Amgen Inc. (AMGN) Q4 2006 Earnings Report, Transcript and Summary

My name is Chris, and I will be your conference facilitator today for Amgen's fourth quarter and full year financial results conference call. All lines have been placed on mute to prevent background noise. There will be a question-and-answer session at the conclusion of the last speaker's prepared remarks. In order to insure 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. You may begin your conference, sir.

Thank you, Chris. Good afternoon everybody. I'd like to welcome you to our conference call. We have several topics that we will discuss with you today, and given the breadth of these topics, the duration of the call may exceed our customary one hour. Our Chairman and CEO, Kevin Sharer will lead off with a recap of 2006 and lay out our strategic objectives for 2007. Roger Perlmutter, who is our head of R&D, will then provide a pipeline update. Following Roger will be Richard Nanula, our Chief Financial Officer. Richard will discuss business results for Q4 and full year 2006, followed by George Morrow, who is our Head of Global Commercial Operations. George will review our product performance in 06 as well as the outlook for these products in 2007. Richard will then come back and provide our overall growth outlook for 2007, after which we'll be happy to take your questions. As we have done over the past two quarters, we'll use slides for our presentations. These slides have been posted on our website, and they were also sent separately by e-mail. So before we start, I would like to mention that through the course of our presentations today, we'll make certain forward-looking statements. And of course, actual results can vary materially. So with that, I would like to turn the call over to Kevin.Kevin Sharer: Thanks, Arvind. Hi, everybody, Happy New Year. We are taking a little bit different agenda approach today, as Arvind said. We got a lot to talk about in the pipeline, and we'll have Roger right after I'm done report on that. First thing is the Safe Harbor statement. I just want to mention -- I won't read it obviously, but we're making some predictions here and you can't be sure they will come true. And there are other SEC documents that more fully contain all the information. I assume, as Arvind said, that you have our slides, and I'll refer to them. I'm going to start at slide five, which says "2006 Highlights." 2006 was a very strong year for Amgen. I'm delighted with our performance. I'm proud of what our folks did, and we're really well positioned for 2007. The press release contains most this information, but let me give you some of the highlights at least as I see it. What we're trying to do here is serve more and more patients every year. We're trying to deliver for shareholders. And simultaneously, we're trying to invest in research and development as well and as heavily as we can. And the numbers for 2006 indicate that in 2006 that's what we did. Revenue and EPS -- adjusted EPS. Revenue grew 15% and adjusted EPS grew 22%, respectively, and that's in a time when we invested or increased research and development spending by 39%. And I'm really proud of that result. I'd particularly like to point out that international had another really good year with 16% sales growth, and the future is all about the pipeline and launching Vectibix in the fourth quarter was a terrific achievement by the folks at Amgen. We're really pleased with the early results. George will talk about it. They exceeded our expectations -- the market share as well as the volume and the overall receptivity. So I am delighted that we've got a product now that's an actual cancer therapeutic. The pipeline is expanding and improving and moving. We can't expect every single trial to go the way we would wish, but most of them have been. And I'm particularly pleased with the fact that the clinical development and the overall research and development organization initiated nine mega trials in one year. And those are trials with each over 200 sites. And that's for a relatively new experience for a company not a lot of experience doing that. That's terrific and these are products that really are going to be important to patients. We have positive results. Roger will talk about our Phase III for AMG 531, our thrombocytopenia drug and the AMG 706 thyroid trials are moving ahead. We're enthusiastic about that. We did have some negative results that Roger will review, one in the Sensipar chronic kidney disease and another one in Aranesp anemia of cancer. We have to each year look outside the Company and be nimble and aggressive and creative in closing deals. We did this year. We bought the half of Abgenix we didn't own, which allowed us to launch Vectibix. The Avidia acquisition in northern California for technology platform company was a promising molecule really mattered and right at the end of the year, in the Christmas season, we entered into an important collaboration with Cytokinetics for a cardiovascular drug which by the way cost us about $0.03 on fourth quarter results, which Richard will talk about later. Let's move to page six. I think it's good every once in awhile to take a look and see where we've been and in the last five years have been years of accomplishment, growth, and enthusiasm here at Amgen. Revenues have gone from 4 to $14.3 billion which is 29% annual growth and the overwhelming majority of that growth has been organic. We didn't buy it. And adjusted EPS at the same time has grown 27% compounded annually, 118 to 390. So we've been able to deliver on the bottomline as we deliver on the topline and research and development has increased at a dramatic rate as well. Cumulative cash flow since 2001 is 420 billion and while we're still significantly dependent on EPOGEN and NEUPOGEN, 27% of our sales, five years ago those two products were 98%. Research and development, there's a lot of ways you can measure progress there. Here are a few: The number of our products in our development pipeline has grown 140% from 20 to 48. We've just about doubled the number of new molecules annually into the clinic from 7 to 12 and the number of patients enrolled has more than doubled from 18 to 44,000. And our large molecule manufacturing capacity, we're the biggest in the world at it is 2.5 times greater this year than it was five years ago, and that's no small accomplishment. So page seven of 2007, we're a month into it. It's obviously early. We feel good about it. Here is what we're trying to do in 2007. As we always do, we're trying to balance delivering for shareholders with R&D investment. Richard will talk more about it. We don't see R&D investment increasing as rapidly, it increased 39% in 2006, but we're still going to increase it a significant amount. We've got the mega trials going. We're going to have to now execute more, that is enroll lots and lots of patients. That's a real challenge. We can do it. We've got many new molecules to bring into the clinic and we're going to make good choices and effectively move them ahead. We want to grow our markets and hold or increase share. We have a history of doing that. I'm confident George and the team can keep it up. We've obviously in the Peg-EPO matter have an intellectual property challenge that we're prepared to vigorously defend. We're confident in our position and optimistic about the future. And in anemia management, we're the worldwide leader and we want to maintain and increase that position. And finally, we've got lots of enthusiasm about the future in terms of what we'll need to make and we are investing a substantial amounts of money to meaningfully expand our production capacity around the world to be ready to deliver on a promise of the pipeline. So, all in all, 2006 a great year for us. 2007, we're ready, and let me turn it over to Roger to talk about the pipeline.

