My name is Brian, and I will be your conference facilitator today for Amgen’s Third Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. There will be a question-and-answer session at the conclusion of the last speakers’ prepared remarks. [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 third quarter. Based on our strong results in Q3, I think you’ll agree that our business is performing well and we are on target to deliver against our long-term objectives and commitments. I think what’s really exciting for us right now is that we are on the verge of a new whole new product cycle that is beginning to unfold. To discuss all these topics and more, in much greater detail, our Chairman and CEO, Bob Bradway; will lead the call today. Bob will provide an overview of our strategic and operational progress, followed by David Meline, our CFO, who will review our Q3 results and address guidance related issues. Following David, our Head of Global Commercial Operations, Tony Hooper, will discuss our product performance during the quarter; followed by Head of R&D, Sean Harper, who will provide an update on recent approvals and our pipeline. So before I turn it over to Bob, I will provide my customary comments and reminders. We will use slides for our presentation today. These slides have been posted on our website and a link was sent to you separately by email. Our comments today will be governed by our Safe Harbor statement, which in summary says that through the course of our presentation and discussion today, we may make certain forward-looking statements and actual results could vary materially. So with that, I would like to turn the call over to Bob. Bob?

Okay. Thank you, Arvind, let me welcome our listeners to the call. This is an exciting time at Amgen, and once again this quarter, seems we have a healthy dose of information to share with you. So perhaps before jumping in, I should provide some context. I recall that we met with analysts and investors one year ago in New York to layout our long-term strategy for growth and our objectives for the next few years. Since then I’m pleased to report, we made steady progress towards achieving all of those objectives as you’ll hear on this call. Our strategy for long-term growth starts with innovation. We set, as an objective that we would launch six new products this year, and with the approval this week of IMLYGIC, a drug for melanoma, we’re now delivering on the promise of those six opportunities. And of course, we believe that two of these new products, Repatha, for cardiovascular disease and Kyprolis, for multiple myeloma represent particularly significant opportunities for patients and shareholders. Sticking with innovation, I’d like to point out that behind our six new launches, our innovative pipeline continues to advance with rapid Phase 3 progress in our migraine program, strong new data for romosozumab and a successful Phase 3 program for etelcalcetide in kidney disease. In addition, as we reported earlier this week our innovative heart failure program omecamtiv mecarbil delivered promising results in Phase 2b testing, open with prospect of another exciting opportunities for us in the field of cardiovascular disease. Similarly our biosimilar pipeline has advanced considerably over the past year with positive Phase 3 data for two of our nine programs, specifically our humira and avastin biosimilars. And Sean will provide more details on all this progress shortly. In addition to delivering on the promise of innovation…

Okay, thanks Bob. Turning to the third quarter on Page 5 of the slide deck, revenues at $5.7 billion grew 14% year-over-year, with 14% product sales growth driven by continued momentum across our product portfolio. Other revenues increased $24 million year-over-year due primarily to a milestone received for the filing of kyprolis in Japan. Total revenue in product sales were negatively impacted by approximately two percentage points year-over-year due to foreign exchange headwinds. Adjusted operated income at $2.7 billion grew 19% from prior year. Adjusted operating margin improved two points to 49% for the quarter, reflecting our continued growth and the benefits from our transformation program along with significant investment in our launch activities. On the adjusted basis, the cost of sales margin at 13.5% improved by 2.2 points driven by net selling prices, lower royalties and manufacturing efficiencies. Research and development expenses at $1.1 billion were up 11% versus the prior year. This increase was driven by up from payments from deal activity in the quarter, and increased investments in support of new product launches. This increase was partially offset by savings from transformation and process improvement efforts. SG&A expenses were up 17% on a year-over-year basis, driven by commercial investments in new product launches and ENBREL-related payments partially offset by savings from transformation process improvement efforts. Total operating expenses increased 10% year-over-year and increased 8% sequentially. For the quarter operating expenses benefited by approximately three percentage points from foreign exchange year-over-year. We saw an increase of spending in Q3 versus the prior quarter, this reflect the typical pattern from the business, plus our launch investments this year. Other income and expenses declined by $18 million or 14% on a year-over-year basis to a net expense of $147 million in the quarter. The adjusted tax rate was 18% for…

