My name is Jason and I will be the conference facilitator today for Amgen's Fourth Quarter Full Year 2022 Financial Results Conference Call. [Operator Instructions] I would now like to introduce Mr. Arvind Sood, Vice President of Investor Relations. Mr. Sood, you may now begin.

Okay. Thank you, Jason. Good afternoon, everyone and welcome to our call to discuss the results for Q4 and full year 2022. 2022 was once again a year exemplified by great execution despite some of the macro challenges. Our Chairman and CEO, Bob Bradway, will make some opening comments, followed by prepared comments from other members of our senior leadership team. You should have received a link to our slides that we have posted. Through the course of our discussion, we will make some forward-looking statements and use non-GAAP financial measures to describe our performance and just a reminder that actual results can vary materially. So with that, I would like to turn the call over to Bob.

Okay. Thank you, Arvind and hello, everyone and thank you for joining our call. So beginning the year feeling confident about the long-term growth outlook for our business and let me offer 5 reasons why. First, we have a number of innovative volume-driven products that still have plenty of room to run and we saw that in 2022. Repatha, Prolia and EVENITY each generated double-digit sales and volume growth in the fourth quarter and for the full year. We expect continued growth from these products in 2023 and beyond with Repatha, in particular, helped by important new data from the FOURIER open-label extension study and new prescribing guidelines. OTEZLA delivered 7% volume growth in both the fourth quarter and the full year, benefiting from a label expansion that gives us the opportunity to reach millions of new patients in the U.S. with mild to moderate psoriasis. LUMAKRAS and TEZSPIRE collectively contributed more than $450 million in full year sales and we're pursuing additional indications for both products. We're especially pleased to see TEZSPIRE being utilized by patients across all types of severe asthma. Murdo will share more about the performance of our in-line products in a moment. Second, we moved 6 first-in-class molecules into Phase III or potentially registration-enabling trials in 2022, including Olpasiran for LP(a), rocatinlimab for atopic dermatitis, TEZSPIRE in eosinophilic esophagitis and of course, bemarituzimab, tarlatimab in BLINCYTO in cancer. We've also begun enrolling patients in a Phase II trial for AMG 133. Based on early data, this molecule, with its unique mechanism of action, looks like it may have an attractive profile for the treatment of obesity. And more on our pipeline from Dave Reese in a moment. Third, we have an industry-leading biosimilars business that will contribute to our growth over time. In 2022, we…

Thanks, Bob. 2022 was another year of strong execution of our mission to bring [indiscernible] products to the millions of patients in the world who suffer from gravest illness. The evolution of our portfolio continue by record sales for 16 brands. We saw strong volume gains across our general medicine and hematology-oncology growth brands. Our inflammation therapeutic area expanded with the launch of TEZSPIRE and the acquisition of TAVNEOS, 2 first-in-class medicines that treat serious disease. In addition, our announced acquisition of Horizon Therapeutics will add several important medicines to our portfolio. In total, volume growth for 2022 was 9% with 7% growth in the U.S. and 14% growth ex U.S. as we continue to deliver on our international growth strategy. Excluding the impact of foreign exchange, full year global product sales grew 4% as our volume increases were offset by a 5% decline in net selling price. Including the 2% negative foreign exchange impact, product sales increased 2% year-over-year. In the quarter, we also saw strong volume growth with a 10% increase year-on-year. Starting with our general medicine business which includes Prolia, EVENITY, Repatha and Aimovig, overall revenue for these 4 products grew 21% year-over-year for the fourth quarter and 18% for the full year, driven by 19% and 21% volume growth, respectively. In bone health, Prolia sales grew 14% year-over-year for the fourth quarter, driven primarily by 11% volume growth. EVENITY which complements Prolia in our bone portfolio, had record sales of $225 million for the quarter, driven by strong volume growth across markets. Repatha sales increased 22% year-over-year for the fourth quarter with volume growth of 31%, partially offset by lower net selling price. In the U.S., we generated volume growth of 32% for the fourth quarter, aided by broad adoption of Repatha by cardiologists and increasing…