Thanks, Kevin. Well, 2006 was an extraordinary year for the Company and an extraordinary year for research and development. We have a lot of data to review this afternoon and I'll highlight new data that became available in the fourth quarter with respect to Vectibix, Aranesp, Sensipar, our AMG 706 molecule, which now has the generic name Motesanib diphosphate, AMG 531, the Denosumab program and I'll say a few words about research productivity and the Cytokinetics collaboration. As we look at slide 10, I'll begin by talking about Vectibix and the PACCE study. You'll recall that Vectibix has been examined in the third-line colorectal cancer setting and had demonstrated an effect on progression in that setting. We had begun some time ago a non-registration enabling Phase IIIb study in the first-line treatment of metastatic colorectal cancer, the PACCE study, in which patients are treated with a variety of chemotherapy regimens and Avastin with and without panitunumab and the primary end point of the study is progression free survival. The study is fully enrolled, and in the fourth quarter, we got a one of a set of interim analysis, a data that we had wanted to have available to help us understand how best to employ Vectibix in the setting of colorectal cancer. So, for Vectibix, we have 12 week response rate data that became available from a blinded central review of radio graphs from the first 500 patients of this study, which involves more than a thousand patients. In this analysis, we found that there was a safety signal, of course, what you would expect when you add Vectibix which has its own adverse experience profile to the already very complicated regimens that these patients are experiencing. And in particular, there was an increased incidence of severe events of diarrhea, dehydration and infections when Vectibix was given in combination with Avastin and either irinotecan or oxaliplatin-based chemotherapy. But I would emphasize that we did not have any unexpected adverse experiences. There was nothing new that came up as a result, and these are things which are noted in our product label and in the investigative brochure. The response rates among all of these different groups were broadly comparable. This is early days in this analysis, and the PACCE study following the data monitoring committee review is continuing in accordance with their recommendations. We have, of course, informed investigators about the safety events that we're seeing in this initial analysis. We do expect that an interim, a second interim analysis where with 25% of the events progression free survival data will be available in the second quarter 2007 as yet it is too early to assess the true efficacy and risk benefit profile of Vectibix in this setting. Now, this is one of many, many studies, of course, that we're performing with Vectibix and if you look at slide 12, there's a listing of some of those studies. Since I will be showing you a number of these kinds of slides where we list clinical studies for different therapeutic agents, I want to emphasize that these slides represent a selection of the total studies. We've tried very hard to identify those things that we thought were most important. And in addition, the slides are arranged such that you see studies that we've previously described in gray. We've highlighted new studies in blue, and wherever there's a change in status of the study that's important to update, I've circled that in red. Please note also that the last column of the chart shows the projected data publication date. This refers to publication in a scientific forum of typically a peer reviewed publication. There will be many samples where it is necessary to actually present data in advance of this and thought we will choose to present topline data under some circumstances where that seems appropriate. So, I would point out with respect to Vectibix that our studies are continuing as we had hoped with respect to the Japanese study, second-line colorectal cancer registration and first-line colorectal cancer registration. And I think all of you are aware of the fact that recently, it was announced that in the first-line colorectal cancer setting, EGF receptor antagonism which was achieved using cetuximab or Erbitux did give a positive result in the CRYSTAL study, which certainly inspires us, still further, and increases our enthusiasm for this agent. With this in mind, we've added new studies, including a second colorectal cancer adjuvant study, Phase III study which will compliment our adjuvant study which is being performed with a cooperative group, NSABP, that directly compares Vectibix to Avastin in that setting. We also have begun two Phase II studies or begun planning for two Phase II studies in locally advanced squamous cell carcinoma of the head and neck. These two Phase II studies are intended to provide data regarding the safety and efficacy of Vectibix used in this setting, which we've not previously explored, and will provide the basis for the Phase III study in the same indication. We continue with our planning for a Phase III study in recurrent or metastatic squamous cell carcinoma of the head and neck. That study has been delayed slightly, as we work to improve study, design and operational efficiencies. But we think we'll catch up with regard to that study. So things are going extremely well with respect to the Vectibix clinical program. Let me now turn to Aranesp. In Aranesp, we received in the fourth quarter data from our Phase III study in the anemia of cancer setting. Now, this is an attempt to expand the label for Aranesp to include patients with anemia that is not secondary to chemotherapy but, in fact, is attributed to the cancer itself. The Phase III study evaluated anemic patients, who had active malignancy who are not receiving chemotherapy or radiotherapy and in whom it was not planned to provide chemotherapy or radiotherapy in the near future. These individuals understandably are gravely ill, and in this patient population, one can expect that there would be a high frequency of adverse events. The study was designed to show, as we had previously shown in Phase II studies, that Aranesp could reduce the frequency of transfusions and improve quality of life. With respect to the transfusion endpoint, the study did not meet its primary endpoint. We did not show a statistically significant reduction in transfusions in this patient population at the 16-week endpoint. Moreover, we did see a statistically significant adverse effect of Aranesp on overall mortality in this patient population. And so we conclude that the risk benefit ratio for Aranesp in these extremely ill patients with anemia secondary to malignancy is at best neutral and, perhaps, negative. We have made this information available to regulatory agencies around the world, and we are continuing to study this patient population. Of course, the study at all dosing has been completed in the study at the 16-week time point, but we're going to continue to follow these patients and evaluate the effects of Aranesp in this patient population. Now, I want to point out as shown on slide 14 that the anemia of cancer study for which treatment is completed and the safety follow-up is ongoing is just one of a series of large outcome studies that we are performing with Aranesp to ask the question of whether anemia management with this agent benefits patients with respect to concrete outcomes. And there are two additional studies, the Red-HF study, asking whether anemia therapy improves outcomes inpatients with heart failure, and also the TREAT study, which asks whether anemia treatment with Aranesp as compared to placebo in a randomized, double-blind study improves overall mortality and reduces cardiovascular events in diabetic patients with renal insufficiency who are not on dialysis. This is a quite large study. At the end of the fourth quarter, we had enrolled more than 3,000 patients in this study. And I highlight this study because of the attention that was directed to the CHOIR study, which is a related kind of study that was performed using Procrit to treat anemia inpatients with chronic renal insufficiency that was published in the New England Journal in November. That study concluded that there was an adverse result, an adverse affect on mortality as a result of higher levels of higher targets of anemia treatment using Procrit, and there was quite a lot of media attention. And in that context, I want to mention that we had our data safety and monitoring committee perform the 20% interim analysis. This is an analysis that was pre-specified at the time when 20% of the events had occurred in the TREAT study. At that time, TREAT had already more patient experience than in the CHOIR study, and there were more adjudicated events than had been seen in the choir study. Our data safety monitoring committee was aware of the CHOIR study and had a chance to look in detail at those results. And after reviewing the unblinded data, they advised us to continue the TREAT study. And in that context, I think, it's important to emphasize that it will take some time before we fully understand the risk benefit profile in different patient populations for the use of Aranesp. We are in discussions with radio agencies about cardiovascular risk associated with the [indiscernible], and we want to insure that the Aranesp label is updated to correctly reflect the best available evidence with regard to cardiovascular safety. And so, in fact, we are doing that and expect that we will be updating the label. Let me turn now to Sensipar or Mimpara as it's called in Europe. We did have results during the fourth quarter for our Phase III study of Sensipar used in the treatment of secondary hyperparathyroidism in patients with chronic renal insufficiency. Now, this is an expended indication for Sensipar, which is used to treat secondary hyperparathyroidism in patients on dialysis. So we're looking at a substantially less ill population with considerable residual renal function, in whom we tried to treat secondary hyperparathyroidism. The study was positive on all primary and secondary endpoints. Sensipar effectively reduced parathyroid hormone levels in this patient population. However, as we examined the data, we found laboratory evidence of hypocalcaemia, like that which we had seen in our Phase II study, which was not associated with clinical sequelae. But in light of the fact that these are comparatively healthy patients, who see physicians relatively infrequently, we felt this incidence of hypocalcaemia was of concern. And for this reason, we have decided that the risk benefit profile was not sufficient to justify use in this indication, and we will not seek a label with this dosing schedule. We will have the opportunity to discuss these data in great detail with the regulatory agency, and we believe that opportunities exist for alternative dosing regimen. Because of the power of Sensipar to reduce hyperparathyroidism, we would like to see the opportunity to bring this important medicine to patients who could benefit from its very dramatic positive effect. Let me turn now to AMG 706, which now has the generic name motesanib diphosphate. At the end of the fourth quarter, we obtained data from our Phase II study in patients with refractory or metastatic thyroid cancer. The study was positive in the sense that there is very clear evidence of biological activity. And importantly, the adverse experience profile for this drug, including the adverse experiences of cholecystitis and gallbladder enlargement, appear manageable. So we're very enthusiastic about these data, and we will be meeting with regulatory agencies in the near future to review these data and go over them in some detail. We, of course, also will be presenting these data in detail in a peer review scientific forum. Now, because of our increased enthusiasm for motesanib diphosphate, we are pursuing it in a number of other studies. We have reinitiated our studies head to head with Avastin. I recall that motesanib diphosphate is a kinase inhibitor that acts on the receptor that is a target for vascular endothelial growth factor, the target of Avastin. And so it is doing the kinds of things that Avastin can do with respect to blocking VEGF signaling, although it does many other things besides. We have begun our Phase II studies head to head with Avastin in breast cancer, HER2 negative breast cancer, and also in first-line non-small cell lung cancer treatment. In addition, we have planned initiation of a Phase III study that we had previously put on hold because of concerns about our gallbladder enlargement in the first-line non-small cell lung cancer setting, looking at chemotherapy with and without motesanib. We have also planned a study in first-line endocrine therapy in combination with aromatase inhibitors. So the program is moving forward on all cylinders. If I can direct your attention then to slide 18 and talk about AMG 531, AMG 531 is the first peptibody that has ever been brought to Phase III registration studies. It is a thrombopoietin agonist that increases platelet production from the bone marrow. And we've studied it in a number of settings, but most particularly in the setting of immune thrombocytopenic purpura. We have completed now two Phase III studies. We locked the database on the second one early this quarter. But at the end of the fourth quarter, we had the opportunity to review data from the first study, which is a study in patients who have failed all prior therapies and are post-splenectomy. And we've asked the question as to whether AMG 531 can improve platelet counts in these individuals. The study was positive with respect to all primary and secondary endpoints. And the safety and tolerability profile appear very favorable for AMG 531 in the ITP setting. So we're very much looking forward to seeing data from the second Phase III study, which should be available in the very near future. And assuming that those data are also positive, we expect to be able to file AMG 531 for approval in this indication in 2007. I should point out that we are also studying AMG 531 in other clinical settings, including in patients with myelodysplastic syndrome and in patients who have undergone myelosuppressive chemotherapy, which has caused thrombocytopenia. So we're quite enthusiastic about AMG 531. And with that I'll turn your attention to denosumab on slide 19. Denosumab is, of course, our largest clinical program. In aggregate, it is the single agent for which we are pursuing the most clinical trials. Denosumab is a fully human antibody directed against RANK ligand. And the RANK ligand/RANK Interaction is, of course, the pivotal interaction that controls bone resorption. We believe denosumab has enormous potential as an antiresorptive agent in the setting of postmenopausal osteoporosis, hormone ablation associated bone loss, as well as in the setting of metastatic disease to bone, and also in inflammatory bone erosion. We have moved forward with essentially our entire clinical program in 2006. We completed enrollment of 1,100 patient study -- Phase III study in post-menopausal osteoporosis, looking at treatment of head-to-head with alendronate. We also completed enrollment in a study in which we are examining the ability of denosumab to actually treat multiple myeloma by blocking the bone resorption that is so characteristic of this bone invasive malignancy. In addition, in 2006, in the fourth quarter, we obtained one-year data in rheumatoid arthritis showing that denosumab suppressed bone resorption that is seen in this inflammatory illness and also reduced bone erosion substantially, confirming and, in fact, expanding upon data which we presented at the American College of Rheumatology based on our MRI studies. The data obtained at the 12-year time point are from plain film in the more traditional analysis of bone erosions and we look forward to having the opportunity to present these data in a scientific forum at some time later this year. We're really very, very enthusiastic about them. While I'm on the subject, I want to mention to you that we will be getting the first tranches of data for our registration enabling program in denosumab in postmenopausal osteoporosis in 2007. We expect our PMO prevention data will be available in a relatively short period of time. We should have these available for presentation in the second half of 2007. And we also expect to be able to show you data from our study of hormone ablation in the setting of breast cancer towards the end of this year. 2006 was indeed an extraordinary year for research and development. We now have, as Kevin mentioned, 48 molecules in development. And our research productivity in 2006 was greater than in any prior year. We introduced 12 new molecules into clinical development. We put five molecules into people. At the end of the year, we obtained an option on this entirely new approach, the first new approach in decades for treating heart failure that was developed by our colleagues at Cytokinetics, something which we've been studying at a distance for a long time. And we're really looking forward to having the opportunity to look at much more closely. And we had unprecedented clinical study volumes so that we are now conducting clinical work. In 39 countries we enrolled more than 10,000 patients in 2006. But one thing I would like to draw your attention to is this breadth of clinical indications that we're pursuing with our various molecules. Slide 21 is something of a tonnage chart which shows 31 molecules that we have committed to development that address clinical syndromes not only in cancer, which includes molecules like AMG 386 and AMG 479, AMG 102, things that you can see on our website. But in addition, our approach is to asthma with AMG 317, to other inflammatory disease, our approach to neurologic diseases, including Alzheimer's and chronic pain, very exciting approaches to bone loss that include increasing bone production as an (inaudible) antagonism program, AMG 785. It's a very, very broad and deep program and extremely exciting program, and we expect to have 10 new molecules in Phase II clinical trials in 2007. So, enormous progress has been made over a relatively short period of time. In 2007, we are targeting Vectibix approval in Europe as shown on slide 22. We do expect to file for approval of AMG 531 in the ITP indication assuming our second Phase III study is as the first one was. We will have an opportunity to look at the first interim progression free survival data, the primary endpoint in the PACCE study. We have our denosumab datasets, and we will be initiating our Phase III study in non-small cell lung cancer with motesanib diphosphate A very exciting year for us, and with that, I'll let Richard review Q4 '06 and the full year business results.