Thanks, David, and good afternoon folks. You’ll find a summary of our global sales performance for the third quarter on Slide number 10. This is an exciting quarter for Amgen as we launched Repatha and continued to deliver strong performance with our growth products. Globally, product sales grew 14% year-over-year and our U.S. business delivered 20% year-over-year growth. Our international business grew 3% year-over-year excluding the negative impact of foreign exchange, with the 7% unit growth in Europe. Let me start with an update on Repatha. The European approval of Repatha in July marked the first PCSK9 inhibitor approval in the world. We’re now also approved in the U.S. and Canada. Along with our Japanese partner Astellas, we expect Japanese approval in the first half of next year. We’ve designed Repatha’s clinical program to demonstrate, it is simple, single dose achieving maximal PCSK9 inhibition, provides intensive and predictable cholesterol-lowering. This profile is resonating well with physicians. In the U.S. the launch is off to a good start, we built our salesforce with experienced cardiovascular professionals and we established our presence in the field with our polymer launch in the first quarter this year. Upon approval, our field force was trained and quickly in the fields meeting with our prioritized Repatha customer targets. Anticipating a period of negotiation for payers post approval we launched the Repatha Ready program. This program provides Repatha to appropriate patients if they wish during the insurance verification process, while plans finalize [indiscernible] and fulfillment pathways. The response to our launch is extremely encouraging, as the volume we request to-date is a clear indicator of the unmet need and physician belief in the benefits of Repatha. With the recent formulary decision, Express Scripts recognized the value of Repatha and we continue to negotiate with other payers to…

Thanks, Tony. Good afternoon. Amgen's R&D efforts are rolling along nicely with six major regulatory approvals of innovative products for serious diseases over the last year. This is the core of what we do, invest in true innovation in order to change the practice of medicine. Today, I'll begin with some comments on our cardiovascular programs. We recently submitted a supplemental BLA to offer patients a single dose option for the 420 milligram monthly dose of Repatha, utilizing an automated device as part of our previously announced collaboration with West Pharmaceutical Services. And the FDA has communicated a July 2016 PDUFA date. As we previously announced, based on our current modeling of our event driven cardiovascular outcome study, we anticipate the number of events required for final analysis to accrue by about the middle of 2016. With the top line data expected to follow in the second half of the year. We also anticipate the results of our coronary artery intravascular ultrasound study in the second half of 2016. We believe that demonstrating a disease modifying effect on arthroscopic plaque burden would be a compelling result, complementary to our outcomes data. In addition, we were very pleased at our Phase 2 oral dosing study of AMG423 or omecamtiv mecarbil, a myosin activator we are developing with cytokinetics in the setting of chronic heart failure met all of its objectives. We've already begun reviewing these data with our partners, key opinion leaders and soon with regulators, to better understand the potential role of omecamtiv in the treatment of chronic heart failure patients. Regarding our CETP inhibitor, we have flexibility to gain our R&D investment going forward after a careful review of Lilly CETP outcomes data when they become available. Turning to oncology. Following on the U.S. label expansion, Kyprolis has received…

Okay, thanks. As Sean said this is an exciting time and a lot going on at the Company, so let's open it up for questions now. If we can ask our Operator to remind everybody of the procedure.

[Operator Instructions] And our first question comes from the line of Matt Roden from UBS.

Great, thanks very much for taking the questions. Congrats on a very nice quarter. I guess David, when I’m looking at your new preliminary 2016 guidance we’re seeing, it falls just a touch below consensus. Just wanted to get your sense for whether or not we should be looking at the revenue side or the margin side or tax side, what is it that you think the street is missing, and if it is the revenues is it related to biosimilar competition, or lower than the street expectations on PCSK9? I’m just trying to get a sense for where you think we’re off?