Thanks, Murdo. Good afternoon, everyone. For research and development, last year was one of high-quality execution and on-time delivery of results as we continued to progress our innovative pipeline. In general medicine, we strengthened our cardiovascular franchise and emerging portfolio of obesity assets, 2 areas of significant unmet need, affecting millions of patients globally. Repatha, of course, is the cornerstone of these efforts. And last November at AHA, we presented FOURIER open-label extension data. These data were recognized by the American College of Cardiology expert consensus decision pathway which indicated there appears to be no LDL cholesterol level below which benefit ceases. Additionally, LDL cholesterol recommendations were updated to reflect a reduction in target LDL levels in highest-risk patients from 70 to 55 milligrams per deciliter. This is a level that is not attainable for a large number of patients without PCSK9 inhibitor therapy. Another molecule that we are excited about is Olpasiran. At AHA, we presented Phase II data where Olpasiran dosed 75 milligrams or higher every 12 weeks reduced Lp(a) concentrations by 95% to 100% in patients with established atherosclerotic cardiovascular disease with baseline Lp(a) levels of approximately 260 nanomolars per liter. Olpasiran appeared both safe and well tolerated in this study. We are encouraged by these data, particularly our dosing frequency, safety and tolerability profile and degree of Lp(a) reduction. We have initiated a Phase III outcome study and 6,000 subjects with atherosclerotic cardiovascular disease and significantly elevated Lp(a) levels of at least 200 nanomolars per liter. Now turning to obesity. In December, we presented data from a Phase I study where AMG 133 appeared safe, well-tolerated and demonstrated a 14.5% reduction in body weight at day 85 following 3 monthly subcutaneous injections. Body weight reductions were observed up to 150 days after the final AMG 133 administration. Given these favorable attributes, we are now enrolling a 570-subject Phase II study to explore AMG 133 in patients with obesity with or without diabetes and related comorbidities. The study will also investigate different dosing levels and regimens… [Technical Difficulty]

…applying 4%. Recall our Q4 2021 results included approximately $200 million of favorable impact to other income and expense resulting from a gain on our Beijing investment. Full year non-GAAP EPS of $17.69 grew 27% versus our re-GAAP [ph] 2021 result. Non-GAAP Q4 operating expenses were unchanged year-over-year while full year non-GAAP operating expenses declined 12%. The full year includes the impacts in 2021 of the $1.5 billion 5-prime IP [ph] R&D charge and the $400 million licensing payment that KKC [ph] for rocatinlimab. We advanced our pipeline and invested in product launch activities in 2022 while delivering a 51% non-GAAP operating margin as a percentage of product of sale. On a non-GAAP basis, Q4 cost of sales as a percent of product sales decreased 1.2 percentage points on a year-over-year basis, down to 16.3%. For the full year, cost of sales as a percentage of product sales decreased by 0.5 percentage points, down to 15.9%. Both the quarter and full year improvements were primarily due to fewer COVID-19 antibody shipments and lower manufacturing costs, partially offset by changes in our product mix. Non-GAAP R&D spend in the fourth quarter decreased 2% year-over-year, primarily due to higher business development activity in 2021, including our upfront payments in connection with our Genera Biomedicines and Iraqis Therapeutics collaborations, along with lower marketed product support. This was partially offset by higher support for key assets in early- and late-stage programs. However, adjusted for 2021 BD activity, Q4 2022 R&D investment increased 7% year-over-year. And for the full year, non-GAAP R&D spend declined 8% based on the same drivers of the fourth quarter. However, adjusted for BD activity, full year 2022 R&D investment increased by 5%. Q4 non-GAAP SG&A expenses increased 2% year-over-year, driven by higher marketed product support, including investments in our priority…

Okay. Well, thank you, Peter and Dave, for soldiering on despite the technical difficulties. And again, apologies to all of you who've dialed in to join us on the call and who found some disruption in the proceedings here. A number of you have e-mailed your questions to Arvind. What I'd like to suggest is that any of you who have questions, directly e-mail them now to Arvind and Arvind will read them and we'll try to answer them here in the room. And let me just assure all of you that we will rearrange our schedule and be available to answer questions if we don't get to it on this conference call, be available to Arvind and his team to answer questions you may have after we wrap up. So with that, let me turn to Arvind and we'll tackle the questions that you've already submitted.

Yes. Thanks, Bob. And apologies to everybody for the technical difficulties that we have had. And as Bob said, just please e-mail your questions to me directly. So the first question that we have is from Yaron Werber of Cowen and he submitted 2 questions. His first question is that Amgen will move to fair value from equity method of accounting for BeiGene. As you also now own less than 19.9% equity in BeiGene, will Amgen stop consolidating BeiGene's losses and profits from now on? And then the second question is, can you discuss when you plan to file the high concentration of AMGEVITA once you get the Phase III interchangeable data in the first half of 2023?