Thank you, Roger. Turning to slide 24, our fourth quarter results, revenue growth was strong at 17%. It was due to strong demand for Aranesp, ENBREL and Neulasta and NEUPOGEN. Inventory of our major products ended within their normal inventory range except for NEUPOGEN, which was slightly above its normal range. All but 2% of revenue growth was due to demand. George will give you a product-by-product detail in a moment, but quarter four US sales totaled $3.1 billion, an increase of 18%. Quarter four international sales were $636 million, an increase of 17%. Those were positively impacted by $26 million of foreign exchange. Without the foreign exchange, international product sales would have increased 12%. Operating expenses, which I always discuss on an adjusted basis, grew 23% in the fourth quarter. As in the past, fourth quarter operating expenses were higher than the third on an absolute and a percentage of sales basis due to the timing of major medical meetings, as well as certain other discretionary programs. Cost of sales increased 8%. That continued favorability in cost of sales margin is due to decreased royalty expenses we've been talking about during the year as well as cost deficiencies at several of our factories. R&D significant expense increase at 52% in the quarter was due primarily to increased funding for clinical trials for our late stage programs, including the nine mega trials that Roger discussed initiating this year, which were up and running for the entire quarter. And we also continued to expand our staff and our research and preclinical organization. Last quarter's call we indicated R&D -- well, fourth quarter expense would grow slower than Q4, it actually grew a little bit faster due to the cost of our Cytokinetics collaboration signing near the end of the year. SG&A expense growth of 10% reflects the spending needed to support our growing organization, and in particular, our new ERP system, promotion and advertising for our marketed products, as well as higher Wyeth profit sharing expenses given ENBREL's strong Fourth quarter. Our tax rate, adjusted tax rate was 19.7% from the quarter versus 22.6% in fourth quarter of last year, and that was driven by the retroactive expansion of the R&D tax credit, as well as the favorable audit adjustment. So earnings per share were $0.90 for the quarter, up 20%. On a GAAP basis, fourth quarter EPS was $0.71. GAAP results were negatively impacted and pre-tax basis by $54 million from stock option expense and by $130 million from the required write-off of acquired in-process R&D on Avidia, and fourth quarter adjusted EPS including stock option expense was $0.87 per share. That was an increase of 24% over the prior quarter. Turning to page 25 for our full quarter results, you'll hear many of the same themes that I talk about here as I did on the prior page. Revenue growth was strong at 15% for the year, again driven by Aranesp, Filgrastim and ENBREL. Inventories were actually down slightly year-over-year. So it was a strong demand driven year. The actual sales were $2.5 billion, an increase of 16% and foreign exchange for the year didn't have a material impact on our full year sales growth. As far as operating expenses, cost of sales increased only 2%, much slower than revenue growth. Again, the lower royalty expenses were most of this, but we also had favorable product mix from a cost standpoint as well as cost deficiencies in our factories. R&D expense, 39% growth. That was at the high end of our 30% to 40% '06 guidance range as we invested heavily in the late stage pipeline and expanded our preclinical and research organization, as well as we're sort of busy on the outreach front. SG&A expense grew 16%, a little faster than revenue growth reflecting the spending needed to support the growing organization, but in particular, ERP, higher legal costs associated with our ongoing litigation, as well as higher Wyeth profit sharing expenses. The adjusted tax rate was lower than last year as we indicated it would be on the Q3 call, dropping from 24.4 to 22.3 this year. So it's driven by favorable audit settlements as well as increased manufacturing in Puerto Rico. Earnings per share were $3.90, up 22% for the year. EPS growth exceeded revenue growth by 15%, by seven percentage points, which I'll discuss in a moment and break that out for you. And the impact of Cytokinetics was about $0.03 and that's mainly the difference between year consensus and our actual number. On a GAAP basis, EPS was $2.48 in 2006 and that is versus $2.93 in 2005, a decrease was driven primarily by $1.2 billion in pre-tax write-offs of acquired IP R&D from Abgenix and Avidia. The GAAP results also included $233 million of stock option expense, which amounted to $0.14 a share, adding all that up, 2006 adjusted EPS including stock option expense was $3.76, an increase of 25% versus the prior year. On Page 26, I briefly explain the Income Statement leverage for 2006. I said last year, this time we would have substantial less EPS versus revenue leverage than the 15 points we experienced in 2005 and in 2006, it was actually seven points of leverage. That's composed of operating income growing six points slower than revenue. That's really the large planned increase in R&D, the more than offsetting the leverage provided by cost of sales. Net income grew six points faster than operating income. Tax drove half that leverage and the other half is driven by higher yields on our investment portfolio and higher cash balances. And then EPS grew seven points faster than net income and that's drew primarily to share repurchase program, which was front ended towards the first half of the year which reduced our diluted shares about 6% from the prior year. On Page 27, is a balance sheet and cash flow update. Primary drivers of our cash and debt position changed in 2006 with a $5 billion of convertible notes, issued in the first quarter as well as the acquisitions of Abgenix and Avidia along with our aggressive share repurchase program. Capital expenditures reflect our manufacturing, capacity and site expansions in Puerto Rico and Ireland, as well as some other locations along with the capitalized portion of our ERP investment. And we bought over 70 million shares in 2006 and spent about $5 billion to do so. In December, the Board authorized $5 billion of additional share repurchasing combined with the previous authorized stock repurchase; we have about $6.5 billion remaining of share repurchase authority. Page 28, I often get asked whether our share repurchase program merely offsets dilution from stock options and the numbers on this page are beginning and ending shares outstanding, so they differ slightly from the fully diluted numbers used to compete adjusted EPS but the bottom line is that share reduction from our share repurchase program over the last three years is more than three times greater than the shares issued, due to option exercises. I'll turn it over to George for his commercial review.

