Amgen Inc. (AMGN) JP Morgan 41st Annual Healthcare Conference (Transcript)

Amgen Inc. (NASDAQ:AMGN) JP Morgan 41st Annual Healthcare Conference Call January 9, 2023 6:45 PM ET

Company Participants

Bob Bradway – Chairman & Chief Executive Officer

Conference Call Participants

Christopher Schott – JP Morgan

Christopher Schott

Good afternoon, everybody. I’m Chris Schott from JPMorgan and it’s my pleasure to be introducing Amgen today. From the company, we have the Chairman and CEO, Bob Bradway. Obviously, a very eventful year for the company in 2022 and look forward to hearing from Bob as we think about the story going forward. So with that, I’ll turn it over.

Bob Bradway

Okay. Thank you and thank you for your interest in Amgen. We feel we’ve delivered well in the past and that we’re well positioned to deliver in the future. Now, I know that many of you are very familiar with Amgen but there are a few who are joining this event that are a little bit less familiar with our company. So I thought I might just take a couple of moments and very quickly orient those of you who are new to Amgen, to our company.

I would start by pointing out that these are our 26, 27 brands. What they have in common is that they address serious illnesses and most of these are first-in-class innovative medicines with a large effect size against those serious illnesses. And these 26 or 27 medicines generated about $26-plus billion over the course of the last 4 quarters, addressing, again, the needs of patients in the following disease areas.

You can see, we’re active in cancer. We’re active in inflammatory diseases, rheumatoid arthritis, for example, severe asthma as well as a couple of newer indications for us that you see listed here. And in addition, we’re very active in the fight against some of society’s biggest health challenges, including heart attack, stroke and of course, we have an obesity franchise that’s attracting quite a bit of attention at the moment as well. So we have a broad-based business, again, characterized by innovative medicines focused on serious disease.

Again, perhaps for the benefit of those that are less familiar with Amgen, let me just share a few facts here just to orient you to the scale of our business. And for those that are more familiar with Amgen, let me jump in and give you a sense for how we feel as we kick off the year 2022. And what I would say is that, in addition to being well prepared for the future, we feel we executed effectively in 2020 and that we are making the progress that we intended to, against our long-term objectives which we discussed with our investors at our Investor Day in February of 2022.

Now, the reasons that we feel optimistic about the progress we’re making, starts with the performance of our in-line commercial brands. We have a portfolio of leading innovative brands which, through the first 3 quarters of the year, generated volume growth of about 9% and that’s a reflection of the fact that these are brands that address very large markets like cardiovascular disease, osteoporosis, asthma and of course, cancer and these are brands that we expect to continue to grow through the end of the decade.

With respect to our pipeline, we accelerated and de-risked a number of important programs in our pipeline in 2022 and I’ll talk more about these this afternoon. But there are 6 programs in particular that I would highlight which we moved into Phase 3 or into registration-enabling trials in our pipeline.

We committed a little more than a decade ago to establish a biosimilar business which, we think, can play a role in helping to create savings and offering choice in the health care system and we are proud today to have an industry-leading biosimilar business. And again, with respect to our long-term objectives for that business area, we were successful in 2022 in completing 3 Phase 3 clinical trials for what we expect to be our next 3 biosimilar programs and those are molecules directed against EYLEA, STELARA and Soliris.

We also, of course, feel we’re well positioned to be the first in the U.S. to launch a biosimilar molecule for adalimumab with our product known as AMJEVITA. So we’re looking forward to having the opportunity beginning on January 31 to compete in this marketplace.

International growth is an important part of our reason for believing we can deliver attractive performance through the end of the decade. And again, through the first 3 quarters of the year, the volume demand for our products internationally grew by some 17%. So we’re encouraged by what we see in terms of the international demand for what we’re doing.

And finally, as I’ve often said at this conference, capital allocation is a forethought at Amgen, not an afterthought. And here again, I think, we maintained our disciplined approach — the capital allocation throughout the course of the year, including completing one and announcing a second important acquisition, while increasing our dividend by some 10% during the course of the year and after having completed a buyback program amounting to in excess of $6 billion.

Our world is changing fast and we often say that the factors like the Inflation Reduction Act, you either get ahead of it or it runs you over and I think we feel we got ahead of it in 2022. And again, part of that is a reflection of the fact that we built a portfolio of products that we think is well suited to volume-driven growth in an environment of declining net prices. And I’m sure it’s not lost on any of you that net prices have been declining in the U.S. market since 2018. That’s a trend that we anticipated and again, is a fact that I think our product portfolio is well suited to address.