I’d say the one place that kind of jumps out is if you look at the tax rate which is up year-over-year, more than actually we previously indicated the rate would go to, is probably the biggest area where we see some differences, which is frankly part of the reason why I thought it would be helpful to give you a preliminary view of what we think is going on in 2016. I think the good news in that regard is while we’re generally in line with consensus overall it would imply I think that we’ve got somewhat better operating performance we see for the business next year than perhaps the analysts have in their models right now.

David do you want to reiterate your R&D tax credit point as well, just to make sure that Matt and others would…

Yes, so the rate that we’ve got out there for next year as is the case with this year, again we’ve chosen to exclude the R&D tax rate from the calculate – the R&D tax credit because of the ongoing uncertainty of that eventually being passed and impacting unfavorably on the rate.

Okay, go to the next question.

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

Hi, thanks for taking the question. Congrats on all the progress. Maybe just two quick ones for me. First on the Repatha launch, can you give us the sales number for the quarter? And then any comments on the breadth of prescribing you’re seeing and types of patients? And then on the pipeline, Sean, you mentioned omecamtiv, what are the key outstanding questions there and just timing of next steps for that program, thank you?

Hi, Tony.

Terence, it’s Tony. So let me respond. I mean, obviously we launched in September, so it was not much of a quarter, so I think you’ll probably see a better reflection of sales in the fourth quarter and once we finish all our negotiations. The utilization criteria the payers are putting to place are pretty much in line with the label at the moment, so high-risk patients with diagnosed after a disease who have LDL above 130, that's where we see the patients.

Tony, you want to talk about the European piece of the launch as well?

Sure. So we have launch in Europe as we know, and we do have patients at the moment in the UK, some Scandinavian countries and Germany.

Great, and with respect to omecamtiv mecarbil, what I would say is that we're in the usual stage of having just seen these data. We have partners to review the data with we're working with really the top key experts in heart failure from around the world and have been for years on the program. So we have to review the data with them and of course talk with the regulators through the usual and the Phase 2 sort of meetings before we can reach a formal decision about whether to proceed and in what exactly format, in terms of study designs and that sort of thing. So it's all the usual steps that we have to go through for a very significant decision to advance into – outcomes trial in a setting like congestive heart failure, but we are very pleased with the data that we generated from the study.

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

Hi, thanks, good afternoon. I wanted to ask a little bit more in the guidance. I guess just broadly speaking can you be more clear on what actually spurred you to talk about 2016 already? And in terms of the biosimilar assumptions there, is it safe to say to be more specific you don't expect a GCSF – excuse me a long acting GCSF any time before at least second half of 2016? And with that, do you therefore expect to assume a high penetration of the on-body device and where do you think that can go to in terms of penetration, thanks?

Michael in terms of why we decided to provide a preliminary framework today, it’s really as we looked at it, as we look into 2016, what we observe is there’s a lot of dynamics going on. And as I mentioned, we’ve got a number of new products that we see launching as you know, we are now approved for the sixth one as we had hoped. So what's going on with that, what's going on with the competitive environment in terms of our legacy portfolio, obviously foreign exchange and then our own efforts to improve the competitiveness of the business. So my feeling was that it would be useful to you guys in that at the end of October, you're starting to look more specifically at 2016, so I thought it would be useful to provide that initial indication today. And as I said earlier, the sort of the expectations are generally in line with what we said today, but there’s some differences. So we just thought it would be helpful to you guys to get something out there. So maybe Tony wants to comment on the other piece?

Sure, I mean, let me then just add that, as we look at the assumptions in place by 2016 numbers, we don’t assume any new additional biosimilars until the second half of 2016. As regard to the on-body Injector for Neulasta, we continue to be very excited about the launch and the uptick in the marketplace. As I said, just over 60% of our customers or accounts that have actually purchased at least once, and the average market share was about 19% in the third quarter and that market share keeps growing.

Brian, let’s take the next question.

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

As well, maybe for Tony or even Bob. Just kind of curious on the U.S. pricing environment, whether you think there’s been any real or perceived changes in that outlook?