Okay. Thanks, Richard. And as Arvind mentioned I'll start with an overview of 2006 results and then finish up with a 2007 issues and key drivers of growth. Turning to slide 30, the commercial highlights as shown here. We drove 15% year-over-year revenue growth in the fourth quarter which largely reflects demand as inventories at wholesalers remained within the normal range. Globally, Aranesp remains the key driver of overall growth, ENBREL had a solid quarter and Vectibix, which we launched in mid October is off to a great start. As the headline states on the next slide, we maintained our growth momentum in the fourth quarter of 2006, with the possible exception of ENBREL, which I'll discuss in a moment, we see the fourth quarter as a continuation of solid trends established throughout the entire year. In other words, we don't see any trend breaks. Slide 32 provides a summary of Aranesp revenue growth and key drivers. In the US, Inventory was flat quarter-on-quarter and the oncology segment was a key driver of overall growth. It grew about 17%. In Europe, share gains of both oncology and nephrology contributed to overall growth. Turning to slide 33, NEUPOGEN and Neulasta combined grew 10% fourth quarter '06 versus fourth quarter '05. Inventories increased slightly from third quarter '06 but decreased from the fourth quarter '05. Driving first cycle penetration in the roughly 50% of patients indicating both our label and expert guidelines remains our focus. ENBREL sales were boosted in the fourth quarter by both strong, underlying demand and a favorable adjustment in discounts. The discount adjustment is a one-time reversal of an accrual related to TRICARE, which is a department of defense prescription benefit program, and I guarantee you'll never hear that mentioned again. It's truly a one-off situation. What occurs that both the rheumatology and dermatology segments grew 20% fourth quarter '06 versus fourth quarter '05, in that we held share in both segments in the second half of '06. During the first half of '07, we learn that the strong fourth quarter demand reflected true change in trend. For example, we want to rule out any potential seasonal effects such as patients filling an extra prescription before stepping into a new plan year, which is common in prescription Markets. Nevertheless, we know what the key drivers are and we're intensely focused on executing our plan. EPOGEN is next on slide 35. We continue to believe that EPOGEN is growing in line with - which is roughly 3% to 4%, and inventories remain well within the normal range. The Epo monitoring policy or EMP implemented by CMS last year is entirely consistent with their label and may have prompted a slight decline in dosage in the second half of 2006. The news on Sensipar on slide 36 is all good. In particular, we continue to penetrate the patient population with PTH greater than 300, but at 28% penetration there's lots of room for continued growth. So we're very bullish on Sensipar going forward. Slide 37 reviews our international performance. The only point I want to make is while inventory levels typically don't fluctuate meaningfully in Europe, because of a cut over to a new financial system, that's the ERP system that Richard mentioned at the end of '06, we exited the year with a lower amount of product in the channels. As a result, I wouldn't read too much into the 12% Fourth Quarter growth versus 16% for the full year. Overall 2006 was a terrific year for Amgen international. We launched Vectibix on October 11 of last year and achieved sales of almost $40 million by year-end and that's shown on slide 38. As shown on the left hand panel, through November, the overall class grew about 20% and Vectibix captured more than a 20% share shown on the right hand panel. With this significant amount of trial, oncology and their staff can evaluate firsthand how Vectibix performs clinically leading to better informed decisions in terms of future use and based on everything we're hearing, that bodes very well for Vectibix going forward. Let's now turn to the outlook for 2007. For the most part, the reimbursement environment will look a lot like a continuation of '06 and I'm talking about slide 39 now. The exception -- the deficit reduction act and this is the Medicare provision within it is captured in the fifth bullet point. In essence Medicaid rebate are easy to capture in the retail setting, which utilizes NDC codes and difficult to capture in the office setting, which generally does not use NDC codes. Beginning in 2007, states will need to capture rebates in the office setting in order to collect federal matching funds and that will require systems changes to capture these new codes and really what I'm talking about is the part B injectable drugs. So stay tuned, but I should also point out any potential financial affect is well within our guidance. Slide 40 is next. In 2007, we will once again focus on anemic chronic kidney disease and chemotherapy induced patients not currently being treated. This pool of several 100,000 patients has and will continue to be the primary driver of Aranesp growth. We're also pleased with the level of differentiation achieved versus the first generation EPOs, serve as well as we in Europe later this year. We'll discuss the anemia of cancer, clinical findings and it's far too early for us to discuss any potential impact on the marketplace. Turning to EPOGEN, it's certainly going to be an exciting year for this product. If Roche decided to launch peg-EPO, we're certainly ready for them. The bigger question is, are potential questions ready for peg-EPO and I think that's adequately addressed in the first bullet. Regarding the NKF review of anemia guidelines, the fact that 1.5 million patients have been treated with EPOGEN, we have a well established risk benefit profile and our promotion has always been strictly according to our label, we do not anticipate a major shift in clinical practice. However, given all the recent public debate, a small decline in sales cannot be ruled out in 2007. It's really not much to add to slide 42 regarding Neulasta. There remain several 100,000 patients who according to best practice should be receiving primary prophylaxis given the strength of the chemo regimens. And we will continue to ship away at this for years to come. On to slide 43. The key to long time growth of Vectibix is to continue to organize successful trials in our label indication, launch outside the US, and build the evidence base and label as rapidly as possible. Oncology clearly wants to use Vectibix more broadly and Roger and his team are working hard to facilitate their access. We're also pleased that the new clinical data on EGFr class demonstrated a significant benefit in expanded populations. My last slide, number 44 provides an overview of our plan for ENBREL. We believe ENBREL has the best balance of safety and efficacy in the class and need to drive this key point of differentiation home with our customers. Secondly, we need to do a better job of tapping the huge potential pool of biologic naive patients in the both the room and towards the segments and stimulating the right dialogue between doctors and patients remains the key along with helping them overcome reimbursement barriers. And we believe we're making great progress on all fronts. Richard?