Okay. We do that in 2 pieces. Pete, why don't you hit the accounting question?

Yes, quick question -- quick answer. Thank you, Yaron, for the question. On BeiGene equity method of accounting, as I said in my remarks, we will record, in our GAAP income statement, the mark-to-market but that won't be recorded in our non-GAAP income statement. So the answer is we will not include any earnings from -- or losses as our share of BeiGene going forward in our non-GAAP income statement.

Okay. And then on AMGEVITA, why don't we do a 2-parter there? Dave Reese and then Murdo, you may want to add some thoughts.

Yes. In terms of the filing time lines, once we have the data in hand, we'll be then giving guidance as to when we expect filing and potential approval of that after the appropriate regulatory interactions. It's important, I think, as Bob were put this in context, let me ask Murdo to comment here.

Yes. Thanks, Dave. We have had some inbound questions on this, as you can imagine, during the day, given that we are launching. So far, launch is progressing well. We have product making its way into the channel and we're already receiving inbound interest in AMGEVITA from payers, prescribers and patients. One thing that's important to remember is the current product that we have in the market is a lower concentration, original concentration AMGEVITA or adalimumab but it is citrate-free, meaning that the patient experience here is still 1 where we minimize the injection site pain by having a citrate-free formulation. And patient experience here has been positive in our clinical trials and we anticipate that not having a high concentration will not be a barrier in the market. These are very low volumes that are injected through an auto-injectable pen. And we've seen very, very good reliability of patients being able to administer. In addition, of course, we provide nurse support for patients. And then while it wasn't asked, I think it's also important to note that we are providing financial assistance, support and reimbursement support for both prescribers and patients as we launch the product. So really a full suite of services and support that you would expect for a branded launch being applied to the launch of the first biosimilar, adalimumab, to launch in the U.S., that is AMGEVITA.

Okay. Thank you, Murdo and Dave. Let's go to the next question, Arvind.

So the next question is from Geoff Meacham [ph] from BofA Merrill Lynch. And his question is, he said, I know you have AMGEVITA but are you expecting an indirect impact in the second half of '23 or the first half of '24 from all the HUMIRA biosimilars and STELARA, on Otezla and ENBREL mainly? And he is interested in the volume and price impact.

Okay. Murdo, you want to share your thoughts on that?

It's hard for me, obviously, to comment on what competitors may do as other biosimilars of adalimumab enter the market beyond July. But what we have seen coming into 2023 is a good cycle of reimbursement negotiations and we've been able to secure a very broad coverage for both ENBREL and Otezla. We expect that insurance coverage to continue throughout the course of 2023. And as is usual, we had small concessions on net price to secure that broad reimbursement but nothing unusual compared to prior years.

The next question is from Chris Raymond from Piper Sandler. And he has 2 questions. The first 1 is on Otezla. And Chris says, I know there are a lot of puts and takes on this market and I know you guys have highlighted a tailwind of mild-to-moderate psoriasis patients coming into therapy. But Otezla is kind of unique in that there is a sizable discontinuation rate. Just with that, if you're probably not going away, talk about why we shouldn't be more concerned about [indiscernible] and maybe just as importantly, the next-generation molecules that are coming behind it. Especially noticing that a decline Q-over-Q both in the U.S. and rest of the world, even with a 9% inventory build, any color on how you grow through this coming competition would be very helpful. And then he has a question on AMGEVITA.