Eric, obviously that’s a topical question. I guess the important thing from our perspective is to reflect on what our business model is, which is to develop innovative medicines directed against serious diseases, and we tried advance medicines that have a big effect for patients and with that, big effects for society. So if you look at the six medicines we’re launching, that’s exactly what the medicines represent, and you know we think medicines that have a big effect size for patients, medicines that create value. And so we anticipated this moment and the development work that we’ve been doing, anticipated it in our strategy, and then the molecules that we’ve chosen to advance. So again, this doesn’t come as a surprise to us, that there are questions about the value of the medicines and the price and we think the more we can do to help focus on the economic burden of diseases like cardiovascular disease, cancer, neuro-degenerative diseases and the significant prospect or opportunity that our medicines represent against those, the more appropriate framing for the discussion. So I wouldn’t say there’s anything particularly precipitous changing for those of us that are at the innovative biopharmaceutical and other than the fact that we’re incredibly exciting window of time here with lots of important new innovative medicines against, again some of the vaccine, tough diseases that we all face.

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

Hi, this is Vikram on for Matthew. So just two quick questions from our side. So, first could you talk about the sustainability of price increases that you saw with Enbrel and EPOGEN, especially with EPOGEN if you could touch on the share losses to Fresenius, that would be helpful. And then secondly, you touched on this a little earlier during the call, but if you could quantify the impact of end-user purchasing patterns on Neulasta, that would also be very helpful.

I think there are three questions there. So Tony do you want to try and tackle the EPOGEN?

So, just to Bob’s point again, right? So the price increases we take in the marketplace are based on the value of our products bring to market and the competitive environment in which they operate. In the EPOGEN situation, Fresenius, it represents about one-third of the marketplace in the U.S. and they are in the process of converting a large amount of their business to Masera. I think they will be probably be announcing within the next couple days, how much of their business they have converted. And I didn't get the question on Neulasta, sorry.

Repeat the third question you had there?

End-user purchasing patterns on Neulasta?

So what was the question about end-user?

Just how much end-user inventory?

Okay, so, net-net as I said the end-user purchases for Neulasta, Xgeva and EPOGEN were just in excess of $100 million in the third quarter, and we expect that to burn off in the fourth quarter.

All right.

Okay, Brian, let’s take the next one.

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

Hi guys, thanks for taking the question. Congrats on a great headline print. I had a couple questions. Number one, for Fresenius has taken much more share as has been mentioned in other questions. I'm wondering why. Is it simply that you will not match price? Because I think last quarter, you mentioned something about how, and when do such contract negotiations happen? And so it sounds like you're sort of guiding us to give up on Fresenius and I want to know is that because the Masera is offering a price that Amgen just doesn't think is economical to match? My second question was on biosimilar humira, is it still your expectation Bob that you're going to launch in 2017? Because Rick Gonzalez, AbbVie, your counterpart, absolutely insists like table pounding, heavy breathing, that there's no way that's going to happen before like 2019 or so. So I'd just like to get your updated thoughts on that? And finally can you give us any indication whatsoever, any, about what our expectations should be for gross to net discounting for the PCSK9 class, either right now early days or more steady state level. Because that's what we need obviously in our models, thank you.

Okay, let’s see whether we can tackle those. I think there was three questions there Tony. The first one was about, presenting a similar respond to Mark’s question?

So we have no idea what the agreement is between Fresenius and Roche who is supplies Masera to them. And our pricing decisions, I’ll tell you might not just on our contract with Fresenius but the overall dialysis market in the U.S. And so we are balancing existing customers and customers who were possibly changing their portfolio.

And gross to net Tony you want to?

On gross to net we don’t make public any of the contract negotiations we have with the payers.

Obviously, we’re – the negotiations continue to be underway here in the U.S. and internationally. And with respect to Humira, Mark, we are excited about confidence in the clinical data that we have and as you would expect we’re preparing to file those data with regulators. We recognize that there is intellectual property here that needs to be respected but we will continue to advance our molecule and continue to assess the intellectual property that’s in place. And if we have a dispute, well the good news is, there’s a process for resolving that dispute and we will push forward on that basis.

Okay Brian, we will take the next one.