Okay. On Page 46 is our guidance for 2007. Taking into account Georgia's view on our products and the risks and the opportunities we see in 2007, we're issuing the revenue guidance of 15.4 billion-16 billion, which would result in 8% to 12% growth for 2007. We again expect a bit of leverage in the P&L but again, we intend to invest in our pipeline opportunities very aggressively and so EPS, our range is $4.30-$4.50 which would be 10% to 15% growth. On Page 47, I'll give some qualitative or directional guidance on the individual line items in the P&L. For cost of sales, we expect cost of sales to be comparable as a percentage of sales to 2006 as we anniversary a full year of the ENBREL royalty reductions. We expect R&D growth in the low teens from a growth rate standpoint. That's going to be due to continuation of 13 mega trials, nine started in '06 and four in 2004 as well as a number of additional studies that on our late stage programs including Vectibix and 706, some of which Roger already mentioned to you and then the ten new molecules in Phase II we're going to fund as well. SG&A, we're expecting lower growth rate in 2007 than 2006 as we anniversary our ERP and litigation expense from last year. On the tax rate, we're expecting our tax rate to be slightly lower than 2006 due to an expansion of the R&D tax credit that was extended in 06, it will be extended in '07 and we're also increasing machining in Puerto Rico as Aranesp bulk moving there in mid year more than offsetting some of the one-time benefits in the tax rate we received in 06. In share repurchase, we're expecting a comparable investment level for 2006. Lastly, on Page 48, we expect capital expenditures to continue to grow next year. We're continuing to expanding our Puerto Rico manufacturing site. We built, we're going to break some ground in Ireland after buying the land in 2006, so we'll spend more money in Ireland in 2007, and then we continue to upgrade and expand our R&D sites in San Francisco, Seattle, as well as Cambridge. Okay. Richard. Thank you for that. Chris, why don't we go ahead and open it up for the Q&A session, if you can please review the procedure for asking questions.