Moving to the IRA or the Inflation Reduction Act. I think you’re all aware of the likelihood of this legislation having a chilling effect on innovation in our industry for the long term. And while we think that’s true, we think our relative positioning for the Inflation Reduction Act is strong, given our heritage and orientation towards biologic molecules and given our very efficient cost structure and in particular, our world-class, efficient biomanufacturing capabilities.

Finally, I would note, in terms of getting ahead of the challenges facing our industry that we think the combination of compressed sector valuations, the rising cost of capital for some of the smaller companies in our industry and the scarcity of funding, will create opportunities for us on the strategic business development front.

And again, as you’re well aware, we undertook 2 important transactions in 2022. The first, the acquisition of ChemoCentryx; and the second, the announced acquisition of Horizon. And I’m sure it’s not lost on any of you that both of those are well positioned in a world — or in a U.S. Inflation Reduction Act setting. So we’re excited about the value that we can bring to those acquisitions and what they represent for us as opportunities at Amgen.

The details of Horizon, again, are perhaps familiar to you at this point but we feel very confident that this is a strategically compelling and a financially advantageous transaction for us. This is an acquisition that we think will strengthen our portfolio of first-in-class and best-in-class therapeutics. We think that it will leverage our decades of established leadership and inflammation, in particular, in nephrology and we think that we have the global scale to capitalize on the growth potential of the Horizon products.

We also think that our decades of leadership in biologics research, development and manufacturing, will enable us to add value to the Horizon portfolio. And we think, financially, the combined company will be a very strong one, whether measured by cash flows or prospective growth. So we’re excited about what that represents and I would simply reiterate that we expect the deal to close in the first half of 2023.

Deals always look good on paper. Fortunately, the ChemoCentryx deal looks good to us in reality as well and the integration of that company is proceeding very efficiently, very effectively from our perspective, bringing to us a molecule known as TAVNEOS which is a first-in-class treatment for a very rare but serious disorder known as ANCA-associated vasculitis.

This is an autoimmune disorder that leads to inflammation and can lead to the destruction of small blood vessels with serious consequences for those who are experiencing it. And this is a disorder that is treated by nephrologists and rheumatologists where again we have decades of experience and these are professionals in whose offices we’re in and out every day. So we look forward to being able to build on the potential for TAVNEOS as a result of that acquisition.

With respect to our portfolio of commercial products, there are some rookies and some veterans in this list that will be familiar to you. But let me just remind you that we’re active in inflammation, oncology and general medicine and I would just highlight 2 of the important contributors to the outlook for growth in our inflammation franchise, by pointing to Otezla which, of course, is the oral product that is widely prescribed and has been used now for many years to treat psoriasis and we experienced about 7% volume growth for that medicine through the first 3 quarters of the year.

And then let me just highlight that TEZSPIRE, having now crossed its first year anniversary, is off to a great start, whether measured by the clinical effect of the medicine or by the broad prescriber base that is reaching for TEZSPIRE. We’re really encouraged by the results we see. So pulmonologists, allergists are prescribing it for patients irrespective of what their eosinophil status is.

So some important questions that some of you had at the time of launch have been answered by the data that we’ve generated in the first 12 months and we’re excited about inflammation and TEZSPIRE in particular.

Shifting to oncology. This portfolio continued to perform well in 2022 with 11% of volume growth and I’ll highlight a couple of the opportunities that we see for further expansion of the opportunity in oncology at a moment.

And I also want to touch on our general medicine molecules, starting with Repatha which generated 52% growth through volume growth, through the first 9 months of the year. And I would also point you to one of the things that we expect to be a really important contributor to growth for Repatha in the future which are the open-label extension data that were reported in the fourth quarter which demonstrated very encouraging results indeed for those patients who have sustained low levels of LDL throughout in that case, about 8.6 years, demonstrating significant reduction in cardiovascular events and demonstrating that when it comes to LDL, lower is better and the sooner you get lower, also the better. The American College of Cardiology has also changed its prescribing guidelines, again, I think, paving the way for increased growth and demand for Repatha over the balance of the decade.

