Hello, my name is Brian, and I will be your conference facilitator today for Amgen’s First Quarter 2015 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. There will be a question-and-answer session at the end of the last speakers’ prepared remarks. In order to ensure that everyone has a chance to participate, we would like to request that you limit yourself through asking one question during the Q&A session [Operator Instructions]. I would now like to introduce Arvind Sood, Vice President of Investor Relations. Mr. Sood, you may begin.

Okay, Brian, thank you. Good afternoon everybody. I would like to welcome you to our conference call to review our operating performance for the first quarter. After you’ve had a chance to assess our performance I think you’ll concur you’ll agree that we are off to a great start. To further discuss our performance today our Chairman and Chief Executive Officer, Bob Bradway, will lead the call. Bob will provide a brief overview of our strategic and operational progress followed by our CFO David Meline, who will review our Q1 results. Following David, our Head of Global Commercial Operations, Tony Hooper, who will discuss our product performance during the quarter, followed by our Head of R&D, Sean Harper, who will provide a brief update on our pipeline. We will give slides for 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. Bob?

Okay, thank you, Arvind. Good afternoon everyone, thank you for joining our call. As you can see from our results we’re off to a solid start so far in 2015. And our performance during the quarter is a good indication that we’re on track to deliver our long-term objectives as well. Financially, we delivered strong quarter really across the board. Our U.S. business delivered 15% growth and internationally we were up 10% at constant currency. Product performance was solid across the portfolio and I was especially pleased with the strong growth we delivered for Prolia, XGEVA, Kyprolis, Enbrel and Vectibix. Heading into the balance of the year, we have good momentum in our base business and Tony will have more to say about that in a few minutes. Our earnings growth of 33% reflects the benefits of our transformation initiatives and our discipline in controlling expenses ahead of the launch investments that we’ll make later this year. As David will share based on the strong performance in the quarter we’re raising our 2015 earnings guidance. With the Corlanor approval last week we’re excited to bring the first new heart failure medicine to the market in the U.S. in almost a decade. Corlanor was approved to reduce the risk of hospitalization for worsening heart failure in patients with chronic heart failure, which is you know is a significant economic burden on our society. Through Corlanor, we look forward to establishing our presence in cardiovascular field as we prepare to launch Repatha later this year. In addition to Corlanor, we are launching BLINCYTO for patients with relapsed/refractory acute lymphoblastic leukemia and our Neulasta on-body injector which addresses a real clinical problem with an innovative solution that enables the administration of Neulasta the day after chemotherapy. R&D as you know is a core…

Okay, thanks, Bob. Turning to the first quarter on Page 5 of the slide deck, revenues at $5 billion grew 11% year-over-year with 12% product sales growth driven by continued momentum across our product portfolio. Total revenue in product sales were impacted 2% unfavorably due to foreign exchange headwinds. Adjusted operating income at $2.4 billion grew 32% from prior year. Adjusted operating margin improved to 50% for the quarter, reflecting strong growth and continued progress from our transformation initiative. On an adjusted basis, the cost of sales margin at 15.1% improved by 0.6 points driven by lower royalties and higher average net sales price offset partially by product mix. Research and development expenses at approximately $850 million, were down 14% versus the prior year. R&D spend was favorably impacted by the transformation and process improvements across the area. SG&A expenses were flat on a year-on-year basis, as increased commercial investments in new product launches were enabled by savings from transformation and process improvement efforts. Total operating expenses declined 3% year-on-year and 22% sequentially. This performance reflects the combination of the first quarter being typically the lowest expense level during the calendar year, plus a share of the $400 million of incremental savings expected during 2015 from our transformation initiative. Going forward, we expect quarterly expenses to increase in line to modestly above historical trends, reflecting increasing launch and R&D investments through the balance of 2015. Other income and expenses improved 9% on a year-over-year basis at a $146 million in the quarter. The adjusted tax rate was 17% for the quarter, a 1.6 point increase versus Q1 of 2014. This increase was primarily due to the unfavorable tax impact of changes in the geographic mix of earnings, partially offset by a state audit settlement in the quarter. As a result,…