[Operator Instructions]. We'll pause for just a moment to compile the Q&A roster. And your first question comes from Chris Raymond.

Hi, yes. Thanks for taking the question. Questions on Vectibix. Just curious, George, you show on one of your slides that it looks like we're seeing a market expansion here with Vectibix now added the Erbitux. In earlier, state your competition sort of further mush as of more Vectibix was in Erbitux failures. Wonder if you could maybe comment, is that what you're seeing or if not, if you're seeing something else if you could sort of give a little bit of color and maybe talk about where you think use patterns might be going, just sort of here in the near future.

Yeah, Chris. So I don't know from the Erbitux values but what we are seeing is the vast majorities in monotherapy, third line, some fourth line, and we're kind of surprised that the market expanded the way it did. We are also hearing of some Erbitux switches, which is sort of unprecedented. But I think, right now, the products being used very much according to the label and doctors are getting to the point now where they are actually starting to see some results, so they have been on patients have been on the product for two or three months now and where I think it goes next is going to be based on their clinical experience. Does it really match up with the clinical data they've seen and does the safety profile tell ability really meet their expectations and our sense is that it is. I don't know if you want to add anything to that Roger?

No. I think if they role you've got it.

And could I ask a follow-up question on Sensipar, if it's okay?

We would kind of like to keep the questions just one, and if we don't get it in the course here, come back later. We want to give everybody a chance. So let's go to the next question, please.

Your next question comes from Eric Schmidt. Eric Schmidt - Cowen & Company: Good afternoon. Thanks for taking my call. The question is on the guidance for revenues in 2007, the 8% to 12% revenue growth. I think in light of the 17% year-over-year growth that you saw in Q4 and Amgen speak we might call that a trend break. So I'm wondering if Richard or George could address what seems to be a conservative estimate based on the current run rate.

Could you say that again? Eric Schmidt - Cowen & Company: Yeah. Just looking at the 8% to 12% revenue growth guidance for 2007 and comparing that to what you saw in Q4 of 06, 17% , I'm wondering what might cause that trend break.

Yes. So I think whenever you look at the quarter growth, you have to look at inventory level, the previous quarter, so the quarter-on-quarter growth and the year-on-year-type growth. So you really get into a lot of sort of three dimensional math and so I think probably the best way to think about going into this year is other than potential uptick in ENBREL and we'll know probably by the end of the first quarter, all of the other trends are very much straight lines right now. Eric Schmidt - Cowen & Company: Okay.

Up Tick the Next question. Your next question comes from Jeff Meacham.

Hi, thanks for taking the question. Just a follow-up on that previous question on guidance. You probably don't want to go into detail, but when are you guys assuming a launch and what color if any can you give us on your assumptions on initial market share impact?

We know that the FDA's got a date in what, May, and if peg-EPO actually launches our hundred is probably second half of the year. We don't know if they are or not. We can't comment on market share, but I will say that we are going to vigorously defend and be ready and George and his team have done a great job already getting us ready. I don't think that the peg-EPO factor is going to be a big dynamic in '07 one way or the other, financially.

Thanks.

Your next question is from David Witzke.

Yeah. Good afternoon. Regarding back to Vectibix, if you can comment, what of the 39 million sales, what percent is channel build and then also when would you expect reimbursement change from 95% AWP to AS P plus six? Thank you.

Okay. So let me take the second part first. It isn't 95% AWP right now. It's plus six. Weighted average wholesale cost so it's basically list price plus six and that lasts for six months and then it will go to an ASP based reimbursement format for the Medicare book-of business obviously private pay varies all over the map. And in terms of channel build, it's pretty low. I'd say in the low single-digits, millions, and right now, what we're seeing is pure demand pull through.

Thank you.

Your next question comes from May-Kin Ho.

Hi. George, a question about the top line growth next year. We're beginning to see some dose reduction on EPO and do you expect that to flow over into Aranesp, and if the anemia franchise kind of flattens out, what would bring their revenue up to 8% to 12%.

Up to what? I didn't hear the last part of that?

Hi. Future (inaudible) guidance.

Hi Well, first of all, with EPOGEN, we might see a slight decrease. I think what buffers that is May-Kin Ho, is that once you see a dose decline, what you see is a lot more patients going sub 11 and I think nephrologists based on the evidence overwhelming evidence will say that there's far more risk in having patients below 11 than there is having people temporarily over 12 or 13. And so I think that's sort of the big regulator. And that's why we say if anything, we'll see a slight dose decline, and I think probably more because centers probably don't want to stick out right now in this environment than for any other reason. And, you know, I think the revenue guidance is solid. And as usual, you know, we take a look at trends and try to give you a sense. And I think my obligation on these calls is to let you know if we see any kind of trend breaks. And, you know, right now we're very happy with the way we exited the year.

Your next question is from Jennifer Chao.

Thanks for taking the question. Realizing that the Aranesp OSC data is still being -- OAC data is still being analyzed, I'm wondering, George, if you can just help us appreciate the current penetration into the AOC market and why this is or is not a potential broader concern at this juncture from a commercial standpoint?

Okay. Obviously, whenever we have a finding like this, we are concerned. And we're going to handle this with total transparency with the physicians and all of you. First of all, let me just reiterate that AOC is not a label indication, nor an area where we promote it. It's not a time we spend a lot of time looking at. It's also a heterogeneous categorization of several different patient types. Exact, there are some 20 to 30 different ICD-9 codes that account for this broad category. So as a result, I don't have a precise answer to this question of how much -- you know, what the impact or how much sales we have here, but our best estimate right now is that AOC broadly find is about 12% of our global sales through Aranesp, the vast majority of that being in the US. What I can tell you is what portion of the overall AOC population is represented by this study population that Roger referred to, included those patients with active cancer and especially great prognosis and short life expectancy and excluded those with non-active cancer with presumably longer life expectancies. And we just don't have good data on that. And frankly, it would be very difficult even with time to get really good data to characterize that market. So as we move forward with this situation, as we communicate with doctors, we'll certainly let you know how they're reacting to it and, you know, what impact that's having on their view of using anemia agents. And Roger I don't know if you want to add anything to that?