Okay. So first on Otezla, I would start with the fact that we are the only systemic product indicated for a broad range of psoriasis patients without regard to the severity and really makes us the ideal first-line first systemic post-topical choice of therapy. And that is the positioning of the brand. The size of that market is very large. There's 4 million patients with a mild to moderate form of psoriasis. About 1.5 million of those patients would be regarded as not doing as well as they could on topical treatment by potential switching to a systemic like Otezla. As I mentioned just a few moments ago, Otezla also enjoys very broad frontline access, that is it doesn't require that you step through another systemic therapy. And it also means that prescribers can make it the first choice. And these are busy dermatologists. They want something that's easy. They don't want a lot of prior paperwork. And they want to be able to provide an ability for patients to start quickly on their therapy. Only Otezla offers that in the psoriasis market. I think what we're seeing right now is an effect of a number of free goods programs that were launched at the end of last year and continue into this quarter. When physicians have free goods programs or sometimes referred to as bridging programs, usually used at the beginning of a product launch when there hasn't been an opportunity to secure access with pharmacy benefit managers, physicians will sometimes use those to try novel therapies coming into the market. However, as those novel therapies go through the negotiation process with PBMs and payers, oftentimes, it becomes more difficult to try those novel therapies because of the nature of the access that they result with. And I think that's really where the sustained advantage of Otezla in that first-line systemic post-topical prebiologic patient population really allows us a long-term growth opportunity. And we continue to feel confident in the long-term growth of this brand. And we have a very strong commercial presence in a number of markets around the world and we continue to feel good from what we're hearing from our prescribing base of dermatologists. I will say that the short-term impact of these free good programs, we're watching it very closely and we're making sure that we continue to be competitive in the marketplace.

Okay. Chris, the second question is the same as the question that we have from Salveen Richter of Goldman Sachs. And she says on AMGEVITA, could you offer more details on how the dual pricing option will work and drive uptick? And how should we think about net pricing? What are your expectations for the market in midyear once more biosimilars enter?

Well, maybe I can answer the second part first. We don't comment on product-specific pricing and so I really can't answer the net price. I think it's fair to say that as additional entrants come into the market, net prices usually go down. We've seen that in our other biosimilars business but we would expect that to happen here. With respect to the 2 list price approach that we've employed here at this launch, this is really to address the complexity of the U.S. market. Pharmacy benefit managers have a business model that requires that they negotiate rebates with manufacturers and so they would prefer a high list price and negotiate rebates to net the price down and then pass those rebates through to their upstream employer clients. There are other stakeholders and customers in the health care system that prefer a net price-based model and don't care about the difference between list and net or gross price and net price. And so for those, we have the lower net price product available. So just a reminder, we have a high list price at 5% below HUMIRA and then we have a low list price at 55% below HUMIRA. We also intend to ensure that AMGEVITA is an affordable medicine for patients by providing co-pay assistance as well as helping patients secure reimbursement through the insurer. We are also pleased to report that we enjoy broad access out of the gate on day 1 of launch with the 3 national pharmacy benefit managers, so broad parity coverage alongside HUMIRA.

Let me just -- I note that we're up to the half past the hour but we will continue to take questions for as long as necessary here to answer those questions and until there is a recording of this that will be available in the form of a transcript for those of you that have conflicts and can't stay beyond the set time. So Arvind, why don't you go to the next question?

Yes. The next question is from Colin Bristow for UBS. And here's a question on the obesity pipeline. What update should we expect to get this year? Will we see data from the remaining 3 cohorts from the Phase I study? And then on AMG 786, when should we expect updates, more disclosure on this asset and program?

Yes. In terms of the obesity pipeline, AMG 133, the 2 additional cohorts you're referring to, I don't know that we'll see data over the course of this year on that. If that changes, of course, I'll provide guidance. AMG 786 is a small molecule with a different mechanism of action, as indicated to GLP-1 or Gipper receptor agonist or antagonist. So that's going through dose escalation over the course of the year. I'll provide guidance in terms of when we may see data from that program. And of course, at the time of data availability, we'll talk about the target as well.

Okay. Thanks, David. Arvind, let's go to the next question.

So the next question is from Evan Seigerman from BMO Capital Markets. And Evan wanted to know, he said with slowing LUMAKRAS sales, can you expand on how you may have revised your commercial strategy to better align with the commercial potential of the assets?

Yes. I'm not sure we have a slowing overall volume growth. I think what we saw and I mentioned this, it might not have come through clearly on the audio but in the quarter, we did see a price effect based on reaching reimbursement decision finalization in France. And so we had a $12 million charge in the quarter against LUMAKRAS. It grew 7% volume in the quarter. But I think we anticipated the opportunity for LUMAKRAS in second-line being limited to the incident population. And we are commercially and medically sized appropriately for that opportunity. I think as we expand into earlier lines of therapy or other tumor types, we will continue to invest behind the product.