Thank you, David. And good afternoon folks, you’ll find the summary of our global sales performance for the first quarter on Slide number 9. I’m pleased to report that we’re off to a strong start in our first quarter of 2015. We select some execution across all aspects of our commercial strategy, launching products, growing on newer products and defending our mature in line brands. Globally product sales grew 12% year-over-year. As Bob mentioned, our U.S. business delivered outstanding results of 15% year-over-year growth and our international business grew 10% year-over-year excluding the negative impact of foreign exchange. Let me first update you on our new product launches. In the U.S. our recent launches of BLINCYTO acute lymphoblastic leukemia and the on-body injector for Neulasta are going very well with positive feedback from healthcare providers. BLINCYTO as you know was approved in two and a half months by the FDA underscoring the unmet medical need in ALL patients. We are seeing a broad acceptance of the product with orders from most major institutions and good reimbursement access. We launch the on-body injector for Neulasta during quarter one. Patients no longer have to return to the hospital 24 hours later after their chemo, the on-body injector simply infuses Neulasta return. We’re still on the early stages of our launch we’ve seen good breadth prescribing was about 800 accounts ordering product to-date. At last Wednesday we received the approval for Corlanor to reduce the risk of hospitalization in patients with chronic heart failure. Corlanor is the first new medicine for chronic heart failure in the U.S. in almost a decade. Heart failure is a common condition that affects maybe six million people with annual cost of over $30 billion in the U.S. the majority of these costs are related to hospitalizations. And…

Thanks Tony. Good afternoon. Well, continues to be a very busy timeframes in R&D, and today I would like to start with our cardiovascular program, specifically the recent U.S. approval Corlanor or ivabradine for chronic symptomatic systolic heart failure. Chronic heart failure is in arise in the United States and represents a very large and growing healthcare expenditure burden primarily due to the cost of repeated hospitalizations in these very gradual patients. In fact, reducing hospitalizations in these patients as a specific focus in many healthcare systems including medicare a resting heart rates is seven or more appears to be a maladaptive response in the setting of chronically reduced cardiac pump function. Yes, despite the availability of specific beta blockers, many heart failure patients in the United States maintain such an elevated heart rate at rest. For these patients Corlanor’s unique mechanism of action, they potentially benefit them, with respect to reducing the risk of hospitalization for worsening heart failure. In the large outcome study performed by our colleagues at [indiscernible] that risk was reduced by 26% compared to placebo on top of standard of care including beta blocker. Obviously, reduction in hospitalizations reflects patients doing better overall, in terms of their heart failure management. We’re not only thrilled with the prospect of making Corlanor available to chronic heart failure patients in the U.S., but we also view this is an excellent way to introduce ourselves to the company to the U.S. cardiology community, as we prepared for the launch of our PCSK9 inhibitor Repatha. Of course Repatha continues to be a main focus for U.S. And, we’re very pleased to see the enthusiasm for this agent, at the recent American College of Cardiology meetings. In response with the data we presented there and publish to the New England Journal…

Okay, thanks Sean. Before we move to Q&A, let me just repeat that we’re focused on executing against the strategy for long-term growth that we laid out during our business review meeting last October. We’re successfully executing on our new product launches. We’re now continuing to grow key products such as Enbrel, Prolia, XGEVA, Vectibix, Sensipar and Nplate. Of course, we continue to advance our robust pipeline as you’ve just heard from Sean and our transformation efforts are delivering efficiencies in cost savings, which we’ll capturing across the company. This quarter’s results proved to us that we’re delivering progress against our long-term objectives. And with that, we would like to take your questions. Bryan, do you to remind our callers of the procedures for the Q&A.

Sure. [Operator Instructions] And our first question comes from the line of Geoffrey Porges from Bernstein.

