decision not to design your trial that way? Maybe that's a Sean question.

And for Tony, what commercial implications, if any, is this going to have in your mind? And then third, just to follow up on someone else's question, just to be more direct, I think what's going on, on the Street right now is people are concerned that the romo fracture reduction magnitude may look optically less than what is contained, for example, in the Forteo label or some of the data that Radius has produced for the PTH analogue, primarily because at two years you're comparing obviously your sclerostin antibody to an active comparator versus these other agents which were compared to placebo I believe.

So the question is should we be expecting, Sean, can you just talk about, is this an apples-to-apples comparison or apples-to-oranges comparison when we actually see that number? Thank you..

Sean, why don't you do romo and the Pfizer PCSK9 question, and then Tony can do part of it..

Okay. So with respect to room, what I would say is that you're right that this will not be so straightforward as to make cross-trial comparisons of those sort. They're fraught with difficulty always, these Santa Claus trial comparisons.

But in osteoporosis, because the trials are very large and of very similar design, in general people have felt pretty comfortable doing that. and you've seen that, for example, when we had our three-year fracture data for Prolia, people compared it to three-year fracture data with bisphosphonate, either oral or IV, et cetera.

And I think in this case it's going to be much more difficult to make those kind of simple comparisons. I think what will happen here is that the data will be interpreted by the experts in the field.

And as always is the case with a specialty product like this that's targeted at a very specific patient population, the experts in the field will make the determination whether they think that the data are impressive and who ought to be getting the product, and that will influence prescribing outside the expert community.

With respect to the primary versus secondary prevention strategies, I think that the companies that were in the lead on PCSK9 wanted to get outcomes data for these products as fast as was possible.

And the fastest way to get the outcomes data is to study a patient population that has a fairly high event rate, and that generally is achieved – or one of the main levers you can pull is to have patients who have suffered a prior event. That's one of the strongest predictors of a subsequent event.

As you know, there have been slightly different flavor variants on that that have been pursued by us and by Regeneron, but that's been the basic approach. Moreover, it's never been necessary in this field to do outcomes trials in various different populations in order to have a label the covers broad patient populations.

So what you really need to do is demonstrate convincingly that the LDL level reductions that you're achieving with your agent translate unequivocally into reductions in cardiovascular outcome risk. That's all you need to do. And we feel that the studies will do that.

Obviously, a company coming behind, it has to think about what they're going to do to try to differentiate their position..

So I think that the payers will be looking at high-risk patients. Physicians will be making decisions around patients to prescribe that have a high risk. And I think the clinical trials we have will take into account all patients that are high-risk.

Clearly those who have an event or have concomitant disabilities will be a higher chance of getting a drug and getting it prescribed..

Jake, let's take the next question..

And your next question comes from the line Eun Yang from Jefferies..

Thank you. So when you look at Forteo sales, ex-U.S. sales are higher than U.S. sales despite limit of aggressive price increases. But when you look at Prolia, U.S. sales account for 64% of total sales.

Why do you think that there is a difference in usage between anabolic and entire result of Asia, or so you think this is due to several of the administration versus efficiency of the administration (1:03:40)? And the follow-on, that is romosozumab is going to be used one-year treatment whereas the PTA channels are going to be used two-year in use, countries is two years.

So how do you think about the pricing of romosozumab? Thank you..

Let me try and answer the first piece about the difference in the sales globally. I think Prolia was simply a timing around coming to market. We came to market during a fiscal crisis, and the entire reimbursement process outside the United States took a number of years.

In fact, in France it took us 4.5 years from approval to get the final decision made on pricing. So outside the U.S. they are running to catch up in terms of the patient usage. And then we are sure that eventually we should get to a decent balance.

Sean?.

I think the other question....

Another question had to do with pricing..

Pricing, value, Tony?.

I imagine it's premature..

I think the price we'll be able to charge will be clearly linked around the value proposition we see coming out of the clinical trials..

Okay, Jake, let's take the next question please..

And your next question from the line of Cory Kasimov from JPMorgan..

Hey, good afternoon, guys. Thanks for taking my question.

I wanted to go back to Kyprolis for a minute, and just wondering if you have an efficacy interim look built into CLARION similar to what you had for ENDEAVOR? And if you do, what triggers it? And what kind of action can be taken? Would it just be – it could be stopped for either futility or overwhelming efficacy? Thanks..

Yeah. So these trials were all designed more or less at the same time by the same group of people. And they all have a generally similar design in that they have interim analyses. Obviously, that interim analysis has in it the ability to stop the trial for clear futility and to stop the trial for overwhelming efficacy.

And if you, I'm sure will recall, both ASPIRE and ENDEAVOR were stopped for overwhelming efficacy. I think this is a reasonable design. But I don't think that we are in any way planning on seeing a first-line study stopped for overwhelming efficacy at the interim, but it is a possibility..

As we said, Cory, we're expecting this in 2017. Okay, let's go to the next question..

And your next question comes from the line of Ying Huang from BofA Merrill Lynch..

Hi. Good afternoon, guys. Thanks for taking my question. If you don't mind, can you spell out the sales of Repatha last quarter? I know it's a small number, but just a housekeeping question there.