Okay. The next question is from Michael Yee. And Michael wants to know, he said, on 2023 guidance, can you clarify what the input is for revenue growth versus EPS growth range? Specifically, is there a positive impact from BeiGene accounting? And does the tax rate of 18% to 19% negatively impact EPS? Or is COGS offset, as explained last year, is 2023 OpEx growing more than revenue?

Arvind, let me start by working our way from the tax question. So on the tax side of it, the 18% to 19% is increases by the amount. Although, as I have highlighted both last year and this year, we have a small carryover effect of about $125 million that's currently capitalized in cost of goods sold that will be released that -- excuse me, currently capitalized in inventory that will be released in the cost of goods sold, primarily during the first quarter without a corresponding tax benefit. So the answer is, going forward, after that $125 million works its way through cost of goods sold, it will be roughly equivalent to move from the Puerto Rico Excise Tax or the PRET which was recorded in cost of goods sold down to the actual income tax rate. The question on guidance. And I think the question was, what's included from BeiGene and what's not. As I said earlier to Yaron's question, what won't be included now is our share of either losses or gains in BeiGene's income. So we will include, on a mark-to-market basis in our GAAP income statement, the results of BeiGene and then the movements in the security but not in our non-GAAP income statement. We will no longer record our share of losses or their income.

Let me just say, Michael and to the prior question from Evan, if you need more detail on that to make sure you fully understand what we're saying in our response, just let us know, we'll get back to you. I think particularly, Evan, for your question, if you're not familiar with that mechanism that's common to us in France, happy just to provide more color for you. Again, Michael, I know a lot going on here and apologies for the disruption and don't know if you were able to follow all the slides earlier. So if you need more color, let us know, we'll call you back after the conference call. Okay. Go ahead, Arvind, to the next question.

Okay. Then we have a second question from Salveen asking, could you put the upcoming TEPEZZA Phase IV data and chronic context for us? What do you need to see? How would positive data expand the opportunity for the drug?

We are subject to the restrictions that we have on our ability to say anything on what's in the documents. You want to address that?

Yes. I mean, I think we're restricted, of course, by Irish takeover rules here. What we can say is that it's worth reminding everyone that the current label is broad and encompasses patients with thyroid eye disease, the -- due to autoimmune thyroiditis. This is primarily a study that will generate data in a population that we believe will help with reimbursement and with payers. And let me ask Murdo to comment on that. I would point out that mechanistically, there is no difference between chronic thyroid eye disease and the acute form of the disease. In fact, it's a semantic definition as to when the disease progresses to the chronic form but the underlying pathogenic mechanism of being driven in large part by IGF1R [ph] is intact. And therefore, based on prior data and mechanistically, we're optimistic about that study. Murdo?

Yes. Look, I think the Horizon team is doing a very good job commercializing this product and continue to help many patients within the broad current indication, as Dave mentioned. And I think additional data here could be additive to the already very promising growth of the product.

Okay. Thanks, Salveen, for your question. Let's go to the next one, Arvind.

The next 1 is from Christopher Schott of JPMorgan. And Christopher is saying, can you elaborate on our Otezla in 2023? Bristol suggesting that they are seeing some strong initial uptake in their bridge program and would be interested how much of this market expansion for orals versus something you're seeing in Otezla. And you mentioned an impact from competitor free drug impact over the next few quarters. Do you anticipate that will lessen as the year continues or an impact for much of the year?

Yes. It's a similar question to 1 asked earlier but perhaps I can elaborate a little bit for Chris. It's fairly clear that dermatologists want to use the easiest product and safest and well-understood product when moving to a first systemic treatment post topically. Many of these topical patients are hesitant to try a systemic agent. And so I think this is where Otezla's profile studied extensively with over 700,000 patients globally having experienced this product, the safety and efficacy of Otezla is extremely well understood. As I mentioned earlier, the frontline access coverage that we've secured in the U.S. without a lot of prior authorization requirement, the convenience of that for dermatology practices is very clear and it makes it a really good first-line treatment, systemic treatment, especially for a patient with milder or more moderate disease. For moderate or severe disease, it is likely that you're going to need to use something like a biologic or a second-line agent. And we think that given that [indiscernible] has yet to go through the market access process and secure payer reimbursement, we're not really seeing how it's actually going to be used longer term in the marketplace. And I think sometimes, these free good programs can distort what the actual uptake curve will be for a product.