Our bone franchise which is comprised, for the treatment of osteoporosis, with Prolia and EVENITY, also performed very well during the course of the year and we continue to be excited about the outlook for growth from those innovative first-in-class molecules that are making a big difference for women at risk of fracture after having transited through menopause.

With respect to the pipeline, we have a pipeline of first-in-class medicines, again, focused in inflammation, oncology and general medicine and I’ll highlight a number of these in particular. But let me just repeat that 6 of these molecules transitioned from mid-stage to Phase 3 or registration-enabling studies during the course of the year and I’ll give you a sense of that here in a moment.

Starting in inflammation with TEZSPIRE. We began a Phase 3 study that was announced recently but we began that study in November, in eosinophilic esophagitis. So we now have 2 Phase 3 studies underway for TEZSPIRE, offering life cycle management expansion opportunities. And then, of course, we have 2 important Phase 2 trials also studying this first-in-class medicine which is an antibody directed at TSLP. So very exciting, looking forward to generating more data for that medicine and seeing what we can do for patients who are suffering from autoimmune disorders.

Rocatinlimab is our antibody — partnered antibody which is directed at patients suffering from atopic dermatitis. That program is actively enrolling patients in the Phase 3 trial. I would remind you again, this is a novel program, an antibody that’s directed at OX40 which is expressed on activated T cells. So it is a molecule that not only eliminates those activated T cells but also plays a role in preventing the expansion of — or the further activation of other pathogenic T cells. So we’re encouraged that, that’s rapidly enrolling now. We look forward to generating results there. And then we have 2 other mid-stage programs in inflammation directed against lupus and ulcerative colitis.

Turning to oncology. Let me just point out that we began — again, last year, we began our Phase 3 study in first-line gastric cancer for bemarituzumab which is an antibody against FGF — the FGF receptor 2b and we’re excited to be rapidly enrolling that program and also studying it in another — a number of other tumors that express the fibroblast growth factor. So quite a bit going on in that program.

Tarlatamab is another cancer asset that entered into potentially registration-enabling work during the course of 2022. This is a half label extended — or excuse me, half-life extended BiTE directed against the target known as DLL3 which is particularly prevalent in small cell lung cancer patients which, as you know, is a very challenging disease for which there has been very little innovation over a long period of time.

So we’re excited about what we’ve seen in the way of clinical evidence for efficacy with this molecule. And as I said, that rapidly enrolled in a Phase 2 program that has the potential to be registration-enabling.

Shifting to BLINCYTO. I want to highlight BLINCYTO as well where we generated, again, very important data in 2022 that we think will play an important role in helping BLINCYTO to become a bigger medicine over the balance of the decade. BLINCYTO was also a BiTE molecule. And the Phase 3 data that I’m referring to were reported at the ASH meeting in the fourth quarter which demonstrated that BLINCYTO when combined with chemotherapy, generated superior survival outcomes for patients compared to standard of care. So this represents in first-line ALL patients, a really significant advance, in particular for patients who were considered to be MRD negative.

On the back of clinical data that we’ve generated with that molecule in a subcutaneous formulation, we’re also moving very rapidly forward with that formulation and excited about what new opportunities that might open up for us with BLINCYTO as well.

And finally, as you know, our LUMAKRAS which is a first-in-class molecule directed against KRAS G12C mutations, continues to be performing well and continues to be active across a wide range of different clinical studies.

Let me just jump quickly then to our general medicine franchise and repeat what I said earlier about Repatha which is that, we think the open-label extension data for Repatha which were reported in the fourth quarter, are very important and underscore or provide confidence in our outlook for this business and for the role that it can play in helping to prevent heart attacks and strokes.

Olpasiran is our siRNA medicine directed at Lp(a). And here again, we reported Phase 2 data in 2022 that showed we were able to reduce LP(a) levels 95% to 100% in patients who are born with high levels of Lp(a). And off the back of those very strong data, we opened a Phase 3 study that began enrolling in the fourth quarter and I would say there’s tremendous demand from clinicians and patients to be included in that study.

And then finally, let me touch on 2 obesity assets. Notice I said 2. AMG 133, of course, attracted quite a bit of attention following our Phase 1 data which demonstrated an attractive trio of qualities for that molecule, again, in a Phase 1 study. On the back of that, we have begun enrolling patients in a Phase 2 study, so that is underway.