I will try and be brief. There have been some questions about a partnership to support the launch of Repatha. And it seems as though it’s also fairly [indiscernible] but is that something that you can now help us to rule out definitively given that that you have a pretty short interval until the launch? Thanks.

Geoff, we’re excited about launching Repatha and we’re well along as you say in our plans for launching the molecule and we own the rights to this product globally and we look forward to commercializing it globally. Of course, we’re sharing – you know we had a partnership in Japan with Astellas but otherwise the rights are ours.

Terrific. Well, I’ll take that as a no, thanks.

Okay. Brian, let’s take the next question.

Yes, our next question comes from the line of Michael Yee from RBC Capital Markets.

Thanks. You hit on the Neulasta on-body device briefly, but maybe if you could give some color as to the launch, how fast you think you can convert and whether or not there is anything else that we should be thinking about as to why that would be different than the NEUPOGEN competition like we saw there and now we can get comfortable with [indiscernible] competition to Neulasta.

Michael, it’s Tony. So let me do some response. Obviously, it’s pretty early in the launch period itself, but we’ve seen pretty good uptick across as I said the 800 institution, the early debate was around reimbursement and access. We’re blocking that down and the product starts to move quite fast. We are exceeding our own internal expectations at this particular stage and we continue to see very good feedback from patients who really see this as a distinctive and definitive advantage. Nurses are also very keen to utilize the product and to help patients as they go home. And last but not least more and more institutions are stepping in to buy products. So we continue to see an ongoing conversion of the business to the on-body injector.

Our next question comes from the line of Chris Raymond from Robert W Baird.

Question on Repatha. So, I know you probably don’t want to go too much into the patent infringement case against Sanofi and Regeneron, but – so just noticing that the proposed scheduling order is out there and it has – and some of the key events – the Markman hearing for example and jury trial slated for after launch of both of these drugs. And I know you have talked about in the past in fact you have a press release I think from last year you know highlighting a potential PI, preliminary injunction. Is that still on the table or how should we think about that given the scheduling order here that – that’s out there? Thanks.

Thanks for your question, Chris. We’re focused on having this matter reviewed on the merits. And as you pointed out, we’re fortunate that it looks like we’re going to be able to do that early in the New Year. So, we’ll look forward to – again this is being reviewed in its entirety. And as you know and as we’ve said before, we feel we have a very strong intellectual property patent estate on this product and we demonstrated in the past our determination to assert our IP rights and defend them and that’s what we look forward to doing for this product early next year.

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

Hi, guys thank for taking my question. First, congrats on all of the progress in last six months, 12 months on margins and on Kyprolis. So congrats on that. My question is actually on margins in the quarter. David you talked about how you printed a 50% operating margin, which is dangerously close to the 20 – lower end of the 2018 margin guidance you gave and it sounds like you expect that margin to deteriorate throughout this year. I was wondering if you can talk through some of those dynamics as the year goes on. I think your guidance implies a full year operating margin of may be 44% or 45%, maybe talk about why your guidance implies deterioration throughout the year. And I recognize this is deterioration from a surprisingly great number this quarter? Thanks.

Yes, so first of all in Q1 as we said we are really encouraged by the performance in the business which was obviously a combination of solid top line growth, as well as the fact that we had very good expense management in the quarter. If you frame that as to how that evolves through the year then what I would say is a couple of things, one is we’d indicated previously that we expect this year our transformation to deliver about $400 million of incremental savings. And certainly we saw a share of proportionate share of that already land here in Q1. And those savings will continue pretty steadily through the year. The second dynamic on cost then is around the cost trends in particular if I look at SG&A and the sales and marketing area, as well as R&D, we do expect to see raising costs which is a combination of the fact that we inevitably, normally for the business of the first quarter is the low point for expenses overall for the year, but I think importantly for us right now we do have these launches that are coming up we do expect to underwrite those launches significantly with this transformation savings and we do expect the trend of spending to increase through the year. So I think you basically framed it correctly as to how we are thinking about this evolving in the year.