Then Murdo, there is a second question from Chris. He's asking, how are you thinking about ENBREL pricing dynamics over time, given the expected significant price declines in the HUMIRA market? I know you've talked about price continuing to erode but not accelerate. Can you remind us why we shouldn't expect a bigger step-down in price in 2023 or 2024 as the HUMIRA market price resets down significantly?

Well, as I mentioned before, we're primarily through our 2023 cycle and we've secured very good access. We've had to concede a bit of price, as I mentioned but not anything that looks precipitous compared to prior years. So we're pleased with that. ENBREL is an important product for many indications. We see that the safety and efficacy profile of ENBREL is well understood. I think physicians also want choice. And I think that's where PBMs are also open to having more than 1 TNF product on their formulary. And I think that's really what we've been able to secure and what we continue to think we'll be able to achieve in the future.

Let's go to the next question.

The next question is from Mohit Bansal from Wells Fargo. And his question is, could you talk a little bit more about your HUMIRA biosimilar negotiations thus far? Seems like AbbVie has parity access with majority of them and the pricing is different for the first half versus the second half and there's more competition. Are your contracts similar? And how should we think about the cadence of launch as the year progresses?

Well, I can't comment on a competitor's contracts with PBMs and payers. What I can say is we've secured broad access for AMGEVITA at the 3 national PBMs. We continue to work with other customers to provide access for providers and patients alike. And we'll continue to compete effectively as we have done everywhere else in the world with this product. And outside of the U.S., we were able to establish a leadership position with AMGEVITA. And we think, given the services that we've provided and the commercial footprint we have, we're in a very good competitive position vis-à-vis other biosimilars.

I know a number of you have submitted questions, so we're continuing to work through the list. Anybody who hasn't yet shot Arvind an e-mail, we're going to go through those and we've got couple of handfuls still to go. So let's, Arvind, go to the next question.

Yes. The next 1 is a question by Greg Renza of RBC Capital Markets and Dave, this is for you. We were interested in hearing some color on the antibody drug conjugate strategy in light of the recent deals. How is the team approaching the space?

Yes. Thanks, Greg. What I view this is as another modality in our toolkit. We've been watching the antibody drug conjugate technology quite closely for the past several years. It's advanced, so what we feel is that we'll use ADCs on appropriate targets. I view it as an addition and an extension of our modalities. These collaborations bring together our experience on target identification and validation as well as, of course, antibody generation with some of the newer conjugation technology. So as that progresses, more to come but you should view this as additive to our armamentarium.

Okay. The next question is by Tim Anderson of Wolfe Research. And his question is on AMGEVITA in the U.S. And he's asking, any commentary and your comfort with sell-side consensus for U.S. sales which seems to be around $600 million in 2023? And anything you can say about contract specifics such as whether there's price protection, if any of them go beyond 2023?

Yes, we don't give product-specific guidance. And this is a new event in the U.S. biosimilar market, given this is the first big pharmacy benefit product to go up. So we will continue to update all of you as the launch progresses. We have said we think this will be gradually slope on this launch and I'm going have to keep you apprised as we go forward.

Okay. The next 1 is by Dave Risinger of SVB Securities and he has 2 questions. The first 1 is for you, Dave. Please discuss key novel drug candidate readouts to watch in 2023. And the second 1 for you, Murdo. How do you expect formulary positioning for AMGEVITA to potentially change in January of 2024 after AMGEVITA is assigned an interchangeability designation?

Yes. Thanks, David. This is a year where certainly my focus, my team's focus will be on execution, a huge amount to carry forward in the pipeline. So things that I would keep an eye on, how well are we enrolling the Phase III Olpasiran trial? How well are we enrolling the AMG 133 Phase II trial? In the general medicine portfolio, in inflammation, how are the suite of rocatinlumab trials enrolling? How are we delivering on TEZSPIRE additional indications? And then finally, in oncology, things to keep an eye on are the tarlatumab program, not only the Phase II potentially registrational trial readout in the second half of the year but also initiation of a Phase III trial in second-line disease. These are some of the top line things that I'll be paying attention to. And then there are, of course, a host of others earlier in the pipeline and in discovery research.