And then in addition, I would offer that we have begun clinical studies for a second obesity molecule known as AMG 786 and we’re remaining quiet about the mode of action of that molecule. But I would say that our interest in it was inspired by human genetics and that it operates in a method or a manner that’s orthogonal to AMG 133.

Furthermore, when it comes to obesity, we have a series of preclinical assets that we’re very excited about as well, assets that also work orthogonally to AMG 133. So our commitment to obesity and the disorders that are related to obesity is a franchise commitment.

With respect to our research engine, let me just quickly say that, again, we’re really excited about how we have repositioned, restructured, energized our research efforts at Amgen and we talked in some length in February about the generative Biology platform at Amgen as well as our multi-specific platform. And during the course of the year, we made tremendous progress in both of those areas.

I’ll just give you a couple of quick examples to underscore my enthusiasm. First, with respect to using technology to reduce the cycle time that it takes us to choose the right molecules to advance into the clinic, our antibody lead optimization time lines were shrunk by about half. So think about that as from 2 handfuls or many months to something less than one handful of months to choose a lead antibody. So we’re moving at a speed there that wasn’t possible a few years ago.

And similarly, with respect to our bispecific or multi-specific leads, we’ve also demonstrated during the course of the year — past year that we’ve been able to deploy our technology in a way that enables us to significantly — in this case, reduce by 75%, the time that it takes to — from design of a molecule to generation of multi-specific leads. So again, that would — you think about that in terms of a couple of dozen months to something less than a handful of months. So we’re excited about what we see there.

I would note that if you were reading your press — industry press over the holidays, you may have seen that we entered into 2 collaborations to bring antibody drug conjugate opportunities to Amgen. We’re intrigued by the data that have been generated in this field. And while that was an area that we had a presence in a number of years ago, we withdrew and in light of changes in the field, we are back in and those were the subjects of the transactions that we announced with LegoChem and Synaffix.

And then, finally, I would just note that we continue to be very active in leveraging our world-leading human genetics capabilities and complementing those genetics capabilities with considerable other efforts in proteomics and other areas of human data in order to inform our choices for which molecules to advance in discovery research and how to design our clinical trials.

Let me just quickly touch on a couple more things and then we’ll open up for Q&A.

Our industry-leading biosimilars business, we think will be accretive to long-term growth. As I said earlier, we expect to be the first and only competitor to Humira in the U.S. market beginning on January 31 and we think we’ll enjoy that period of exclusivity for some number of months.

We are in a position now to be in the first wave of launches for the 3 other biosimilar molecules that I mentioned earlier. And as we’ve said in the past, we expect this business to be able to grow considerably during the decade and to be able to do that at attractive margins, given that we have the capabilities that are required in order to establish that performance for our business globally.

Capital allocation, as I’ve already said, is an important part of how we run the business and our commitment to capital allocation is something that we take seriously. We obviously deployed a significant amount of capital this year in making acquisitions and that was on top of the $4-plus billion that we invested in our R&D and that was on top of the $1 billion that we invested in long-term capital projects. And, of course, it came alongside of the 10% dividend increase in the repurchase of more than $6 billion of stock. I think I went — there we go.

With respect to the bottom line, obviously, accountability today is broader than just delivering the bottom line and this is something that, fortunately, at Amgen, we’ve been focused on for some time. In fact, we were focused on it before we knew what to call it but we have a number of activities underway to address our responsibilities to the community from an ESG perspective.

I’m often asked whether I feel more confident or less about the outlook for Amgen for the balance of the decade now, as compared to where we were in February when we met with our investors and shared our long term perspectives. And I would say that we feel even more confident about the outlook for our business than we did then.

And let me just remind you what we said. We said that we felt we could deliver attractive financial performance which we define as operating performance, that would reflect mid single-digit revenue growth — off the back of that mid single-digit revenue growth. And on average, we expected earnings per share to be able to grow by high single-digit to low double-digit. We continue to feel very confident about our prospect for delivering that.

We also stated that we expected to be able to deliver that performance while continuing to return significant capital to our shareholders. And I think, as you’ve seen, we’ve continued on that trend during the course of the year.

We said that in order to deliver those results, we would need to expand successfully in our international markets and we have, as I remarked earlier, with volumes growing in the first 3 quarters by 17% internationally.