And Mark, not to miss the opportunity to talk about the long-term as I said and as David said in his remarks, we feel we are clearly making progress towards our long-term objectives including net margin objective.

Brian, let’s take the next question.

Yes and our next question comes from the line of Matthew Harrison from Morgan Stanley.

Great thanks for taking the question. I want ask one of ivabradine. You guys have highlighted potentially a million patients do you think could potentially be candidates for ivabradine therapy that’s a pretty big market number when you look at how you price that it about 4,500 on an annual basis and well below where forecast are. Can you may be help us think about either why consensus is too low on ivabradine or why not all of that patient population you highlight is actually accessible? Thanks.

So we did the initial analysis based around looking at the number of patients with cardiac heart failure and then specifically looking at the subset with heart rates of [70] [ph] and above. And that’s to help us hone down the size of a particular market, the pricing is the pricing is made based on the value proposition we think that we bring into market, obviously we come to market for the first time as a cardiology company and we intend to try and get to as many of those million patients as possible.

And our next question comes from the line of Robyn Karnauskas from Deutsche Bank.

Hi guys, thanks for taking my question. Just given the recent outcome of the BP CIA case about and I guess the ruling - the first ruling was that you do not have to go through the patent dance and your confidence in 2017 launch of biosimilar Humira. Can you help me understand like what gives you confidence that the timelines if you were to go through this patent dance won’t go longer because many consultants say that this could go - the BP CIA discussion could go for many years beyond like two-year period or one-year period. So help me understand like giving your knowledge of that process why it won’t take an extremely long time. Thanks.

Well here Robyn based on our understanding of legislation based on the progress that we’re making and developing at adalimumab. We still expect that we will be in position to launch that in 2017. And of course with respect to the Sandoz matter we’re expecting that I will be heard in the appeal courts later in the year. Tony do you want to add anything?

We’ve basically debating a concept of 180 days notice. So that’s the debate at the moment. Once we get to a point in time that we would agree to live Sandoz they have the right to come to market at risk.

And our next question comes from the line of Eric Schmidt from Cowen and Company.

Thanks for taking question. May be a follow-up to Mike’s question on the On-body Injector for Neulasta, Tony, I have no idea of how to put the 800 accounts into context, could you tell us sort of how many accounts you have in general for your last overall and is there a target conversion rate that you are hoping to get say over the next 12 months, what would you define as a successful conversion, could you share with us?

So the 800 accounts are about 25% of our large customers. And we clearly have a target that we aiming for, I’m not going to be disclosing that at the moment, but we’re driving hard to get a much of our business come to the on-body injector possible.

Thank you.

Brian, will you go on?

Yes, our next question comes from the line of Terence Flynn from Goldman Sachs.

Hi, thanks for taking my question. Obviously with following your approval of the ivabradine and the upcoming approval of Emab, just wondering if you guys can talk about longer-term thoughts on your cardiovascular franchise because you will be putting your fair familiar sales reps behind these two products, but is there an appetite to continue to add there? Thanks.

So, Terence it was a little bit hard to hear your questions, but I think you were asking about Corlanor and Repatha, we are excited as we’ve said to get launched in the cardiovascular field with Corlanor and we think again an innovative medicine and it require some work educate to cardiologist about the appropriate use of this medicine with heart failure patients but we are excited about that and we are excited also about the innovative biology behind Repatha and the opportunity for that medicine and make a big difference for our patients with the risk of heart attack and stroke. So, our focus is on those two medicines right now to the extent that we have other opportunities to advance innovative biology with big effects in cardiovascular disease, we will look carefully those. And as you know we have one such medicine that’s in late stage of development now, which is our Omecamtiv mecarbil program, which Sean referred earlier in his remarks, so those constitute three pretty exciting innovative opportunities for us right now and if we find opportunities to build on those we’ll look at them carefully.