And just on the AMGEVITA question, I would say that we have a commitment to continuing to make sure that the product attributes of our biosimilars provide payers, providers and patients with all of the benefits that they're looking for. And we're also trying to ensure that there is no reason to switch away from AMGEVITA in the long range. So we hope that interchangeability, the high concentration and the fact that we already have a citrate-free product on the market, along with the services we provide, along with the fact that this is an Amgen team of people who understand the inflammation indications of this product very well and they have relationships with the customers that prescribe HUMIRA, we feel really good about the durability of AMGEVITA long term beyond 2024.

Okay. The next question is from Umer Raffat from Evercore and he has 2 questions. The first 1 is for you, Dave, on OX40 and the monthly dosing in Phase III. He said and I don't see an arm investigating extended intervals quarterly or biannually. I'm just trying to tie the Phase III dosing interval versus the durable efficacy seen through 6 months post last dose. And the second question is for you, Peter, that the tax rate stepped up from 14% to 18% to 19%. Just wanted to get some additional color.

Yes. Regarding the dosing of rocatinlumab. As we've indicated before, we will explore different dosing paradigms here. And as that suite of Phase III trials fully launches, I think it will become clear what we're looking for there based on both the mechanism of action of the molecule as well as patient convenience. Peter?

Umer, good question on tax. Again, it's just a change in what I would say the real estate on the P&L which is the PRET moves from the cost of sales line down to income tax expense in connection with the change in Puerto Rico for us from a PRET to the actual income tax in Puerto Rico which began here in 2023. So that's the nature of that change and that's where the 18% to 19% comes in from where we've been here historically.

Okay. The next question is from Jay Olson of Oppenheimer. And Jay is asking, can you talk about your plans for geographic diversification? It seems like ex U.S. revenues have become a small percentage of Amgen's total revenues over the past few quarters. And we were wondering what underlying dynamics drove that shift in geographical mix and if there are any future launches or other dynamics that might push the geographical mix back in favor of ex U.S. growth.

Yes, we are actually very pleased with the expansion internationally of the Amgen footprint being in over 100 markets. We continue to launch products and secure reimbursement around the world. I talked about LUMAKRAS. And most recently in China, we've been able to secure national reimbursement drug listing for both Prolia and Repatha. Our Japanese affiliate is growing well. In the recent history, I think what you're seeing is a function of just timing of launches coming a bit earlier in the U.S. and also some of our partnering products. I think longer term, what we've got is a very interesting portfolio of products that will continue to make their way around the world. The announced Horizon acquisition has a very large opportunity internationally. And we see our JPAC region is actually our fastest-growing potential opportunity longer term. So I wouldn't look at short-term movement from quarter-to-quarter. The long-term prevailing trend is that we will grow quickly outside the United States.

Okay. The next question is for you, Murdo, from Michael Schmidt of Guggenheim Partners. And he's asking, how confident are you in achieving low double-digit Otezla growth in 2023 and beyond, given the current pattern of essentially flat sales since 2020 of $2.2 billion?

Yes, I think we remain quite confident in our long-term growth of Otezla. We are in a period where there's a lot of new product entrants in the market competing for new patient starts. I think the unique positioning of the product, as I mentioned, allows us to source a very large pool of patients. And our coverage around the world and particularly in the U.S. from an insurance reimbursement perspective allows us to penetrate that market. So we feel very good about the continued prospects to grow Otezla.

Okay. The next question is from Robyn Karnauskas from Truist Securities. So she's asking, big picture, your guidance implies potentially flat growth. Given biosimilar pressures and pricing pressures, do you think 2023 is a trough year? And regarding the guidance range, can you give pushes and pulls on the biosimilar range?

So Robyn, maybe I'll start on the last piece and then Pete, you can reiterate what we said about '23. But as I said in my remarks, Robyn, we have 6 further similar launches planned between now and the end of the decade in the United States and other countries around the world. And it is the launch of those molecules through time which will enable us to continue to grow that franchise. So I would reiterate what I said earlier in my prepared comments. I think you've heard Murdo address as well the attractive opportunities that we think we'll have here, in particular, with AMGEVITA though we're in the first day of launch. And with respect to '23, Pete, I don't know whether you want to say anything in addition to what you already have about the outlook for the year.