No, I think George has got it exactly right. You know, we studied a particular population of patients -- in that population of patients of greatly old patients, we conclude that their risk benefit ratio is at best neutral and perhaps negative. But we can't speak to the totality of indications that are pursued off-label by practicing physicians who use their best judgment in treating patients every day.

So I appreciate the color. Just a clarification. Richard, does your 8% to 12% figure on the revenues anticipate some of the impact here from the AOC setting?

You know, I think George's view -- I don't want to put words in his mouth. But I think we're trying to give you a guidance that captures everything that we know about today. And I think he said especially that this information was late breaking and is hard to estimate the impact. But George--?

No. You know, right now, I'm comfortable with our guidance.

Okay.

Yes, let me just reinforce that. We're comfortable with the guidance we issued given everything we know today and everything we can project. So we stand behind this guidance fully.

Thanks.

Your next question is from Mark Schoenebaum.

Hi. Thanks a lot for taking my question. I won't ask a Sarah question, although I'm tempted to.

It's okay.

Well, okay. Fine. I'll ask a Sarah question. Given all of the disclosures in the -- that have come out of the Boston courtroom and publicly available documents, can the investor community rest assure that you guys know at this point what the molecular structures of peg-EPO is and how it's made?

We're highly confident in our knowledge of peg-EPO and how it's made and highly confident in our position with respect to the patents. And we look forward to proving that in court.

Your next question is from Geoffrey Porges.

Thanks very much for taking the question. Just a little question on Vectibix, Roger. To what do you attribute the lack of response rate difference at that 12 week point, somewhat of a surprise? And then just related to that, do you have any plans to study Vectibix in a neo-adjuvant setting in colorectal cancer? It would seem that some of the data suggests that might be the best opportunity.

Yes, Geoff, you know, again, it's early days in the PACCE study. We had central reads on the majority of the first 500 patients. But this is a 12 week time point, which is not of course the customary way in which you look at the response rates. So I don't want to read too much into these data. Keep in mind that when we designed the PACCE study now, some long time ago, we wanted to gain additional data that would help inform us about how best to use Vectibix in this early setting. We're going to get that data. We're lucky people are treated with a lot of different regimens. You know, it's sure is possible that what happens in the setting where you have Oxaliplatin containing regimens plus Avastin that you can't get much beyond that. But we don't know that, and I think we'll wait and see what we get as we look at particularly at PFS data first, the 25% interim and then later. And yes, we're very interested the neo-adjuvant setting just as we are pursuing the adjuvant setting. We're looking at a lot of different opportunities with Vectibix. As I've always said, I think there's substantial data from especially preclinical and now clinical settings that says that EGF receptor antagonism should be useful very early in colorectal cancer. And we're going to nail that.

Thanks very much.

Your next question comes from Eric Ende.

Thanks. And the chronic anemia of cancer study, what was the higher mortality related to? In other words, was it due to an increase in cancer-related deaths?

Eric, the study in anemia of cancer was not intended to be a survival study. And so we can't tell you what the relative increase in deaths at the 16-week time point was due to. There's a natural tendency when patients die who have metastatic disease and have been suffering with cancer for a long time to simply say that, you know, the death was due to cancer. Interestingly, if you aside from the mortality difference, there were no specific adverse event differences that were seen in these two populations, that is treated versus untreated. You know, we're still pouring through these data. There are lots of interesting questions to ask about the dataset. And we're looking forward to having the opportunity to explore that fully in a scientific setting with you.

Right.

Your next question is from Shiv Kapoor.

Thanks for taking my question. The question is for Roger. You've mentioned in the press release a couple of delays in the Phase III program for Vectibix in head and neck cancer. Can you provide some color on the reasoning behind those delays, please?

Yeah. I can for both of them. For the locally advanced head and neck cancer, to be honest with you, we've had so many physicians who have been inquiring about the use of Vectibix in this setting, we felt it was very important to get some data on this that would help to inform the subsequent registration trial. And we decided that we would launch two new Phase II studies designed specifically to get that information. For the Phase III study in metastatic or recurrent disease, there it's just an operational sequencing to get the study right. And so we took a small delay in that study simply because we got an awful lot of these studies getting queued up all at once and that's the way it came out.

So no efficacy or safety concerns?

No, no, absolutely not. We're extremely bullish on Vectibix and the way it's performing.

Thanks a lot.

Your next question is from George Farmer.

Hi. Regarding the AOC trial, you may not have seen improvement in transfusion rate. But did you see an increase in hemoglobin levels with Aranesp in the setting?

Yes, George, absolutely. We did see an increase in hemoglobin. And, you know, there's a lot -- as I say there's a lot of color in this, you know. And an aspect of it is that perhaps due to the very grave nature of the disease in these patients, a lot of patients whom we would have expected to be transfused because they had hemoglobins less than eight actually didn't get transfused. And a pre-specified sensitivity analysis, if you look at just those individuals whose hemoglobins declined below eight, we did meet that endpoint. But of course, that wasn't the primary endpoint.

And a follow-up if I may. In those patients that were not receiving chemo, had they ever received chemo or radiation or they just chose not to receive further therapy?

Most of the -- virtually all of these patients have had prior therapy.

Okay.

They had a lot of therapy.

Right. Okay. Great. Thank you.

Your next question is from Ian Somaiya.

Yes, hi. Just had a -- wanted to circle back on a comment that Roger made regarding the PACCE data, specifically that the response rates are broadly comparable. I was just wondering if you were specifically referring to the proportion of patients that responded or the magnitude as well as the duration of those responses.

Ian, I'm just referring to traditionally define response rates by resist criteria that is, those individuals who have the 30% decline in the linear dimension of tumors. Again, saying they are broadly comparable -- we have to break it down into a whole variety of different treatment regimens, because there are (inaudible) versus really T-can with or without Vectibix and we are just looking at the early returns. This first interim analysis largely gives us information about safety and doesn't permit us to define the risk benefit ratio in any sense for Vectibix treatment in this setting.

Your next question is from Joel Sendek.

Thanks. My question is on AMG-531. I was encouraged to hear that you plan to file this year. And I'm wondering where that compound ranks on your priority list? The ITP is not the biggest indication, I'm wondering if you have a plan to maybe accelerate the other studies in order to perhaps get some off label use?

Joel, you know, we're anxious to get the label indication for AMG-531. We're looking forward to seeing second Phase III study. We'll have the opportunity to present some of our data with respect to Myelodysplastic Syndromes. It's quite interesting and I think people will want to look at those data very carefully. But of course, the business of gaining registration in any of these other indications requires that we do long term studies to actually demonstrate efficacy and safety. And that will take a certain amount of time. Initially we'll gain registration just as you say in the ITP setting which is a limited setting, but nevertheless quite significant.