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

Great, thanks very much for taking the questions and congrats on the very nice quarter here. Sean I wanted to ask on the ENDEAVOR trial, the Kyprolis that you reported this quarter so, should we assume that the benefit that you saw with Kyprolis over Velcade was observed in both the Velcade experienced and the Velcade naïve patients, because I think trial allowed both. And then can you also elaborate on the differences that you observed in cardiovascular safety between the agents and just putting it together based on the expert feedback? And how do you think these results will impact the standard of care in myeloma here? Thanks.

Okay, few questions in there. I’d say yes, we did see a pretty consistent treatment effect of Kyprolis independent of the baseline characteristics of these patients whether they had experienced transplant before whether they had been treated previously with velcade. The CV safety data I don’t have anything additional to say than the information we put in you know the press release until we would be presenting at ASCO. And I do think that this standard of my view on it is that well there is always lots of exciting innovation going on in oncology these days, backbone therapies in this particular disease are going to include a proteasome inhibitor for a good long time and it’s becoming pretty clear that the best agent is Kyprolis.

And our next question comes from the line of Yaron Werber from Citi.

Hi this is [indiscernible] on for Yaron. For Repatha, what do you expect the label to look like? Do you expect standard tolerance to be a specific indication on label or something broader than that.

Yes. Of course it’s very hard to predict what regulators will decide to do there I think it is possible to write an indication which speaks to patients who are not adequately treated with respect to their LDL cholesterol response with stands or intolerant to stands so if you look at lot of the recent labeling indications that have been used by the agency they have this sort of the structure and that’s kind of in my mind the base case what you’d expect to hope to get in the various jurisdictions that we’re going to be negotiating the labels. But it’s really hard to predict exactly where the language will like.

Thanks.

And our next question comes from the line of Howard Liang from Leerink.

Thanks very much and congrats. Regarding the FDA panel for T-VEC next week in recent cases FDA has approved drugs for a narrow indication when the package is less than perfect. I don’t know if that’s a positive case but can you talk about whether there’s any population where the risk benefit is specially coming for T-VEC. Also are you show the new anyway some of the checkpoint inhibitor combination data at the FDA panel?

Okay. So the first question which implies that the package is less than perfect I think it’s probably true, yes, that’s true almost everything we do. And I think that in this case it’s clear that the population that we’re studied in the Phase 3 trial included a fairly broad range of patients with local regional and metastatic melanoma disease. And I think if you’ve seen the data that we’ve presented in various scientific forums, the responded durable response rates and the subgroup analysis looking at survival for that matter how the biggest impact in the earlier stages of the disease. So it is possible that’s where the conversation would go and the advisory committee and with FDA but at this point we do have a positive trial for the whole population that we studied and so that’s the logical place to start the conversation. And then with respect to the checkpoint inhibitor all we would be doing at the advisory committee meeting would be to have a slide that will indicate of course the various studies that are going on and going with the product that include the ones I’ve referenced in my prepared remarks as well as certainly being in the capable of presenting the pubically available data with the evolocumab combination the Phase 1b data that we presented previously at scientific forum.

And our next question comes from line of Ying Huang from Bank of America.

Hi. And good afternoon, thanks for taking my questions. First of all I have a question on your biosimilar Humira programs here. Now that you’ve finished both Phase 3 trials already what’s the timeline for a submission in your plans. And then secondly do you plan to seek a broad label including oral indications that you did not try in Phase 3 and then quickly also David R&D cost is coming down much faster than SG&A this quarter compared to a year ago should we expect that to continue and is that driven by research or development? Thank you.

Why don’t we break that into two parts, Sean will talk about the Humira question first?

Yes. So we do intent to submit Humira later this year the biosimilar later this year. And in fact we would be seeking this sort of a broader labels set of indications through the extrapolation mechanism that is consistent with the current guidances.

Okay.

David?