Our next question comes from the line of Cory Kasimov from JP Morgan.

Hey, good afternoon guys, thanks for taking the questions. I wanted to follow-up on the 2016 guidance questions and ask if you can at least qualitatively speak to your comfort level with the Street’s Repatha expectations for next year. And then also on PCSK9 front, should we expect the deal with Express Scripts to set a precedent for comparable agreements with other payors going forward? Thanks a lot.

Again two questions here, Cory with respect to guidance for 2016 we’re not giving individual product line revenue guidance. Again I think David addressed pretty comprehensively what our thinking was in general about the P&L for 2016 and we hope that it’s up to have it at this stage in the game. And with respect to what to expect from other payers again Tony you care to comment on that?

We were delighted that Express Scripts left the option of which drug to use to physicians and patients and we continue to believe that’s the best place to be in the marketplace. That’s our position as we go out to market but we are in the middle of negotiations so we don’t know where we are going to land.

Okay, understood. Thank you.

Okay.

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

Thank you for taking my questions as well. Specifically I have one for Enbrel. When you provide 2015 guidance, what’s your assumption for the pricing trend? I know you can’t spell out the details, but can we expect somewhat similar level of pricing for 2016? And then on E12 in the market for dialysis, obviously we know what happened with Fresenius, but what’s your expectation for the other one-third independent dialysis centers of the market. And then I guess lastly, given the recent biotech, I guess correction in the market, what’s your thought of M&A in terms of being opportunistic here? Thanks.

Well, let me answer the question around the independent and the dialysis units. Right now they receive the supply from us. We are delighted to see the level of switching that’s taking place from EPOGEN to Aranesp amongst both the independence of both the medium and small dialysis centers. So we’ll continue to work with them as we go forward. On Enbrel, the net price always depends on a combination of price increases on list versus large amounts of contracting. Enbrel competes at a highly competitive environment, where payers make decisions around where products are on their more reason in terms of a preferred tier and non-preferred tier based on the rebates. And when you’re on a preferred tier you pay rebate, if you aren’t a preferred tier you don’t pay the rebate. So it’s a huge amount of dramatic changes inside hundreds of additional plans.

Okay. And then on the M&A question, Ying. As we said a year ago, that we would focus on early stage transactions and if you look at the activity that we engaged in over the past 12 months, you can see we brought in a lot of earlier stage innovative new products and technology opportunities. And we said more recently that we’re opening the aperture a little bit, beginning to look at our broader range of things including potentially some larger things. We think obviously that the valuations in the sector are probably more favorable now for the later stage assets than they were a year ago. And so, we’re continuing to look and I think it may be some time, however, before the owners of those late stage assets adjust their pricing expectations to reflect the current trading environment. But we’re continuing to look for nothing to report on the call.

Brian…

And our next question…

Yes, go ahead.

Yes. And our next question comes from Eun Yang from Jefferies.

Thanks for the question. A question on Kyprolis. I understand that the Kyprolis has a greater path of improvement versus elotuzumab, but some physicians comment that the mix of different degrees overlaps the patient population, makes it difficult to compare across the study data. Now with elotuzumab entering the market already next year, can you share with us, what you are hearing as to how physicians who would utilize Kyprolis versus elotuzumab in the relapsed setting?

Yes, I think, it is I think just very early days in my view to assess that and I think there’s some in general the theme that I continue to hear when I talk to experts in this area is the concept that they don’t view molecules like blinatumomab as things that are likely to displace a proteasome inhibitor from the backbone therapy in multiple myeloma, but rather looking at them as adjunct therapies, so our strategy is to be the preferred best-in-class proteasome inhibitor and to have adequate combination data of course with a lot of these new molecules as they come along to make sure that we are part of the best-in-class regimens for the disease.

And I think just to add to that Sean I think what we demonstrated in the ASPIRE study was unprecedented in terms of PFS in the second line relapse setting and the data that was presented elotuzumab is so-called eloquent study again difficult to make cross trial comparisons but is certainly was not comparable to what we saw.