Thanks.

Your next question is from Steve Harr.

What was the hemoglobin goal from the AOC study and do you have any idea of the total dose of a (inaudible) given?

Steve, the hemoglobin target was 12 and recommended transfusion on hemoglobin went below eight. I can't give you the total dose. But keep in mind that these patients vary enormously and this is talking about groups of patients who some of whom have lymphoma, widely disseminated, some of whom have solid tumors, metastatic, they all had to have active disease. And resistance to Epoetin to Aranesp is extremely common in those populations. So there will be much more heterogeneity there then you would see in other populations you might look at. And probably just looking at Epo dose is not as relevant in that setting.

Your next question is from Michael Aberman.

Hi, guys, thanks for taking the call. I guess I have a follow-up on the Aranesp. This is now one of several large Phase III trials which have been set out to show benefit for Aranesp, but showed instead an increase in mortality, and the CHOIR trial sort of caused people to take a look at use of EPOGEN in the dialysis setting, not just chronic kidney disease. And I'm just wondering there have been people who argue perhaps there's too much use in certain settings of the oncology setting in both Aranesp and (inaudible)? And how do you think this trial data might also impact in that setting, in particular where large insurers are looking to find ways to decrease cost? And perhaps Epo might stand out as a way to sort of look at use and now with this piece of data out there.

That's a darn good question, and a complicated one. Let me try to weigh in a little bit I'll ask George and Roger, their view. I think the best way to look at this is to pass the Markets and the indications and the payers, and I'm sorry it's this complicated, but it is. I think in the dialysis area, for EPOGEN in the U.S, The CHOIR data, clearly has gotten some interest, but we want to emphasize that was for a hemoglobin, above what we dose, and what we promote and what's on the label. So my hunch is George mentioned it, that might have a slightly downward effect on dose, maybe we don't see it as that dramatic. I don't think the Congress is going to follow-up on that particular study as a catalyst. I think there's always pressure on EPOGEN use and there always has been on dialysis and that's going to continue a PACCE, not some dramatic new thing. Certainly on the oncology market for Aranesp and pre-dialysis in the US, there are many, many, many, many patients, who can benefit from this drug that are not now getting it. Certainly as we understand better the oncology of cancer trial result, which is both Roger and George have indicated is complicated, is related to one part of the folks who are getting the drug. It's not on label, and we're just going to have to wait and see. Our payers are trying to reduce what they pay for drugs and are they looking for opportunities to do that. That's true now, it will always be true. I don't see this as potentially any kind of watershed event, but it could have a bit of a directional down, but when we look at the overall size of the market and what's unserved, it more than overcomes that downside. We go to Europe and we obviously, our market leaders there in both dialysis and oncology. We face for the first time in the anemia segment some follow-on biologic competitors including peg-EPO. We're ready for them. We have factored every one of these things into our guidance and it seems like every year, there's a whole variety of threats out there and I don't minimize those threats, they're real. But Amgen has faced them before and I think the value of our medicines, the safety, the efficacy and the ethical way that we serve patients has served us and the patients well, but I'll turn their own reactions over to first Roger and then George to give you their view, but I think the franchise is a very healthy and have good futures and every year we've got challenges. Roger?

Yes. Let me just say that, I think it is very important to recognize how different these patient populations are, and that one can't reason, just as you don't reason from study-to-study even within a population, you can't reason across these populations. People who have chemotherapy induced anemia are very different from people who have chronic renal insufficiency, who certainly are different from people with end-stage renal disease. And in each one of these areas, you have to look at the data pretty carefully. The first thing to say is that, where we have labeled indications, the data are extremely strong with respect to treatment of anemia and the risk benefit ratio. So the anemia of cancer study that we did is an off-label study attempting to expand the indication and very different patient setting. And one should be careful about generalizing from that to other cancer indications where the data, which has been reviewed many, many times are really quite strong. I think that the second thing to say is that each one of these studies has its own idiosyncrasies and they have to be looked at extremely closely. You may have seen the recent editorial from looking at the CHOIR study. And asking questions about the data analysis, there are more of those kinds of analysis that will be published I suspect and will, as we look through all of these data and when we publish our own data, anemia of cancer, I suspect there will be a lot of people will look at our data set and find what we had recognized. It takes a long time before you really can shift through these evidence packages and understand what the real risk benefit ratio is, and we should take our time to do that. I think people will. George?

I think the only thing to add is, obviously you can't rule out payers using this, but I'd really be surprised if they use this broadly to block access. And I think what's going to come down to is, you know, we'll share all the information with doctors, we're in the process of doing that and they will make judgments. They want to help their patients. These are patients who up, in many cases in this study where they've tried everything else and they are on their way out, unfortunately, and doctors will make judgments about what kind of benefit they feel EPO has been providing them. And I think a lot of cases they will say you know what? I still -- I want to make these people feel as good as they possibly can, you know the last few months of life, and they are probably are on that side. But, you know, we'll make sure there is total transparency on the data and doctors will make their own judgments also and I think that will determine what impact it has.

Great. Do you think a black box warning is a possibility?

It's a possibility.

Okay. Thanks.

But I think that the overall data is going to be in the broad sense exactly what George and Roger said.

All right. Thanks, guys.

And of course, as we are now approaching 6:15. It's close time. Why don't we take one last question?

Last question comes from Jim Reddoch.

Thanks for taking the question. In front of Waxman's bills introduction, there's some reports going around Washington that score savings from follow on EPOs at up to $40 billion over 10 years. Some of these assume EPO patent expiration in 2004. Others, I guess if you -- I would hope that 2013 expiration. What are your thoughts on this coming to a head here? Thanks.

Thanks for the question. I -- we have the opportunity to meet with Dr. Waxman the other day and talk about some of these issues. First, follow on biologics or new ground for the FDA and for the United States. Europe has, because of the different patent expiry timing, had to deal with this already. What we're most concerned about is first and foremost, patient safety and as you know, follow on biologics are not generic and clinical trials have to be done. I don't think there's anybody who thinks the United States that the patents expire in 2004. I'm not sure where that came from. It's quite a bit further out than that. And I think there are very big differences of opinion about how market shares will change and what prices will be in the follow on biologics area. It certainly will not be like generic pills and I think that some of the folks are doing some of that work might have wrongly assumed that. But I think that like most things in the political arena that when you first hear of things, there's some concern, but as people work together and Waxman certainly is going to work with us and others that we get to reason good judgments and I'm confident we will here too, so I'm not that worried about it. I think we'll all together here make the right judgments and focus on patients.

Okay. I'd like to thank everybody for your participation. If you have any follow on questions, the Investor Relations team of course will be available to respond to your questions. Thanks again.

And that concludes today's Conference Call. You may disconnect at this time.