Biosimilars, as I said, we will need to perform well in our biosimilars business in order to be able to deliver those results for you. But again, we successfully completed our Phase 3 program for 3 molecules on time, on budget, in 2022. I’ve already touched on AMJEVITA. And in total we’ll have 11 biosimilar molecules when we get to the end of the decade.

And then finally, we said we had to advance the innovative pipeline in order to deliver those results. And I would just repeat that we de-risked at least 6 programs during the course of the last 10 to 12 months by moving 6 programs from mid-stage to late-stage Phase 3 or registration-enabling trials. So we’re excited about that.

In addition, I think we demonstrated the kind of data that we needed to have confidence in the growth of our in-line innovative brands. So Otezla, obviously, we demonstrated over the course of the last 12 months that the mild to moderate indication will be an important one for us in the U.S. So that — we’ve had now 12 months of data to make us feel more confident about the outlook for that.

TEZSPIRE, as I mentioned, a year ago, it was still in the first few weeks of its launch. We can now look at the benefit of that molecule with the benefit of a full year and recognize that it’s off to a very strong start, making a big difference for patients and then well recognized for that by prescribers and payers.

The open-label extension data for Repatha was core to our belief that, that will be a big growth driver for us throughout the course of the decade and we’ve now been able to share those data publicly.

And then finally, I would just reiterate that our bone health franchise will be an important contributor to growth for us over the decade. And there too, we’ve demonstrated that EVENITY continues to be a very strong performing molecule now around the world, capitalizing on the strong franchise that we’ve built already with prescribers for osteoporosis therapies with Prolia.

And then, again, a year ago, we didn’t know exactly what would happen from Washington, or from a political perspective but now we do. And the IRA, our Inflation Reduction Act, we’ve made some assumptions in February about what changes government legislation might have on the business and the Inflation Reduction Act is in line with what we expected at that time. So that was a big unknown, or risk. We now know what the issue is and we can adapt accordingly to deal with it.

So all in all, looking at our business, again, we remain very optimistic about the long term. We remain strongly of the belief that the business development that we’re doing is additive to what we think we can achieve organically and we feel we’re in an even better position now to deliver on those long-term objectives.

So with that, why don’t we turn it over to questions and I’ll join you at the podium there.

Question-and-Answer Session

Q – Christopher Schott

Sounds great.

Bob Bradway

Trying to click that slide forward. It doesn’t seem to want to move. Let’s — here we go. Give it one more chance. There we go. Perfect. Thank you.

Christopher Schott

Thank you. Great. So maybe just kicking off on the questions. Would love to dive into a few product questions. So maybe first on Otezla. Can you just talk a little bit about the ramp in mild with the label expansion, how that’s been going so far? And how you’re seeing the franchise in terms of like what patients are being started on the drug today versus where we were a few years ago?

Bob Bradway

Yes. So recall that we were waiting for data that would show efficacy in mild to moderate patients which we’ve received. And then, we’ve had the benefit of the last 12 months to engage with prescribers. And we felt that there were about 1.5 million incremental patients in the U.S. that we could reach with the benefit of these data in the label. And I think the experience in the last 12 months would suggest that there are indeed a large number of patients that are transitioning from topicals to some therapy and we think Otezla is well suited for those patients based on the years of data and the — both safety and efficacy data for those patients.

And that’s what we’re seeing. So, so far, so good. I know there have been a lot of questions about the TYK2s but, so far, I would say there’s nothing that’s happening in the new product category that’s surprising to us or different from what we expected. So again, very much in line with what we had expected for the psoriasis patients.

Christopher Schott

Should we expect, as the TYK2 starts to get some kind of better coverage, that there could be some window of time where volume growth could slow as we had some physicians taking patients who are responding as well and kind of explore what that profile could look like?

Bob Bradway

Again, I think we’re going to see patients continuing to move from topical to oral. I don’t think those patients will go straight to TYK2. I think there’s still some prescriber reluctance to embrace a product that doesn’t have the established safety and efficacy record of Otezla. So we think that we will see patients flowing from the mild to moderate community on to Otezla. Patients who aren’t responding adequately or feel they need a different therapy, may then move on to TYK2 or move on to another biologic. But fundamentally, I think we feel that the dynamics are in place.

Now, with respect to how — from one quarter through another, how patient volumes will move, I mean, clearly, there are some free drug programs and other things in the market now, that will be disruptive from one quarter to the next but when we look at the opportunity for Otezla through the remaining years of its patent life which takes us to the end of the decade, we feel very good towards the end of the deck. We feel very good about the prospects for continuing to serve more and more patients with that medicine.