Yes, so in terms of the cost savings what I would fist say is that if you look at the savings we expect this year as well as through the whole program as we’ve said before that those are savings that are being accrued across all of the areas of cost, so it’s not concentrated in one versus the other. And secondly if you look at the particular pattern of savings in the first quarter what you can observe as I mention is that. And as we’ve talked before we are investing freeing up flexibility to invest in our launch portfolio. So you can expect that a substantial share of what we save in SG&A will be reinvested towards the launches and then I think the third thing I’d commented as to R&D that was a combination in the quarter of R&D tends to be rather lumping in terms of the spend. So you saw a combination of savings and that we are getting from our transformation in the quarter as well as some of the inevitable lumpiness that occurs from quarter-to-quarter in that area. So I think bottom line is that we expect going forward through the year to see rising costs which you typically see in the pattern through the year. But see it a little more accentuated as a combination of rising cost with launch activities as well as in the case of R&D we still are continuing to invest in clinical trials and we will see some increases there. And then as to the, if I may one final comment R versus D, and basically as we have talked before we’ve done work to look at all of the processes across all of our business activities and so we are seeing efficiencies in both of those areas broadly.

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

Thank you. Question on Romosozumab. In the structured trial comparing to Forteo is the change in the BMD if sufficient enough to differentiate it from Forteo or are you following the patient to longer to see difference in non-vertebral fracture risk reduction?

Yes, so the studies that are being done with Romosozumab versus Forteo are all designed to look at BMD and as you’ve seen probably the data that I presented at the business review shows that in fact those differences are quite substantial but of course we’re also looking at the quality of bone. And in particular the cortical bone thickness which we’ve also looking at using fairly advanced imaging technologies there is no plan for us to do comparative fracture studies against teriparatide at this time.

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

Hi guys this is Carter on for Geoff. Tony can you provide a NEUPOGEN share of the short-acting GCSF market for the quarter and I guess more broadly what are your expectations regarding potential timing of a potential biosimilar Neulasta I know some biosimilar companies have disclosed plans to file for approval later this year. Potentially just on a PK-PD study without a Phase 3 study your thoughts there would be appreciated. Thank you.

Okay. So just remind you in fourth quarter 2014, NEUPOGEN’s market share was 80% first quarter 2015 NEUPOGEN’s market share was 80%. As regard to Neulasta they could end the market towards the end of 2015 when our package expires.

Hey Brian, why don’t you go at and take one last question as we’re getting to the top of the hour.

Yes. And our last question comes from the line of Cory Kasimov from JP Morgan.

Hi, good afternoon guys, thanks for squeezing me in. So I want to follow-up on Matt’s question regarding Kyprolis. With the impressive result now I want to hand for ENDEAVOR as well as ASPIRE for that matter how do you think about the implications for the frontline CLARION study perhaps more importantly what is your market research suggest about the relative use of proteasome inhibitors in the frontline multiple myeloma study in relative to later stages of treatment thanks.

Why don’t I start in terms we can follow-up I think with respect to the CLARION study which of course is the head-to-head study against allocate in the first line setting. We feel that study has been significantly de-risked by seeing the ASPIRE data and the ENDEAVOR data. Now the extent which you’ve been read through results from ENDEAVOR to CLARION is something you know people sit around and debate but certainly we feel good about the likelihood that we’ll see a favorable result from the trial. And Tony, you want to respond to it.

Probably we’ve done a fair amount of work I mean it all comes down again to what potential outcome of the CLARION trial will be. But as John just said if we continue to going from ASPIRE to ENDEAVOR we assume we’ll have a positive result versus the competition in the marketplace. The objective in multiple myeloma is to drive progression free survival for as long as possible before you have to go onto your second and third line therefore we assume that we’ll be seeing usage in first inline to once we got the indication.

All right. Corey thanks for your question as you point out things are going very well for Kyprolis and we’re excited about the data that we have in hand as well as the data that we may generate well thanks for joining our call, Arvind and his team will be around if there are questions that you didn’t get a chance to ask on the call. And we’ll look forward to connecting with you on the next quarterly call. Thanks.

Thank you everybody.