And then secondly on romosozumab regulatory path, do you believe firmly that the first Phase 3 trial that would read out in 1Q this year should be sufficient for FDA approval? Thanks..

Sorry.

Did you get the second question, Sean? Okay, why don't you go ahead in the second question?.

Yes, on the romo study, yes, we believe based on the published guidances by regulators around the world and our interactions with the regulators around the world that if successful, the placebo-controlled study we were just talking about earlier, the first of these studies that reads out, will be sufficient for global registration..

Okay. And as to the Repatha sales, you're right, we're not breaking those out by line item at this time..

Jake, let's go ahead and move on to the next question, please..

And your next question comes from the line of Brian Skorney from Robert W. Baird..

Hey, good afternoon, guys. Thanks for taking the question.

Just thinking a little bit more about the outcomes data for Repatha expected later this year, where do you think the range of outcomes can fall in terms of how we extrapolate the reduction in LDL capability of the drug to what we've classically seen in terms of CV reduction? And kind of maybe think about what the range should be based on that? And how it could deviate from that classical extrapolation, whether it's due to different types of patients or just the trial design? How we can think about that? Thanks..

Yeah. I mean this is the kind of subject than one can sit around and talk about for many, many hours with experts, which I've done. And I think the best thing I can say is that we have a remarkably linear relationship that we've established, most recently with IMPROVE-IT, extending that line in just a remarkably linear fashion.

Extending the line that was created by statins and by other interventions, such as ileal bypass surgery and so on, and the genetics of course.

And so when you put it all together, what you have to believe scientifically is that what the truth is, that you're going to fall right on that line in the same way as if you achieved that additional LDL lowering with a statin or with ezetimibe, were that possible. Obviously it's not. Could it deviate from the line? Sure.

I mean it is always possible that some of the foibles of the way that the clinical trials are designed and conducted – there is of course, for example, a treatment lag of some sort that occurs when you start therapies.

And so when the study reads out very quickly instead of over a longer period of time, that has a bigger influence, et cetera, that could make it come off the line slightly in one direction. We also know that the agent does have some activities that statins don't have.

For example, there is an effect on Lp(a), which is present in some individuals and seems to be a strong prognostic factor that could make the dot come off the line a little bit the other direction. So there's some variability that you could expect.

But from a scientific perspective, based on the human genetics and everything we know, one would expect that you're going to see a reduction that would be proportional and dissimilar (1:10:26). And that would be roughly this ballpark around the one-third level reduction of the risk.

So that's the kind of number that many people – keep in mind I think the 50% reduction in risk that was suggested by the analyses that were published in The New England Journal, there's a very wide confidence interval around those.

And while you can't rule out the possibility that you'll see that big of a reduction, that's a bigger reduction than you would expect to get if you were achieving the LDL lowering that we're achieving with a statin. So it requires some other biology like Lp(a) or something to be going on.

And I can't tell you that's not happening, but it sure wouldn't be my base case..

We'll know in a few months, so, okay?.

Lots to talk about today. So we have exceeded our prescribed hour, Jake.

Why don't we take two last questions?.

And your next question comes from the line of Jim Birchenough from Wells Fargo..

Good afternoon. This is Nick in for Jim this afternoon. We've spent a lot of time talking about the very late-stage pipeline, and clearly you've done a pretty impressive job developing those molecules. But what are you pointing investors to in terms of the early stage? If I look at the Phase 2 pipeline, half of those AMGs are with Astra.

There's the CTEPH inhibitor that I guess you're all wondering what to do. And then many of those Phase 1 molecules have been around for a long time.

So Phase 3 looks really good, but what about Phase 2 and Phase 1? What should we be focused on?.

We're actually really excited. I think it's fair that we've had so much going on in the later stages that we haven't spent as much time focusing on talking about what's going on in the earlier pipeline. But we're really excited about quite a number of things in the earlier pipeline. Obviously, omecamtiv mecarbil is very exciting.

We have the migraine, new migraine antibody PAC-1 that I mentioned. We have a novel heart failure molecule which will be entering in the clinic this year. That's something that we've developed in-house. We have a completely novel inflammation mechanism that no one else is pursuing that I think is extremely interesting that's entering Phase 1 now.

And we have quite a range of bites (1:12:57) targets that are moving forward into the clinic either now or in the relatively near future. So I think there's plenty to look forward to in that space.

And we also have earlier than that really the most exciting stuff, which is some of the targets that we believe we are uniquely working on because they've arisen from our advanced population-based human genetic efforts like this sort of Gene X example that some of you may recall from our business review, which is moving along very nicely.

So I think in a future business review type setting we'll probably talk a little bit more. It's been hard to do that with everything that's been going on in the late-stage work..

Jake, let's take one last question, please..

And there are no further questions at this time, sir..

Okay, great. In that case, let me thank everybody for your participation in our call. Between myself and my team, we'll be around for a while. So if there are any other questions, feel free to call us. Have a good day..

Ladies and gentlemen, this concludes Amgen's fourth quarter and financial results conference call. You may now disconnect..