Christopher Schott

So plenty of runway in terms of these [ph]. Yes. So we’re kind of right around the corner from the biosimilar Humira launch. So I’d love just latest thoughts on launch dynamics there as we think about maybe both this year and next year, how that market you see shaping up?

Bob Bradway

Right. Well, again, I would perhaps offer a couple of thoughts. First, we worked hard to have a biosimilar ready approved and ready to go. And as I’ve said now a couple of times, we expect to launch on January 31. We expect that we’ll launch with a parity formulary position in most of the market. And so, we expect that will pave the way for some adoption over time. I would say — I wouldn’t expect the adoption to be anything like what we saw for Embasi or KANJINTI [ph], for example, where we saw very rapid adoption. Those are so-called buy-and-bill products. And so, the market dynamics there are very different from what we’re going to see for AMJEVITA as it competes with Humira. So I think it will be more gradual.

But the important thing from our perspective is that we have an opportunity now and we’ve succeeded so far in that opportunity, of being recognized by the formularies of the big payers and — so that we will be listed as an alternative to the innovative brand. And I don’t think that will be possible for the dozen or whatever it is other adalimumab biosimilars that are seeking to come to the market. So I think — our hope is that over the next year or 2, we will have established a firm long term position for AMJEVITA. And we’re the leading biosimilar provider outside of the United States and our aspiration, of course, is to be that in the United States as well.

Christopher Schott

And a broader question on the biosimilar business. This is one that I’m sure you get pretty frequently. And I think investors are trying to get their still hands around the attractiveness in the market. It seems like on one hand, there’s a huge TAM to go after and there’s relatively few players and Amgen being seemingly the best position of them. They have all the pieces in place to be successful. But I guess, on the other hand, it seems like there’s been quite a bit of price competition that gets introduced as new players enter the space. So I guess, how do you think about balancing those as you think about this as one of your kind of core growth drivers over time?

Bob Bradway

Well, I think you’re right that the addressable market is large. We think we can provide an appropriate alternative to the innovative brands. We think we can do that reliably with a high-quality biosimilar portfolio and we expect that through time. We’ll be able to earn an attractive return for our shareholders by doing that.

If we look at what we’ve established so far, I don’t think there’s any question in our mind that we’re earning a return for our shareholders as well in excess of our cost of capital on the biosimilar program. But that comes from executing on time, on budget. And I would note that not everyone in the biosimilar industry has been able to complete their programs on time. That’s part of what we expected. We thought it would prove more difficult than perhaps other observers expected and that at some point, there would be a shakeout as a result in the number of competitors for any individual molecules. So there will be price pressure as long as there are more marginal competitors in these markets. But what we’ve seen in Europe, for example, is that, over time, the number of competitors stabilizes and there continues to be a relatively attractive market for us from a margin or cash flow standpoint.

So, again, we’re a world leader in biologic development — biologic process development, biologic manufacturing and we’re able to bring those capabilities to bear for the benefit of our biosimilar business. And in addition, we’re bringing forward biosimilars that are in therapeutic categories where we have strong existing relationships with payers and prescribers and we’re able to use that network for the benefit of our biosimilar brands. So we think those — that combination of attributes has enabled us and will enable us to continue to earn an attractive return here. But we’ll continue to evaluate each opportunity to make sure that we continue to have that confidence. So far, we think there are 11 medicines that we intend to commercialize through the back end of this decade.

Christopher Schott

Can you talk about TEZSPIRE and the uptick you’ve seen so far? And maybe also as part of that, what are you most excited about as you think about the additional indications that you’re developing?

Bob Bradway

Well, again, TEZSPIRE is a novel first-in-class medicine. And at Amgen, we’ve been excitedly awaiting the opportunity to serve patients with this medicine. It’s Phase 1 data. We’re in the New England Journal of Medicine because they were still striking the Phase 2 data. We’re in the New England Journal Phase 3 data. We’re in the New England Journal. And this is a new pathway for inflammatory diseases. It functions higher on the inflammatory cascade than other molecules that have been explored previously. And we think it’s turned out that, that has — that creates some benefits for prescribers and for patients. And again, it’s off to a strong start for patients suffering from severe asthma, irrespective of whether they have high or low levels of eosinophils. And for prescribers, both allergists and pulmonologists, it’s proving to be an attractive option. So, so far, so good, touch wood, from a safety and efficacy standpoint.