Thanks. I think we covered it earlier. I'd just note a couple of items that happened in 2022 that we didn't expect benefit from in '23, just to reiterate those. We don't expect any and assume any COVID-19 antibody revenues in '23. We're assuming a lower amount of Nplate sales in '23, Robyn, compared to '22. Recall, '22 had the significant purchase by the U.S. government in the second half of the year. We had several favorable changes to estimated sales deductions that occurred in '22 and we sold the generics business in Turkey which closed late in '22. So a couple of puts and takes around those. And so we look forward to a year in 2023 with strong growth in our priority products, since of, Repatha, Prolia, TAVNEOS. And also -- and that's in light of -- consistent with the industry trends we talked about in our recent history with mid-single-digit price declines in our portfolio but good volume growth. I think maybe to go back to the question Jay asked, too, we expect strong volume growth outside the United States in 2023. So we're looking forward to taking on '23 with a lot of aggressiveness.

Okay. The next question is from Matt Phipps of William Blair. And Matt's saying the oncology biosimilar 2023 guidance suggests a year-over-year decline of 38% versus a 30% year-over-year decline from '21 to '22. Is the rate of erosion in the oncology biosimilars expected to continue to get larger beyond 2023 or will this eventually hit something of a floor?

I wouldn't say we expect it to get larger but we will continue to see a decline in that business which is a function of the average selling price decline that we've seen thus far.

Yaron calling. He said I'm confused by the tax rate going up to 18% to 19% while COGS are 16% to 17%. Hence, I don't see any offsets in the COGS line. What am I missing?

I think the answer to that is that our volume growth, the volume growth is quite large and that's really the offset, Yaron. That's a good question. And so we see that happening. We also -- in terms of the move of the PRET down there, recall, too, in cost of sales this year, we've got $125 million coming in off of the release out of inventory into cost of sales without any corresponding tax provision. And so the percent of sales versus a percent of pretax too, you've got to be thinking about that in terms of the income tax provision itself. So that's the puts and the takes on that. But when you strip it all back, it's really that move of the PRET down into the income tax expense that increases that effective rate to 18% to 19%.

Okay. The next question is from [indiscernible] from Credit Suisse. Thanks for the comments on Otezla and ENBREL. So can you add a bit more color into the dynamics in immunology? Are there any changes in the channel and mix of patients? Has there been any formulary disruptions?

Overall, our immunology business looks very good. I think we're very pleased with the TEZSPIRE launch. We continue to see broad phenotypes of patients regardless of biomarker status being treated. We are seeing de novo patients who haven't seen a biologic before in their treatment of their uncontrolled asthma. And we're also seeing patients being switched from other products within the class. And so we expect that area of autoimmune disease growing in terms of the biologic penetration of severe uncontrolled asthma. And we're well positioned to compete for that expanded treatment pattern. ENBREL continues to serve many patients. And the trends there are fairly predictable and fairly consistent. Otezla, as we've mentioned, is seeing some pressure from new free drug programs, both for our topicals as well as new entrant oral And then we also have just picked up TAVNEOS which we're really excited about, a product that treats a severe autoimmune disease, ANCA-associated vasculitis, very young product, very early in its life cycle and I think a lot of growth there to be had. And then, of course, last but certainly not least, on the branded side, the announced acquisition of Horizon. So I think the inflammation area, along with our own innovative pipeline and the pipeline of Horizon is a very good growth opportunity for us long term. And last but not least, here we are on the first day of launch of a novel biosimilar to the largest product in the U.S. and that's HUMIRA. So I think we've got a lot of opportunities for growth ahead.

I think we're down to our last question, Arvind, if you want to...

Yes. Let me read the last question, Bob and after that, you might have some concluding comments. So the last question is from Brian Skorney of Baird and Brian wants to know, do you expect this to be more of a longer-term tax rate, assuming no major changes to corporate tax rates in the U.S.?

Yes, Brian, I think, as you know, we don't give long-term guidance on tax rates. And so we won't go beyond this year, so 18% to 19%. And go back to your own just to make sure we understand the change in the PRET. The PRET is a percentage of its cost of sales as opposed to the income tax rate which is pretax income. So that's a little bit of the difference to that Yaron asked about. So 18% to 19% this year is where we're at and that's where we'll -- that's what we'll give you for now.

All right. Well, thank you very much, again, for your patience. Apologies that we had a little bit of difficulty with our vendor's connection earlier on the call. So if you have any further questions, shoot them into Arvind. We'll be around here this afternoon, Peter Murdo, Dave and myself, to answer any further questions you might have. And we appreciate your joining the call and look forward to talking to you during the course of 2023. Thank you.

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