No, it certainly not. I think the question presumed that you can’t make the comparison as well across the studies and of course we all recognized there are limitations to making study – cross study comparison.

Just to remind everyone that the product not approved in the U.S. yet so I think we should wait until the FDA makes a decision and we can see a label.

Okay, let’s go to the next question?

Well, take the next one.

Yes. And our next question comes from the line of Geoff Meacham from Barclays Capital.

Hi guys, thanks for taking the question. One, Repatha, obviously the tipping point in utilization is going to come from the outcomes data but that speaks I think to the sickest patients getting access today. And so I know it's early, but any common features so far in new starts beyond LDL, things like prior statin experience or cardiac events and then would you expect this to differ in the EU looking out say 6 to 12 months? Thanks.

Okay, Geoff thanks for the question. Tony why don’t you…

So Geoff, let me just reiterate I mean having long – a number of cardiovascular drugs in my life this one feels pretty good. I mean the level of discussion we’re getting among cardiologists and high prescribing primary care physicians is more than what I would have expected. They really understand the value of lowering LDL and understand what the statins have delivered in terms of the outcomes data, so in my mind, the understanding is there, the demand is there, and the need is there. The slow march we are taking with payers in the U.S. of course is reducing the opportunity for patients to get access to these drugs early, with the likelihood of Express Scripts having made this decision and we work actively with the other guys to get product up and running. The utilization criteria at the moment they’ve set in places is fairly tight to insure that patients step through a number of situations, but I continue to believe that what we are seeing in terms of patients being referred to the hub for insurance verification, I feel pretty confident about that. In Europe, of course the label is slightly broader but we do take longer to negotiate with the various countries country by country in Europe.

Okay, Brian, as we are at the top of the hour why don't we take two more questions?

Okay, let’s see. And we do have a question from the line of Brian Skorney from Baird.

Hi, this is Colleen on the line for Brian. Thanks for taking the question. I know we're still early in the launch but can you comment on how many patients have started on Repatha? And can you also comment on the regulatory pathway for oral LDL lowering drugs like CTEP inhibitors or other mechanism for statin lowering and the need for cardiovascular outcome studies versus the more accelerated paths you're able to take with Repatha? Thank you.

This is Tony. The IMS data has not been very clear in terms of actual prescriptions up until about a week or two ago, so I would imagine the data the terms are coming now is accurately representing the number of patients receiving a prescription from a pharmacy. This of course doesn't take into account the patients that are moving through the hubs either run by ourselves or by our competitors, assisting patients during the verification process, as plans go through their formulary and guideline of pathway process to decide how and when to allow the usage of these PCSK9s.

With respect to the regulatory environment for other mechanisms such as CTEP inhibition, I think what I would say we're going to observe is what we saw with the PCSK9 class, which is regulators really taking into account in their determinations around what evidence base would be necessary to gain market access, and what kind of population should be included in initial labeling prior to outcome studies, that's going to be predicated very much on mechanism. And I think in the case of PCSK9, there was a certain value placed on the science that underlies that mechanism and the fact that thus far, we’ve not had a situation for example, where the mechanism had been tested and failed in large outcomes trials so it’s going to be a case-by-case determination by regulators based on the mechanism and the evidence base that exists and whether or not there is safety overlay and that sort of thing. So it’s not a simple question to answer. I think but I think that the parameters that will be weighed are fairly clear.

And we have a question from the line of Chris Raymond from Raymond James.

Question on Enbrel. So I'm looking at the math on Slide 15 and it seems to make some sense with respect to price making up the difference when you factor in inventory and units, but just want to clarify. Do you see and is it also possible that a quarterly driver could be changes in rebates and discounts? Is that a measurable impact at all quarter-on-quarter, especially this quarter?

So normally contracts are for annual period but by definition, any change in a contract will then impact your year-over-year calculations for four quarters in a row, so clearly, there are contract changes that impact the net selling price in quarter three, yes.

Okay, thank you.

Okay, great. Well, thanks everybody for participating in our call and you know myself and my team will stick around for a while, so if you have any other questions or thoughts feel free to give us a call. Have a good day.