And there are 4 big programs that are underway, 2 in Phase 3, 2 in Phase 2 for TEZSPIRE. Obviously, the biggest opportunity there is COPD but that’s still some way off and still perhaps a little bit more speculative and the Phase 3 programs in chronic polyps and in eosinophilic esophagitis or probably near-term opportunities. Obviously, not as big as COPD but what we see there is a little bit of the pipeline in a product metaphor. Lots of different opportunities to go after inflammatory diseases where the TSLP access may be relevant.

Christopher Schott

On 133, it’s obviously generated a lot of excitement over the past few months. I know it’s still early in development but just would love to get your thinking about the obesity market and the role Amgen is going to play in the space?

Bob Bradway

Well, again, we think there is still an unmet need there even after taking into account a couple of molecules that are further along in their development life cycle than ours. And we’ve approached this medicine differently from our competitors. We made a decision to try to interdict both GLP-1 and the GIP receptor and in particular, to antagonize GIPR based on human genetic data that led us to believe that, that was the right way to think about addressing the obesity challenge for these patients. And the data that we showed from the Phase 1 trial were very, very encouraging as regards to effect size, encouraging as regards to the dosing intervals that we explored, encouraging as regards to the duration of effect. And even after the medicine and stopped being administered, patients maintain weight loss in some cases up into 6-plus months.

So we’re encouraged by what we’ve seen from that Phase 1 program and that’s what led us to rapidly enroll the molecule in a Phase 2 study where we will explore it on a variety of different arms. But there is obviously a massive opportunity to address the public health problem of obesity and its — and the disorders that are related to obesity. And I think as the biology of adipose issue becomes better understood and as its contribution — inflammatory processes that contribute to related diseases becomes better understood, this will be seemed to be an important new way to try to prevent some of the chronic diseases that are such a problem for us in society today.

Now, I would say that we have — as I mentioned in my remarks a moment ago, we have a second asset in the clinic generating data now that — which works orthogonally to AMG 133 and several preclinical assets which also work orthogonally to AMG 133 which is a way of saying, ultimately, we think we may have to go after obesity and related complications of obesity through a variety of different mechanisms. And right now, we’re excited about the leads that we have and the progress that we’re making in designing medicines to address them.

Christopher Schott

On that 786 asset, when could we conceptually see some initial data and profile there?

Bob Bradway

When we have them. We’ll have more to say about that during the course of the year.

Christopher Schott

Maybe in the last few minutes — have a few questions from the queue related to Horizon. I guess, first, how are you thinking about capital allocation in — over these next several years as you’re delevering post — some of the acquisition goes forward as you go through this delevering process?

Bob Bradway

Again, I think we’ll continue to maintain our disciplined approach to capital allocation. It starts with investing in long term attractive innovation, so our innovation and external innovation. And we’ll remain committed to returning capital to our shareholders. And we’ve mentioned or we’ve announced that we expect to be able to bring leverage down to the status quo ante by 2025. So the combined company will be a very strong, cash flow generating enterprise and we expect to leverage or to benefit from that strong cash flow to bring down leverage levels in the way that we’ve already announced.

Christopher Schott

Are tuck-in acquisitions still on the table in that?

Bob Bradway

What’s a tuck-in?

Christopher Schott

Tuck-in sub $5 billion.

Bob Bradway

Sure. We’re going to continue to look — and will continue to look across a range of opportunities to acquire external innovation and also to license external innovation. So, as I said in my remarks earlier, we think the environment now is well suited to business development opportunities and we want to keep the company — and we think we’ve put the company in a position to capitalize on that and we want to continue to capitalize on that.

Christopher Schott

And maybe one last quick one here, another one coming in from the queue. How do you see the pipeline at Horizon fitting into Amgen’s broader efforts?

Bob Bradway

Well, obviously, we’ll have more to say about that once the transaction has closed but there are a number of assets there that we’re intrigued by and there are important studies that are running now. We look forward to seeing the data when those — when they become available. So again, stay tuned. Look forward to have more discussion about that after the deal closes which we expect to be at some point in the middle of the year.

Christopher Schott

Great. I think we’re out of time. Thank you.

Bob Bradway

Thank you. Appreciate your support.